AGREEMENT AND
PLAN OF REORGANIZATION
by and among
IR,
MERGER SUB
and
ZT
dated as of January 27, 2000
1.1 The Offer.............................................................1
1.2 Company Action........................................................3
1.3 Directors.............................................................3
ARTICLE II
THE MERGER
2.1 The Merger............................................................4
2.2 Effective Time........................................................5
2.3 Closing of the Merger.................................................5
2.4 Effects of the Merger.................................................5
2.5 Certificate of Incorporation and By-laws..............................5
2.6 Directors.............................................................5
2.7 Officers..............................................................5
2.8 Conversion of Shares..................................................5
2.9 Delivery of Merger Consideration......................................6
2.10 Dissenting Shares.....................................................7
2.11 Treatment of ZT Options...............................................8
2.12 Adjustments...........................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ZT
3.1 Existence; Good Standing; Corporate Authority.........................8
3.2 Authorization, Validity and Effect of Agreements......................9
3.3 Capitalization........................................................9
3.4 Subsidiaries.........................................................10
3.5 Other Interests......................................................10
3.6 No Conflict; Required Filings and Consents...........................10
3.7 Compliance...........................................................11
3.10 Absence of Certain Changes...........................................13
3.11 Material Contracts...................................................13
3.12 Litigation...........................................................14
3.13 Taxes................................................................14
3.14 Employee Benefit Plans...............................................15
3.15 Labor and Employment Matters.........................................17
3.16 No Brokers...........................................................17
3.17 Year 2000 Compliance.................................................17
3.18 Insurance............................................................18
3.19 Properties...........................................................18
3.20 Environmental Laws...................................................18
3.21 Related Party Transactions...........................................20
3.22 Bank Accounts........................................................20
3.23 Intellectual Property................................................21
3.24 Minute Books.........................................................21
3.25 Accounting Records; Internal Controls................................21
3.26 Past Product Liability and Returns...................................21
3.27 Full Disclosure......................................................21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IR AND MERGER SUB
4.1 Existence; Good Standing; Corporate Authority........................22
4.2 Authorization, Validity and Effect of Agreements.....................22
4.3 No Conflict; Required Filings and Consents...........................22
4.4 No Brokers...........................................................23
4.5 Full Disclosure......................................................24
4.6 Financing............................................................24
ARTICLE V
COVENANTS
5.1 Alternative Proposals................................................24
5.2 Interim Operations...................................................25
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5.4 Filings, Other Action................................................26
5.5 Third-Party Consents.................................................26
5.6 Inspection of Records; Access and Information........................26
5.7 Publicity............................................................27
5.8 Expenses.............................................................27
5.9 Insurance; Indemnity.................................................27
5.10 Appreciation Rights..................................................28
5.11 Cooperation, Notification............................................28
5.12 Financial Statements.................................................29
5.13 Commercially Reasonable Efforts......................................29
5.14 Anti-takeover Statutes...............................................29
5.15 Merger Without Meeting of Shareholders...............................29
5.16 Payment of Debt......................................................29
5.17 Guaranty and Indemnity Agreement.....................................29
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Merger...........30
6.2 Conditions to Obligation of ZT to Effect the Merger..................30
6.3 Conditions to Obligation of IR to Effect the Merger..................31
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Consent........................................32
7.2 Termination by Either IR or ZT.......................................32
7.3 Termination by ZT....................................................32
7.4 Termination by IR....................................................33
7.6 Extension, Waiver....................................................33
ARTICLE VIII
GENERAL PROVISIONS
8.1 Nonsurvival of Representations, Warranties and Agreements............34
8.2 Notices..............................................................34
8.3 Assignment; Binding Effect...........................................34
8.4 Entire Agreement.....................................................34
8.5 Amendment............................................................35
8.6 Governing Law........................................................35
8.7 Counterparts.........................................................35
8.8 Headings.............................................................35
8.9 Interpretation.......................................................35
8.10 Waivers..............................................................35
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8.11 Incorporation of Exhibits............................................36
8.12 Severability.........................................................36
8.13 Enforcement of Agreement.............................................36
8.14 Definitions of Subsidiary, Person and Knowledge......................36
8.15 Waiver Of Jury Trial.................................................36
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LIST OF EXHIBITS
EXHIBIT A Stock Option Agreement
EXHIBIT B ZT Shareholder Support Agreement
EXHIBIT C Offer Conditions
EXHIBIT D Incentive Compensation Agreement with
International Rectifier Corporation
EXHIBIT E Form of Opinion of Counsel to ZT
EXHIBIT F Incentive Compensation Agreement with
Omnirel LLC
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement")
dated as of January 27, 2000, is by and among International Rectifier
Corporation, a Delaware corporation ("IR"), Zing Technologies, Inc., a New York
corporation ("ZT"), and IRC Acquisition Corporation, a New York corporation and
a direct wholly owned subsidiary of IR ("Merger Sub").
RECITALS
A. ZT and IR have determined to engage in the transactions
(the "Transactions") contemplated by (i) the Stock Option Agreement dated as of
the date hereof among ZT, IR, and Merger Sub (the "Stock Option Agreement")
attached as EXHIBIT A and (ii) this Agreement, including (a) the commencement of
an Offer (as defined below) by Merger Sub to purchase any and all of the
outstanding shares of common stock, $0.01 par value, of ZT ("ZT Common Stock"),
and (b) a business combination whereby Merger Sub will be merged with and into
ZT, with ZT continuing as the surviving corporation of such merger and a direct
wholly-owned subsidiary of IR (the "Merger").
B. The respective boards of directors of ZT, IR and Merger Sub
have approved and declared advisable this Agreement and the Transactions.
C. To induce IR to enter into this Agreement, certain
shareholders of ZT have executed a shareholder support agreement ("ZT
Shareholder Support Agreement") with IR in the form of EXHIBIT B.
ARTICLE I
THE OFFER
1.1 THE OFFER.
(a) Provided that nothing shall have occurred that would result in a
failure to satisfy any of the conditions set forth in EXHIBIT C hereto, as
promptly as practicable after the date hereof, Merger Sub shall, and IR shall
cause Merger Sub to, commence (within the meaning of Rule 14d-2 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) promptly, but
in no event later than the tenth business day after the date of this Agreement,
an offer (the "Offer") to purchase any and all of the outstanding shares of ZT
Common Stock at a price of fifteen dollars and thirty-six cents ($15.36) per
share (the "Offer Price"), net to the seller in cash. The initial expiration
date of the Offer shall be the twentieth business day from and after the date
the Offer is commenced, including the date of commencement as the first business
day in accordance with Rule 14d-2 under the Exchange Act (the "Initial
Expiration Date"). The obligation of Merger Sub to accept for payment, purchase
and pay for shares of ZT Common Stock shall be subject, except as provided in
Section 1.1(b), only to the satisfaction of the condition that a number of
shares of ZT Common Stock representing not less than two-thirds of the total
issued and outstanding shares of ZT Common Stock on a fully-diluted basis on the
date such shares are purchased pursuant to the Offer have been validly tendered
and not withdrawn
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prior to the expiration of the Offer (the "Minimum Condition") and of the
other conditions set forth in EXHIBIT C hereto; provided, however, that
Merger Sub expressly reserves the right to waive any of the conditions to the
Offer and to make any change in the terms or conditions of the Offer in its
sole discretion, subject to Section 1.1(b).
(b) Without the prior written consent of ZT, neither IR nor Merger Sub
will decrease the price per share of ZT Common Stock payable in the Offer,
decrease the number of shares of ZT Common Stock sought in the Offer, change the
form of consideration payable in the Offer, or impose or alter the conditions to
the Offer in addition to or from those set forth in EXHIBIT C or in a manner
that is otherwise materially adverse to the holders of shares of ZT Common
Stock. Notwithstanding anything in this Agreement to the contrary, without the
consent of ZT, Merger Sub shall have the right to extend the Offer beyond the
Initial Expiration Date only in the following events: (i) from time to time if,
at the Initial Expiration Date (or extended expiration date of the Offer, if
applicable), any of the conditions to the Offer shall not have been satisfied or
waived, until such conditions are satisfied or waived; (ii) for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the Offer
or any period required by applicable law, or (iii) if all conditions to the
Offer are satisfied or waived and the shares of ZT Common Stock validly tendered
and not withdrawn pursuant to the Offer represent more than two-thirds of the
total issued and outstanding shares of ZT Common Stock on a fully diluted basis,
Merger Sub may extend the Offer for a period not to exceed ten business days;
provided that as of the date the Offer is extended, all conditions previously
imposed (other than compliance with Sections 5.2 and 5.6) shall be deemed
satisfied as of such extended expiration date, whether any such condition is in
fact satisfied on such dates. Subject to the foregoing and to the terms and
conditions of the Offer, Merger Sub shall, and IR shall cause it to, accept for
payment and pay for, as promptly as practicable after the expiration of the
Offer, all shares of ZT Common Stock properly tendered and not withdrawn
pursuant to the Offer that Merger Sub is obligated to purchase. IR shall provide
or cause to be provided to Merger Sub on a timely basis the funds necessary to
pay for any shares of ZT Common Stock that Merger Sub becomes obligated to
accept for payment, and pay for, pursuant to the Offer.
(c) As soon as practicable after the date hereof, IR and Merger Sub
shall file with the SEC a Tender Offer Statement on Schedule TO (the "Schedule
TO") with respect to the Offer, which will contain the offer to purchase and
form of the related letter of transmittal (such Schedule TO and such documents
included therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "Offer Documents"). IR and ZT each agrees
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect. IR and Merger Sub 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 of ZT Common Stock, in each case as and to the extent required by
applicable federal securities laws. ZT and its counsel shall be given an
opportunity to review and comment on the Offer Documents prior to their being
filed with the SEC or disseminated to the holders of shares of ZT Common Stock.
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1.2 COMPANY ACTION.
(a) ZT hereby consents to the Offer and represents that its board of
directors, at a meeting duly called and held has (i) unanimously determined that
this Agreement, the Stock Option Agreement and the Transactions, including the
Offer, the Merger, and the purchase of Shares contemplated by the Offer and the
Stock Option Agreement, are fair to and in the best interests of ZT's
shareholders, (ii) unanimously approved and adopted this Agreement, the Stock
Option Agreement, the ZT Shareholder Support Agreement and the Transactions,
including the Offer, the Merger, and the purchase of Shares contemplated by the
Offer and the Stock Option Agreement, in accordance with the requirements of the
Business Corporation Law of the State of New York (the "NYBCL") and (iii)
unanimously resolved to recommend acceptance of the Offer and approval and
adoption of this Agreement and the Merger by its shareholders. ZT has been
advised that all of its directors, and each of its executive officers who has
been informed of the Transactions and who owns shares of ZT Common Stock, intend
to tender their shares of ZT Common Stock pursuant to the Offer and, if
applicable, to vote in favor of the Merger. ZT will cause its transfer agent to
promptly furnish IR with a list of ZT's shareholders, mailing labels and any
available listing or computer file containing the names and addresses of all
record holders of shares of ZT Common Stock and lists of securities positions of
shares of ZT Common Stock held in stock depositories and to provide to IR such
additional information (including, without limitation, updated lists of
shareholders, mailing labels and lists of securities positions) and such other
assistance as IR may reasonably request in connection with the Offer.
(b) As soon as practicable on the day that the Offer is commenced, ZT
shall file with the SEC and disseminate to holders of shares of ZT Common Stock,
in each case as and to the extent required by applicable federal securities
laws, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with
any amendments or supplements thereto, the "Schedule 14D-9") that shall reflect
the recommendations of ZT's board of directors referred to above. ZT and IR each
agree promptly to correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in any
material respect. ZT agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to holders
of shares of ZT Common Stock, in each case as and to the extent required by
applicable federal securities laws. IR and its counsel shall be given an
opportunity to review and comment on the Schedule 14D-9 prior to its being filed
with the SEC.
1.3 DIRECTORS.
(a) Promptly following the purchase of and payment for a number of
shares of ZT Common Stock that satisfies the Minimum Condition, and from time to
time thereafter, IR shall be entitled to designate the number of directors,
rounded up to the next whole number, on ZT's board of directors that equals the
product of (i) the total number of directors on ZT's board of directors (giving
effect to the election of any additional directors pursuant to this Section) and
(ii) the percentage that the number of shares of ZT Common Stock beneficially
owned by IR (including shares of ZT Common Stock paid for pursuant to the Offer)
bears to the total number of shares of ZT Common Stock outstanding, and ZT shall
take all action within its power to cause IR's designees to be elected or
appointed to ZT's board of directors, including, without limitation, increasing
the number of directors, and seeking and accepting resignations of
3
incumbent directors. At such time, ZT will also use its reasonable best
efforts to cause individual directors designated by IR to constitute the
number of members, rounded up to the next whole number, on (i) each committee
of ZT's board of directors other than any committee of such Board established
to take action under this Agreement or the Stock Option Agreement and (ii)
each board of directors of each ZT Subsidiary (as defined in Section 8.14),
and each committee thereof, that represents the same percentage as such
individuals represent on the ZT board of directors. Notwithstanding the
foregoing, in the event that IR's designees are to be appointed or elected to
ZT's board of directors, until the Effective Time (as defined below), such
board of directors shall have at least two directors who are directors on the
date of this Agreement and who are not officers of ZT (the "Continuing
Directors"); provided that in the event that the number of Continuing
Directors shall be reduced below two for any reason whatsoever, any remaining
Continuing Directors (or Continuing Director, if there shall be only one
remaining) shall be entitled to designate persons to fill such vacancies who
shall be deemed to be Continuing Directors for purposes of this Agreement.
(b) ZT's obligations to appoint IR's designees to the ZT board of
directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. ZT shall promptly take all actions, and shall include in
the Schedule 14D-9 such information with respect to ZT and its officers and
directors, as Section 14(f) and Rule 14f-1 require in order to fulfill its
obligations under this Section. IR shall supply to ZT in writing and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of IR's designees pursuant to
Section 1.3(a) and until the Effective Time, the approval of the Continuing
Directors shall be required to authorize (and such authorization shall
constitute the authorization of the ZT board of directors and no other action on
the part of ZT, including any action by any other director of ZT, shall be
required to authorize) any termination of this Agreement by ZT, any amendment of
this Agreement requiring action by the ZT board of directors, any amendment of
the certificate of incorporation or bylaws of ZT, any extension of time for
performance of any obligation or action hereunder by IR or Merger Sub, any
waiver of compliance with any of the agreements or conditions contained herein
for the benefit of ZT and any material transaction with IR, Merger Sub or any
affiliate thereof unless such transaction is on terms no less favorable to ZT
than ZT would obtain in a similar transaction with an unrelated third party.
ARTICLE II
THE MERGER
2.1 THE MERGER. At the Effective Time (as defined in Section 2.2
below) and upon the terms and subject to the conditions of this Agreement and
in accordance with the NYBCL, Merger Sub will be merged with and into ZT.
Following the Merger, ZT will continue as the surviving corporation (the
"Surviving Corporation") and as a wholly owned subsidiary of IR, and the
separate corporate existence of Merger Sub will cease.
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2.2 EFFECTIVE TIME. Subject to the provisions of this Agreement, the
parties will cause the Merger to be consummated by filing an appropriate
certificate of merger (the "Certificate of Merger") with the Secretary of
State of the State of New York in such form as required by, and executed in
accordance with, the relevant provisions of the NYBCL as soon as practicable
on or after the Closing Date (as defined in Section 2.3 below). The Merger
will become effective upon such filing or at such time thereafter as is
provided in the Certificate of Merger (the "Effective Time", and the date of
such effectiveness shall be the "Effective Date").
2.3 CLOSING OF THE MERGER. The closing of the Merger (the "Closing")
will take place at a time and on a date to be specified by the parties, which
will be no later than the last business day of the month in which the
conditions set forth in ARTICLE VI (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions) are satisfied or waived (the "Closing Date"), at
the offices of O'Melveny & Xxxxx LLP, 1999 Avenue of the Stars, Los Angeles,
California, unless the parties agree to another time, date or place in
writing.
2.4 EFFECTS OF THE MERGER. The Merger will have the effects set
forth in the NYBCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all properties, rights, privileges,
powers and franchises of ZT and Merger Sub will vest in the Surviving
Corporation, and all debts, liabilities and duties of ZT and Merger Sub will
become the debts, liabilities and duties of the Surviving Corporation.
2.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. The certificate of
incorporation and bylaws of Merger Sub in effect at the Effective Time will
be the certificate of incorporation and bylaws of the Surviving Corporation
until respectively amended in accordance with their terms and applicable law,
except that the name of the Surviving Corporation will be Zing Technologies,
Inc.
2.6 DIRECTORS. The directors of Merger Sub at the Effective Time
will be the initial directors of the Surviving Corporation, each to hold
office in accordance with the certificate of incorporation and bylaws of the
Surviving Corporation until such director's successor is duly elected and
qualified.
2.7 OFFICERS. The officers of Merger Sub as of the Effective Time
will be the initial officers of the Surviving Corporation until such
officer's successor is duly elected or appointed and qualified.
2.8 CONVERSION OF SHARES. At the Effective Time and without any
action on the part of the holder thereof, each issued and outstanding share
of ZT Common Stock will convert into the right to receive an amount in cash
equal to fifteen dollars and thirty-six cents ($15.36) (the "Merger
Consideration"). As a result of the Merger, each issued and outstanding share
of common stock, $1.00 par value, of Merger Sub will be converted into and
become one fully paid and non-assessable share of common stock, $0.01 par
value, of the Surviving Corporation. Notwithstanding anything contained in
this Section 2.8 to the contrary, each share of ZT Common Stock issued and
held in ZT's treasury immediately before the Effective Time, and each share
of ZT Common Stock held by IR, Merger Sub, any other IR Subsidiary or any ZT
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Subsidiary immediately before the Effective Time, will, by virtue of the
Merger, cease to be outstanding and will be cancelled and retired without
payment of any consideration therefor.
2.9 DELIVERY OF MERGER CONSIDERATION.
(a) Promptly after the Effective Time, IR shall deposit or cause to be
deposited in trust (the "Payment Fund") with an agent reasonably acceptable to
ZT (the "Payment Agent") for the benefit of the holders of certificates
representing the shares of ZT Common Stock issued and outstanding as of the
Effective Time (collectively "ZT Certificates"), the aggregate Merger
Consideration, as and when needed, to be paid in respect of the shares of ZT
Common Stock. The Payment Fund shall not be used for any other purpose. The
Payment Fund may be invested by the Paying Agent, as directed by Surviving
Corporation, in (i) obligations of or guaranteed by the United States, (ii)
commercial paper rated A-1, P-1 or A-2, P-2, and (iii) certificates of deposit,
bank repurchase agreements and bankers acceptances of any bank or trust company
organized under federal law or under the law of any state of the United States
or of the District of Columbia that has capital, surplus and undivided profits
of at least $1 billion or in money market funds which are invested substantially
in such investments. Any net earnings with respect thereto shall be paid to the
Surviving Corporation as and when requested by the Surviving Corporation.
(b) As soon as reasonably practicable after the Effective Time, IR will
instruct the Payment Agent to mail to each holder of record of ZT Common Stock
immediately before the Effective Time (excluding any shares of ZT Common Stock
cancelled pursuant to Section 2.8):
(1) a letter of transmittal (the "Letter of Transmittal")
(which will specify that delivery will be effected, and risk of loss and
title to the ZT Certificates will pass, only upon delivery of such ZT
Certificates to the Payment Agent and will be in such form and have such
other provisions as IR specifies), and
(2) instructions for use in effecting the surrender of each
ZT Certificate in exchange for the aggregate Merger Consideration with
respect to the shares of ZT Common Stock formerly represented thereby.
(c) IR and the Surviving Corporation shall cause the Payment Agent to
pay to the holders of a Certificate, as soon as practicable after receipt of any
Certificate (or in lieu of such Certificate an affidavit of lost, stolen or
destroyed share certificates (including customary indemnity or bond against
loss) in form and substance reasonably satisfactory to IR) together with the
Letter of Transmittal, duly executed, and such other documents as IR or the
Payment Agent reasonably request, in exchange therefor a check in the amount
equal to the cash, if any, which such holder has the right to receive pursuant
to the provisions of this ARTICLE II, less the amount of any applicable
withholding taxes. No interest shall be paid or accrued on any cash payable upon
the surrender of any Certificate. Each Certificate surrendered in accordance
with the provisions of this Section 2.9(c) shall be cancelled forthwith.
(d) In the event of a transfer of ownership of shares of ZT Common
Stock which is not registered in the transfer records of ZT, the Merger
Consideration may be paid to
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the transferee only if (i) the Certificate representing such shares of ZT
Common Stock surrendered to the Paying Agent in accordance with Section
2.9(c) hereof is properly endorsed for transfer or is accompanied by
appropriate and properly endorsed stock powers and is otherwise in proper
form to effect such transfer, (ii) the person requesting such transfer pays
to the Paying Agent any transfer or other taxes payable by reason of such
transfer or establishes to the satisfaction of the Paying Agent that such
taxes have been paid or are not required to be paid, and (iii) such person
establishes to the satisfaction of IR that such transfer would not violate
any applicable federal or state securities laws.
(e) At and after the Effective Time, each holder of a Certificate that
represented issued and outstanding shares of ZT Common Stock immediately prior
to the Effective Time shall cease to have any rights as a shareholder of ZT,
except for the right to surrender his or her Certificate in exchange for the
Merger Consideration multiplied by the number of shares represented by such
Certificate and except as otherwise provided by applicable law, and no transfer
of shares of ZT Common Stock shall be made on the stock transfer books of the
Surviving Corporation.
(f) Any portion of the Payment Fund (including any interest received
with respect thereto), which remains unclaimed six months after the Effective
Time, will be paid to the Surviving Corporation upon demand. Any holders of
Certificates who have not theretofore complied with this Section 2.9 will
thereafter look only to the Surviving Corporation and IR for payment (subject to
applicable abandoned property, escheat and similar laws) of their claim for the
Merger Consideration, without interest thereon. Notwithstanding the foregoing,
neither IR, the Surviving Corporation nor the Paying Agent shall be liable to a
holder of a Certificate for any Merger Consideration properly delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(g) Any portion of the Merger Consideration made available to the
Payment Agent pursuant to Section 2.9(a) to pay for shares of ZT Common Stock
for which appraisal rights have been perfected shall be returned to IR, upon
demand.
2.10 DISSENTING SHARES . Notwithstanding anything in this Agreement
to the contrary, shares of ZT Common Stock that are issued and outstanding
immediately before the Effective Time and that are held by shareholders who
have (a) not voted such shares in favor of the Merger (or consented thereto
in writing), (b) delivered a written objection to the Merger and a demand for
appraisal of such shares of ZT Common Stock in accordance with Section 623 of
the NYBCL (insofar as such Section is applicable to the Merger and provides
for appraisal rights with respect to it) and (c) not failed to perfect or
have not effectively withdrawn or lost their rights to appraisal and payment
under the NYBCL, shall not be converted into the right to receive the Merger
Consideration as provided in Section 2.8 hereof. Instead, ownership of such
shares will entitle the holder thereof to receive the consideration
determined pursuant to Section 623 of the NYBCL; provided, however, that if
such holder fails to perfect or effectively withdraws such holder's right to
appraisal and payment under the NYBCL, each of such shares shall thereupon be
deemed to have been converted, at the Effective Time, into the right to
receive the Merger Consideration, without any interest thereon, upon
surrender of the Certificate or Certificates in the manner provided in
Section 2.8 hereof. ZT will give IR (d) prompt notice of any demands (or
withdrawals of demands) for appraisal received by ZT pursuant to the
7
applicable provisions of the NYBCL and any other instruments served pursuant
to the NYBCL and received by ZT and (e) the opportunity to participate in all
negotiations and proceedings with respect to demands for appraisal under the
NYBCL. ZT will not, except with the prior consent of IR (which consent will
not be unreasonably withheld), make any payment with respect to any such
demands for appraisal or offer to settle, or settle, any such demands.
2.11 TREATMENT OF ZT OPTIONS. At the closing of the Offer, each
holder of outstanding ZT options shall, upon surrender of such options, be
entitled to receive from IR or the Surviving Corporation, for each ZT option
surrendered, an amount equal to the product of (i) the Merger Consideration
minus the exercise price of such ZT option surrendered by such holder
multiplied by (ii) the number of shares of ZT Common Stock covered by such ZT
option, less any applicable withholding taxes, and without interest paid
thereon, and each such surrendered ZT option shall terminate. At the
Effective Time, any remaining ZT options shall terminate, and the holders
thereof shall be entitled to receive from IR or the Surviving Corporation,
for each ZT option held, an amount equal to the product of (i) the Merger
Consideration minus the exercise price of such ZT option held by such holder
multiplied by (ii) the number of shares of ZT Common Stock covered by such ZT
option, less any applicable withholding taxes, and without interest paid
thereon. Prior to the closing of the Offer, ZT shall take all actions
(including, if appropriate, amending the terms of any option plan or
arrangement) that are within its power to give effect to the transactions
contemplated by this Section 2.11.
2.12 ADJUSTMENTS. If, during the period between the date of this
Agreement and the Effective Time, any change in the outstanding shares of ZT
Common Stock shall occur, including by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment of
shares of ZT Common Stock, or stock dividend thereon with a record date
during such period, the cash payable pursuant to the Offer, the Merger
Consideration and any other amounts payable pursuant to this Agreement shall
be appropriately adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ZT
Except as set forth in the disclosure letter delivered at or
before the execution of this Agreement to IR (provided that an item on such
disclosure schedule is deemed to qualify only the particular Subsection or
Subsections specified for such item unless from the description of such item it
is clear that such item should qualify another Subsection, in which case such
disclosure will qualify such other Subsection) (the "ZT Disclosure Letter"), ZT
represents and warrants to IR and Merger Sub as of the date of this Agreement as
follows:
3.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. ZT is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of New York. ZT is duly licensed or qualified to do
business as a foreign corporation and is in good standing under the laws of
any other state of the United States in which the character of the properties
owned or leased by it or in which the transaction of its business makes such
qualification necessary, except where the failure to be so qualified or to be
in good standing would not have a material adverse effect on the business,
results of operations or financial condition of ZT and the ZT Subsidiaries
(as defined in Section 8.14) taken as a whole (a "ZT
8
Material Adverse Effect"). ZT has all requisite corporate power and authority
to own, operate and lease its properties and carry on its business as now
conducted and as described in ZT's Annual Report on Form 10-KSB for the
fiscal year ended June 30, 1999. The copies of ZT's certificate of
incorporation and bylaws made available to IR are true and correct as of the
date hereof.
3.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. ZT has the
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby. The Agreement, the
Merger, and the purchase of shares of ZT Common Stock contemplated by the
Offer and the Stock Option Agreement have been approved by ZT's board of
directors and, subject only to the adoption of this Agreement and the
transactions contemplated hereby by the holders of two-thirds of the total
issued and outstanding shares of ZT Common Stock on a fully-diluted basis,
the consummation by ZT of the transactions contemplated hereby has been duly
authorized by all requisite corporate action. This Agreement constitutes, and
all agreements and documents contemplated hereby (when executed and delivered
pursuant hereto for value received) will constitute, the valid and legally
binding obligations of ZT, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights and general principles of equity.
3.3 CAPITALIZATION.
(a) The authorized capital stock of ZT consists of 12,000,000 shares of
ZT Common Stock, $0.01 par value. As of January 26, 2000, there were 2,406,837
shares of ZT Common Stock issued and outstanding, plus 657,955 shares of ZT
Common Stock held in ZT's treasury. All issued and outstanding shares of ZT
Common Stock are duly authorized, validly issued, fully paid, nonassessable,
free of preemptive rights, and were issued in compliance with all applicable
laws except where non-compliance does not affect ownership of such share or
create any encumbrance thereon or result in a ZT Material Adverse Effect.
(b) The ZT Disclosure Letter lists all outstanding options, warrants
and other rights to purchase shares of ZT's Common Stock as of January 26, 2000
with descriptions of such options, warrants and other rights.
(c) Since January 26, 2000, (i) no options, warrants or other rights to
purchase shares of ZT Common Stock have been granted, and (ii) no additional
shares of capital stock of ZT have been issued, except pursuant to the exercise
of outstanding options.
(d) Except as set forth in paragraphs (a), (b) and (c) above and on the
ZT Disclosure Letter, ZT does not have any shares of its capital stock issued or
outstanding and does not have any outstanding subscriptions, options, warrants,
calls, subscriptions, convertible securities, rights or other agreements or
commitments obligating ZT or any ZT Subsidiary to issue, transfer or sell any
shares of capital stock of ZT or any ZT Subsidiary. ZT has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the shareholders of ZT on any matter. Any equity securities,
which were issued and reacquired by
9
ZT, were so reacquired in compliance with all applicable laws, and ZT does
not have any obligation or liability with respect thereto.
3.4 SUBSIDIARIES. Each ZT Subsidiary is a corporation, limited
liability company or partnership duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
has the corporate, limited liability company or partnership power and
authority to own its properties and to carry on its business as it is now
being conducted, and is duly qualified to do business and is in good standing
in each jurisdiction in which the ownership of its property or the conduct of
its business requires such qualification, except for jurisdictions in which
such failure to be so qualified or to be in good standing would not have a ZT
Material Adverse Effect. The copies of the organizational and charter
documents for the ZT Subsidiaries made available to IR are true and correct
as of the date hereof. The ZT Disclosure Letter lists all of the ZT
Subsidiaries and correctly sets forth the capitalization of each Subsidiary,
the jurisdiction in which each ZT Subsidiary is organized or formed, each
jurisdiction in which each such ZT Subsidiary is qualified or licensed to do
business as a foreign corporation, limited liability company or partnership,
and the current directors and executive officers of each ZT Subsidiary. All
outstanding securities or other ownership interests in each ZT Subsidiary are
(i) owned of record and beneficially by ZT or another of ZT's wholly-owned
Subsidiaries and subject to no lien (other than liens for taxes not yet due
and payable), claim, charge or encumbrance, and (ii) have been duly
authorized, are validly issued, fully paid and nonassessable.
3.5 OTHER INTERESTS. Except for interests in ZT Subsidiaries,
neither ZT nor any ZT Subsidiary owns directly or indirectly any interest or
investment (whether equity or debt) in any corporation, partnership, limited
liability company, joint venture, business, trust or other entity except
money market securities.
3.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by ZT do not, and the
consummation by ZT of the transactions contemplated hereby will not,
(1) conflict with or violate the certificate of
incorporation or bylaws or equivalent organizational documents of (i) ZT or
(ii) any ZT Subsidiary,
(2) subject to making the filings and obtaining the
approvals identified in Section 3.6(b) of this Agreement, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to ZT
or any ZT Subsidiary or by which any property or asset of ZT or any ZT
Subsidiary is bound or affected, or
(3) subject to making the filings and obtaining the
approvals identified in Section 3.6(b) of this Agreement, 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, result in the loss of a material
benefit under, or give to others any right of purchase or sale, or any right
of termination, amendment, acceleration, increased payments or cancellation
of, or result in the creation of a lien or other encumbrance on any property
or asset of ZT or any ZT Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
10
instrument or obligation (each, a "Contract") to which ZT or any ZT
Subsidiary is a party or by which ZT or any ZT Subsidiary or any property or
asset of ZT or any ZT Subsidiary is bound or affected;
except, in the case of clauses (2) and (3), for any such conflicts,
violations, breaches, defaults or other occurrences which would not prevent
or delay consummation of any of the transactions contemplated hereby in any
material respect, or otherwise prevent ZT from performing its obligations
under this Agreement in any material respect, and would not, individually or
in the aggregate, have a ZT Material Adverse Effect.
(b) The execution and delivery of this Agreement by ZT do not, and the
consummation by ZT of the transactions contemplated hereby will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign (each a
"Governmental Entity") or any other third-party, except
(1) for:
(i) applicable requirements, if any, of the Exchange Act, the
Securities Act of 1933 as amended (the "Securities Act"), state
securities or "blue sky" laws ("Blue Sky Laws") and state takeover
laws,
(ii) the pre-merger notification requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and
the rules and regulations thereunder (the "HSR Act"),
(iii) filing of the Certificate of Merger as required by the
NYBCL,
(iv) applicable requirements, if any, of the Internal Revenue
Code of 1986, as amended (the "Code") and state, local and foreign tax
laws,
(v) banks which hold commercial loans to be paid off pursuant
to Section 5.16 hereof; and
(2) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of any of the transactions
contemplated hereby in any material respect, or otherwise prevent ZT
from performing its obligations under this Agreement in any material
respect, and would not, individually or in the aggregate, have a ZT
Material Adverse Effect.
3.7 COMPLIANCE. ZT and each ZT Subsidiary are in compliance with
(a) all laws, rules, regulations, orders, judgments and decrees
applicable to ZT or any ZT Subsidiary or by which any property or asset of ZT
or any ZT Subsidiary is bound or affected, or
(b) all Contracts to which ZT or any ZT Subsidiary is a party or by
which ZT or any ZT Subsidiary or any property or asset of ZT or any ZT
Subsidiary is bound or affected,
11
except in both (a) and (b) where failure to comply would not, individually or in
the aggregate, have a ZT Material Adverse Effect. ZT and the ZT Subsidiaries
have obtained all licenses, permits and other authorizations and have taken all
actions required by applicable law or governmental regulations in connection
with their business as now conducted, except where the failure to obtain any
such item or to take any such action would not have, individually or in the
aggregate, a ZT Material Adverse Effect.
3.8 SEC DOCUMENTS.
(a) ZT has delivered copies to IR of: (i) ZT's annual reports on Form
10-KSB for its fiscal years ended June 30, 1999, 1998, 1997, and 1996, (ii) ZT's
quarterly reports on Form 10-Q for its fiscal quarter ended September 30, 1999,
(iii) its proxy or information statements relating to meetings of, or actions
taken without a meeting by, the shareholders of ZT held since January 11, 1999,
and (iv) all of its other reports, statements, schedules and registration
statements filed with the SEC since January 11, 1999 (the documents referred to
in this Section 3.8(a), collectively, the "ZT Reports").
(b) As of the filing date, each ZT Report complied as to form in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, as the case may be.
(c) As of its filing date (or, if amended or superceded by a filing
prior to the date hereof, on the date of such later filing), each ZT Report
filed pursuant to the Exchange Act did not, and each such ZT Report filed
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(d) Each ZT Report that is a registration statement, as amended or
supplemented, if applicable, filed pursuant to the Securities Act, as of the
date such statement or amendment became effective, did not 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 not misleading.
3.9 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. The audited
consolidated financial statements and unaudited consolidated interim
financial statements of ZT included in the ZT Reports fairly present, in
conformity with generally accepted accounting principles ("GAAP") applied on
a consistent basis (except as may be indicated in the notes thereto), the
consolidated balance sheets of ZT and its consolidated Subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows for
the periods then ended (subject to normal year-end adjustments and footnotes
in the case of any unaudited interim financial statements). Except as and to
the extent reflected or reserved against in such consolidated balance sheets
(including the notes thereto), ZT does not have any liabilities or
obligations (absolute or contingent) of a nature required to be or
customarily reflected in a consolidated balance sheet (or the notes thereto)
prepared in accordance with GAAP consistently applied. The consolidated
statements of operations present fairly in all material respects the results
of operations of ZT for the periods indicated.
12
3.10 ABSENCE OF CERTAIN CHANGES. Except as specifically
contemplated by this Agreement, since September 30, 1999 there has not been
(a) any ZT Material Adverse Effect or any circumstance or event that could
reasonably be expected to have a ZT Material Adverse Effect; (b) any
declaration, setting aside or payment of any dividend or other distribution
with respect to its capital stock; (c) any material change in its accounting
principles, practices or methods; or (d) any damage or destruction to, or
loss of, any physical property, whether or not covered by insurance, that had
or could have a ZT Material Adverse Effect. Since September 30, 1999, neither
ZT nor any ZT Subsidiary has taken any other action that it would be
prohibited from taking after the date hereof pursuant to Section 5.2.
3.11 MATERIAL CONTRACTS. The ZT Disclosure Letter sets
forth a complete and accurate list of any of the following to which ZT or any
ZT Subsidiary is a party or by which ZT or any ZT Subsidiary is bound (each,
a "ZT Material Contract"):
(a) all written management, compensation, employment or other
contracts entered into with any executive officer or director of ZT or any ZT
Subsidiary;
(b) all contracts or agreements under which ZT or any ZT
Subsidiary has any outstanding indebtedness, obligation or liability for
borrowed money or the deferred purchase price of property or has the right or
obligation to incur any such indebtedness, obligation or liability;
(c) all bonds or agreements of guarantee or indemnification in
which ZT or any ZT Subsidiary acts as surety, guarantor or indemnitor with
respect to any obligation (fixed or contingent), other than any such bonds or
agreements entered into in connection with an asset or stock acquisition or
disposition made by ZT or any ZT Subsidiary and other than any such guarantees
of the obligations of ZT or any ZT Subsidiary;
(d) all noncompete agreements to which ZT, any ZT
Subsidiary or any affiliate thereof is a party;
(e) all partnership and joint venture agreements;
(f) each other contract or agreement listed as an exhibit to
ZT's most recent Form 10-K and 10-Q; and
(g) all agreements relating to material business acquisitions
or dispositions during the last three years, including any separate tax or
indemnification agreements.
Except as set forth in the ZT Disclosure Letter, (i) neither ZT nor any
ZT Subsidiary is in default under the terms of any ZT Material Contract, which
default permits the other party to adversely alter or terminate any rights of ZT
or any ZT Subsidiary or accelerate the obligations of ZT or any ZT Subsidiary
under such ZT Material Contract or to collect damages, (ii) to the Knowledge (as
defined in Section 8.14) of ZT, no other party thereto is in default in any
material respect under the terms of any ZT Material Contract, (iii) each ZT
Material Contract is valid, binding and in full force and effect in all material
respects, and (iv) all contracts or agreements
13
under which ZT or any ZT Subsidiary has any outstanding indebtedness,
obligation or liability for borrowed money may be prepaid in full without any
prepayment penalties.
3.12 LITIGATION. There is no action, suit or proceeding pending
against ZT or any ZT Subsidiary or, to the Knowledge of ZT, threatened
against ZT or any ZT Subsidiary, at law or in equity, or before or by any
federal or state court, commission, board, bureau, agency or instrumentality,
that (i) if resolved adversely to it would have a ZT Material Adverse Effect
or (ii) could reasonably be expected to impair its ability to consummate the
Merger. ZT is not aware of any judicial or administrative decision affecting
it or any ZT Subsidiary that could reasonably be expected to impair its
ability to consummate the Merger.
3.13 TAXES.
(a) ZT and each ZT Subsidiary have timely filed all material tax
returns and reports required to be filed by it, or requests for extensions to
file such returns or reports have been timely filed and granted and have not
expired, and all tax returns and reports are complete and accurate in all
material respects. ZT and each ZT Subsidiary have paid (or ZT has paid on its
behalf) all taxes required to be paid by it as shown on such returns. The most
recent financial statements contained in the ZT Reports reflect an adequate
reserve for all unpaid taxes (whether or not disputed and whether or not due) of
ZT and ZT Subsidiaries with respect to all taxable periods and portions thereof
ending on or before the date of such financial statements and no liabilities for
taxes have been incurred by ZT or any ZT Subsidiary subsequent to such date
other than resulting from liquidation of its debt and investment portfolio and
other than in the ordinary course of its business. No deficiencies for any
material amount of taxes have been proposed, asserted or assessed against ZT or
any ZT Subsidiary, nor, as of the date of this Agreement, is any audit,
examination or similar proceeding pending or proposed with respect to taxes of
ZT or any ZT Subsidiary. No requests for waivers of the time to assess any taxes
against ZT or any ZT Subsidiary have been granted or are pending, except for
requests with respect to such taxes that have been adequately reserved for in
the most recent financial statements contained in ZT Reports.
(b) Neither ZT nor any ZT Subsidiary has entered into any
compensatory agreement, plan or arrangement covering any person as to which
payment or vesting thereunder (including any payment or vesting as a result
of the Merger) could result in a nondeductible expense to ZT or any ZT
Subsidiary by reason of Section 280(G) of the Code.
(c) Except as described in the ZT Disclosure Letter, neither ZT nor
any ZT Subsidiary is liable for the taxes of any person (other than another
current member of the ZT consolidated group), including, without limitation,
as a result of the application of Treasury Regulations Section 1.1502-6, any
analogous provision of state, local or foreign law, or as a result of any
contractual arrangement with any third party or with any taxing authority.
(d) All taxes which ZT and each ZT Subsidiary has been required by
law to withhold or to collect for payment have been duly withheld and
collected, and have been paid or accrued, reserved against and added on the
books of ZT except for a failure to pay taxes where such failure would not
have a ZT Material Adverse Effect. ZT and each ZT Subsidiary has complied in
all material respects with all information reporting and backup withholding
14
requirements, including maintenance of required records with respect thereto,
in connection with amounts paid or owing to any employee, independent
contractors, creditor, stockholder or other third party.
(e) As used in this Agreement, "taxes" shall include all Federal,
state, local and foreign income, franchise, property, sales, use, excise and
other taxes, including obligations for withholding taxes from payments due or
made to any other person and any interest, penalties or additions to tax.
3.14 EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE BENEFIT PLANS, COLLECTIVE BARGAINING AND
EMPLOYEE AGREEMENTS, AND SIMILAR ARRANGEMENTS.
(1) The ZT Disclosure Letter lists all employee
benefit plans and collective bargaining, employment or severance agreements or
other similar arrangements to which or by which ZT or any ZT Subsidiary is
bound, legally or otherwise, or under which there is any continuing obligation
of ZT or any ZT Subsidiary (the "Plans"), including, without limitation, (a) any
profit-sharing, deferred compensation, bonus, stock option, stock purchase,
pension, retainer, consulting, retirement, severance, welfare or incentive plan,
agreement or arrangement, (b) any plan, agreement or arrangement providing for
"fringe benefits" or perquisites to employees, officers, directors or agents,
including but not limited to benefits relating to ZT automobiles, clubs,
vacation, child care, parenting, sabbatical, sick leave, medical, dental,
hospitalization, life insurance and other types of insurance, or (c) any other
"employee benefit plan" within the meaning of Section 3(3) or the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). An example of each
form of award agreement executed pursuant to any Plan has been delivered
previously to IR.
(2) ZT has delivered to IR true and complete copies of all
documents and summary plan descriptions with respect to the Plans or summary
descriptions of any Plans not otherwise in writing.
(3) There are no negotiations, demands or proposals that are
pending or have been made which concern matters now covered, or that would be
covered, by plans, agreements or arrangements of the type described in this
section.
(4) Except where failure to so comply or perform will not
result in a ZT Material Adverse Effect, ZT and each ZT Subsidiary are in full
compliance with the applicable provisions of ERISA (as amended through the
date of this Agreement), the regulations and published authorities
thereunder, and all other laws applicable with respect to the Plans. ZT and
each ZT Subsidiary have performed all of their obligations under the Plans.
To the best Knowledge of ZT as of the date of this Agreement, there are no
Actions (other than routine claims for benefits) pending or threatened
against the Plans or their assets, or arising out of the Plans and all of the
Plans have been operated in compliance with their terms. To the best
Knowledge of ZT, as of the date of this Agreement, no facts exist which could
give rise to any such Actions.
15
(5) Except as specified in the ZT Disclosure
Letter, each of the Plans can be terminated by ZT or any ZT Subsidiary, as
applicable, within a period of 30 days following the Effective Time, without
payment of any additional compensation or amount or the additional vesting or
acceleration of any benefits.
(6) All obligations of ZT and each ZT Subsidiary under each
of the Plans (x) that are due prior to the Effective Time have been paid or
will be paid prior to that date, and (y) that have accrued prior to the
Effective Time have been or will be paid or properly accrued at that time.
(7) Except where failure to do so would not have a ZT
Material Adverse Effect, ZT and each ZT Subsidiary have classified all
individuals who perform services for ZT or any ZT Subsidiary correctly under
the Plans, ERISA and the Code as common law employees, independent
contractors or leased employees.
(b) RETIREMENT PLANS.
(1) The ZT Disclosure Letter lists all "employee pension
benefit plans" (within the meaning of Section 3(2) of ERISA) which are also
stock bonus, pension or profit sharing plans within the meaning of Section
401(a) of the Code (the "Retirement Plans").
(2) Each Retirement Plan has been duly authorized by the
appropriate board of directors of ZT and/or ZT Subsidiary whichever is
appropriate. Each Retirement Plan is qualified in form and operation under
Section 401(a) of the Code and each trust under each Retirement Plan is
exempt from tax under Section 501(a) of the Code. No event has occurred that
will or could give rise to disqualification or loss of tax-exempt status of
any Retirement Plan or trust thereunder under such sections. No event has
occurred that will or could subject any Retirement Plan to tax under Section
511 of the Code. No prohibited transaction (within the meaning of Section
4975 of the Code) or party-in-interest transaction (within the meaning of
Section 406 of ERISA) has occurred with respect to any Retirement Plan.
(3) ZT has delivered to IR for each Retirement Plan copies of
the following documents: (i) the Form 5500 filed in each of the most recent
three plan years, including but not limited to all schedules thereto and
financial statements with attached opinions of independent accountants, (ii)
the most recent determination letter from the Internal Revenue Service, (iii)
the consolidated statement of assets and liabilities as of the most recent
valuation date, and (iv) the statement of changes in fund balance and in
financial position or the statement of changes in net assets available for
benefits for the most recently ended plan year. The financial statements so
delivered fairly present the financial condition and the results of
operations of each Retirement Plan as of such dates in accordance with GAAP.
(c) TITLE IV PLANS. No Plan is a "single employer plan" within
the meaning of Section 4001(a)(15) of ERISA or a "multiemployer plan" within
the meaning of Section 3(37) of ERISA. Neither ZT, any ZT Subsidiary nor any
ERISA Affiliate has ever maintained or had an obligation to contribute to a
"single employer plan" within the meaning of Section 4001(a)(15) of ERISA or
a "multiemployer plan" within the meaning of Section 3(37) of ERISA. "ERISA
Affiliate" means any trade or business (whether or not incorporated) that is
or was a member of a
16
group of which ZT or any ZT Subsidiary is or was a member and which is or was
under common control with ZT or any ZT Subsidiary within the meaning of
Section 414 (b) or (c) of the Code.
(d) HEALTH PLANS. All group health plans of ZT, each ZT Subsidiary
and any ERISA Affiliate have been operated in compliance with the group
health plan continuation coverage requirements of Section 4980B of the Code.
Except as required under Section 4980B of the Code, neither ZT, any ZT
Subsidiary nor any ERISA Affiliate has any obligation to provide health
benefits to any employee following termination of employment.
(e) FINES AND PENALTIES. There has been no act or omission by ZT,
any ZT Subsidiary or any ERISA Affiliate that has given rise to or may give
rise to fines, penalties, taxes, or related charges under Section 502(c) or
(i) or Section 4071 of ERISA or Chapter 43 of the Code, which fines,
penalties, taxes or related charges, individually or in the aggregate, could
have a ZT Material Adverse Effect.
3.15 LABOR AND EMPLOYMENT MATTERS. There are no labor or collective
bargaining agreements which pertain to ZT or any ZT Subsidiary. To the
Knowledge of ZT, there is no union organizing effort pending or threatened
against ZT or any ZT Subsidiary. There is no labor strike, labor dispute,
work slowdown, stoppage or lockout actually pending, or to the Knowledge of
ZT, threatened against or affecting ZT or any ZT Subsidiary, except as would
not, individually or in the aggregate, have a ZT Material Adverse Effect.
There is no unfair labor practice or labor arbitration proceeding pending or,
to the Knowledge of ZT, threatened against ZT or any ZT Subsidiary relating
to their business, except for any such proceeding, which would not have a ZT
Material Adverse Effect. Except as set forth in the ZT Disclosure Letter,
none of ZT or any ZT Subsidiary is a party to any employment, consulting,
non-competition, severance, or indemnification agreement still in effect with
any current or former executive officer or director of ZT or any ZT
Subsidiary. True and correct copies of such agreements have been furnished to
IR prior to the date hereof.
3.16 NO BROKERS. ZT has not entered into any contract, arrangement
or understanding with any person or firm which may result in the obligation
of ZT or IR to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby, except
that ZT has retained Fleet Bank as its financial advisor, the terms of which
have been disclosed in writing to IR before the date of this Agreement. Other
than as set forth in this Agreement, ZT is not aware of any claim against it
for payment of any finder's fees, brokerage or agent's commissions or other
like payments in connection with the negotiations leading to this Agreement
or the consummation of the transactions contemplated hereby.
3.17 YEAR 2000 COMPLIANCE. To the Knowledge of ZT, after reasonable
investigation of such officers of ZT and the ZT Subsidiaries who are
competent in such matters, ZT reasonably believes that the software products,
computer systems, building systems and electronic equipment with embedded
systems (the "Systems") controlled by the operations of ZT and the ZT
Subsidiaries are capable of providing or are being adapted or replaced to
provide uninterrupted functionality before, on or after January 1, 2000 in
substantially the same manner and with the same functionality as such Systems
perform as of the date hereof ("Year 2000 Compliant"), except for the failure
to have such capability which would not, individually or in
17
the aggregate, be reasonably likely to have a ZT Material Adverse Effect. ZT
has made inquiry regarding Year 2000 compliance to each of its and the ZT
Subsidiaries' material suppliers, material customers, landlords and vendors
and established a team to attempt to ensure Year 2000 Compliance at ZT and
each ZT Subsidiary on or before December 31, 1999.
3.18 INSURANCE. ZT and the ZT Subsidiaries are, and at all times
during the past three years have been, insured against all risks normally
insured against by reasonably prudent managers of companies engaged in the
same or a similar lines of business (covering the assets, business,
properties, operations, and employees of ZT and the ZT Subsidiaries), and all
of the insurance policies and bonds maintained by ZT and the ZT Subsidiaries
are in full force and effect. The ZT Disclosure Letter lists all insurance
policies and bonds maintained by ZT and the ZT Subsidiaries. Neither ZT nor
any ZT Subsidiary is in default under any such policy or bond. ZT and the ZT
Subsidiaries have timely filed claims with their respective insurers with
respect to all material matters and occurrences for which they believe they
have coverage. All insurance policies maintained by ZT and the ZT
Subsidiaries will remain in full force and effect and may reasonably be
expected to be renewed on comparable terms following consummation of the
transactions contemplated by this Agreement (subject to such entities'
continuing compliance with the applicable terms thereof and any right of
insurers to terminate without cause), and ZT has received no notice or other
indication from any insurer or agent of any intent to cancel or not to renew
any of such insurance policies. ZT and the ZT Subsidiaries have complied with
and implemented all outstanding (i) requirements of any insurance company
that has issued a policy with respect to any of the material properties and
assets of ZT or any Subsidiary and (ii) the requirements of any Governmental
Entity with respect to any such insurance policy.
3.19 PROPERTIES. ZT and each ZT Subsidiary have good and marketable
title, free and clear of all liens, claims, encumbrances and restrictions
(except liens, claims, encumbrances or restrictions arising under any
existing bank agreements as described in the ZT Reports and liens for taxes
not yet due and payable and statutory liens), to all property and assets
described in the ZT Reports as being owned by it, except such as would not
have a ZT Material Adverse Effect. All leases to which ZT or any ZT
Subsidiary is a party are valid and binding and no default has occurred or is
continuing thereunder, which might result in a ZT Material Adverse Effect. ZT
and the ZT Subsidiaries enjoy peaceful and undisturbed possession under all
such leases to which any of them is a party as lessee with such exceptions as
do not materially interfere with the use made by ZT or any ZT Subsidiary.
There are no material liens on any of the assets of ZT or any ZT Subsidiary
that arose in connection with any failure (or alleged failure) to pay any
Taxes. The plants and equipment of each of ZT and each ZT Subsidiary that are
necessary to the operation of its business are in good operating condition
and repair.
3.20 ENVIRONMENTAL LAWS.
(a) Except as set forth on the ZT Disclosure Letter:
(1) neither ZT nor any present or former ZT Subsidiary has
received any written notice, claim, request for information or demand from
any governmental agency or third party alleging that ZT, any present or
former ZT Subsidiary or any ZT Real Properties is in material violation of,
is subject to any administrative or judicial proceeding pursuant to, or has
any material liability under, any Environmental Law;
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(2) with respect to ZT Real Properties which are currently
owned, leased or operated by ZT or any present or former ZT Subsidiary, to
the Knowledge of ZT, there has not occurred, nor is there presently
occurring, any Release or Releases of any Hazardous Materials at, on, into,
beneath or migrating from such ZT Real Properties which, in the aggregate,
would reasonably be expected to result in a material liability to ZT;
(3) with respect to ZT Real Properties which were previously
owned, leased or operated by ZT or any present or former ZT Subsidiary, there
did not occur any Release or Releases of any Hazardous Materials, at, on,
into, beneath or migrating from such ZT Real Properties during or, to the
knowledge of ZT, prior to the period of ownership, lease or operation by ZT
or any ZT Subsidiary which, in the aggregate, would reasonably be expected to
result in a material liability to ZT;
(4) neither ZT nor any present or former ZT Subsidiary has
Released, or allowed or arranged for any third parties to Release, any
Hazardous Materials at any other site in violation of or which would
reasonably be expected to lead to liability under, any Environmental Law
which, in the aggregate, would reasonably be expected to result in a material
liability with respect to ZT;
(5) to the Knowledge of ZT, neither ZT nor any present or
former ZT Subsidiary is a potentially responsible party with respect to a
federal, state, local or foreign environmental cleanup site or sites or with
respect to investigation or corrective actions under any Environmental Law
with respect to matters which, in the aggregate, would reasonably be expected
to result in a material liability to ZT;
(6) each of ZT and ZT's Subsidiaries is currently in
compliance with all Environmental Laws, and to the extent of any prior
noncompliance by any of ZT or any present or former ZT Subsidiary with
Environmental Laws, such noncompliance has been fully resolved, except where
any failure to comply or failure to resolve noncompliance would not
reasonably be expected to result in a material liability to ZT; and
(7) during the period of ownership, lease or operation by ZT
or any present or former ZT Subsidiary of any ZT Real Properties, ZT or such
Subsidiary operated the ZT Real Properties in compliance with all
Environmental Laws, except where any failure to comply would not reasonably
be expected to result in a material liability to ZT.
(8) There are no costs or liabilities associated with any
capital or operating expenditures of ZT or any present or former ZT
Subsidiary required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license, consent, exemption, franchise,
authorization or other approval, any related constraints on operating
activities or any potential liabilities to third parties under Environmental
Laws which would, singly or in the aggregate, have, or could reasonably be
expected to have, a ZT Material Adverse Effect.
(b) For purposes of this Section,.
(1) "ZT Real Properties" shall mean all real property now or
previously owned, operated or leased by ZT or any present or former ZT
Subsidiary.
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(2) "Hazardous Materials" shall mean asbestos, petroleum
products and all other materials on the date hereof defined as "hazardous
substances", "hazardous wastes", "toxic substances", "solid wastes" or
otherwise on or prior to the date hereof listed or regulated pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. (S)9601 et seq. ("CERCLA"); the Resource
Conservation and Recovery Act, 42 U.S.C. (S)(S)6901 et seq. ("RCRA") and any
amendments thereto; the Hazardous Materials Transportation Act, 49 U.S.C.
(S)(S)1801 et seq. ("HMTA"); the Clean Water Act, the Safe Drinking Water
Act; the Atomic Energy Act; the Federal Insecticide, Fungicide, and
Rodenticide Act, the Clean Air Act; or any other similar foreign, federal,
state or local statute, regulation or ordinance or any other law or common
law theory of any foreign, state or federal court, as now in effect, relating
to, or imposing liability or standards of conduct concerning any hazardous or
toxic waste, substance or material.
(3) "Environmental Laws" shall mean any and all foreign,
federal, state and local laws (including, without limitation, common law),
statutes, ordinances, rules, regulations, permits, licenses or other
governmental requirements relating to health, pollution, the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), the release or threatened release, discharge,
emission, of any Hazardous Materials or materials containing Hazardous
Materials or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Materials or the pollution of the environment, including, without limitation,
CERCLA, RCRA and HMTA.
(4) "Release" shall mean releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, escaping, leaching,
disposing or dumping.
3.21 RELATED PARTY TRANSACTIONS. No director or officer of ZT or
any ZT Subsidiary and no person related to any of them by consanguinity or
marriage has any direct or indirect interest in (i) any equipment or other
property, real or personal, tangible or intangible, including, but without
limitation, any item of intellectual property, used in connection with or
pertaining to ZT's or any ZT Subsidiary's business, or (ii) any creditor,
supplier, customer, manufacturer, agent, representative, or distributor of
products of ZT or any ZT Subsidiary; PROVIDED, HOWEVER, that (A) no such
director or officer or other person shall be deemed to have such an interest
solely by virtue of the ownership of less than 3% of the outstanding voting
stock or debt securities of any publicly-held company, the stock or debt
securities of which are traded on a recognized stock exchange or quoted on
the National Association of Securities Dealers Automated Quotation System,
and (B) no such director or officer or other person shall be deemed to have
such an interest solely by virtue of the ownership by a partnership in which
he is a partner of less than 10% of the outstanding voting stock or debt
securities of any privately held company.
3.22 BANK ACCOUNTS. The ZT Disclosure Letter lists each bank, trust
company, savings institution, brokerage firm, mutual fund or other financial
institution with which ZT or any ZT Subsidiary has an account or safe deposit
box and the names and identification of all persons authorized to draw
thereon or to have access thereto.
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3.23 INTELLECTUAL PROPERTY. The ZT Disclosure Letter contains a
true and correct list of all the patents, patent applications, trademarks,
service marks, trade names, domain names, and registered copyrights owned or
exclusively licensed by ZT or any ZT Subsidiary. ZT and each ZT Subsidiary
own, or possess adequate and enforceable licenses or other rights to use, all
patents, trade secrets, inventions, processes, technology, software,
trademarks, service marks, trade names, domain names, and content
(collectively, "the ZT Intellectual Property") used in the business of ZT or
any ZT Subsidiary as currently conducted, and such ownership, licenses or
rights will not be affected by the consummation of the Merger. Neither ZT nor
any ZT Subsidiary has received any written or oral claim or notice from any
person or entity that its rights in, to and under the ZT Intellectual
Property conflict with or infringe on the rights of any other person. To the
Knowledge of ZT, (i) its rights in, to and under the ZT Intellectual Property
do not conflict with or infringe on the rights of any other person, (ii) no
legal action or proceeding has been initiated, asserted or is pending, nor
has any legal action or proceeding been threatened, against ZT or any ZT
Subsidiary either based upon or challenging or seeking to deny or restrict
its use of any of the ZT Intellectual Property, (iii) the ZT Intellectual
Property is valid and enforceable, and (iv) no other person is using the ZT
Intellectual Property in a manner that conflict or infringes on the rights of
ZT, nor has it made any written or oral claim or notice too such effect.
3.24 MINUTE BOOKS. The minute books of ZT and the ZT Subsidiaries
have been made available to IR and its representatives, accurately reflect
all actions and proceedings taken to date by the respective shareholders,
boards of directors and committees of ZT and the ZT Subsidiaries, and such
minute books contain true and complete copies of the charter documents of ZT
and the ZT Subsidiaries and all related amendments. The stock record books of
ZT and each ZT Subsidiary reflect accurately all transactions in their
respective capital stock of all classes.
3.25 ACCOUNTING RECORDS; INTERNAL CONTROLS. ZT and the ZT
Subsidiaries have records that accurately and validly reflect their
respective transactions, and accounting controls sufficient to insure that
such transactions are (i) executed in accordance with management's general or
specific authorization and (ii) recorded in conformity with GAAP so as to
maintain accountability for assets.
3.26 PAST PRODUCT LIABILITY AND RETURNS. There is not presently
pending nor has there within the last five years been an action, suit or
proceeding initiated against ZT or any ZT Subsidiary, at law or in equity, or
before or by any federal or state court, commission, board, bureau, agency or
instrumentality in connection with any product defect of any product
manufactured or sold by ZT or any ZT Subsidiary. Within the last five years,
the aggregate number of units returned to ZT and any ZT Subsidiary has never
and do not currently exceed, in any class of products sold by ZT or any ZT
Subsidiary, 1% of the total number of units sold in such class.
3.27 FULL DISCLOSURE.
(a) Each document required to be filed by ZT with the SEC or
required to be distributed or otherwise disseminated to the ZT's shareholders
in connection with the Transactions (the "ZT Filings"), including, without
limitation, the Schedule 14D-9 to be filed
21
with the SEC in connection with the Merger, and any amendments or supplements
thereto, when filed, distributed or disseminated, as applicable, will comply
as to form in all material respects with the applicable requirements of the
0000 Xxx.
(b) No information with respect to ZT or any ZT Subsidiaries that
ZT or any ZT Subsidiary furnishes to IR in writing specifically for use in
the Offer Documents at the time of the filing thereof, at the time of any
distribution or dissemination thereof and at the time of the consummation of
the Offer, and no statements by ZT and any ZT Subsidiary contained in this
Agreement and the Schedules attached hereto and any written statement or
certificate furnished or to be furnished to IR pursuant hereto or in
connection with the transactions contemplated hereby, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IR AND MERGER SUB
IR and Merger Sub each represents and warrants to ZT as of the date
of this Agreement as follows:
4.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Each of IR and
Merger Sub is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, is duly
licensed or qualified to do business as a foreign corporation and is in good
standing under the laws of any other state of the United States in which the
character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary, except where the failure
to be so qualified or to be in good standing would not have a material
adverse effect on the business, prospects, results of operations or financial
condition of IR and the IR Subsidiaries taken as a whole (an "IR Material
Adverse Effect"), and has all requisite corporate power and authority to
carry on its business as it is now being conducted.
4.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of IR
and Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and all agreements and documents contemplated hereby,
and the consummation by IR and Merger Sub of the transactions contemplated
hereby has been duly authorized by all requisite corporate action. This
Agreement constitutes, and all agreements and documents contemplated hereby
(when executed and delivered pursuant hereto for value received) will
constitute, the valid and legally binding obligations of IR and Merger Sub,
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by IR and Merger
Sub do not, and the consummation by IR and Merger Sub of the transactions
contemplated hereby will not,
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(1) conflict with or violate the certificate of incorporation
or bylaws or equivalent organizational documents of (i) IR or (ii) Merger Sub,
(2) subject to making the filings and obtaining the approvals
identified in Section 4.3(b) of this Agreement, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to IR or any
Merger Sub or by which any property or asset of IR or any Merger Sub is bound
or affected, or
(3) subject to making the filings and obtaining the approvals
identified in Section 4.3(b) of this Agreement, 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, result in the loss of a material benefit
under, or give to others any right of purchase or sale, or any right of
termination, amendment, acceleration, increased payments or cancellation of,
or result in the creation of a lien or other encumbrance on any property or
asset of IR or any Merger Sub pursuant to, any Contract to which IR or any
Merger Sub is a party or by which IR or any Merger Sub or any property or
asset of IR or any Merger Sub is bound or affected,
except, in the case of clauses (1)(ii), (2) and (3), for any such conflicts,
violations, breaches, defaults or other occurrences which would not prevent
or delay consummation of any of the transactions contemplated hereby in any
material respect, or otherwise prevent IR from performing its obligations
under this Agreement in any material respect, and would not, individually or
in the aggregate, have an IR Material Adverse Effect.
(b) The execution and delivery of this Agreement by IR and Merger
Sub does not, and the consummation of the transactions contemplated hereby by
IR and Merger Sub will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Entity or any
other third-party, except
(1) for
(i) applicable requirements, if any, of the Exchange Act, the
Securities Act, Blue Sky Laws and state takeover laws,
(ii) the pre-merger notification requirements of the HSR Act,
and
(iii) filing of the Certificate of Merger as required by NYBCL,
and
(2) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would
not prevent or delay consummation of any of the transactions contemplated
hereby in any material respect, or otherwise prevent IR or Merger Sub from
performing its obligations under this Agreement in any material respect, and
would not, individually or in the aggregate, have an IR Material Adverse
Effect.
4.4 NO BROKERS. IR has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of ZT
or IR to pay any finder's fee, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby except that IR has retained
Xxxxxx & Co. as its financial advisor, the terms of which have
23
been disclosed in writing to ZT before the date of this Agreement. Other than
the foregoing arrangements, IR is not aware of any claim for payment of any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
4.5 FULL DISCLOSURE.
(a) The information with respect to IR and any IR Subsidiaries that
IR furnishes to ZT in writing specifically for use in any ZT Filing will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of
the circumstances under which they were made, not misleading at the time of
the filing of such ZT Filing or any supplement or amendment thereto and at
the time of any distribution or dissemination thereof.
(b) The Offer Documents, when filed, distributed or disseminated,
as applicable, will comply as to form in all material respects with the
applicable requirements of the Exchange Act and, at the time of the filing
thereof, at the time of any distribution or dissemination thereof and at the
time of consummation of the Offer, will not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading, provided that this representation and warranty
will not apply to statements or omissions included in the Offer Documents
based upon information furnished to IR or Merger Sub in writing by ZT
specifically for use therein.
4.6 FINANCING. IR has available, and will make available to Merger
Sub, the funds necessary to consummate the Offer and the Merger and the
transactions contemplated hereby on a timely basis.
ARTICLE V
COVENANTS
5.1 ALTERNATIVE PROPOSALS.
(a) ZT agrees not to, and will not permit any ZT Subsidiary or any
respective officers, directors, employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it or any ZT Subsidiary, collectively its "Representatives") to
solicit, initiate, encourage, discuss or negotiate with any Person (as
defined in Section 8.14) with respect to a merger, acquisition, consolidation
or similar transaction involving, or relating to the purchase of (1) any
assets of ZT or of any ZT Subsidiary, other than in the ordinary course of
business, (2) shares of ZT capital stock, or (3) the capital stock of any ZT
Subsidiary, (any such proposal or offer being referred to in this Agreement
as an "Alternative Proposal") and that neither it nor any ZT Subsidiary will,
nor will it nor any ZT Subsidiary permit its respective Representatives to,
engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to
an Alternative Proposal (excluding the Merger), or otherwise facilitate any
effort or attempt to make or implement an Alternative Proposal.
24
(b) Subject to nondisclosure obligations, if any, set forth in
existing confidentiality agreements, ZT agrees that it will notify IR
immediately if any inquiries or proposals relating to an Alternative Proposal
are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with, it
or any ZT Subsidiary.
5.2 INTERIM OPERATIONS. Except as provided in the ZT Disclosure
Letter, ZT covenants and agrees that after the date hereof and prior to the
Effective Time (unless IR shall have agreed in writing):
(a) ORDINARY COURSE. ZT will, and will cause each ZT Subsidiary
to, operate its business only in the ordinary course of business consistent
with past practices and use its commercially reasonable efforts to (i)
preserve its existing business organization, insurance coverage, material
rights, material licenses or permits, advantageous business relationships,
material agreements and credit facilities; and (ii) retain its key officers
and employees. ZT will not and will not permit any ZT Subsidiaries to: (A)
enter into any material transaction or commitment, or sell, lease, or dispose
of or acquire any material properties or assets, except purchases and sales
of inventory in the ordinary course of business consistent with past
practices; (B) implement any new employee benefit plan, or employment,
compensatory or severance agreement; (C) amend any existing employee benefit
plan or employment agreement except as required by Law or by this Agreement;
(D) enter into, amend or terminate any Material Contract except as required
by Law or by this Agreement; (E) take any action that would jeopardize the
continuance of its material supplier or customer relationships; (F) make any
material change in the nature of their businesses and operations; (G) enter
into any transaction or agreement with any officer, director or affiliate of
ZT or any ZT Subsidiary or make any loan or advance to any employee of ZT or
any ZT Subsidiary; (H) incur or agree to incur any obligation or liability
(absolute or contingent) that individually calls for payment by ZT or any ZT
Subsidiary of more than $25,000 in any specific case or $100,000 in the
aggregate, excluding purchases of inventory in the ordinary course of
business; (I) make any change to its accounting (including tax accounting)
methods, principles or practices, except as may be required by United States
GAAP and except, in the case of tax accounting methods, principles or
practices, in the ordinary course of business of ZT or any ZT Subsidiary
consistent with past practice or any change in its tax elections that would
materially increase its tax liabilities; (J) authorize or make capital
expenditures in excess of $25,000; (K) mortgage or otherwise encumber or
subject to any lien any properties or assets except pursuant to existing
agreements; (L) grant, confer or award any bonuses or other forms of cash
incentives to any officer, director or employee except consistent with past
practice; (M) enter into any new bank credit agreement or line of credit or
amend in any material respect its existing bank credit agreement or lines of
credit; (N) grant any severance or termination pay to, or enter into any new
employment or severance agreement with any present or future officer,
employee or director, other than consistent with past practices; (O) take any
action that would make any representation or warranty of ZT hereunder to be
inaccurate in any material (except where such representation or warranty is
already qualified as to materiality) respect or omit to take any action
necessary to prevent such representation or warranty from being inaccurate in
any material (except where such representation or warranty is already
qualified as to materiality) respect; (P) acquire any capital stock of any
Person; or (Q) authorize, or commit or agree to take, any of the foregoing
actions.
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(b) CHARTER DOCUMENTS. Neither ZT nor any ZT Subsidiary will amend
its certificate of incorporation or bylaws or other charter documents.
(c) DIVIDENDS. ZT will not (i) declare, set aside or pay any
dividend or make any other distribution or payment with respect to any shares
of its capital stock or other ownership interests, or (ii) directly or
indirectly redeem, purchase or otherwise acquire any shares of its capital
stock, or make any commitment for any such action.
(d) CAPITALIZATION. Neither ZT nor any ZT Subsidiary will issue any
shares of its capital stock, effect any stock split or reclassification or
otherwise change (or agree to do so) its equity securities, options,
warrants, or convertible instruments as it existed on the date of this
Agreement, except pursuant to the exercise of options, warrants, conversion
rights and other contractual rights existing on the date of this Agreement
and disclosed pursuant to this Agreement. Neither ZT nor any ZT Subsidiary
will grant, confer or award any option, warrant, conversion right or other
right not existing on the date of this Agreement to acquire any shares of its
capital stock or membership interests.
5.3 INTENTIONALLY LEFT BLANK.
5.4 FILINGS, OTHER ACTION. Subject to the terms and conditions
herein provided, ZT and IR shall: (a) promptly make their respective filings
and thereafter make any other required submissions under the HSR Act with
respect to the Merger; (b) use all reasonable efforts to cooperate with one
another in (i) determining which filings are required to be made prior to the
Effective Time with, and which consents, approvals, permits or authorizations
are required to be obtained prior to the Effective Time from, any
Governmental Entity in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
(ii) timely making all such filings and timely seeking all such consents,
approvals, permits or authorizations; and (c) use all reasonable efforts to
take, or cause to be taken, all other action and do, or cause to be done, all
other things necessary, proper or appropriate to consummate and make
effective the transactions contemplated by this Agreement.
5.5 THIRD-PARTY CONSENTS. Each party must, and must cause its
Subsidiaries to, use all commercially reasonable efforts to obtain all
consents required in connection with the transactions contemplated by this
Agreement, and each party must promptly notify the other parties of any
failure or prospective failure to obtain any such consents and, if requested
by the other party, must provide such other party with copies of all material
filings and correspondence in connection with, and evidence of, all consents
applied for or obtained.
5.6 INSPECTION OF RECORDS; ACCESS AND INFORMATION. From the date of
this Agreement to the Effective Time, ZT will
(a) allow all IR Representatives reasonable access at all
reasonable times to the offices, records and files, correspondence, audits
and properties, as well as to all information relating to commitments,
contracts, titles and financial position, or otherwise pertaining to the
business and affairs, of ZT and the ZT Subsidiaries,
26
(b) furnish to IR, IR's counsel, financial advisors, auditors and
other Representatives such financial and operating data and other information
as such persons may reasonably request, and
(c) instruct the employees, counsel and financial advisors of ZT to
cooperate with IR in IR's investigation of the business of ZT and the ZT
Subsidiaries.
5.7 PUBLICITY. The initial press release relating to this Agreement
will be a joint press release and thereafter ZT and IR shall, subject to
their respective legal obligations (including requirements of stock exchanges
and other similar regulatory bodies), consult with each other, and use
reasonable efforts to agree upon the text of any press release, before
issuing any such press release or otherwise making public statements with
respect to the transactions contemplated hereby and in making any filings
with any federal or state governmental or regulatory agency or with any
national securities exchange with respect thereto.
5.8 EXPENSES. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the party incurring such expenses except
as expressly provided in this Agreement.
5.9 INSURANCE; INDEMNITY.
(a) From and after the Effective Time, IR will indemnify, defend
and hold harmless to the fullest extent that ZT would have been permitted
under applicable law each person who is now, or has been at any time before
the date of this Agreement, an officer or director of ZT (individually, an
"Indemnified Party" and collectively, the "Indemnified Parties"), against all
losses, claims, damages, liabilities, costs or expenses (including reasonable
attorneys' fees), judgments, fines, penalties and amounts paid in settlement
in connection with any claim, action, suit, proceeding or investigation
arising out of or pertaining to acts or omissions, or alleged acts or
omissions, by them in their capacities as such occurring at or before the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (an "Action"),
(1) any Indemnified Party wishing to claim indemnification must
promptly notify IR thereof,
(2) IR must pay the reasonable fees and expenses of counsel
selected by the Indemnified Party, which counsel shall be reasonably
acceptable to IR, in advance of the final disposition of any such Action to
the full extent permitted by applicable law, upon receipt of any undertaking
required by applicable law, and
(3) IR will cooperate in the defense of any such matter;
PROVIDED that IR will not be liable for any settlement effected without its
written consent and PROVIDED, FURTHER, that IR shall not be obligated
pursuant to this Section to pay the fees and disbursements of more than one
counsel for all Indemnified Parties in any single Action except to the extent
that in the opinion of counsel for the Indemnified Parties reasonably
satisfactory to IR, two or more of such Indemnified Parties have conflicting
interests in the outcome of such action.
27
(b) IR must cause the Surviving Corporation of the Merger or its
successor to keep in effect for seven years provisions in its certificate of
incorporation and bylaws providing for indemnification of the Indemnified
Parties that is substantially the same as is currently set forth in the ZT
Certificate of Incorporation and bylaws, giving effect for any successor to
the laws of the state of incorporation of such successor.
(c) For seven years after the Effective Time, IR must cause to be
maintained officers' and directors' liability insurance covering the
Indemnified Parties who are currently covered, in their capacities as
officers and directors, by ZT's existing officers' and directors' liability
insurance policies on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance; PROVIDED that IR will not
be required to pay an annual premium in excess of one and one-half times the
current annual premium paid by ZT for its existing coverage (the "Cap") in
order to maintain or procure such coverage; and PROVIDED, FURTHER, that if
equivalent coverage cannot be obtained, or can be obtained only by paying an
annual premium in excess of the Cap, IR will only be required to obtain as
much coverage as can be obtained by paying an annual premium equal to the Cap.
(d) For two years after the Effective Time, IR must cause to be
maintained either ZT's present insurance policy covering ZT's Retirement
Savings Plan or a new policy with substantially similar terms, which may be
an insurance policy that covers IR and its Subsidiaries.
(e) The provisions of this Section will survive the consummation of
the Merger and expressly are intended to benefit each of the Indemnified
Parties.
5.10 APPRECIATION RIGHTS. Prior to the closing of the Offer, all
appreciation rights outstanding under the Omnirel, L.L.C. Appreciation Rights
Plan shall be terminated.
5.11 COOPERATION, NOTIFICATION.
(a) ZT must confer on a regular and frequent basis with one or more
IR Representatives to discuss, subject to applicable law, material
operational matters and the general status of ZT's and the ZT Subsidiaries'
ongoing operations,
(b) ZT must promptly notify IR of any significant changes in its
and the ZT Subsidiaries' business, properties, assets, condition (financial
or other), results of operations or prospects,
(c) ZT must promptly notify IR of any notice or other communication
(i) from any Person alleging that the consent of such person is or may be
required in connection with the Transactions or (ii) from any governmental or
regulatory agency or authority in connection with the Transactions,
(d) ZT must promptly deliver to IR true and correct copies of any
report, statement or schedule filed with the SEC subsequent to the date of
this Agreement,
(e) Each party must promptly advise the other party of any material
inaccuracy in any of its representations, warranties or nonperformance of any
covenant in this Agreement or of any change or event which has had or,
insofar as reasonably can be foreseen, is
28
reasonably likely to result in, in the case of ZT, a ZT Material Adverse
Effect or, in the case of IR, an IR Material Adverse Effect, and
(f) Each party must promptly provide the other party with copies of
all filings made by such party or any of its Subsidiaries with any
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
5.12 FINANCIAL STATEMENTS. ZT will deliver to IR, as soon as
reasonably practicable but in no event later than thirty days after the end
of each fiscal month and forty-five days after the end of each fiscal quarter
prior to the Effective Date, beginning with the periods included in the
second fiscal quarter of 2000, its unaudited balance sheet as of such date
and related unaudited statements of income and changes in shareholders'
equity for the period then ended. Such financial statements will be prepared
in accordance with GAAP consistently applied and will fairly reflect ZT's
consolidated financial condition and the consolidated results of its
operations for the periods then ended, subject, in the case of unaudited
interim statements, to the absence of notes and to normal year-end
adjustments. ZT will also deliver to IR the related consolidating statements
for each such period.
5.13 COMMERCIALLY REASONABLE EFFORTS. ZT and IR shall each use its
commercially reasonable efforts to cause all conditions to Closing to be
satisfied.
5.14 ANTI-TAKEOVER STATUTES. If any anti-takeover or similar
statute is applicable to the transactions contemplated hereby, ZT represents
that it has and will grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate the effects of such takeover statute on the transactions
contemplated hereby.
5.15 MERGER WITHOUT MEETING OF SHAREHOLDERS. If IR, Merger Sub or
any other Subsidiary of IR shall acquire at least 90% of the outstanding
shares of ZT Common Stock pursuant to the Offer or otherwise, the parties
hereto agree, subject to satisfaction or (to the extent permitted hereunder)
waiver of all conditions to the Merger, to take all necessary and appropriate
action to cause the Merger to be effective as soon as practicable after the
acceptance for payment and purchase of shares of ZT Common Stock pursuant to
the Offer without a meeting of shareholders of ZT in accordance with the
NYBCL.
5.16 PAYMENT OF DEBT. Prior to or at the closing of the Offer, ZT
shall have paid or caused to be paid all amounts owing to banks, brokers, and
other financial institutions by either ZT or any ZT Subsidiary, other than
amounts owed to Fleet Bank as contemplated by Section 3.16.
5.17 GUARANTY AND INDEMNITY AGREEMENT. Prior to or at the closing
of the Offer, the Unlimited Guaranty and Indemnity Agreement between Fleet
Bank and ZT dated August 28, 1997 shall be terminated.
29
ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger will be subject to
the fulfillment at or before the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby
shall have been approved in the manner required by applicable law, by the
certificate of incorporation of the corporation and by the applicable
regulations of any stock exchange or other regulatory body, as the case may
be, by the holders of the issued and outstanding shares of capital stock of
ZT.
(b) The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(c) None of the parties shall be subject to any order or
injunction of a court of competent jurisdiction, which prohibits the
consummation of the transactions contemplated by this Agreement. If any such
order or injunction shall have been issued, each party agrees to use its
commercially reasonable best efforts to have any such injunction lifted.
(d) All consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made, except for
filings in connection with the Merger and any other documents required to be
filed after the Effective Time and except where the failure to have obtained
or made any such consent, authorization, order, approval, filing or
registration would not have a material adverse effect on the business,
results of operations or financial condition of IR and ZT (and their
respective Subsidiaries), taken as a whole, following the Effective Time.
6.2 CONDITIONS TO OBLIGATION OF ZT TO EFFECT THE MERGER. The
obligation of ZT to effect the Merger shall be subject to the fulfillment at
or before the Closing Date of the following conditions:
(a) IR shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or before
the Closing Date, and the representations and warranties of IR and Merger Sub
contained in this Agreement and in any document delivered in connection
herewith shall be true and correct as of the Closing Date as if made on the
Closing Date, except (a) for changes specifically permitted by this Agreement
and (b) that those representations and warranties which address matters only
as of a particular date shall remain true and correct as of such date, and ZT
shall have received a certificate of the Chief Executive Officer, Chief
Operating Officer, or an Executive Vice President of IR, dated the Closing
Date, certifying to such effect.
(b) Merger Sub shall have purchased shares of ZT Common Stock
constituting at least two-thirds of the total issued and outstanding shares
of ZT Common Stock on a fully-diluted basis pursuant to the terms and
conditions of the Offer, unless the failure of
30
Merger Sub to so purchase such shares is a result of a material breach of any
representation, warranty, or condition of ZT under this Agreement.
6.3 CONDITIONS TO OBLIGATION OF IR TO EFFECT THE MERGER. The
obligation of IR to effect the Merger shall be subject to the fulfillment at
or before the Closing Date of the following conditions:
(a) ZT shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or before
the Closing Date, and the representations and warranties of ZT contained in
this Agreement and in any document delivered in connection herewith shall be
true and correct in all material respects as of the Closing Date as if made
on the Closing Date, except (i) for changes specifically permitted by this
Agreement, and (ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date, and IR shall have received a certificate of the President or a Senior
Vice President of ZT, dated the Closing Date, certifying to such effect.
(b) Intentionally Left Blank.
(c) From the date of this Agreement through the Effective Time,
there shall not have occurred any change in the financial condition, business
or operations of ZT and the ZT Subsidiaries, taken as a whole that would have
or would be reasonably likely to have a ZT Material Adverse Effect.
(d) After the Effective Time, no person shall have any right
under any stock option plan (or any option granted thereunder) or other plan,
program or arrangement to acquire any equity securities of ZT or of any ZT
Subsidiary.
(e) The ZT Shareholder Support Agreement shall have remained in
full force and effect through the closing or termination of the Offer,
whichever first occurs.
(f) Intentionally Left Blank.
(g) ZT shall have obtained the consent or approval of each
person whose consent or approval shall be required under any Material
Contract to which ZT or any ZT Subsidiaries is a party.
(h) Merger Sub shall have purchased shares of ZT Common Stock
pursuant to the terms and conditions of the Offer, unless the failure of
Merger Sub to so purchase such shares is a result of a material breach of any
representation, warranty, or condition of IR under this Agreement or the
Offer.
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ARTICLE VII
TERMINATION
7.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
and the Merger may be abandoned at any time before the Effective Time, before
or after the approval of this Agreement by the shareholders of ZT, by the
mutual consent of IR and ZT.
7.2 TERMINATION BY EITHER IR OR ZT. This Agreement may be terminated
and the Merger may be abandoned by action of the board of directors of either
IR or ZT, before or after the approval of this Agreement by the shareholders
of ZT, if
(a) the Merger shall not have been consummated by June 30,
2000; PROVIDED, in the case of a termination pursuant to this clause (a),
that the terminating party shall not have breached in any material respect
its obligations under this Agreement in any manner that shall have
proximately contributed to the failure to consummate the Merger by June 30,
2000;
(b) the approval of ZT's shareholders required by Section
6.1(a) shall not have been obtained at a meeting duly convened therefor or at
any adjournment thereof;
(c) Merger Sub shall not have accepted for payment any shares
of ZT Common Stock pursuant to the Offer before the 41st business day
following commencement of the Offer or Merger Sub shall have failed to
commence the Offer within 30 days following the date of this Agreement,
provided that the right to terminate this Agreement pursuant to this Section
7.2(c) shall not be available to any party whose breach of any provision of
this Agreement results in the failure of the acceptance for payment by Merger
Sub of any shares of ZT Common Stock pursuant to the Offer by such time or of
the Offer to be commenced by such time; or
(d) there shall be any law or regulation that makes acceptance
for payment of, and payment for, the shares of ZT Common Stock pursuant to
the Offer or consummation of the Merger illegal or otherwise prohibited or
any judgment, injunction, order or decree of any court or governmental body
having competent jurisdiction enjoining Merger Sub from accepting for payment
of, and paying for, the shares of ZT Common Stock pursuant to the Offer or ZT
or IR from consummating the Merger and such judgment, injunction, order or
decree shall have become final and nonappealable; PROVIDED that the party
seeking to terminate this Agreement pursuant to this clause (d) shall have
used all reasonable efforts to remove such injunction, order or decree.
7.3 TERMINATION BY ZT. This Agreement may be terminated and the
Merger may be abandoned at any time before the Effective Time, before or
after the approval of this Agreement by the shareholders of ZT, by action of
the board of directors of ZT
(a) if there has been a breach by IR of any representation or
warranty contained in this Agreement which would have or would be reasonably
likely to have an IR Material Adverse Effect or impair the ability of IR or
Merger Sub to timely consummate the transactions contemplated by this
Agreement; or
32
(b) if IR has not commenced the offer within the time period
described in Section 1.1(a), or if there has been a material breach of any
other covenant or agreement set forth in this Agreement on the part of IR,
which breach is not curable or, if curable, is not cured within 30 days after
written notice of such breach is given by ZT to IR.
7.4 TERMINATION BY IR. This Agreement may be terminated and the
Merger may be abandoned at any time before the Effective Time, before or
after the approval of this Agreement by the shareholders of ZT referred to in
Section 6.1(a), by action of the board of directors of IR, if
(a) there has been a breach by ZT of any representation or
warranty contained in this Agreement which would have or would be reasonably
likely to have a ZT Material Adverse Effect, or
(b) there has been a material breach of any of the covenants or
agreements set forth in this Agreement on the part of ZT, which breach is not
curable or, if curable, is not cured within 30 days after written notice of
such breach is given by IR to ZT.
7.5 EFFECT OF TERMINATION AND ABANDONMENT. If this Agreement is
terminated and the Merger is abandoned pursuant to this ARTICLE VII, all
obligations of the parties will terminate, except the obligations of the
parties pursuant to this Section 7.5 and Section 5.8 and except for the
provisions of Sections 8.3, 8.4, 8.6, 8.9, 8.12, 8.13 and 8.15. Moreover, if
this Agreement is terminated pursuant to Section 7.3 or 7.4, nothing in this
Agreement shall prejudice the ability of the non-breaching party from seeking
damages from any other party for any willful breach of this Agreement,
including without limitation, attorneys' fees and the right to pursue any
remedy at law or in equity.
7.6 EXTENSION, WAIVER. At any time before the Effective Time, any
party hereto, by action taken by its board of directors, may, to the extent
legally allowed,
(a) extend the time for the performance of any of the
obligations or other acts of the other parties,
(b) waive any inaccuracies in the representations and
warranties made to such party contained in this Agreement or in any document
delivered pursuant hereto and
(c) waive compliance with any of the agreements or conditions
for the benefit of such party contained in this Agreement. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid
only if set forth in writing signed on behalf of such party.
33
ARTICLE VIII
GENERAL PROVISIONS
8.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall not survive the Merger,
PROVIDED that the agreements contained in ARTICLE I, Section 5.9 and this
ARTICLE VIII will survive the Merger and Section 7.5 will survive termination.
8.2 NOTICES. Any notice required to be given hereunder will be
sufficient if in writing, and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered
mail (return receipt requested and first-class postage prepaid), addressed as
follows:
If to IR: If to ZT:
Attention: Attention:
Telecopier No.: Telecopier No.:
With copies to: With copies to:
O'Melveny & Xxxxx LLP Xxxxxxxx Xxxxx Singer Xxxxxxxxx, LLP
1999 Avenue of the Stars, Suite 700 000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000 Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq. Attention: Xxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000 Telecopier No.: (000) 000-0000
or to such other address as any party shall specify by written notice so
given, and such notice shall be deemed to have been delivered as of the date
so telecommunicated, personally delivered or mailed.
8.3 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by any of the
parties (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the provisions of
Section 5.9, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
8.4 ENTIRE AGREEMENT. This Agreement, the Exhibits, the ZT
Disclosure Letter, and any documents delivered by the parties in connection
herewith constitute the entire agreement among the parties with respect to
the subject matter of this Agreement and supersede
34
all prior agreements and understandings among the parties with respect
thereto except the Confidentiality Agreement dated August 23, 1999 between
Fleet National Bank and International Rectifier Corporation (the
"Confidentiality Agreement") which shall continue in full force and effect,
provided that if there is any conflict between the Confidentiality Agreement
and this Agreement, this Agreement shall prevail. The Confidentiality
Agreement shall survive termination of this Agreement. No addition to or
modification of any provision of this Agreement shall be binding upon any
party hereto unless made in writing and signed by all parties hereto.
8.5 AMENDMENT. This Agreement may be amended by the parties hereto,
by action taken by their respective boards of directors, at any time before
or after approval of matters presented in connection with the Merger by the
shareholders of ZT, but after any such shareholder approval, no amendment
shall be made which by law requires the further approval of shareholders
without obtaining such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
8.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to its
rules of conflict of laws.
8.7 COUNTERPARTS. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies of this
Agreement each signed by less than all, but together signed by all of the
parties hereto.
8.8 HEADINGS. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
8.9 INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and
vice versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa. Each of the parties has participated in the drafting and negotiation
of this Agreement. If an ambiguity or question of intent or interpretation
arises, this Agreement must be construed as if it is drafted by all the
parties and no presumption or burden of proof will arise favoring or
disfavoring any party by virtue of authorship of any of the provisions of
this Agreement
8.10 WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation
by or on behalf of any party, will be deemed to constitute a waiver by the
party taking such action of compliance with any representations, warranties,
covenants or agreements contained in this Agreement. The waiver by any party
hereto of a breach of any provision hereunder will not operate or be
construed as a waiver of any prior or subsequent breach of the same or any
other provision hereunder.
35
8.11 INCORPORATION OF EXHIBITS. ZT Disclosure Letter and all
Exhibits attached hereto and referred to in this Agreement are hereby
incorporated in this Agreement and made a part of this Agreement for all
purposes as if fully set forth in this Agreement.
8.12 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
8.13 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur if any of the provisions of this Agreement was
not performed in accordance with its specific terms or as otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any New York
court, this being in addition to any other remedy to which they are entitled
at law or in equity. In any such action for specific performance, no party
will be required to post a bond.
8.14 DEFINITIONS OF SUBSIDIARY, PERSON AND KNOWLEDGE. As used in
this Agreement, the word "Subsidiary" when used with respect to any party
means any corporation or other organization, whether incorporated or
unincorporated, of which such party directly or indirectly owns or controls
at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the board of directors or
others performing similar functions with respect to such corporation or other
organization, or any organization of which such party is a general partner.
The word "Person" shall mean an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof. The word "Knowledge" of any Person means the actual
knowledge of such Person's executive officers which in the case of ZT shall
mean only Xxxxxx Xxxxxxxx, Xxxxxx Xxxxx, Xxxx Xxxxxxxxxx, Xxxx Xxxxxxx, and
Xxxxxx Xxxxxxx.
8.15 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
36
IN WITNESS WHEREOF, the parties have executed this Agreement
and caused the same to be duly delivered on their behalf on the day and year
first written above.
INTERNATIONAL RECTIFIER CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President Government and
Space Products
ZING TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
IRC ACQUISITION CORPORATION
By: /s/ L. Xxxxxxx Xxxxxxx
--------------------------------
Name: L. Xxxxxxx Xxxxxxx
Title: Vice President
S-1
EXHIBIT C
OFFER CONDITIONS
Notwithstanding any other provision of the Offer, IR and Merger Sub
shall not be required to accept for payment or pay for any shares of ZT Common
Stock, and may terminate the Offer, if
(i) the Minimum Condition has not been satisfied or waived (pursuant to
Section 1.1(a) of the Agreement) by the scheduled expiration date, as extended,
(ii) the applicable waiting period under the HSR Act shall not have
expired or been terminated by the expiration date of the Offer, as extended,
(iii) at any time on or after the date of the Agreement and prior to
the Initial Expiration Date of the Offer (or extended expiration date of the
Offer only if under the Agreement these conditions remain applicable), any of
the following conditions exist:
(a) there shall be instituted and remain pending any action,
investigation or proceeding by any government or governmental authority or
agency, domestic or foreign, or by any other Person, before any court or
governmental authority or agency, domestic or foreign,
(1) challenging the acquisition by IR or Merger
Sub of any shares of ZT Common Stock under the Offer, seeking to restrain or
prohibit the making or consummation of the Offer or the Merger or the
performance of any of the other transactions contemplated by the Agreement or
seeking to require ZT, IR or Merger Sub to pay any damages related to the Offer,
the Merger or the other transactions contemplated by the Agreement that are
material in relation to ZT taken as a whole,
(2) seeking to impose limitations on the ability
of Merger Sub, or to render Merger Sub unable to accept for payment, pay for or
purchase some or all of the shares of ZT Common Stock pursuant to the Offer and
the Merger,
(3) seeking to restrain or prohibit IR's ownership
or operation (or that of IR's Subsidiaries) of all or any portion of the
business or assets of ZT or the ZT Subsidiaries or of IR or the IR
Subsidiaries or to compel IR or any IR Subsidiaries to dispose of or hold
separate all or any portion of the business or assets of ZT or the ZT
Subsidiaries or of IR or the IR Subsidiaries,
(4) seeking to impose limitations on the ability
of IR, Merger Sub or any other IR Subsidiary effectively to exercise full
rights of ownership of the shares of ZT Common Stock, including, without
limitation, the right to vote any shares of ZT Common Stock acquired or owned
by IR, Merger Sub or any other IR Subsidiary on all matters properly
presented to ZT's shareholders, except such limitations on voting securities
as may be required as a result of IR or Merger Sub not complying with
applicable securities laws,
(5) seeking to require divestiture by IR, Merger Sub
or any other IR Subsidiary of any shares of ZT Common Stock, or
C-1
(6) that otherwise is reasonably likely to have a ZT
Material Adverse Effect; or
(b) there shall have been any action taken, or any statute,
rule, regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Offer or the Merger, by any
court, government or governmental authority or agency, domestic or foreign,
other than the routine application of the waiting period provisions of the HSR
Act to the Offer or the Merger, that is reasonably likely, directly or
indirectly, to result in any of the consequences referred to in clauses (1)
through (6) of paragraph (a) above; or
(c) the ZT board of directors (1) shall have withdrawn, or
modified in a manner adverse to IR, its approval or recommendation of the
Agreement, the Offer or the Merger or (2) shall have failed to reaffirm such
approval or recommendation upon IR's reasonable request; or
(d) ZT shall have breached or failed to perform in any
material respect any obligation or to comply in any material respect with any
agreement or covenant of ZT required to be performed or complied with by it
under the Agreement prior to the consummation of the Offer; or any
representations and warranties of ZT contained in the Agreement shall not be
true and correct, individually or in the aggregate, so as to be reasonably
likely to have a ZT Material Adverse Effect, in each case, when made or (except
those that speak as to a specific date) as of the expiration date as set forth
in the first sentence to this clause (iii) of the Offer as if made at and as of
such time; or
(e) there shall have occurred a commencement of a war or armed
hostilities or other national or international calamity directly or indirectly
involving the United States that is reasonably expected to have a ZT Material
Adverse Effect; or
(f) the Agreement shall have been terminated by IR in
accordance with its terms; or
(g) IR shall not have received the opinion of Xxxxxxxx Xxxxx
Singer Xxxxxxxxx, LLP, special counsel to ZT, in substantially the form attached
hereto as EXHIBIT E, or
(iv) the Incentive Compensation Agreement with Xxxx Xxxxxxxxxx in
substantially the form attached as EXHIBIT D shall not be in effect, or
(v) any employee of ZT, or any ZT Subsidiary, who owes any indebtedness
to ZT or any ZT Subsidiary has not either (1) repaid all principal and interest
due thereon in full or (2) instructed ChaseMellon Shareholder Services, L.L.C.
to pay to ZT an amount equal to such principal and interest out of the proceeds
due such employee pursuant to the Offer and to remit the balance of such
proceeds to such employee.
Except as otherwise provided in the Merger Agreement, the foregoing
conditions are for the sole benefit of IR and Merger Sub and may, subject to the
terms of the Agreement, be waived by IR and Merger Sub in whole or in part at
any time and from time to time in their discretion. The failure by IR or Merger
Sub at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts
C-2
and 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 prior to the earlier
of the scheduled expiration date of the Offer or when payment for the shares
of ZT Common Stock tendered pursuant to the Offer should have been made by
Merger Sub or IR.
C-3
