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