Exhibit 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
MICROCHIP TECHNOLOGY INCORPORATED,
MATCHBOX ACQUISITION CORP.
AND
TELCOM SEMICONDUCTOR, INC.
TABLE OF CONTENTS
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ARTICLE I THE MERGER..................................................................................................2
Section 1.01 The Merger.................................................................................2
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Section 1.02 Effective Time; Closing....................................................................2
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Section 1.03 Effect of the Merger.......................................................................2
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Section 1.04 Certificate of Incorporation; Bylaws.......................................................3
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Section 1.05 Directors and Officers.....................................................................3
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Section 1.06 Effect on Capital Stock....................................................................3
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Section 1.07 Surrender of Certificates..................................................................4
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Section 1.08 No Further Ownership Rights in Company Common Stock........................................6
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Section 1.09 Lost, Stolen or Destroyed Certificates.....................................................6
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Section 1.10 Tax and Accounting Consequences............................................................6
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Section 1.11 Taking of Necessary Action; Further Action.................................................7
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ARTICLE II REPRESENTATION AND WARRANTIES OF THE COMPANY...............................................................7
Section 2.01 Organization and Qualification; Subsidiaries...............................................7
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Section 2.02 Certificate of Incorporation and Bylaws....................................................8
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Section 2.03 Capitalization.............................................................................8
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Section 2.04 Authority Relative to this Agreement......................................................10
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Section 2.05 No Conflict; Required Filings and Consents................................................10
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Section 2.06 Legal Compliance; Permits.................................................................11
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Section 2.07 SEC Filings; Financial Statements.........................................................11
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Section 2.08 No Undisclosed Liabilities................................................................12
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Section 2.09 Absence of Certain Changes or Events......................................................12
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Section 2.10 Absence of Litigation.....................................................................13
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Section 2.11 Employee Benefit Plans....................................................................13
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Section 2.12 Registration Statement; Proxy Statement...................................................16
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Section 2.13 Restrictions on Business Activities.......................................................16
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Section 2.14 Title to Property.........................................................................16
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Section 2.15 Taxes.....................................................................................17
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Section 2.16 Brokers...................................................................................19
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Section 2.17 Intellectual Property.....................................................................19
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Section 2.18 Agreements, Contracts and Commitments.....................................................22
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Section 2.19 Opinion of Financial Advisor..............................................................23
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Section 2.20 Board Approval............................................................................23
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Section 2.21 Vote Required.............................................................................24
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Section 2.22 Company Rights Agreement..................................................................24
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Section 2.23 Pooling of Interests......................................................................24
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Section 2.24 Labor Matters.............................................................................24
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Section 2.25 Environmental Matters.....................................................................24
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TABLE OF CONTENTS
(continued)
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Section 2.26 Insurance.................................................................................25
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Section 2.27 State Takeover Statutes...................................................................25
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..................................................25
Section 3.01 Organization and Qualification; Subsidiaries..............................................26
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Section 3.02 Certificate of Incorporation and Bylaws...................................................26
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Section 3.03 Capitalization............................................................................26
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Section 3.04 Authority Relative to this Agreement......................................................27
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Section 3.05 No Conflict; Required Filings and Consents................................................27
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Section 3.06 Legal Compliance..........................................................................28
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Section 3.07 SEC Filings; Financial Statements.........................................................28
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Section 3.08 No Undisclosed Liabilities................................................................29
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Section 3.09 Absence of Certain Changes or Events......................................................29
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Section 3.10 Absence of Litigation.....................................................................29
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Section 3.11 Registration Statement; Proxy Statement...................................................30
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Section 3.12 Taxes.....................................................................................30
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Section 3.13 Brokers...................................................................................31
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Section 3.14 Intellectual Property.....................................................................31
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Section 3.15 Opinion of Financial Advisor..............................................................31
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Section 3.16 Board Approval............................................................................31
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Section 3.17 Pooling of Interests......................................................................31
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Section 3.18 State Takeover Statutes...................................................................32
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ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME.......................................................................32
Section 4.01 Conduct of Business by Company............................................................32
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Section 4.02 Conduct of Business by Parent.............................................................35
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ARTICLE V ADDITIONAL AGREEMENTS......................................................................................36
Section 5.01 Proxy Statement/Prospectus; Registration Statement; Other Filings; Board
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Recommendations....................................................................................36
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Section 5.02 Stockholder Meeting.......................................................................37
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Section 5.03 Confidentiality; Access to Information....................................................39
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Section 5.04 No Solicitation...........................................................................39
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Section 5.05 Public Disclosure.........................................................................41
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Section 5.06 Commercially Reasonable Efforts; Notification.............................................41
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Section 5.07 Third Party Consents......................................................................42
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Section 5.08 Stock Options; ESPP and Employee Benefits.................................................42
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Section 5.09 Form S-8..................................................................................44
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Section 5.10 Indemnification...........................................................................44
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TABLE OF CONTENTS
(continued)
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Section 5.11 Affiliate Agreements; Pooling Actions.....................................................45
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Section 5.12 Regulatory Filings; Reasonable Efforts....................................................45
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Section 5.13 Action by Board of Directors..............................................................46
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Section 5.14 Nasdaq Listing............................................................................46
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ARTICLE VI CONDITIONS TO THE MERGER..................................................................................46
Section 6.01 Conditions to Obligations of Each Party to Effect the Merger..............................46
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Section 6.02 Additional Conditions to Obligations of Company...........................................47
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Section 6.03 Additional Conditions to the Obligations of Parent and Merger Sub.........................47
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ARTICLE VII TERMINATION, AMENDMENT AND WAIVER........................................................................49
Section 7.01 Termination...............................................................................49
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Section 7.02 Notice of Termination; Effect of Termination..............................................50
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Section 7.03 Fees and Expenses.........................................................................51
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Section 7.04 Amendment.................................................................................52
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Section 7.05 Extension; Waiver.........................................................................52
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ARTICLE VIII GENERAL PROVISIONS......................................................................................52
Section 8.01 Non-Survival of Representations and Warranties............................................52
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Section 8.02 Notices...................................................................................52
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Section 8.03 Interpretation............................................................................53
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Section 8.04 Counterparts..............................................................................54
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Section 8.05 Entire Agreement; Third Party Beneficiaries...............................................54
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Section 8.06 Severability..............................................................................54
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Section 8.07 Other Remedies; Specific Performance......................................................55
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Section 8.08 Governing Law.............................................................................55
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Section 8.09 Rules of Construction.....................................................................55
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Section 8.10 Assignment................................................................................55
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Section 8.11 Waiver of Jury Trial......................................................................55
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INDEX OF EXHIBITS
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Exhibit A Form of Company Voting Agreement
Exhibit B Form of Stock Option Agreement
Exhibit C-1 Form of Company Affiliate Agreement
Exhibit C-2 Form of Parent Affiliate Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
and entered into as of October 26, 2000, among Microchip Technology
Incorporated, a Delaware corporation ("Parent"), Matchbox Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Sub"), and
Telcom Semiconductor, Inc., a Delaware corporation ("Company").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law ("Delaware Law"), Parent,
Merger Sub and Company intend to enter into a business combination transaction.
B. The Board of Directors of Company (i) has determined that the Merger (as
defined in Section 1.01) is consistent with and in furtherance of the long-term
business strategy of Company and fair to, and in the best interests of, Company
and its stockholders, (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement, (iii) has adopted a resolution
declaring the Merger advisable and (iv) has determined unanimously to recommend
that the stockholders of Company adopt this Agreement.
C. The Board of Directors of Parent (i) has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of Parent
and fair to, and in the best interests of, Parent and its stockholders, (ii) has
approved this Agreement, the Merger and the other transactions contemplated by
this Agreement, and (iii) has adopted a resolution declaring the Merger
advisable.
D. Concurrently with the execution of this Agreement and as a condition and
inducement to Parent's willingness to enter into this Agreement: (1) certain
stockholders of Company are entering into Voting Agreements in substantially the
form attached hereto as Exhibit A (the "Company Voting Agreements"), (2) Company
is executing and delivering a Stock Option Agreement in favor of Parent in
substantially the form attached hereto as Exhibit B (the "Stock Option
Agreement"), and (3) certain Company Affiliates are entering into Company
Affiliate Agreements in substantially the form attached hereto as Exhibit C-1
(the "Company Affiliate Agreements").
E. Concurrently with the execution of this Agreement and as a condition and
inducement to Parent's willingness to enter into this Agreement certain Parent
Affiliates are entering into Parent Affiliate Agreements in substantially the
form attached hereto as Exhibit C-2 (the "Parent Affiliate Agreements").
F. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
G. It is also intended by the parties hereto that the Merger shall qualify
for accounting treatment as a "pooling of interests."
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
Section 1.01 The Merger. At the Effective Time (as defined in Section 1.02)
and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
Company (the "Merger"), the separate corporate existence of Merger Sub shall
cease and Company shall continue as the surviving corporation. Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
Section 1.02 Effective Time; Closing. As soon as practicable on or after
the Closing Date (as defined in this Section 1.2), and upon the terms and
subject to the conditions of this Agreement, 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 accordance with
the applicable provisions of Delaware Law (the time of such filing (or such
later time as may be agreed upon in writing by Parent and Company and specified
in the Certificate of Merger) being referred to herein as the "Effective Time").
The closing of the Merger and the other transactions contemplated hereby (the
"Closing") shall take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, located at Xxx Xxxxxx, Xxxxx Xxxxx, Xxxxx 0000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, at a date and time to be specified by Parent and
Company, which shall be no later than the second business day following the
satisfaction or, if permitted pursuant hereto, waiver of the conditions set
forth in Article VI hereof, or at such other location, date and time as Parent
and Company shall mutually agree in writing. The date upon which the Closing
actually occurs shall be referred to herein as the "Closing Date."
Section 1.03 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of Company and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
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Section 1.04 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, subject to the provisions of Section 5.10,
the Certificate of Incorporation of Company shall be amended and restated
to be identical to the Certificate of Incorporation in effect for Merger
Sub at the Effective Time.
(b) Subject to the provisions of Section 5.10, the Bylaws of Company
shall be amended and restated to be those in effect for Merger Sub at the
Effective Time.
Section 1.05 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time until their successors shall have been duly elected and
qualified. The initial officers of the Surviving Corporation shall be the
officers of Merger Sub immediately prior to the Effective Time until their
successors shall have been duly elected and qualified.
Section 1.06 Effect on Capital Stock. Subject to the terms and conditions
of this Agreement, at the Effective Time, by virtue of the Merger and without
any action on the part of Parent, Merger Sub, Company or the holders of any of
the following securities, the following shall occur:
(a) Conversion of Company Common Stock. Each share of common stock,
par value $0.001 per share, of Company (the "Company Common Stock") issued
and outstanding immediately prior to the Effective Time (other than any
share of Company Common Stock to be canceled and extinguished pursuant to
Section 1.06(b)) will be automatically converted (subject to Sections
1.06(e) and (f)) into a fraction of a share of Parent Common Stock (as
defined below) (the "Exchange Ratio") equal to (x) $15.00 divided by (y)
the average closing sale price of one share of common stock of Parent, par
value $0.001 per share ("Parent Common Stock"), on the Nasdaq National
Market during the ten (10) trading days ending on the trading day
immediately prior to the Effective Time (the "ACP"); provided, that if the
ACP is greater than $32.61, the Exchange Ratio shall be .46, and provided,
further that if the ACP is less than $28.30, the Exchange Ratio shall be
.53. If any shares of Company Common Stock outstanding immediately prior to
the Effective Time are unvested or are subject to a repurchase option, risk
of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement with Company, then, except to the
extent otherwise provided in such agreement, the shares of Parent Common
Stock issued in exchange for such shares of Company Common Stock will also
be unvested and subject to the same repurchase option, risk of forfeiture
or other condition, and the certificates representing such shares of Parent
Common Stock may accordingly be marked with appropriate legends.
(b) Cancellation of Company-Owned Stock. Each share of Company Common
Stock held by Company or any direct or indirect wholly-owned subsidiary of
Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
(c) Stock Options; Employee Stock Purchase Plans. At the Effective
Time, all options to purchase Company Common Stock then outstanding under
Company's 1994 Stock Option Plan, the Company's 1996 Director Stock Option
Plan and the Company's 2000 Non-Statutory Stock Option Plan (the "Company
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Option Plans"), and the Company Option Plans themselves, shall, except as
otherwise set forth herein, be assumed by Parent in accordance with Section
5.08. At the Effective Time, all purchase rights then outstanding under
Company's 1995 Employee Stock Purchase Plan (the "ESPP"), and the ESPP
itself, shall be assumed by Parent in accordance with Section 5.08.
(d) Capital Stock of Merger Sub. Each share of Common Stock, $0.001
par value per share, of Merger Sub (the "Merger Sub Common Stock") issued
and outstanding immediately prior to the Effective Time shall be converted
into one validly issued, fully paid and nonassessable share of Common
Stock, $0.001 par value per share, of the Surviving Corporation. Each
certificate evidencing ownership of shares of Merger Sub Common Stock shall
evidence ownership of such shares of capital stock of the Surviving
Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into or exercisable or exchangeable for Parent
Common Stock or Company Common Stock), extraordinary cash dividend,
reorganization, recapitalization, reclassification, combination, exchange
of shares or other like change with respect to Parent Common Stock or
Company Common Stock occurring or having a record date on or after the date
hereof and prior to the Effective Time.
(f) Fractional Shares. No fraction of a share of Parent Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to receive a
fraction of a share of Parent Common Stock (after aggregating all
fractional shares of Parent Common Stock that otherwise would be received
by such holder) shall, upon surrender of such holder's Certificates(s) (as
defined in Section 1.07(c)), receive from Parent an amount of cash (rounded
to the nearest whole cent), without interest, equal to the product of (i)
such fraction, multiplied by (ii) the average closing price of one share of
Parent Common Stock for the five (5) most recent days that Parent Common
Stock has traded ending on the trading day immediately prior to the
Effective Time, as reported on the Nasdaq National Market ("Nasdaq").
Section 1.07 Surrender of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent shall select a
bank or trust company reasonably acceptable to Company to act as the
exchange agent (the "Exchange Agent") in the Merger.
(b) Parent to Provide Common Stock. Promptly after the Effective Time,
Parent shall make available to the Exchange Agent, for exchange in
accordance with this Article I, the shares of Parent Common Stock issuable
pursuant to Section 1.06(a) in exchange for outstanding shares of Company
Common Stock, and cash in an amount sufficient for payment in lieu of
fractional shares pursuant to Section 1.06(f) and any dividends or
distributions to which holders of shares of Company Common Stock may be
entitled pursuant to Section 1.07(d).
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(c) Exchange Procedures. Promptly after the Effective Time, Parent
shall cause the Exchange Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates, which immediately prior
to the Effective Time represented outstanding shares of Company Common
Stock (the "Certificates") (i) a letter of transmittal in customary form
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Parent Common Stock pursuant to Section 1.06(a),
cash in lieu of any fractional shares pursuant to Section 1.06(f) and any
dividends or other distributions pursuant to Section 1.07(d). Upon
surrender of Certificates for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Parent, together with such
letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holders of such Certificates shall be
entitled to receive in exchange therefor certificates representing the
number of whole shares of Parent Common Stock into which their shares of
Company Common Stock were converted pursuant to Section 1.06(a), payment in
lieu of fractional shares which such holders have the right to receive
pursuant to Section 1.06(f) and any dividends or other distributions
payable pursuant to Section 1.07(d), and the Certificates so surrendered
shall forthwith be canceled. Until so surrendered, outstanding Certificates
will be deemed, from and after the Effective Time, to evidence only the
ownership of the number of whole shares of Parent Common Stock into which
such shares of Company Common Stock shall have been so converted (including
any voting, notice or other rights associated with the ownership of such
shares of Parent Common Stock under the Certificate of Incorporation or
Bylaws of Parent or under Delaware Law) and the right to receive an amount
in cash in lieu of the issuance of any fractional shares in accordance with
Section 1.06(f) and any dividends or other distributions payable pursuant
to Section 1.07(d).
(d) Distributions With Respect to Unexchanged Shares. Dividends or
other distributions declared or made after the date of this Agreement with
respect to Parent Common Stock with a record date after the Effective Time
will be paid to the holders of any unsurrendered Certificates with respect
to the shares of Parent Common Stock represented thereby when the holders
of record of such Certificates surrender such Certificates.
(e) Transfers of Ownership. If certificates representing shares of
Parent Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
persons requesting such exchange will have (i) paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the
issuance of certificates representing shares of Parent Common Stock in any
name other than that of the registered holder of the Certificates
surrendered, or (ii) established to the satisfaction of Parent or any agent
designated by it that such tax has been paid or is not payable.
(f) Required Withholding. Each of the Exchange Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement
to any holder or former holder of Company Common Stock or Company Stock
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Options such amounts as may be required to be deducted or withheld
therefrom under the Code or state, local or foreign law. To the extent such
amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the person to whom
such amounts would otherwise have been paid.
(g) No Liability. Notwithstanding anything to the contrary in this
Section 1.07, neither the Exchange Agent, Parent, the Surviving Corporation
nor any party hereto shall be liable to a holder of shares of Parent Common
Stock or Company Common Stock for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
Section 1.08 No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued in accordance with the terms hereof
(including any cash paid in respect thereof pursuant to Sections 1.06(f) and
1.07(d)) shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Company Common Stock. There shall be no further
registration of transfers on the records of the Surviving Corporation of shares
of Company Common Stock which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article I.
Section 1.09 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue and pay in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to Section
1.06(a), cash for fractional shares, if any, as may be required pursuant to
Section 1.06(f) and any dividends or distributions payable pursuant to Section
1.07(d); provided, however, that the Exchange Agent, may, in its discretion and
as a condition precedent to the issuance of such certificates representing
shares of Parent Common Stock and the payment of cash and other distributions,
require the owner of such lost, stolen or destroyed Certificates to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim that
may be made against Parent, the Surviving Corporation or the Exchange Agent with
respect to the Certificates alleged to have been lost, stolen or destroyed.
Section 1.10 Tax and Accounting Consequences.
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of the
Code. The parties hereto adopt this Agreement as a "plan of reorganization"
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United
States Treasury Regulations.
(b) It is intended by the parties hereto that the Merger shall qualify
as a "pooling of interests" for accounting purposes.
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Section 1.11 Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Company and Merger Sub, the officers and directors of
Parent and the Surviving Corporation shall be fully authorized (in the name of
Merger Sub, Company, the Surviving Corporation and otherwise) to take all such
necessary action.
ARTICLE II
REPRESENTATION AND WARRANTIES OF THE COMPANY
Company represents and warrants to Parent and Merger Sub, subject to such
exceptions as are disclosed in writing in the disclosure letter supplied by
Company to Parent dated as of the date hereof (the "Company Schedule"), which
disclosure shall provide an exception to or otherwise qualify the
representations or warranties of Company contained in the section of this
Agreement corresponding by number to such disclosure and the other
representations and warranties herein to the extent such disclosure shall
reasonably appear to be applicable to such other representations or warranties,
as follows:
Section 2.01 Organization and Qualification; Subsidiaries.
(a) Each of Company and its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted.
(b) Section 2.01(b) of the Company Schedule sets forth (i) each
subsidiary of Company, (ii) the ownership interest therein of Company and
(iii) if not wholly-owned by Company, the identity and ownership interest
of each other owner of such subsidiary. Neither Company nor any of its
subsidiaries has agreed to make nor is obligated to make nor is bound by
any written or oral agreement, contract, understanding, negotiable
instrument, commitment or undertaking of any nature, in effect as of the
date hereof or as may hereafter be in effect (a "Contract"), under which it
may become obligated to make, any future investment in or capital
contribution to any other entity. Neither Company nor any of its
subsidiaries directly or indirectly owns any equity or similar interest in
or any interest convertible, exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business, association or entity other than the entities identified in
Section 2.01(b) of the Company Schedule.
(c) Company and each of its subsidiaries is qualified or licensed to
do business as a foreign corporation, and is in good standing (with respect
to jurisdictions which recognize such concept), under the laws of all
jurisdictions where the character of the properties owned, leased or
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operated by them or the nature of their activities requires such
qualification or licensing, except where the failure to be so qualified
could not reasonably be expected to result in a Material Adverse Effect on
Company.
Section 2.02 Certificate of Incorporation and Bylaws. Company has
previously furnished to Parent a complete and correct copy of its Certificate of
Incorporation and Bylaws as amended and in effect as of the date of this
Agreement (together, the "Company Charter Documents"). Such Company Charter
Documents and equivalent organizational documents of each of its subsidiaries
are in full force and effect. Company is not in violation of any of the
provisions of the Company Charter Documents, and no subsidiary of Company is in
violation of its equivalent organizational documents except where the violation
of any such equivalent organizational documents of a subsidiary of Company could
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on Company.
Section 2.03 Capitalization.
(a) The authorized capital stock of Company consists of 30,000,000
shares of Company Common Stock, $0.001 par value per share, and 5,000,000
shares of preferred stock, $0.001 par value per share, 30,000 of which are
designated Series A Participating Preferred Stock ("Company Preferred
Stock"). As of the close of business on September 30, 2000, (i) 18,290,106
shares of Company Common Stock were issued and outstanding, all of which
were validly issued, fully paid and nonassessable and were not issued in
violation of any preemptive rights, right of first refusal, or any similar
rights; (ii) no shares of Company Preferred Stock were issued or
outstanding; (iii) no shares of Company Common Stock were held in Company's
treasury; (iv) no shares of Company Common Stock were held by subsidiaries
of Company; (v) 347,750 shares of Company Common Stock were reserved for
future issuance pursuant to the ESPP; (vi) 288,330 shares of Company Common
Stock were reserved for issuance upon the exercise of outstanding options
to purchase Company Common Stock under Company's 1994 Stock Option Plan;
(vii) 126,800 shares of Company Common Stock were reserved for issuance
upon the exercise of outstanding options to purchase Company Common Stock
under Company's 2000 Nonstatutory Stock Option Plan; and (viii) 39,000
shares of Company Common Stock were reserved for issuance upon the exercise
of outstanding options to purchase Company Common Stock under Company's
1996 Director Stock Option Plan.
(b) Section 2.03(b) of the Company Schedule sets forth the following
information with respect to outstanding Company Stock Options (as defined
in Section 5.08) as of September 30, 2000 the total number of shares of
Company Common Stock subject to such Company Stock Options (which number is
not exceeded by the number of shares of Company Common Stock subject to
Company Stock Options outstanding on the date of this Agreement).
(c) Company has made available to Parent accurate and complete copies
of all stock option plans pursuant to which Company has granted such
Company Stock Options that are outstanding as of September 30, 2000 and the
form of all stock option agreements evidencing such Company Stock Options.
Section 2.03(c) of the Company Schedule has attached to it Company's option
schedule, which schedule shall set forth, with respect to each Company
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Stock Option, the name of the holder thereof, the number of shares subject
thereto, and the grant date, exercise price, expiration date and vesting
schedule thereof.
(d) There are no commitments or agreements of any character to which
Company is bound obligating Company to accelerate the vesting of any
Company Stock Option as a result of the Merger. All outstanding shares of
Company Common Stock, all outstanding Company Stock Options, and all
outstanding shares of capital stock of each subsidiary of Company have been
issued and granted in compliance with (i) all applicable securities laws
and other applicable Legal Requirements (as defined below) in effect as of
the time of grant and issuance and (ii) all requirements set forth in
applicable Contracts by which Company is bound and which were in effect as
of the time of grant and issuance. "Legal Requirements" means any federal,
state, local, municipal, foreign or other law, statute, constitution,
principle of common law, resolution, ordinance, code, edict, decree, rule,
regulation, ruling or requirement issued, enacted, adopted, promulgated,
implemented or otherwise put into effect by or under the authority of any
court, administrative agency, commission, governmental or regulatory
authority, domestic or foreign (a "Governmental Entity").
(e) There are no equity securities, partnership interests or similar
ownership interests of any class of equity security of any subsidiary of
Company, or any security exchangeable or convertible into or exercisable
for such equity securities, partnership interests or similar ownership
interests, issued, reserved for issuance or outstanding, except for
securities Company owns free and clear of all liens, pledges,
hypothecations, charges, mortgages, security interests, encumbrances,
claims, options, rights of first refusal, preemptive rights, community
property interests or similar restriction (including any restriction on the
voting of any security, any restriction on the transfer of any security or
other asset, any restriction on the possession, exercise or transfer of any
other attribute of ownership of any asset) ("Encumbrances") directly or
indirectly through one or more subsidiaries.
(f) Except as set forth in Sections 2.03(a) and 2.03(d) hereof and
except for the Stock Option Agreement, as of the date hereof, there are no
subscriptions, options, warrants, equity securities, partnership interests
or similar ownership interests, calls, rights (including preemptive,
purchase or conversion rights), commitments or agreements of any character
to which Company or any of its subsidiaries is a party or by which it is
bound obligating Company or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, or repurchase, redeem or
otherwise acquire, or cause the repurchase, redemption or acquisition of,
any shares of capital stock, partnership interests or similar ownership
interests of Company or any of its subsidiaries or obligating Company or
any of its subsidiaries to grant, extend, accelerate the vesting of or
enter into any such subscription, option, warrant, equity security, call,
right, commitment or agreement.
(g) As of the date of this Agreement, except as contemplated by this
Agreement, there are no registration rights and there is, except for the
Company Voting Agreements and the Company Rights Plan (as defined in
Section 2.22), no voting trust, proxy, rights plan, antitakeover plan or
other agreement currently in effect to which Company or any of its
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subsidiaries is a party or by which they are bound with respect to any
equity security of any class of Company or with respect to any equity
security, partnership interest or similar ownership interest of any class
of any of its subsidiaries. Stockholders of Company will not be entitled to
dissenters' rights under applicable state law in connection with the
Merger.
Section 2.04 Authority Relative to this Agreement. Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to execute and deliver the Stock Option Agreement and the other agreements
contemplated hereby (the "Company Ancillary Agreements") and to perform its
obligations hereunder and thereunder and, subject to adoption of this Agreement
by the stockholders of Company in accordance with Delaware Law and the Company
Charter Documents, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the Company Ancillary Agreements by
Company and the consummation by Company of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on the
part of Company and no other corporate proceedings on the part of Company are
necessary to authorize this Agreement, the Company Ancillary Agreements or to
consummate the transactions contemplated hereby and thereby (other than the
adoption of this Agreement by the stockholders of Company in accordance with
Delaware Law and the Company Charter Documents). This Agreement and the Company
Ancillary Agreements have been duly and validly executed and delivered by
Company and, assuming the due authorization, execution and delivery by Parent
and Merger Sub, constitute the legal and binding obligation of Company,
enforceable against Company in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application affecting the enforcement of creditors' rights and the exercise by
courts of equitable powers.
Section 2.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and the Company
Ancillary Agreements by Company do not, and the performance of this
Agreement and the Company Ancillary Agreements by Company will not, (i)
conflict with or violate the Company Charter Documents or the equivalent
organizational documents of any of Company's subsidiaries, (ii) subject to
obtaining the vote of Company's stockholders in favor of the adoption of
this Agreement and to compliance with the requirements set forth in Section
2.05(b) below, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Company or any of its subsidiaries or by
which its or any of their respective properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that
with notice or lapse of time or both would become a default) under, or
alter the rights or obligations of any third party against or to Company
under, or give to others any rights of termination, amendment, acceleration
or cancellation of, or result in the creation of an Encumbrance on any of
the properties or assets of Company or any of its subsidiaries pursuant to,
any material mortgage, Contract, permit, franchise or other obligation to
which Company or any of its subsidiaries is a party or by which Company or
any of its subsidiaries or its or any of their respective properties are
bound or affected (a "Company Obligation"), except to the extent such
conflict, violation, breach, default, impairment or other effect could not
in the case of clauses (ii) or (iii) individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Company.
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(b) The execution and delivery of this Agreement and the Company
Ancillary Agreements by Company do not, and the performance of this
Agreement and the Company Ancillary Agreements by Company shall not,
require Company to obtain or make, at or prior to the Effective Time, any
consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity or third party, except (i)
pursuant to applicable requirements, if any, of the Securities Act of 1933,
as amended (the "Securities Act"), the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), state securities laws ("Blue Sky Laws"), the
pre-merger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and of foreign
Governmental Entities and the rules and regulations thereunder, the rules
and regulations of the Nasdaq, and the filing and recordation of the
Certificate of Merger as required by Delaware Law and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, (A) could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Company or, after the Effective Time, Parent, or (B) would not prevent
consummation of the Merger or otherwise prevent the parties hereto from
performing their obligations under this Agreement.
Section 2.06 Legal Compliance; Permits.
(a) Neither Company nor any of its subsidiaries is in conflict with,
or in default or violation of, any Legal Requirement or Company Obligation,
except for any conflicts, defaults or violations that (individually or in
the aggregate) would not cause Company to lose any material benefit or
incur any material liability. No charge, complaint, claim, demand, notice,
inquiry, investigation, action, suit, proceeding, hearing or review by any
Governmental Entity is pending or, to the knowledge of Company, being
threatened against Company or its subsidiaries, nor, to Company's
knowledge, has any Governmental Entity indicated to Company in writing an
intention to conduct the same, other than, in each such case, those the
outcome of which could not, individually or in the aggregate, reasonably be
expected to have the effect of prohibiting or materially restricting any
business practice of Company or any of its subsidiaries, any acquisition of
material property by Company or any of its subsidiaries or the conduct of
business by Company or any of its subsidiaries.
(b) Company and its subsidiaries hold all franchises, grants,
authorizations, permits, licenses, variances, exemptions, easements,
consents, certifications, orders and approvals from Governmental Entities
which are necessary to the operation of the business of Company and its
subsidiaries taken as a whole (collectively, the "Company Permits"); and
Company and its subsidiaries are in compliance with the terms of the
Company Permits, except where the failure to hold or be in compliance with
the terms of such Company Permits would not reasonably be expected to have
a Material Adverse Effect on Company.
Section 2.07 SEC Filings; Financial Statements.
(a) Company has made available to Parent (through reference to
documents filed by XXXXX or otherwise) a correct and complete copy of each
report, schedule, registration statement and definitive proxy statement
filed by Company with the Securities and Exchange Commission ("SEC") since
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December 31, 1997 (the "Company SEC Reports"), which are all the forms,
reports and documents required to be filed by Company with the SEC since
such date. As of their respective dates, the Company SEC Reports (A) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (B) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Company does
not have any subsidiaries that are required to file any reports or other
documents with the SEC.
(b) Each set of financial statements (including, in each case, any
related notes thereto) contained in the Company SEC Reports was prepared in
accordance with generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto and except that unaudited statements do not
contain footnotes in substance or form required by GAAP, as is permitted by
Form 10-Q of the Exchange Act) and each fairly presents in all material
respects the financial position of Company at the respective dates thereof
and the results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject
to normal year-end adjustments.
(c) Company has previously furnished to Parent a complete and correct
copy of any amendments or modifications, which have not yet been filed with
the SEC but which are required to be filed after the date hereof, to
agreements, documents or other instruments which previously had been filed
by Company with the SEC pursuant to the Securities Act or the Exchange Act.
Section 2.08 No Undisclosed Liabilities. Neither Company nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
a nature required to be disclosed on a balance sheet or in the related notes to
the financial statements prepared in accordance with GAAP which are,
individually or in the aggregate, material to the business, results of
operations, assets or financial condition of Company and its subsidiaries taken
as a whole, except (i) liabilities disclosed or provided for in Company's
unaudited balance sheet as of June 30, 2000 set forth in the Company SEC Reports
or in the related notes, (ii) liabilities incurred since June 30, 2000 and on or
prior to the date hereof in the ordinary course of business which have not
resulted, in the aggregate, in any material increase in Company's liabilities
from those disclosed or provided for in Company's unaudited balance sheet as of
June 30, 2000 set forth in the Company SEC Reports or in the related notes, or
(iii) liabilities incurred after the date hereof in the ordinary course of
business.
Section 2.09 Absence of Certain Changes or Events. Since June 30, 2000,
there has not been: (i) any Material Adverse Effect on Company, (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of Company's or any of
its subsidiaries' capital stock, or any purchase, redemption or other
acquisition by Company of any of Company's capital stock or any other securities
of Company or its subsidiaries or any options, warrants, calls or rights to
-12-
acquire any such shares or other securities except for repurchases from
employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) any split, combination
or reclassification of any of Company's or any of its subsidiaries' capital
stock, (iv) any granting by Company or any of its subsidiaries of any material
increase in compensation or fringe benefits, except for normal increases in the
ordinary course of business consistent with past practice, or any payment by
Company or any of its subsidiaries of any bonus, except for bonuses made in the
ordinary course of business consistent with past practice, or any granting by
Company or any of its subsidiaries of any increase in severance or termination
pay or any entry by Company or any of its subsidiaries into any currently
effective employment, severance, termination or indemnification agreement or any
agreement the benefits of which would be contingent or the terms of which would
be materially altered upon the consummation of the transactions contemplated
hereby, (v) entry by Company or any of its subsidiaries into any licensing or
other agreement with regard to the acquisition or disposition of any
Intellectual Property (as defined in Section 2.17) other than licenses disclosed
in Section 2.17(g) of the Company Schedule, (vi) any amendment or consent with
respect to any licensing agreement filed or required to be filed by Company with
the SEC, (vii) any material change by Company in its accounting methods,
principles or practices, except as required by concurrent changes in GAAP,
(viii) any material revaluation by Company of any of its assets, including,
without limitation, writing down the value of capitalized inventory or writing
off notes or accounts receivable or any sale of assets of Company other than in
the ordinary course of business, or (x) any material Tax elections made or a
change of tax accounting method.
Section 2.10 Absence of Litigation. Except as specifically disclosed in the
Company SEC Reports, as of the date hereof, there are no material claims,
actions, suits or proceedings pending or, to the knowledge of Company,
threatened (or, to the knowledge of Company, any governmental or regulatory
investigation pending or threatened) against Company or any of its subsidiaries
or any properties or rights of Company or any of its subsidiaries, before any
Governmental Entity.
Section 2.11 Employee Benefit Plans.
(a) All material employee compensation, incentive, fringe or benefit
plans, programs, policies, commitments or other similar arrangements
(whether or not set forth in a written document and including, without
limitation, all "employee benefit plans" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) covering any active employee, former employee, director or
consultant of Company, any subsidiary of Company or any trade or business
(whether or not incorporated) which is a member of a controlled group or
which is under common control with Company within the meaning of Section
414 of the Code (an "ERISA Affiliate") or (ii) with respect to which
Company has material liability as of the date hereof, and covering any
active, former employee, director or consultant of Company, any subsidiary
of Company or any ERISA Affiliate are listed in Section 2.11(a) of the
Company Schedule (the "Plans"). Except with respect to International
Employee Plans (as defined in Section 2.11(h) below) that provide benefits
primarily to comply with applicable local laws, Company has provided or
made available to Parent: (i) correct and complete copies of all documents
embodying each Plan including (without limitation) all amendments thereto,
and all related trust documents; (ii) the three (3) most recent annual
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reports (Form Series 5500 and all schedules and financial statements
attached thereto), if any, required under ERISA or the Code in connection
with each Plan; (iii) the most recent summary plan description, as
applicable, together with the summary(ies) of material modifications
thereto, if any, required under ERISA with respect to each Plan; (iv) the
most recent IRS determination, opinion, notification and advisory letters;
(v) all material correspondence to or from any governmental agency relating
to an actual or potential liability under any Plan; (vi) all forms of
notice and election documents related to the Consolidated Omnibus Budget
Reconciliation Plan of 1985, as amended ("COBRA"); (vii) all discrimination
tests performed with respect to each Plan for the most recent three (3)
plan years; (viii) the most recent annual actuarial valuations, if any,
prepared for each Plan; (xi) if the Plan is funded, the most recent annual
and periodic accounting of Plan assets; (x) all material administrative
service agreements, group annuity contracts, group insurance contracts and
similar written agreements and contracts relating to each Plan; (xi) all
material communications to employees or former employees relating to any
amendments, terminations, establishments, increases or decreases in
benefits, acceleration of payments or vesting schedules which would result
in a material liability under any Plan or proposed Plan; and (xii) all
currently effective registration statements, annual reports (Form 11-K and
all attachments thereto) and prospectuses prepared in connection with any
Plan that includes securities registered under the Securities Act.
(b) Each Plan has been maintained and administered in all material
respects in compliance with its terms and with the requirements prescribed
by any and all statutes, orders, rules and regulations, including but not
limited to ERISA and the Code, which are applicable to such Plans. No suit,
action or other litigation (excluding claims for benefits incurred in the
ordinary course of Plan activities) has been brought or, to the knowledge
of Company, is threatened, against or with respect to any such Plan. There
are no audits, inquiries or proceedings pending or, to the knowledge of
Company, threatened by the Internal Revenue Service (the "IRS") or
Department of Labor (the "DOL") with respect to any Plans. All
contributions, reserves or premium payments required to be made or accrued
as of the date hereof to the Plans have been timely made or accrued. Any
Plan intended to be qualified under Section 401(a) of the Code and each
related trust intended to qualify under Section 501(a) of the Code (i) has
either obtained a favorable determination, notification, advisory and/or
opinion letter, as applicable, as to its qualified status from the IRS or
still has a remaining period of time under applicable Treasury Regulations
or IRS pronouncements in which to apply for such letter and to make any
amendments necessary to obtain a favorable determination, and (ii)
incorporates or has been amended to incorporate all provisions required to
comply with the Tax Reform Act of 1986 and subsequent legislation to the
extent such amendment or incorporation is required. Company does not have
any plan or commitment to establish any new Plan or to modify any Plan
(except to the extent required by law or to conform any such Plan to the
requirements of any applicable law, in each case as previously disclosed to
Parent in writing, or as required by this Agreement). Each Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Parent, Company or any of
its ERISA Affiliates except as otherwise provided in the Plan (other than
ordinary administration expenses and expenses for benefits accrued but not
yet paid).
-14-
(c) Neither Company nor any its ERISA Affiliates has at any time ever
maintained, established, sponsored, participated in, or contributed to any
plan subject to Title IV of ERISA or Section 412 of the Code, and at no
time has Company or any of its ERISA Affiliates contributed to or been
requested to contribute to any "multiemployer plan," as such term is
defined in ERISA or to any plan described in Section 413(c) of the Code.
Neither Company, any of its ERISA Affiliates, nor, to the knowledge of
Company, any officer or director of Company or any of ERISA Affiliates is
subject to any liability or penalty under Section 4975 through 4980B of the
Code or Title I of ERISA. No "prohibited transaction," within the meaning
of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not
otherwise exempt under Section 408 of ERISA, has occurred with respect to
any Plan which could subject Company or its subsidiaries to material
liabilities.
(d) None of the Plans promises or provides retiree medical or other
retiree welfare benefits to any person except as required by applicable
law, and neither Company nor any of its subsidiaries has represented,
promised or contracted to provide such retiree benefits to any employee,
former employee, director, consultant or other person, except (i) to the
extent required by statute or (ii) for benefits the cost of which are fully
paid for by such person.
(e) Neither Company nor any of its subsidiaries is bound by or subject
to (and none of its respective assets or properties is bound by or subject
to) any arrangement with any labor union. No employee of Company or any of
its subsidiaries is represented by any labor union or covered by any
collective bargaining agreement relating to Company or any of its
subsidiaries and, to the knowledge of Company, no campaign to establish
such representation is in progress. There is no pending or, to the
knowledge of Company, threatened labor dispute involving Company or any of
its subsidiaries and any group of its employees nor has Company or any of
its subsidiaries experienced any significant labor interruptions over the
past three (3) years. Company and its subsidiaries are in compliance in all
material respects with all applicable material foreign, federal, state and
local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours.
(f) Neither Company nor any of its ERISA Affiliates has, prior to the
Effective Time and in any material respect, violated any of the health
continuation requirements of COBRA, the requirements of the Family Medical
Leave Act of 1993, as amended, the requirements of the Womens' Health and
Cancer Rights Act, as amended, the requirements of the Newborns' and
Mothers' Health Protection Act of 1996, as amended, the requirements of the
Health Insurance Portability and Accountability Act of 1996, as amended, or
any similar provisions of state law applicable to employees of Company.
(g) Except as required by the Code, including the effect of the
termination described in Section 5.08(c), neither the execution and
delivery of this Agreement by Company nor the consummation by Company of
the transactions contemplated hereby will (i) result in any payment
(including severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any stockholder, director or employee of Company
or any of its subsidiaries under any Plan or otherwise, (ii) materially
-15-
increase any benefits otherwise payable under any Plan, or (iii) except as
required by the Code, result in the acceleration of the time of payment or
vesting of any such benefits.
(h) Each Plan that has been adopted or maintained by Company or any of
its subsidiaries, whether informally or formally, for the benefit of
current or former employees of Company or any of its subsidiaries outside
the United States ("International Employee Plan") has been established,
maintained and administered in material compliance with its terms and
conditions and with the requirements prescribed by any and all statutory or
regulatory laws that are applicable to such International Employee Plan. No
International Employee Plan has unfunded liabilities that, as of the
Effective Time, will not be offset by insurance or fully accrued. Except as
required by law or the terms of any such plan, no condition exists that
would prevent Company or Parent from terminating or amending any
International Employee Plan at any time for any reason.
Section 2.12 Registration Statement; Proxy Statement. None of the
information supplied or to be supplied by Company for inclusion in: (i) the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of the Parent Common Stock in or as a result of the
Merger (the "S-4") will, at the time the S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading; and (ii) the joint proxy statement/prospectus to be filed
with the SEC by Company pursuant to Section 5.01(a) (the "Proxy
Statement/Prospectus") will, at the date mailed to the stockholders of Company,
at the time of the stockholders' meeting of Company (the "Company Stockholders'
Meeting") and at the Effective Time, in connection with the transactions
contemplated hereby, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Proxy Statement/Prospectus will comply as to form in
all material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. Notwithstanding the foregoing,
Company makes no representation or warranty with respect to any information
supplied by Parent or Merger Sub which is contained in any of the foregoing
documents.
Section 2.13 Restrictions on Business Activities. There is no judgment,
injunction, order or decree binding upon Company or its subsidiaries or to which
Company or any of its subsidiaries is a party which has or would reasonably be
expected to have the effect of prohibiting or materially and adversely
restricting any current business practice of Company or any of its subsidiaries,
any acquisition of property by Company or any of its subsidiaries or the conduct
of business by Company or any of its subsidiaries as currently conducted.
Section 2.14 Title to Property. Neither Company nor any of its subsidiaries
owns, nor has Company or any of its subsidiaries previously owned, any real
property. Company and each of its subsidiaries have good and valid title to, or
valid leasehold interests in, all of their material properties and assets, free
and clear of all Encumbrances except as reflected in the financial statements
contained in the Company SEC Reports and except for liens for taxes or other
governmental charges or levies not yet due and payable and such liens or other
imperfections of title, if any, that could not reasonably be expected to result
-16-
in a Material Adverse Effect on Company. All material leases or subleases
pursuant to which Company or any of its subsidiaries lease from others real or
personal property are set forth in Section 2.14 of the Company's Schedule (the
"Company Leases"). Company has delivered to Parent full and complete copies of
all Company Leases as amended to date. Each of the Company Leases is in full
force and effect in accordance with their respective terms and there is not,
under any of such leases, any existing default or event of default of Company or
any of its subsidiaries or, to Company's knowledge, any other party.
Section 2.15 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax" or
"Taxes" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and
liabilities relating to taxes, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value
added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all interest,
penalties and additions imposed with respect to such amounts and any
obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for Taxes of a
predecessor entity.
(b) Tax Returns and Audits.
(i) Company and each of its subsidiaries have timely filed all
federal, state, local and foreign returns, estimates, forms,
information statements and reports ("Returns") relating to Taxes
required to be filed by Company and each of its subsidiaries with any
Tax authority, except such Returns which are not, individually or in
the aggregate, material to Company. Company and each of its
subsidiaries have paid all Taxes required to be paid whether or not
shown to be due on such Returns.
(ii) Company and each of its subsidiaries as of the Effective
Time will have withheld with respect to its employees all federal and
state income Taxes, Taxes pursuant to the Federal Insurance
Contribution Act, Taxes pursuant to the Federal Unemployment Tax Act
and other Taxes required to be withheld, except such Taxes which are
not, individually or in the aggregate, material to Company.
(iii) Neither Company nor any of its subsidiaries has been
delinquent in the payment of any material Tax. There is no material
Tax deficiency outstanding, proposed or assessed against Company or
any of its subsidiaries. Neither Company nor any of its subsidiaries
has executed any unexpired waiver of any statute of limitations on or
extension of any period for the assessment or collection of any Tax.
(iv) No audit or other examination of any Return of Company or
any of its subsidiaries by any Tax authority is presently in progress,
nor has Company or any of its subsidiaries been notified of any
request for such an audit or other examination.
-17-
(v) No adjustment relating to any Returns filed or required to be
filed by Company or any of its subsidiaries has been proposed in
writing, formally or informally, by any Tax authority to Company or
any of its subsidiaries or any representative thereof.
(vi) Neither Company nor any of its subsidiaries has any
liability for any material unpaid Taxes (whether or not shown to be
done on any Return) which has not been accrued for or reserved on
Company's balance sheet dated June 30, 2000 in accordance with GAAP,
whether asserted or unasserted, contingent or otherwise, which is
material to Company, other than any liability for unpaid Taxes that
may have accrued since April 1, 2000 in connection with the operation
of the business of Company and its subsidiaries in the ordinary
course. There are no liens with respect to Taxes on any of the assets
of Company or any of its subsidiaries, other than liens which are not
individually or in the aggregate material, or customary liens for
current Taxes not yet due and payable.
(vii) There is no contract, agreement, plan or arrangement to
which Company or any of its subsidiaries is a party as of the date of
this Agreement, including but not limited to the provisions of this
Agreement, that, individually or collectively, should give rise to the
payment of any amount that would not be deductible pursuant to
Sections 280G, 404 or 162(m) of the Code. There is no contract,
agreement, plan or arrangement to which Company or any of its
subsidiaries is a party or by which it is bound to compensate any
individual for excise taxes paid pursuant to Section 4999 of the Code.
(viii) Neither Company nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as defined in Section 341(f)(4) of the Code) owned by
Company or any of its subsidiaries.
(ix) Neither Company nor any of its subsidiaries is party to or
has any obligation under any tax-sharing, tax indemnity or tax
allocation agreement or arrangement.
(x) None of Company's or its subsidiaries' assets are tax exempt
use property within the meaning of Section 168(h) of the Code.
(xi) Neither Company nor any of its subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section
355 of the Code (x) in the two years prior to the date of this
Agreement or (y) in a distribution which could otherwise constitute
part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
(xii) Company and each of its subsidiaries are in full compliance
with all terms and conditions of any Tax exemptions, Tax holiday or
other Tax reduction agreement or order of a territorial or foreign
government and the consummation of the Merger will not have any
adverse effect on the continued validity and effectiveness of any such
Tax exemptions, Tax holiday or other Tax reduction agreement or order.
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(xiii) Company has not been and will not be required to include
any adjustment in taxable income for any tax period (or portion
thereof) pursuant to Section 481 or 263A of the Code or any comparable
provision under State or foreign Tax laws as a result of transactions
or events occurring, or accounting methods employed, prior to the
closing.
(xiv) Company has never been a member of an affiliated group of
companies within the meaning of Section 1504 of the Code. Company has
no liability for Taxes of any Person other than Company (i) under
Section 1502-6 of the Treasury regulations (or any comparable
provisions under state or foreign law) or (ii) as a transferee or
successor.
Section 2.16 Brokers. Except for fees payable to each of Broadview
International LLC, pursuant to an engagement letter dated September 16, 1999,
2000, and fees payable to X.X. Xxxxxxxxx, Towbin, pursuant to an engagement
letter dated August 30, 2000 (as amended September 25, 2000) a copy of each of
which has been provided to Parent, Company has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders fees or agent's
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
Section 2.17 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"Intellectual Property" shall mean any or all of the following
and all worldwide common law and statutory rights in, arising
out of, or associated therewith: (i) patents and applications
therefor and all reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof
("Patents"); (ii) inventions (whether patentable or not),
invention disclosures, improvements, trade secrets,
proprietary information, know how, technology, technical data
and customer lists, and all documentation relating to any of
the foregoing; (iii) copyrights, copyright registrations and
applications therefor, and all other rights corresponding
thereto throughout the world; (iv) domain names, uniform
resource locators ("URLs") and other names and locators
associated with the Internet ("Domain Names"); (v) industrial
designs and any registrations and applications therefor; (vi)
trade names, logos, common law trademarks and service marks,
trademark and service xxxx registrations and applications
therefor; (vii) all databases and data collections and all
rights therein; (viii) all moral and economic rights of
authors and inventors, however denominated; and (ix) any
similar or equivalent rights to any of the foregoing (as
applicable).
"Company Intellectual Property" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, Company
and its subsidiaries.
"Registered Intellectual Property" means all Intellectual
Property that is the subject of an application, certificate,
filing, registration or other document issued, filed with, or
recorded by any private, state, government or other legal
authority and that has not been abandoned or allowed to lapse.
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"Company Registered Intellectual Property" means all of the
Registered Intellectual Property owned by, or filed in the
name of, Company or any of its subsidiaries.
(a) Section 2.17(a) of the Company Schedule is a complete and accurate
list of all Company Registered Intellectual Property which specifies the
jurisdictions in which each such item of Company Registered Intellectual
Property has been issued or registered and lists any proceedings or actions
before any court or tribunal (including the United States Patent and
Trademark Office (the "PTO") or equivalent authority anywhere in the world)
related to any of the Company Registered Intellectual Property.
(b) No Company Intellectual Property or product or service offering of
Company or any of its subsidiaries (a "Company Product") is subject to any
proceeding or outstanding decree, order, judgment, contract, license,
agreement, or stipulation (other than those imposed by applicable law)
restricting in any manner by its terms the use, transfer, or licensing
thereof by Company or any of its subsidiaries, or which may affect the
validity, use or enforceability of such Company Intellectual Property or
Company Product.
(c) Each item of Company Registered Intellectual Property is, to the
knowledge of Company, valid and subsisting. All necessary registration,
maintenance and renewal fees currently due in connection with such Company
Registered Intellectual Property have been made. All necessary documents,
recordations and certificates in connection with such Company Registered
Intellectual Property have been filed with the relevant patent, copyright,
trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such
Company Registered Intellectual Property, except, in such case, as would
not materially adversely affect such item of Company Registered
Intellectual Property.
(d) Company or one of its subsidiaries owns and has good title to or
has all necessary licenses to each material item of Company Intellectual
Property free of any Encumbrance (excluding rights of licensor and
non-exclusive licenses and related restrictions granted in the ordinary
course). In this paragraph the term "Encumbrance" excludes infringement of
Company Intellectual Property by third parties.
(e) To the extent that any Intellectual Property that has been
developed or created independently by a third party or jointly with a third
party for Company or any of its subsidiaries is used by Company or any of
its subsidiaries or is incorporated into any Company Products, Company has
a written agreement with such third party with respect thereto and Company
thereby either (i) has obtained ownership of, and is the exclusive owner
of, or (ii) has obtained a perpetual, non-terminable license to all such
Intellectual Property.
(f) Neither Company nor any of its subsidiaries has transferred
ownership of, or granted any exclusive license with respect to, any
material Company Intellectual Property, to any third party.
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(g) Section 2.17(g) of the Company Schedule lists all material
contracts, licenses and agreements to which Company or any of its
subsidiaries is a party: (i) with respect to Company Intellectual Property
licensed or transferred to any third party (other than end-user licenses in
the ordinary course); (ii) pursuant to which a third party has licensed or
transferred any Intellectual Property to Company or any of its
subsidiaries; or (iii) by which Company has agreed to, or assumed, any
obligation or duty to warrant, indemnify, reimburse, hold harmless,
guarantee or otherwise assume or incur any obligation or liability to
provide a right of rescission with respect to the infringement or
misappropriation by Company or such other person of Intellectual Property
Rights of anyone other than Company.
(h) All contracts, licenses and agreements listed in Section 2.17(g)
of the Company Schedule are in full force and effect. The consummation of
the transactions contemplated by this Agreement will neither violate nor
result in the breach, modification, cancellation, termination or suspension
("Termination") of such contracts, licenses and agreements by their terms.
Each of Company and its subsidiaries is in compliance with any such
contracts, licenses and agreements. To the knowledge of Company, all other
parties to such contracts, licenses and agreements are in material
compliance with, and have not breached any term of, such contracts,
licenses and agreements, which breach has not been cured. Following the
Closing Date, the Surviving Corporation will be permitted to exercise all
of Company's rights under such contracts, licenses and agreements by their
terms to the same extent Company and its subsidiaries would have been able
to had the transactions contemplated by this Agreement not occurred and
without the payment of any additional amounts or consideration other than
ongoing fees, royalties or payments which Company would otherwise be
required to pay. There is no provision in any of Company's contracts or
agreements which, as a result of this Agreement and the transactions
contemplated by this Agreement, requires Parent or Merger Sub to (i) grant
to any third party any right to or with respect to any material
Intellectual Property owned by, or licensed to, either of them, (ii) be
bound by, or subject to, any non-compete or other material restriction on
the operation or scope of their respective businesses, or (iii) be
obligated to pay any royalties or other material amounts to any third party
in excess of those payable by Parent or Merger Sub, respectively, prior to
the Closing.
(i) Company's and its subsidiaries' design, development, manufacture,
distribution, reproduction, marketing or sale of the products of Company
and its subsidiaries has not infringed or misappropriated and does not
infringe or misappropriate the Intellectual Property of any third party,
and does not constitute unfair competition or trade practices under the
laws of any jurisdiction.
(j) Neither Company nor any of its subsidiaries has received written
notice from any third party that the operation of the business of Company
or any of its subsidiaries or any act, product or service of Company or any
of its subsidiaries, infringes or misappropriates the Intellectual Property
of any third party or constitutes unfair competition or trade practices
under the laws of any jurisdiction.
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(k) To the knowledge of Company, no person has infringed or
misappropriated or is infringing or misappropriating any Company
Intellectual Property.
(l) Company and each of its subsidiaries has taken reasonable steps to
protect Company's and its subsidiaries' rights in Company's confidential
information and trade secrets that it wishes to protect or any trade
secrets or confidential information of third parties provided to Company or
any of its subsidiaries. Each of Company and its subsidiaries has a policy
requiring each employee and contractor to execute a proprietary
information/confidentiality agreement substantially in the form provided to
Parent. All current and former employees and contractors of Company and any
of its subsidiaries have executed such an agreement.
Section 2.18 Agreements, Contracts and Commitments. As of the date of this
Agreement, neither Company nor any of its subsidiaries is a party to or is bound
by:
(a) any written employment or consulting agreement, contract or
commitment with any officer or employee of Company or any of its
subsidiaries currently earning an annual salary in excess of $100,000 or
member of Company's Board of Directors, other than those that are
terminable by Company or any of its subsidiaries on no more than thirty
(30) days' notice without material liability or financial obligation to
Company, except to the extent general principles of law may limit Company's
ability to terminate employees at will;
(b) any material agreement of indemnification or any guaranty other
than any agreement of indemnification entered into in connection with the
sale of products or license of technology in the ordinary course of
business;
(c) any agreement, contract or commitment containing any covenant
limiting the right of Company or any of its subsidiaries to engage in any
line of business or to compete with any person or granting any exclusive
distribution rights;
(d) any agreement, contract or commitment relating to the disposition
or acquisition by Company or any of its subsidiaries after the date of this
Agreement of a material amount of assets not in the ordinary course of
business or pursuant to which Company or any of its subsidiaries has any
material ownership interest in any corporation, partnership, joint venture
or other business enterprise other than Company's subsidiaries;
(e) any material dealer, distributor, joint marketing or development
agreement under which Company or any of its subsidiaries have continuing
obligations to jointly market any product, technology or service and which
may not be canceled without penalty upon notice of ninety (90) days or
less, or any agreement pursuant to which Company or any of its subsidiaries
have continuing obligations to jointly develop any intellectual property
that will not be owned, in whole or in part, by Company or any of its
subsidiaries and which may not be canceled without penalty upon notice of
ninety (90) days or less;
(f) any material agreement, contract or commitment to license any
third party to manufacture or reproduce any Company product, service or
technology or any material agreement, contract or commitment to sell or
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distribute any Company products, service or technology except agreements
with distributors or sales representatives in the normal course of business
cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided to Parent;
(g) any mortgages, indentures, guarantees, loans or credit agreements,
security agreements or other agreements or instruments relating to the
borrowing of money by Company or any of its subsidiaries or extension of
credit (other than customer accounts receivable owing to Company or any of
its subsidiaries in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms);
(h) any material settlement agreement under which Company or any of
its subsidiaries has ongoing obligations;
(i) any other agreement, contract or commitment that calls for the
payment or receipt by Company or any of its subsidiaries of $1,000,000 or
more;
(j) any agreement under which the consequences of a default could
reasonably be expected to have a Material Adverse Effect on Company; or (k)
any other agreement, contract or commitment that is of the nature required
to be filed by Company as an exhibit to a Report on Form 10-K under the
Exchange Act which has not already been filed.
Company has delivered or made available to Parent a correct and complete
copy of each Company Contract (as defined below) as amended to date. Each
Company Contract, with respect to Company and any relevant subsidiary and, to
Company's knowledge, all other parties thereto, is legal, valid, binding,
enforceable and in full force and effect in all respects. Neither Company nor
any of its subsidiaries, nor to Company's knowledge any other party to a Company
Contract, is in breach, violation or default under a Company Contract. Neither
Company nor any of its subsidiaries has received written notice within the last
twelve months that it has breached, violated or defaulted under, any of the
terms or conditions of any of the agreements, contracts or commitments to which
Company or any of its subsidiaries is a party or by which it is bound that are
required to be disclosed in the Company Schedule pursuant to this Section 2.18
(any such agreement, contract or commitment, a "Company Contract") in such a
manner as would permit any other party to cancel or terminate any such Company
Contract, or would permit any other party to seek material damages or other
remedies (for any or all of such breaches, violations or defaults, in the
aggregate).
Section 2.19 Opinion of Financial Advisor. Company has been advised by its
financial advisor, X.X. Xxxxxxxxx, Towbin, that in its opinion, as of the date
of this Agreement, the Exchange Ratio is fair to stockholders of Company from a
financial point of view, and Company shall provide to Parent a copy of the
written confirmation of such opinion as soon as available.
Section 2.20 Board Approval. The Board of Directors of Company has, as of
the date of this Agreement, (i) approved, subject to stockholder approval, this
Agreement, the Company Ancillary Agreements and the Merger and the other
transactions contemplated hereby and thereby, (ii) determined that the Merger is
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consistent with the long-term business strategy of Company and is in the best
interests of the stockholders of Company and is on terms that are fair to such
stockholders (iii) adopted a resolution declaring the Merger advisable and (iv)
determined unanimously to recommend that the stockholders of Company adopt this
Agreement.
Section 2.21 Vote Required. The affirmative vote of holders of a majority
of the outstanding shares of Company Common Stock which shares are entitled to
vote with respect to the Merger is the only vote of the holders of any class or
series of Company's capital stock necessary to adopt this Agreement.
Section 2.22 Company Rights Agreement. Company has delivered to Parent a
true and complete copy of the Preferred Shares Rights Agreement, dated as of
November 19, 1998, between Company and ChaseMellon Shareholder Services, LLC
(the "Company Rights Plan"). Company has taken all action so that the entering
into of this Agreement, the Stock Option Agreement, the Company Voting
Agreements and the Merger, the acquisition of shares pursuant to the Stock
Option Agreement and the other transactions contemplated hereby and thereby will
not result in a grant of any rights to any person under the Company Rights Plan.
Section 2.23 Pooling of Interests. To its knowledge, based on consultation
with its independent accountants, neither Company nor any of its directors,
officers or affiliates has taken any action which would interfere with Parent's
ability to account for the Merger as a "pooling of interests."
Section 2.24 Labor Matters. No work stoppage or labor strike against
Company is pending or, to Company's knowledge, threatened. Company does not know
of any activities or proceedings of any labor union to organize any employees.
There are no actions, suits, claims, labor disputes or grievances pending, or,
to the knowledge of Company, threatened relating to any labor, safety or
discrimination matters involving any Employee, including, without limitation,
charges of unfair labor practices or discrimination complaints, which, if
adversely determined, would, individually or in the aggregate, result in any
material liability to Company. Neither Company nor any of its subsidiaries has
engaged in any unfair labor practices within the meaning of the National Labor
Relations Act. Company is not presently, nor has it been in the past, a party
to, or bound by, any collective bargaining agreement or union contract with
respect to Employees and no collective bargaining agreement is being negotiated
by Company.
Section 2.25 Environmental Matters. Except as could not reasonably be
expected to have a Material Adverse Effect on Company, Company (i) has obtained
all applicable permits, licenses and other authorizations that are required
under Environmental Laws and all such permits are valid and in full force and
effect; (ii) is in compliance in all respects with all terms and conditions of
such required permits, licenses and authorizations, and also is in compliance in
all respects with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
such laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder; and
(iii) has conducted its business in substantial compliance with all applicable
Environmental Laws. "Environmental Laws" means all Federal, state, local and
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foreign laws and regulations relating to pollution of the environment (including
ambient air, surface water, ground water, land surface or subsurface strata) or
the protection of human health and worker safety, including, without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials. "Hazardous Materials" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, asbestos-containing materials, hazardous substances, petroleum and
petroleum products or any fraction thereof, excluding, however, Hazardous
Materials contained in products typically used for office and janitorial
purposes properly and safely maintained in accordance with Environmental Laws.
Section 2.26 Insurance. Company and each of its subsidiaries has insurance
policies and fidelity bonds of the type and in amounts customarily carried by
persons conducting business or owning assets, equipment and properties similar
to Company and its subsidiaries (collectively, the "Insurance Policies"). There
is no claim by Company or any of its subsidiaries pending under any of the
Insurance Policies as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds, which denial of coverage could
reasonably be expected to have a Material Adverse Effect on Company. All
premiums due and payable under the Insurance Policies have been paid and Company
and its subsidiaries are otherwise in compliance in all material respects with
the terms of the Insurance Policies. Company has not received notice of any
threatened termination of, or any material premium increase with respect to, any
of the Insurance Policies.
Section 2.27 State Takeover Statutes. The Board of Directors of Company has
taken all actions so that the restrictions contained in Section 203 of the
Delaware Law applicable to a "business combination" (as defined in such Section
203) will not apply to the execution, delivery or performance of this Agreement,
the Company Ancillary Agreements or to the consummation of the Merger or the
other transactions contemplated by this Agreement or the Company Ancillary
Agreements. To the knowledge of Company, no other state takeover statute is
applicable to the Merger or the other transactions contemplated hereby.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub jointly and severally represent and warrant to
Company, subject to such exceptions as are disclosed in writing in the
disclosure letter supplied by Parent to Company dated as of the date hereof (the
"Parent Schedule"), which disclosure shall provide an exception to or otherwise
qualify the representations or warranties of Parent and Merger Sub contained in
the section of this Agreement corresponding by number to such disclosure and the
other representations and warranties herein to the extent such disclosure shall
reasonably appear to be applicable to such other representations or warranties,
as follows:
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Section 3.01 Organization and Qualification; Subsidiaries.
(a) Each of Parent and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation and has the requisite corporate power and authority to
own, lease and operate its assets and properties and to carry on its
business as it is now being conducted.
(b) Parent has no material subsidiaries except for the corporations
identified in the Parent SEC Reports (as hereinafter defined). Neither
Parent nor any of its subsidiaries has agreed nor is obligated to make nor
is bound by any Contract under which it may become obligated to make, any
future investment in or capital contribution to any other entity. Neither
Parent nor any of its subsidiaries directly or indirectly owns any 10% or
greater equity or similar interest in, or any interest convertible,
exchangeable or exercisable for, any 10% or greater equity or similar
interest in, any corporation, partnership, joint venture or other business,
association or entity other than the entities identified in the Parent SEC
Reports and Parent's limited partnership or limited liability company
interests in venture capital funds. Neither Parent nor any of its
subsidiaries directly or indirectly owns, beneficially or of record, any
shares of Company Common Stock or other equity interest in Company other
than pursuant to this Agreement and the Company Voting Agreements.
(c) Each of Parent and Merger Sub is qualified or licensed to do
business as a foreign corporation, and is in good standing (with respect to
jurisdictions which recognize such concept), under the laws of all
jurisdictions where the character of the properties owned, leased or
operated by them or the nature of their activities requires such
qualification or licensing, except where the failure to be so qualified or
licensed could not reasonably be expected to result in a Material Adverse
Effect on Parent.
Section 3.02 Certificate of Incorporation and Bylaws. Parent has previously
furnished to Company complete and correct copies of its Certificate of
Incorporation and Bylaws as amended and in effect as of the date of this
Agreement (together, the "Parent Charter Documents"). Such Parent Charter
Documents are in full force and effect. Parent is not in violation of any of the
provisions of the Parent Charter Documents. Parent has previously furnished to
Company complete and correct copies of Merger Sub's Certificate of Incorporation
and Bylaws as amended and in effect as of the date of this Agreement (together,
the "Merger Sub Charter Documents"). Such Merger Sub Charter Documents are in
full force and effect. Merger Sub is not in violation of any of the provisions
of the Merger Sub Charter Documents.
Section 3.03 Capitalization. The authorized capital stock of Parent
consists of 300,000,000 shares of Parent Common Stock and 5,000,000 shares of
preferred stock, $0.001 par value per share, 650,000 of which are designated
Series A Participating Preferred Stock ("Parent Preferred Stock"). As of the
close of business on September 30, 2000, (i) 119,196,721 shares of Parent Common
Stock were issued and outstanding; and (ii) no shares of Parent Preferred Stock
were issued or outstanding. The authorized capital stock of Merger Sub consists
of 1,000 shares of common stock, $0.001 par value per share, all of which, as of
the date hereof, are issued and outstanding. All of the outstanding shares of
Parent's and Merger Sub's respective capital stock have been duly authorized and
validly issued and are fully paid and nonassessable and were not issued in
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violation of any preemptive rights, right of first refusal, or any similar
rights. The shares of Parent Common Stock to be issued pursuant to the Merger,
upon issuance will be, duly authorized, validly issued, fully paid and
nonassessable and free and clear of all Encumbrances. All of the outstanding
shares of capital stock (other than directors' qualifying shares) of each of
Parent's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and all such shares (other than directors' qualifying shares) are
owned by Parent or another subsidiary free and clear of all Encumbrances.
Section 3.04 Authority Relative to this Agreement.
(a) Each of Parent and/or Merger Sub has all necessary corporate power
and authority to execute and deliver this Agreement and to execute and
deliver the Stock Option Agreement, the Company Voting Agreements and the
Company Affiliate Agreements (the "Parent Ancillary Agreements") and to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Parent Ancillary Agreements by Parent and/or Merger
Sub and the consummation by Parent and/or Merger Sub of the transactions
contemplated hereby and thereby have been duly and validly authorized by
all necessary corporate action on the part of Parent and/or Merger Sub, and
no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement and the Parent Ancillary Agreements
or to consummate the transactions so contemplated. This Agreement and the
Parent Ancillary Agreements have been duly and validly executed and
delivered by Parent and/or Merger Sub and, assuming the due authorization,
execution and delivery by Company, constitute legal and binding obligations
of Parent and/or Merger Sub, enforceable against Parent and/or Merger Sub
in accordance with their respective terms.
Section 3.05 No Conflict; Required Filings and Consents.
(a) The execution, delivery and performance of this Agreement and the
Parent Ancillary Agreements do not and will not, (i) conflict with or
violate the Parent Charter Documents or Merger Sub Charter Documents, (ii)
subject to the requirements set forth in Section 3.05(b) below, conflict
with or violate any law, rule, regulation, order, judgment or decree
applicable to Parent or any of its subsidiaries or by which they or any of
their respective properties are bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or materially impair Parent's
or Merger Sub's rights or alter the rights or obligations of any third
party against or to Parent or Merger Sub under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or
result in the creation of an Encumbrance on any of the properties or assets
of Parent or Merger Sub pursuant to, any material mortgage, Contract,
permit, franchise or other obligation to which Parent or Merger Sub is a
party or by which Parent or Merger Sub or any of their respective
properties are bound or affected, except to the extent such conflict,
violation, breach, default, impairment or other effect could not in the
case of clauses (ii) or (iii) individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Parent.
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(b) The execution and delivery of this Agreement and the Parent
Ancillary Agreements by Parent and/or Merger Sub do not, and the
performance of this Agreement and the Parent Ancillary Agreements by Parent
and/or Merger Sub shall not, require Parent or Merger Sub to obtain or make
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity or third party except (i) pursuant
to applicable requirements, if any, of the Securities Act, the Exchange
Act, Blue Sky Laws, the pre-merger notification requirements of the HSR Act
and of foreign governmental entities and the rules and regulations
thereunder, the rules and regulations of Nasdaq, and the filing and
recordation of the Certificate of Merger as required by Delaware Law and
(ii) where the failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, (A) would not prevent
consummation of the Merger or otherwise prevent Parent or Merger Sub from
performing their respective obligations under this Agreement or (B) could
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent.
Section 3.06 Legal Compliance.
Neither Parent nor Merger Sub is in conflict with, or in default or
violation of, any Legal Requirement, except for any conflicts, defaults or
violations that (individually or in the aggregate) would not cause Parent or
Merger Sub to incur any material liability. No charge, complaint, claim, demand,
notice, inquiry, investigation, action, suit, proceeding, hearing or review by
any Governmental Entity is pending or, to the knowledge of Parent, being
threatened against Parent or Merger Sub, nor, to Parent's knowledge, has any
Governmental Entity indicated to Parent in writing an intention to conduct the
same, other than, in each such case, those the outcome of which could not,
individually or in the aggregate, reasonably be expected to have the effect of
prohibiting or materially restricting any business practice of Parent or Merger
Sub, any acquisition of material property by the Parent or Merger Sub or the
conduct of business by Parent or any of its subsidiaries.
Section 3.07 SEC Filings; Financial Statements.
(a) Parent has made available to Company (through reference to
documents filed by XXXXX or otherwise) a correct and complete copy of each
report, schedule, registration statement and definitive proxy statement
filed by Parent with the SEC since December 31, 1997 (the "Parent SEC
Reports"), which are all the forms, reports and documents required to be
filed by Parent with the SEC since such date. As of their respective dates,
the Parent SEC Reports (A) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and (B) did not at the time they were filed (or if amended or superseded by
a filing prior to the date of this Agreement, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. None of Parent's subsidiaries is required to file any
reports or other documents with the SEC.
(b) Each set of consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports was
prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto and
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except that unaudited statements do not contain footnotes in substance or
form required by GAAP, as is permitted by Form 10-Q of the Exchange Act)
and each fairly presents in all material respects the consolidated
financial position of Parent and its subsidiaries at the respective dates
thereof and the consolidated results of their operations and cash flows for
the periods indicated, except that the unaudited interim financial
statements were or are subject to normal year-end adjustments.
(c) Parent has previously furnished to Company a complete and correct
copy of any amendments or modifications, which have not yet been filed with
the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Parent with the SEC
pursuant to the Securities Act or the Exchange Act.
Section 3.08 No Undisclosed Liabilities. Neither Parent nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
a nature required to be disclosed on a balance sheet or in the related notes to
the consolidated financial statements prepared in accordance with GAAP which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of Parent and its subsidiaries taken as a
whole, except (i) liabilities disclosed or provided for in Parent's unaudited
balance sheet as of June 30, 2000 as set forth in the Parent SEC Reports or in
the related notes or (ii) liabilities incurred since June 30, 2000 in the
ordinary course of business.
Section 3.09 Absence of Certain Changes or Events. Since June 30, 2000,
there has not been: (i) any Material Adverse Effect on Parent, (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of Parent's or any of
its subsidiaries' capital stock, or any purchase, redemption or other
acquisition by Parent of any of Parent's capital stock or any other securities
of Parent or its subsidiaries or any options, warrants, calls or rights to
acquire any such shares or other securities except for repurchases from
employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) any split, combination
or reclassification of any of Parent's or any of its subsidiaries' capital
stock, (iv) any material change by Parent in its accounting methods, principles
or practices, except as required by concurrent changes in GAAP, (v) any
amendment or consent with respect to any licensing agreement filed or required
to be filed by Parent with the SEC, or (vi) any material revaluation by Parent
of any of its assets, including, without limitation, writing down the value of
capitalized inventory or writing off notes or accounts receivable or any sale of
assets of the Parent other than in the ordinary course of business.
Section 3.10 Absence of Litigation. As of the date hereof, there are no
claims, suits, actions or proceedings that have a reasonable likelihood of
success on the merits pending or, to the knowledge of Parent, threatened
against, relating to or affecting Parent or any of its subsidiaries, before any
court, governmental department, commission, agency, instrumentality or
authority, or any arbitrator that seek to restrain or enjoin the consummation of
the transactions contemplated by this Agreement or that could otherwise
reasonably be expected to have a Material Adverse Effect on Parent.
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Section 3.11 Registration Statement; Proxy Statement. None of the
information supplied or to be supplied by Parent for inclusion in: (i) the S-4
will, at the time the S-4 becomes effective under the Securities Act, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading; and (ii) the Proxy Statement/Prospectus will, at the date mailed to
the stockholders of Company, at the time of the Company Stockholders' Meeting
and at the Effective Time, in connection with the transactions contemplated
hereby, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The S-4 will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations promulgated by
the SEC thereunder. Notwithstanding the foregoing, Parent makes no
representation or warranty with respect to any information supplied by Company
which is contained in any of the foregoing documents.
Section 3.12 Taxes.
(a) Parent and each of its subsidiaries have timely filed all federal,
state, local and foreign returns, estimates, forms, information statements
and reports ("Returns") relating to Taxes required to be filed by Parent
and each of its subsidiaries with any Tax authority, except such Returns
which are not, individually or in the aggregate, material to Parent. Parent
and each of its subsidiaries have paid all Taxes required to be paid
whether or not shown to be due on such Returns.
(b) Neither Parent nor any of its subsidiaries has any liability for
any material unpaid Taxes (whether or not shown to be done on any Return)
which has not been accrued for or reserved on Parent's balance sheet dated
June 30, 2000 in accordance with GAAP, whether asserted or unasserted,
contingent or otherwise, which is material to Parent, other than any
liability for unpaid Taxes that may have accrued since April 1, 2000 in
connection with the operation of the business of Parent and its
subsidiaries in the ordinary course. There are no liens with respect to
Taxes on any of the assets of Parent or any of its subsidiaries, other than
liens which are not individually or in the aggregate material, or customary
liens for current Taxes not yet due and payable.
(c) Neither Parent nor any of its subsidiaries has been delinquent in
the payment of any material Tax. There is no material Tax deficiency
outstanding, proposed or assessed against Parent or any of its
subsidiaries. Neither Parent nor any of its subsidiaries has executed any
unexpired waiver of any statute of limitations on or extension of any
period for the assessment or collection of any Tax.
(d) Parent and each of its subsidiaries are in full compliance with
all terms and conditions of any Tax exemptions, Tax holiday or other Tax
reduction agreement or order of a territorial or foreign government and the
consummation of the Merger will not have any adverse effect on the
continued validity and effectiveness of any such Tax exemptions, Tax
holiday or other Tax reduction agreement or order.
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Section 3.13 Brokers. Except for fees payable to Xxxxxx Xxxxxxx & Co.
Incorporated pursuant to an engagement letter dated September 18, 2000, a copy
of which has been provided to Company, Parent has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders fees or
agent's commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
Section 3.14 Intellectual Property. For the purposes of this Agreement,
"Parent Intellectual Property" shall mean any Intellectual Property that is
owned by, or exclusively licensed to, Parent and its subsidiaries.
(a) No Parent Intellectual Property is subject to any proceeding or
outstanding decree, order, judgment, contract, license, agreement, or
stipulation restricting in any manner by its terms the use, transfer, or
licensing thereof by Parent or any of its subsidiaries, or which may affect
the validity, use or enforceability of such Parent Intellectual Property,
in each case which could reasonably be expected to have Material Adverse
Effect.
(b) Parent's and its subsidiaries' design, development, manufacture,
distribution, reproduction, marketing or sale of the products of Parent and
its subsidiaries has not infringed or misappropriated and does not infringe
or misappropriate the Intellectual Property of any third party, and does
not constitute unfair competition or trade practices under the laws of any
jurisdiction, except as would not be expected to have a Material Adverse
Effect.
(c) Neither Parent nor any of its subsidiaries has received written
notice from any third party that the operation of the business of Parent or
any of its subsidiaries or any act, product or service of Parent or any of
its subsidiaries, infringes or misappropriates the Intellectual Property of
any third party or constitutes unfair competition or trade practices under
the laws of any jurisdiction, except as would not be expected to have a
Material Adverse Effect.
Section 3.15 Opinion of Financial Advisor. Parent has been advised by its
financial advisor, Xxxxxx Xxxxxxx & Co. Incorporated, that in its opinion, as of
the date of this Agreement, the Exchange Ratio is fair from a financial point of
view, and Parent shall provide to Company a copy of the written confirmation of
such opinion as soon as available.
Section 3.16 Board Approval. The Board of Directors of Parent has, as of
the date of this Agreement, unanimously (i) approved this Agreement, the Parent
Ancillary Agreements and the transactions contemplated hereby and thereby, (ii)
determined that the Merger is consistent with the long-term business strategy of
Parent and is in the best interests of the stockholders of Parent and is on
terms that are fair to such stockholders and (iii) adopted a resolution
declaring the Merger advisable.
Section 3.17 Pooling of Interests. Except as set forth on Section 3.17 of
the Parent Disclosure Schedule, to its knowledge, based on consultation with its
independent accountants, neither Parent nor any of its directors, officers or
affiliates has taken any action which would interfere with Parent's ability to
account for the Merger as a "pooling of interests."
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Section 3.18 State Takeover Statutes. The Board of Directors of Parent has
taken all actions so that the restrictions contained in Section 203 of the
Delaware Law applicable to a "business combination" (as defined in such Section
203) will not apply to the execution, delivery or performance of this Agreement
or the Parent Voting Agreement or to the consummation of the Merger or the other
transactions contemplated by this Agreement or the Company Voting Agreement. To
the knowledge of Parent, no other state takeover statute is applicable to the
Merger or the other transactions contemplated hereby.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
Section 4.01 Conduct of Business by Company. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement pursuant to its terms or the Effective Time, Company and each of
its subsidiaries shall, except to the extent that Parent shall otherwise consent
in writing, carry on its business in the ordinary course in substantially the
same manner as heretofore conducted and in substantial compliance with all
applicable laws and regulations, pay its debts and taxes when due subject to
good faith disputes over such debts or taxes, pay or perform other material
obligations when due subject to good faith disputes over such obligations, and
use its commercially reasonable efforts consistent with past practices and
policies to (i) preserve intact its present business organization, (ii) keep
available the services of its present officers and employees, and (iii) preserve
its relationships with customers, suppliers, distributors, licensors, licensees
and others with which it has significant business dealings. In addition, Company
will promptly notify Parent of any material event involving its business or
operations occurring outside the ordinary course of business.
In addition, except as expressly permitted by the terms of this Agreement,
without the prior written consent of Parent, during the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Company shall not do any
of the following and shall not permit its subsidiaries to do any of the
following:
(a) Except as required by law or pursuant to the terms of a Plan in
effect as of the date hereof, waive any stock repurchase rights,
accelerate, amend or change the period of exercisability of options or
restricted stock, or reprice options granted under any employee,
consultant, director or other stock plans or authorize cash payments in
exchange for any options granted under any of such plans;
(b) Grant any severance or termination pay to any officer or employee
except pursuant to written agreements outstanding, or practices or policies
existing, on the date hereof (or as required by applicable law) and as
previously disclosed in writing or made available to Parent, or adopt any
new severance plan, or amend or modify or alter in any manner any severance
plan, agreement or arrangement existing on the date hereof;
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(c) Other than in the ordinary course of business consistent with past
practices, transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Company
Intellectual Property, or enter into grants to transfer or license to any
person future patent rights; provided that in no event shall Company
license on an exclusive basis or sell any Company Intellectual Property
(other than in connection with the abandonment of immaterial Company
Intellectual Property after at least five (5) business days' written notice
to Parent);
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of Company or its subsidiaries, except repurchases
of unvested shares at cost in connection with the termination of the
employment relationship with any employee pursuant to stock option or
purchase agreements in effect on the date hereof (or any such agreements
entered into in the ordinary course consistent with past practice by
Company with employees hired after the date hereof);
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber or
propose any of the foregoing with respect to any shares of capital stock or
any securities convertible into shares of capital stock, or subscriptions,
rights, warrants or options to acquire any shares of capital stock or any
securities convertible into shares of capital stock, or enter into other
agreements or commitments of any character obligating it to issue any such
shares or convertible securities, other than (x) the issuance, delivery
and/or sale of (i) shares of Company Common Stock pursuant to the exercise
of stock options or warrants outstanding as of the date of this Agreement,
and (ii) shares of Company Common Stock issuable to participants in the
ESPP consistent with the terms thereof, and (y) the granting of stock
options to new employees in the ordinary course of business in such amounts
and in all other respects and consistent with past practices and in an
amount not to exceed 150,000 in the aggregate with similar vesting terms;
(g) Cause, permit or submit to a vote of Company's stockholders any
amendments to the Company Charter Documents (or similar governing
instruments of any of its subsidiaries); (h) Acquire or agree to acquire by
merging or consolidating with, or by purchasing any equity interest in or a
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to enter into any joint
ventures or strategic partnerships;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets except in the ordinary course of business consistent
with past practice, except for the sale, lease, licensing, encumbering or
disposition (other than through licensing permitted by clause (c)) of
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property or assets which are not material, individually or in the
aggregate, to the business of Company and its subsidiaries;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
Company, enter into any "keep well" or other agreement to maintain any
financial statement condition or enter into any arrangement having the
economic effect of any of the foregoing other than in the ordinary course
of business consistent with past practice;
(k) Other than the increase in the number of shares of Company Common
Stock available for grant pursuant to the Company's 2000 Nonstatutory Stock
Option Plan by 1,000,000, adopt or amend any Plan or any employee stock
purchase or employee stock option plan; or enter into any employment
contract or collective bargaining agreement (other than offer letters and
letter agreements entered into in the ordinary course of business
consistent with past practice); pay any special bonus or special
remuneration to any director or employee; or, other than annual salary
increases for employees and officers (but not directors) in the ordinary
course of business consistent with past practices, increase the salaries or
wage rates or fringe benefits (including rights to severance or
indemnification) of its directors, officers, employees or consultants
except, in each case, as may be required by law; or increase the cash
compensation of the persons listed on Schedule 4.01(k) hereto by more than
8% of the total base salary paid to such persons in the aggregate in
calendar year 2000; provided that any such increase is approved by the
Board of Directors of the Company and would not adversely affect the
ability of Parent to account for the merger as a "pooling of interests."
(l) (i) pay, discharge, settle or satisfy any litigation (whether or
not commenced prior to the date of this Agreement) or any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities recognized or
disclosed in the most recent financial statements (or the notes thereto) of
Company included in the Company SEC Reports or incurred since the date of
such financial statements or disclosed in Section 2.08 or 2.09 of the
Company Schedule, or (ii) waive the benefits of, agree to modify in any
manner, terminate, release any person from or knowingly fail to enforce the
confidentiality or nondisclosure provisions of any agreement to which
Company or any of its subsidiaries is a party or of which Company or any of
its subsidiaries is a beneficiary;
(m) Except in the ordinary course of business consistent with past
practice, materially modify, amend or terminate any Contract disclosed in
Section 2.17(g) or 2.18 of the Company Schedule or waive, delay the
exercise of, release or assign any material rights or claims thereunder;
(n) Except as required by GAAP, revalue any of its assets or make any
change in accounting methods, principles or practices;
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(o) Incur or enter into any agreement, contract or commitment
requiring Company or any of its subsidiaries to pay in excess of $750,000;
(p) Engage in any action that would reasonably be expected to (i)
cause the Merger to fail to qualify as a "reorganization" under Section
368(a) of the Code or (ii) interfere with Parent's ability to account for
the Merger as a "pooling of interests," whether or not (in each case)
otherwise permitted by the provisions of this Article IV;
(q) Make any Tax election or accounting method change (except as
required by GAAP) inconsistent with past practice that, individually or in
the aggregate, is reasonably likely to adversely affect in any material
respect the Tax liability or Tax attributes of Company or any of its
subsidiaries, settle or compromise any material Tax liability or consent to
any extension or waiver of any limitation period with respect to Taxes; or
(r) Agree in writing or otherwise to take any of the actions described
in Section 4.01 (a) through (q) above.
Section 4.02 Conduct of Business by Parent. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Parent and each of its
subsidiaries shall, except to the extent that Company shall otherwise consent in
writing, carry on its business in the ordinary course in substantially the same
manner as heretofore conducted and in substantial compliance with all applicable
laws and regulations, pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, pay or perform other material obligations
when due subject to good faith disputes over such obligations, and use its
commercially reasonable efforts consistent with past practices and policies to
(i) preserve intact its present business organization, (ii) keep available the
services of its present officers and employees, and (iii) preserve its
relationships with customers, suppliers, distributors, licensors, licensees and
others with which it has significant business dealings.
In addition, except as expressly permitted by the terms of this Agreement,
without the prior written consent of Company, during the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Parent shall not do any
of the following and shall not permit its subsidiaries to do any of the
following:
(a) Declare, set aside, or pay any dividends or make any other
distributions (whether in cash, stock, equity securities or property) in
respect to Parent's capital stock, except where (i) an adjustment is made
to the Exchange Ratio in accordance with Section 1.06(e) or (ii) the
holders of Company Common Stock will otherwise receive an equivalent,
proportional dividend or distribution (based on the Exchange Ratio, as
adjusted pursuant to Section 1.06(e)) in connection with the Merger as if
they had been holders of Parent Common Stock on the record date for such
dividend or distribution;
(b) Purchase, redeem, or otherwise acquire, directly or indirectly,
any shares of capital stock of Parent or its subsidiaries in any amounts
that would adversely affect Parent's financial condition or liquidity;
(c) Effect any amendment to Parent's Certificate of Incorporation;
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(d) Engage in any action that would reasonably be expected to (i)
cause the Merger to fail to qualify as a "reorganization" under Section
368(a) of the Code or (ii) interfere with its ability to account for the
Merger as a "pooling of interests," whether or not (in each case) otherwise
permitted by the provisions of this Article IV;
(e) Take any action that would materially delay the consummation of
the transactions contemplated hereby; or
(f) Agree in writing or otherwise to take any of the actions described
in Section 4.02 (a) through (e) above.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01 Proxy Statement/Prospectus; Registration Statement; Other
Filings; Board Recommendations.
(a) As promptly as practicable after the execution of this Agreement,
Parent and Company shall jointly prepare and Parent shall file with the SEC
the S-4, which shall include a document or documents that will constitute
(i) the prospectus forming part of the registration statement on the S-4
and (ii) the Proxy Statement/Prospectus. Each of the parties hereto shall
use its best efforts to cause the S-4 to become effective as promptly as
practicable after the date hereof, and, prior to the effective date of the
S-4, the parties hereto shall take all action required under any applicable
laws in connection with the issuance of shares of Parent Common Stock
pursuant to the Merger. Each of Parent and Company shall provide promptly
to the other such information concerning its business and financial
statements and affairs as, in the reasonable judgment of the providing
party or its counsel, may be required or appropriate for inclusion in the
Proxy Statement/Prospectus and the S-4, or in any amendments or supplements
thereto, and cause its counsel and auditors to cooperate with the other's
counsel and auditors in the preparation of the Proxy Statement/Prospectus
and the S-4. As promptly as practicable after the effective date of the
S-4, the Proxy Statement/Prospectus shall be mailed to the stockholders of
Company. Each of the parties hereto shall cause the Proxy
Statement/Prospectus to comply as to form and substance with respect to
such party in all material respects with the applicable requirements of (i)
the Exchange Act, (ii) the Securities Act, and (iii) the rules and
regulations of the Nasdaq. As promptly as practicable after the date of
this Agreement, each of Company and Parent will prepare and file any other
filings required to be filed by it under the Exchange Act, the Securities
Act or any other Federal, foreign or Blue Sky or related laws relating to
the Merger and the transactions contemplated by this Agreement (the "Other
Filings"). Prior to the Effective Time, Parent shall use its commercially
reasonable efforts to obtain all regulatory approvals needed to ensure that
the Parent Common Stock to be issued in the Merger will be registered or
qualified under the securities law of every jurisdiction in the United
States in which any registered holder of Company Common Stock has an
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address of record on the record date for determining the stockholders
entitled to notice of and to vote at the Company Stockholders' Meeting;
provided that Parent shall not be required to consent to the service of
process in any jurisdiction in which it is not so subject. Each of Company
and Parent will notify the other promptly upon the receipt of any comments
from the SEC or its staff or any other government officials of the receipt
of notice that the S-4 has become effective, of the issuance of any stop
order, of the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any
jurisdiction, or of any request by the SEC or its staff or any other
government officials for amendments or supplements to the S-4, the Proxy
Statement/Prospectus or any Other Filing or for additional information and,
except as may be prohibited by any Governmental Entity or by any Legal
Requirement, will supply the other with copies of all correspondence
between such party or any of its representatives, on the one hand, and the
SEC or its staff or any other government officials, on the other hand, with
respect to the S-4, the Proxy Statement/Prospectus, the Merger or any Other
Filing. Each of Company and Parent will cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under
this Section 5.01(a) to comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
(b) The Proxy Statement/Prospectus shall (i) solicit the approval of
this Agreement and the Merger and include the recommendation of the Board
of Directors of Company to Company's stockholders that they vote in favor
of approval of this Agreement and the Merger, subject to the right of the
Board of Directors of Company to withdraw its recommendation and recommend
a Superior Proposal determined to be in compliance with Section 5.02(c) of
this Agreement, and (ii) include the opinion of X.X. Xxxxxxxxx, Towbin
referred to in Section 2.19; provided, however, that the Board of Directors
of Company shall submit this Agreement to Company's stockholders whether or
not at any time subsequent to the date hereof such board determines that it
can no longer make such recommendation. If Company has not breached Section
5.02(c), then nothing contained in this Agreement shall prevent the Board
of Directors of Company from complying with Rule 14d-9 and Rule 14e-2 under
the Exchange Act.
(c) Each of Parent and Company shall promptly inform the other of any
event which is required to be set forth in an amendment or supplement to
the Proxy Statement/Prospectus, the S-4 or any Other Filing and each of
Parent and Company shall amend or supplement the Proxy Statement/Prospectus
to the extent required by law to do so. No amendment or supplement to the
Proxy Statement/Prospectus or the S-4 shall be made without the approval of
Parent and Company, which approval shall not be unreasonably withheld or
delayed.
Section 5.02 Stockholder Meeting.
(a) Company shall call and hold the Company Stockholders' Meeting as
promptly as practicable after the date hereof for the purpose of voting
upon the approval of this Agreement and the Merger pursuant to the Proxy
Statement/Prospectus, and Company shall use commercially reasonable efforts
to hold the Company Stockholders' Meeting as soon as practicable after the
date on which the S-4 becomes effective. Nothing herein shall prevent
Company from adjourning or postponing the Company Stockholders' Meeting if
there are insufficient shares of Company Common Stock, represented in
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person or by proxy, necessary to conduct business at the Company
Stockholders' Meeting. Unless Company's Board of Directors has withdrawn
its recommendation of this Agreement and the Merger in compliance with
Section 5.02(c), Company shall use commercially reasonable efforts to
solicit from its stockholders proxies in favor of the approval of this
Agreement and the Merger pursuant to the Proxy Statement/Prospectus and
shall take all other commercially reasonable action necessary or advisable
to secure the vote or consent of stockholders required by Delaware Law or
applicable stock exchange requirements to obtain such approval. The Company
shall take all other action reasonably necessary or advisable to promptly
and expeditiously secure any vote or consent of stockholders required by
applicable Law and its Certificate of Incorporation and Bylaws to effect
the Merger. Company's obligation to call, give notice of, convene and hold
the Company Stockholders' Meeting in accordance with this Section 5.02(a)
shall not be limited to or otherwise affected by the commencement,
disclosure, announcement or submission to Company of any Acquisition
Proposal or any change in the Board of Directors recommendation regarding
the Merger.
(b) Subject to Section 5.02(c): (i) the Board of Directors of Company
shall recommend that Company's stockholders vote in favor of and adopt and
approve this Agreement and the Merger at the Company Stockholders' Meeting;
(ii) the Proxy Statement/Prospectus shall include a statement to the effect
that the Board of Directors of Company has recommended that Company's
stockholders vote in favor of and adopt and approve this Agreement and the
Merger at the Company Stockholders' Meeting; and (iii) neither the Board of
Directors of Company nor any committee thereof shall withdraw, amend or
modify, or propose or resolve to withdraw, amend or modify in a manner
adverse to Parent, the recommendation of the Board of Directors of Company
that Company's stockholders vote in favor of and adopt and approve this
Agreement and the Merger.
(c) Nothing in this Agreement shall prevent the Board of Directors of
Company from withholding, withdrawing, amending or modifying its
recommendation in favor of the Merger if (i) a Superior Offer (as defined
below) is made to Company and not withdrawn, (ii) neither Company nor any
of its representatives shall have violated any of the restrictions set
forth in Section 5.04, and (iii) the Board of Directors of Company
concludes in good faith, after consultation with its outside counsel, that,
in light of such Superior Offer, the withholding, withdrawal, amendment or
modification of such recommendation is required in order for the Board of
Directors of Company to comply with its fiduciary obligations to Company's
stockholders under applicable law. Nothing contained in this Section 5.02
shall limit Company's obligation to hold and convene the Company
Stockholders' Meeting (regardless of whether the recommendation of the
Board of Directors of Company shall have been withdrawn, amended or
modified). For purposes of this Agreement, "Superior Offer" shall mean an
unsolicited, bona fide written offer made by a third party to consummate
any of the following transactions: (i) a merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar
transaction involving Company pursuant to which the stockholders of Company
immediately preceding such transaction hold less than 51% of the equity
interest in the surviving or resulting entity of such transaction; (ii) a
sale or other disposition by Company of assets (excluding inventory and
used equipment sold in the ordinary course of business) representing in
excess of 51% of the fair market value of Company's business immediately
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prior to such sale, or (iii) the acquisition by any person or group
(including by way of a tender offer or an exchange offer or issuance by
Company), directly or indirectly, of beneficial ownership or a right to
acquire beneficial ownership of shares representing in excess of 51% of the
voting power of the then outstanding shares of capital stock of Company, in
each case on terms that the Board of Directors of Company determines, in
its reasonable judgment (based on advice of a financial advisor of
nationally recognized reputation) to be more favorable to Company
stockholders from a financial point of view than the terms of the Merger;
provided, however, that any such offer shall not be deemed to be a
"Superior Offer" if any financing required to consummate the transaction
contemplated by such offer is not committed and is not likely in the
judgment of Company's Board of Directors to be obtained by such third party
on a timely basis.
Section 5.03 Confidentiality; Access to Information.
(a) Confidentiality Agreement. The parties acknowledge that Company
and Parent have previously executed a Confidentiality Agreement, dated as
of September 26, 2000 (the "Confidentiality Agreement"), which
Confidentiality Agreement will continue in full force and effect in
accordance with its terms.
(b) Access to Information. Company will afford Parent and its
accountants, counsel and other representatives reasonable access during
normal business hours, upon reasonable notice, to the properties, books,
records and personnel of Company during the period prior to the Effective
Time to obtain all information concerning the business, including the
status of product development efforts, properties, results of operations
and personnel of Company, as Parent may reasonably request. No information
or knowledge obtained by Parent in any investigation pursuant to this
Section 5.03 will affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the
parties to consummate the Merger.
Section 5.04 No Solicitation.
(a) From and after the date of this Agreement until the earlier of the
Effective Time or termination of this Agreement pursuant to Article VII,
Company and its subsidiaries will not, nor will they authorize or permit
any of their respective officers, directors, affiliates or employees or any
investment banker, attorney or other advisor or representative retained by
any of them to, directly or indirectly (i) solicit, initiate, encourage or
induce the making, submission or announcement of any Acquisition Proposal
(as defined below), (ii) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect
to, or take any other action to facilitate any inquiries or the making of
any proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal, (iii) engage in discussions with any person with
respect to any Acquisition Proposal, (iv) subject to Section 5.02(c),
approve, endorse or recommend any Acquisition Proposal or (v) enter into
any letter of intent or similar document or any contract, agreement or
commitment contemplating or otherwise relating to any Acquisition
Transaction (as defined below); provided, however, this Section 5.04(a)
shall not prohibit Company from (A) furnishing information regarding
Company and its subsidiaries to, entering into a confidentiality agreement
with or entering into discussions with, any person or group in response to
a Superior Offer submitted by such person or group (and not withdrawn) if
(1) neither Company nor any representative of Company and its subsidiaries
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shall have violated any of the restrictions set forth in this Section 5.04,
(2) the Board of Directors of Company concludes in good faith, after
consultation with its outside legal counsel, that such action is required
in order for the Board of Directors of Company to comply with its fiduciary
obligations to Company's stockholders under applicable law, (3) (x) at
least two (2) business days prior to furnishing any such nonpublic
information to, or entering into discussions or negotiations with, such
person or group, Company gives Parent written notice of the identity of
such person or group and of Company's intention to furnish nonpublic
information to, or enter into discussions or negotiations with, such person
or group and (y) Company receives from such person or group an executed
confidentiality agreement containing customary limitations on the use and
disclosure of all written and oral information furnished to such person or
group by or on behalf of Company, and (4) contemporaneously with furnishing
any such information to such person or group, Company furnishes such
information to Parent (to the extent such information has not been
previously furnished by Company to Parent) or (B) complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal
with respect to which no violation of this Section 5.04 shall have
occurred. Company and its subsidiaries will immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding two sentences by any officer or director of Company
or any of its subsidiaries or any investment banker, attorney or other
advisor or representative of Company or any of its subsidiaries shall be
deemed to be a breach of this Section 5.04 by Company. In addition to the
foregoing, Company shall (i) provide Parent with at least forty-eight (48)
hours prior notice (or such lesser prior notice as provided to the members
of Company's Board of Directors) of any meeting of Company's Board of
Directors at which Company's Board of Directors is reasonably expected to
consider a Superior Offer and (ii) provide Parent with at least three (3)
business days prior written notice (or such lesser prior notice as provided
to the members of Company's Board of Directors) of a meeting of Company's
Board of Directors at which Company's Board of Directors is reasonably
expected to recommend a Superior Offer to its stockholders and together
with such notice a copy of the definitive documentation relating to such
Superior Offer.
For purposes of this Agreement, "Acquisition Proposal" shall mean any offer
or proposal (other than an offer or proposal by Parent) relating to any
Acquisition Transaction. For the purposes of this Agreement, "Acquisition
Transaction" shall mean any transaction or series of related transactions other
than the transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from Company by any person or "group" (as defined under
Section 13(d) of the Exchange Act and the rules and regulations thereunder) of
more than a 15% interest in the total outstanding voting securities of Company
or any of its subsidiaries or any tender offer or exchange offer that if
consummated would result in any person or "group" (as defined under Section
13(d) of the Exchange Act and the rules and regulations thereunder) beneficially
owning 15% or more of the total outstanding voting securities of Company or any
of its subsidiaries or any merger, consolidation, business combination or
similar transaction involving Company pursuant to which the stockholders of
Company immediately preceding such transaction hold less than 85% of the equity
interests in the surviving or resulting entity of such transaction; (B) any
sale, lease (other than in the ordinary course of business), exchange, transfer,
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license (other than in the ordinary course of business), acquisition or
disposition of more than 15% of the assets of Company; or (C) any liquidation or
dissolution of Company.
(b) In addition to the obligations of Company set forth in paragraph
(a) of this Section 5.04, Company as promptly as practicable shall advise
Parent orally and in writing of any request received by Company for
information which Company reasonably believes would lead to an Acquisition
Proposal or of any Acquisition Proposal, or any inquiry received by Company
with respect to, or which Company reasonably believes would lead to any
Acquisition Proposal, the material terms and conditions of such request,
Acquisition Proposal or inquiry, and the identity of the person or group
making any such request, Acquisition Proposal or inquiry. Company will keep
Parent informed in all material respects of the status and details
(including material amendments or proposed amendments) of any such request,
Acquisition Proposal or inquiry.
Section 5.05 Public Disclosure. Parent and Company will consult with each
other, and to the extent practicable, agree, before issuing any press release or
otherwise making any public statement with respect to the Merger, this Agreement
or an Acquisition Proposal and will not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law or any listing agreement with a national securities exchange or Nasdaq, in
which case reasonable efforts to consult with the other party will be made prior
to such release or public statement. The parties have agreed to the text of the
joint press release announcing the signing of this Agreement.
Section 5.06 Commercially Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use commercially reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement, including to accomplish the
following: (i) causing the conditions precedent set forth in Article VI to
be satisfied; (ii) obtaining all necessary actions or nonactions, waivers,
consents, approvals, orders and authorizations from Governmental Entities;
(iii) making all necessary registrations, declarations and filings
(including registrations, declarations and filings with Governmental
Entities, if any); (iv) avoiding any suit, claim, action, investigation or
proceeding by any Governmental Entity challenging the Merger or any other
transaction contemplated by this Agreement; (v) obtaining all consents,
approvals or waivers from third parties required as a result of the
transactions contemplated in this Agreement; (vi) defending any suits,
claims, actions, investigations or proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental
Entity vacated or reversed; and (vii) executing or delivering any
additional instruments reasonably necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, subject to the other
terms and conditions hereof, Company and its Board of Directors shall, if
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any state takeover statute or similar statute or regulation is or becomes
applicable to the Merger, this Agreement or any of the transactions
contemplated by this Agreement, use commercially reasonable efforts and
take all acts necessary to ensure that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly
as practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger, this
Agreement and the transactions contemplated hereby. Notwithstanding
anything herein to the contrary, nothing in this Agreement shall be deemed
to require Parent or Company or any subsidiary or affiliate thereof to
agree to any divestiture by itself or any of its affiliates of shares of
capital stock or of any business, assets or property, or the imposition of
any material limitation on the ability of any of them to conduct their
business or to own or exercise control of such assets, properties and
stock.
(b) Company shall give prompt notice to Parent upon becoming aware
that any representation or warranty made by it contained in this Agreement
has become untrue or inaccurate, or of any failure of Company to comply
with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, in
each case, where the conditions set forth in Section 6.03(a) or Section
6.03(b) would not be satisfied as a result thereof; provided, however, that
no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations
of the parties under this Agreement.
(c) Parent shall give prompt notice to Company upon becoming aware
that any representation or warranty made by it or Merger Sub contained in
this Agreement has become untrue or inaccurate, or of any failure of Parent
or Merger Sub to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it
under this Agreement, in each case, where the conditions set forth in
Section 6.02(a) or Section 6.02(b) would not be satisfied as a result
thereof; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
Section 5.07 Third Party Consents. As soon as practicable following the
date hereof, Parent and Company will each use its commercially reasonable
efforts to obtain any consents, waivers and approvals under any of its or its
subsidiaries' respective agreements, contracts, licenses or leases required to
be obtained in connection with the consummation of the transactions contemplated
hereby.
Section 5.08 Stock Options; ESPP and Employee Benefits.
(a) Stock Options. At the Effective Time, Parent shall assume the
Company Stock Option Plans and each outstanding option to purchase shares
of Company Common Stock (each, a "Company Stock Option") under the Company
Option Plans, whether or not vested, shall be assumed by Parent. Each
Company Stock Option so assumed by Parent under this Agreement will
continue to have, and be subject to, the same terms and conditions of such
Company Stock Options immediately prior to the Effective Time (including,
without limitation, any repurchase rights or vesting provisions and
provisions regarding the acceleration of vesting on certain transactions),
except that (i) each Company Stock Option will be exercisable (or will
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become exercisable in accordance with its terms) for that number of whole
shares of Parent Common Stock equal to the product of the number of shares
of Company Common Stock that were issuable upon exercise of such Company
Stock Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded down to the nearest whole number of shares of
Parent Common Stock and (ii) the per share exercise price for the shares of
Parent Common Stock issuable upon exercise of such assumed Company Stock
Option will be equal to the quotient determined by dividing the exercise
price per share of Company Common Stock at which such Company Stock Option
was exercisable immediately prior to the Effective Time by the Exchange
Ratio, rounded up to the nearest whole cent. Parent shall comply with the
terms of all such Company Stock Options and use its best efforts to ensure,
to the extent required by and subject to the provisions of, the Company
Option Plans, and to the extent permitted under the Code, that any Company
Stock Options that qualified for tax treatment as incentive stock options
under Section 422 of the Code prior to the Effective Time continue to so
qualify after the Effective Time. Parent shall take all corporate actions
necessary to reserve for issuance a sufficient number of shares of Parent
Common Stock for delivery upon exercise of assumed Company Stock Options on
the terms set forth in this Section 5.08(a).
(b) ESPP. At the Effective Time, Parent shall assume the ESPP in
accordance with its terms, and all outstanding rights to purchase shares of
Company Common Stock under the ESPP ("Purchase Rights"), shall be converted
(in accordance with the Exchange Ratio) into rights to purchase shares of
Parent Common Stock (with the number of shares rounded down to the nearest
whole share and the purchase price as of the offering date for each
offering period in effect as of the Effective Time rounded up to the
nearest whole cent). All such converted Purchase Rights shall be assumed by
Parent, and each offering period in effect under the ESPP immediately prior
to the Effective Time shall be continued in accordance with the terms of
the ESPP until the end of such offering period. The ESPP shall terminate
with the exercise of the last assumed Purchase Right, and no additional
Purchase Rights shall be granted under the ESPP following the Effective
Time, provided that references to Company in the ESPP and related documents
shall mean Parent (except that the purchase price for a relevant period
shall be determined with respect to the fair market value of Company Common
Stock on such date, as adjusted hereby). Parent shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of
Parent Common Stock for issuance upon exercise of Purchase Rights under the
ESPP assumed in accordance with this Section 5.08(b). Parent agrees that,
from and after the Effective Time, Company's employees may participate in
the employee stock purchase plan sponsored by Parent ("Parent ESPP"),
subject to the terms and conditions of the Parent ESPP, and that service
with Company shall be treated as service with the Parent for determining
eligibility of Company's employees under the Parent ESPP.
(c) 401(k). Company shall terminate, effective as of the day
immediately preceding the Effective Time, any and all 401(k) plans
sponsored or maintained by Company unless Parent provides written notice to
Company prior to the Effective Time that any such 401(k) plan shall not be
terminated. Parent shall receive from Company evidence that Company's
plan(s) and / or program(s) have been terminated pursuant to resolutions of
Company's Board of Directors (the form and substance of such resolutions
shall be subject to review and approval of Parent), effective as of the day
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immediately preceding the Effective Time. Company employees shall be
eligible to participate in a 401(k) plan sponsored by Parent no later than
the first day of the next commencing month immediately after the Effective
Time.
(d) Benefits; Prior Service. From and after the Effective Time,
Company employees shall be provided with employee benefits that are the
same as those provided to employees of Parent who are similarly situated
and which are substantially similar in the aggregate to those provided such
employees prior to the Effective Time. Parent shall cause employees of
Company and its subsidiaries to be credited with service with Company and
each of its subsidiaries for purposes of eligibility and vesting under each
employee benefit plan maintained by Parent or its subsidiaries after the
Effective Time to the extent of their service with Company; provided,
however, that such service shall not be recognized to the extent that such
recognition would result in duplication of benefits.
Section 5.09 Form S-8. Parent agrees to file a registration statement on
Form S-8 for the shares of Parent Common Stock issuable with respect to assumed
Company Stock Options as soon as is reasonably practicable (and in any event
within 30 days) after the Effective Time and shall maintain the effectiveness of
such registration statement thereafter for so long as any of such options or
other rights remain outstanding.
Section 5.10 Indemnification.
(a) From and after the Effective Time, Parent will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of Company
(or any predecessor corporation) pursuant to (i) each indemnification
agreement between Company and its directors or officers in effect
immediately prior to the Effective Time (the "Indemnified Parties") and
(ii) any indemnification provision under the Company Charter Documents as
in effect on the date hereof. The Certificate of Incorporation and Bylaws
of the Surviving Corporation will contain provisions with respect to
exculpation and indemnification that are at least as favorable to the
Indemnified Parties as those contained in the Company Charter Documents as
in effect on the date hereof, which provisions will not be amended,
repealed or otherwise modified for a period of six (6) years from the
Effective Time in any manner that would adversely affect the rights
thereunder of any Indemnified Party or of individuals who, immediately
prior to the Effective Time, were employees or agents of Company, unless
such modification is required by law.
(b) In the event Company or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers a material amount
of its properties and assets to any person in a single transaction or a
series of transactions, then, and in each such case, Parent will either
guarantee or otherwise remain liable for the indemnification obligations
referred to in this Section 5.10 or will make or cause to be made proper
provision so that the successors and assigns of Company or the Surviving
Corporation, as the case may be, assume the indemnification obligations
described herein for the benefit of the Indemnified Parties.
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(c) The provisions of this Section 5.10 shall survive consummation of
the Merger and are (i) intended to be for the benefit of, and will be
enforceable by, each of the Indemnified Parties and (ii) in addition to,
and not in substitution for, any other rights to indemnification or
contribution that any such Indemnified Party may have by contract or
otherwise.
(d) For a period of six (6) years after the Effective Time, Parent
will either (i) cause the Surviving Corporation to maintain in effect, if
available, directors' and officers' liability insurance covering those
persons who are currently covered by Company's directors' and officers'
liability insurance policy on terms comparable to those applicable to the
current directors and officers of Company; provided, however, that in no
event will Parent or the Surviving Corporation be required to expend in
excess of 150% of the annual premium currently paid by Company for such
coverage (or such coverage as is available for such 150% of such annual
premium), or (ii) Parent may purchase directors' and officers' liability
tail coverage on terms comparable to those applicable to the current
directors and officers of Company covering all periods prior to the
Effective Time.
Section 5.11 Affiliate Agreements; Pooling Actions.
(a) Set forth in Section 5.11(a) of the Company Schedule is a list of
those persons who may be deemed to be, in Company's reasonable judgment,
affiliates of Company within the meaning of Rule 145 promulgated under the
Securities Act or Opinion 16 of the Accounting Principles Board applicable
to SEC rules and regulations (each, a "Company Affiliate"). Company will
provide Parent with such information and documents as Parent reasonably
requests for purposes of reviewing such list. Company will use its
commercially reasonable efforts to deliver or cause to be delivered to
Parent, on or as promptly as practicable following the date hereof, from
each Company Affiliate that has not delivered a Company Affiliate Agreement
on or prior to the date hereof, an executed Company Affiliate Agreement.
Each Company Affiliate Agreement will be in full force and effect as of the
Effective Time. Parent will be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be received by a Company
Affiliate 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 the Company Affiliate Agreement.
(b) Promptly after execution of this Agreement, Parent will take the
actions specified in Section 3.18 of the Parent Disclosure Schedule.
Section 5.12 Regulatory Filings; Reasonable Efforts. As soon as may be
reasonably practicable, Company and Parent each shall file with the United
States Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice ("DOJ") Notification and Report Forms
relating to the transactions contemplated herein as required by the HSR Act, as
well as comparable pre-merger notification forms required by the merger
notification or control laws and regulations of any other applicable
jurisdiction, as agreed to by the parties. Company and Parent each shall each
use all commercially reasonable efforts to obtain early termination of any
waiting period under HSR and Company and Parent shall each promptly (a) supply
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the other with any information which may be required in order to effectuate such
filings and (b) supply any additional information which reasonably may be
required by the FTC, the DOJ or the competition or merger control authorities of
any other jurisdiction and which the parties may reasonably deem appropriate;
provided, however, that Parent shall not be required to agree to any divestiture
by Parent or Company or any of Parent's subsidiaries or affiliates of shares of
capital stock or of any business, assets or property of Parent or its
subsidiaries or affiliates or of Company, its affiliates, or the imposition of
any material limitation on the ability of any of them to conduct their
businesses or to own or exercise control of such assets, properties and stock.
Section 5.13 Action by Board of Directors. 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 interpretative
guidance of the SEC so that (i) the assumption of Company Stock Options by
Company Insiders (as defined below) pursuant to this Agreement, and (ii) the
receipt by Company Insiders of Parent Common Stock in exchange for Company
Common Stock pursuant to the Merger, shall in each case be an exempt transaction
for purposes of Section 16 of the Exchange Act by any officer or director of
Company who may become a covered person of Parent for purposes of Section 16 of
the Exchange Act (a "Company Insider").
Section 5.14 Nasdaq Listing. Parent shall authorize for listing on Nasdaq
the shares of Parent Common Stock issuable, and those to be reserved for
issuance, in connection with the Merger, effective upon notice of issuance.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.01 Conditions to Obligations of Each Party to Effect the Merger.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions, any of which may be waived if waived in writing by both
Parent and Company:
(a) Stockholder Approval. This Agreement shall have been adopted and
the Merger shall have been duly approved by the requisite vote under
applicable law by the stockholders of Company.
(b) Registration Statement Effective; Proxy Statement. The SEC shall
have declared the S-4 effective. No stop order suspending the effectiveness
of the S-4 or any part thereof shall have been issued and no proceeding for
that purpose, and no similar proceeding in respect of the Proxy
Statement/Prospectus, shall have been initiated or threatened in writing by
the SEC.
(c) No Order; HSR Act. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting consummation of the
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Merger. All waiting periods, if any, under the HSR Act relating to the
transactions contemplated hereby will have expired or terminated early and
all material foreign antitrust approvals required to be obtained prior to
the Merger in connection with the transactions contemplated hereby shall
have been obtained.
(d) Tax Opinions. Each of Company and Parent shall have received a
written opinion from its respective tax counsel, in form and substance
reasonably satisfactory to Company or Parent, as the case may be, to the
effect that the Merger will constitute a reorganization within the meaning
of Section 368(a) of the Code and such opinion shall not have been
withdrawn; provided, however, that if tax counsel to Company (Jenkens &
Xxxxxxxxx, Professional Corporation) does not render such opinion or
renders but withdraws such opinion, this condition shall nonetheless be
deemed to be satisfied if counsel to Parent (Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, Professional Corporation) renders, and does not withdraw, such
opinion to Company. Officers of Company, Parent and Merger Sub shall
provide tax counsel with customary officer's tax certificates in support of
such tax opinions.
Section 6.02 Additional Conditions to Obligations of Company. The
obligation of Company to effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Company:
(a) Representations and Warranties. Each representation and warranty
of Parent and Merger Sub contained in this Agreement (i) shall have been
accurate in all respects as of the date of this Agreement and (ii) shall be
true and correct in all respects on and as of the Closing Date with the
same force and effect as if made on the Closing Date except, with respect
to clauses (i) and (ii), (A) in each case, or in the aggregate, as does not
constitute a Material Adverse Effect on Parent and (B) for those
representations and warranties which address matters only as of a
particular date (which representations shall have been true and correct
(subject to the qualification as set forth in the preceding clause (A)) as
of such particular date) (it being understood that, for purposes of
determining the accuracy of such representations and warranties, (i) all
"Material Adverse Effect" qualifications and other qualifications based on
the word "material" or similar phrases contained in such representations
and warranties shall be disregarded and (ii) any update of or modification
to the Parent Schedule made or purported to have been made after the date
of this Agreement shall be disregarded). Company shall have received a
certificate with respect to the foregoing signed on behalf of Parent by an
authorized officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied with, in all material respects, all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Closing Date, and Company shall have received a
certificate to such effect signed on behalf of Parent by an authorized
officer of Parent.
Section 6.03 Additional Conditions to the Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to effect the Merger shall be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) Representations and Warranties. Each representation and warranty
of Company contained in this Agreement shall have been true and correct in
all respects as of the date of this Agreement and (ii) shall be accurate in
all respects on and as of the Closing Date with the same force and effect
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as if made on and as of the Closing Date except, with respect to clauses
(i) and (ii), (A) in each case, or in the aggregate, as does not constitute
a Material Adverse Effect on Company; provided, however, such Material
Adverse Effect qualifier shall be inapplicable with respect to
representations and warranties contained in Sections 2.04, 2.19, 2.20,
2.21, and 2.27 (which representations shall have been true and correct in
all material respects as of the date of this Agreement and shall be
accurate in all material respects as of the Closing Date) and (B) for those
representations and warranties which address matters only as of a
particular date (which representations shall have been accurate (subject to
the qualification as set forth in the preceding clause (A)) as of such
particular date) (it being understood that, for purposes of determining the
accuracy of such representations and warranties, (i) all "Material Adverse
Effect" qualifications and other qualifications based on the word
"material" or similar phrases contained in such representations and
warranties shall be disregarded and (ii) any update of or modification to
the Company Schedule made or purported to have been made after the date of
this Agreement shall be disregarded). Parent shall have received a
certificate with respect to the foregoing signed on behalf of Company by an
authorized officer of Company.
(b) Agreements and Covenants. Company shall have performed or complied
with, in all material respects, all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the
Closing Date, and Parent shall have received a certificate to such effect
signed on behalf of Company by an authorized officer of Company.
(c) Consents. Company shall have procured consents set forth in
Section 6.03(c) of the Company Schedule.
(d) Opinion of Accountants. Parent shall have received (i) from
PricewaterhouseCoopers LLP, independent auditors for Company, a copy of a
letter addressed to Company dated as of the Closing Date in substance
reasonably satisfactory to Parent (which may contain customary
qualifications and assumptions) to the effect that PricewaterhouseCoopers
LLP concurs with Company management's conclusion that no conditions exist
related to Company that would preclude Company from being a party to a
business combination for which the "pooling of interests" method of
accounting is used and (ii) from KPMG LLP, independent accountants for
Parent, a copy of a letter addressed to Parent dated as of the Closing Date
in substance reasonably satisfactory to Parent (which may contain customary
qualifications and assumptions) to the effect that KPMG LLP concurs with
Parent management's conclusion that the Merger can properly be accounted
for as a "pooling of interests."
(e) Company Affiliate Agreements. The Company Affiliate Agreements
shall be in full force and effect.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the requisite approval of
the stockholders of Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
(b) by either Company or Parent if the Merger shall not have been
consummated by April 30, 2001 (such date, or such other date that may be
agreed by mutual written consent, being the "Outside Date") for any reason;
provided, however, that the right to terminate this Agreement under this
Section 7.01(b) shall not be available to any party whose action or failure
to act has been a principal cause of or resulted in the failure of the
Merger to occur on or before such date if such action or failure to act
constitutes a breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity shall have
issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree, ruling or other action shall
have become final and nonappealable;
(d) by either Company or Parent if: (i) the Company Stockholders'
Meeting (including any adjournments thereof) shall have been held and
completed and the stockholders of Company shall have taken a final vote on
a proposal to adopt this Agreement and (ii) the required approval of the
stockholders of Company contemplated by this Agreement shall not have been
obtained; provided, however, that the right to terminate this Agreement
under this Section 7.01(d) shall not be available to Company or Parent
where the failure to obtain Company stockholder approval shall have been
caused by the action or failure to act of Company or Parent, respectively,
and such action or failure to act constitutes a breach by Company or
Parent, respectively, of this Agreement;
(e) by Company, upon a breach of any covenant or agreement on the part
of Parent set forth in this Agreement, or if any representation or warranty
of Parent shall have been untrue when made or shall have become untrue, in
either case such that the conditions set forth in Section 6.02(a) or
Section 6.02(b) would not be satisfied as of the time of such breach or as
of the time such representation or warranty shall have become untrue;
provided, that if such inaccuracy in Parent's representations and
warranties or breach by Parent is curable by Parent through exercise of its
commercially reasonable efforts, then Company may not terminate this
Agreement pursuant to this Section 7.01(e) for thirty (30) days after
delivery of written notice from Company to Parent of such breach; provided
that Parent continues to exercise commercially reasonable efforts to cure
such breach (it being understood that Company may not terminate this
Agreement pursuant to this Section 7.01(e) if such breach by Parent is
cured during such thirty-day period);
(f) by Parent, upon a breach of any covenant or agreement on the part
of Company set forth in this Agreement, or if any representation or
warranty of Company shall have been untrue when made or shall have become
untrue, in either case such that the conditions set forth in Section
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6.03(a) or Section 6.03(b) would not be satisfied as of the time of such
breach or as of the time such representation or warranty shall have become
untrue; provided, that if such inaccuracy in Company's representations and
warranties or breach by Company is curable by Company through exercise of
its commercially reasonable efforts, then Parent may not terminate this
Agreement pursuant to this Section 7.01(f) for thirty (30) days after
delivery of written notice from Parent to Company of such breach; provided
that Company continues to exercise commercially reasonable efforts to cure
such breach (it being understood that Parent may not terminate this
Agreement pursuant to this Section 7.01(f) if such breach by Company is
cured during such thirty-day period);
(g) by Parent if a Triggering Event (as defined below) shall have
occurred. For the purposes of this Agreement, a "Triggering Event" shall be
deemed to have occurred if: (i) the Board of Directors of Company or any
committee thereof shall for any reason have withheld, withdrawn or
refrained from making or shall have modified, amended or changed in a
manner adverse to Parent its recommendation in favor of the adoption of
this Agreement or the approval of the Merger; (ii) Company shall have
failed to include in the Proxy Statement/Prospectus the recommendation of
the Board of Directors of Company in favor of the adoption of this
Agreement and the approval of the Merger; (iii) the Board of Directors of
Company fails to reaffirm its recommendation in favor of the adoption of
this Agreement within ten (10) business days after Parent requests in
writing that such recommendation be reaffirmed at any time following the
public announcement and during the pendency of an Acquisition Proposal;
(iv) the Board of Directors of Company or any committee thereof shall have
approved or recommended any Acquisition Proposal; (v) Company shall have
entered into any letter of intent or similar document or any agreement,
contract or commitment accepting any Acquisition Proposal; (vi) Company
shall have breached any of the provisions of Section 5.04 of this Agreement
or (vii) a tender or exchange offer relating to not less than 15% of the
then outstanding shares of capital stock of Company shall have been
commenced by a person unaffiliated with Parent and Company shall not have
sent to its securityholders pursuant to Rule 14e-2 promulgated under the
Securities Act, within ten (10) business days after such tender or exchange
offer is first published sent or given, a statement disclosing that Company
recommends rejection of such tender or exchange offer.
Section 7.02 Notice of Termination; Effect of Termination. Any termination
of this Agreement under Section 7.01 will be effective immediately upon (or if
the termination is pursuant to Section 7.01(e) or 7.01(f) and the proviso
therein is applicable, thirty (30) days after) the delivery of written notice
thereof by the terminating party to the other parties hereto. In the event of
the termination of this Agreement as provided in Section 7.01, this Agreement
shall be of no further force or effect, except (i) as set forth in this Section
7.02, Section 7.03 and Article VIII (General Provisions), each of which shall
survive the termination of this Agreement, and (ii) nothing herein shall relieve
any party from liability for any intentional or willful breach of this
Agreement. No termination of this Agreement shall affect the obligations of the
parties contained in the Confidentiality Agreement, all of which obligations
shall survive termination of this Agreement in accordance with their terms.
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Section 7.03 Fees and Expenses.
(a) General. Except as set forth in this Section 7.03, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such fees and
expenses whether or not the Merger is consummated; provided, however, that
Parent and Company shall share equally all fees and expenses, other than
attorneys' and accountants fees and expenses, incurred in connection with
the printing and filing (with the SEC) of the Proxy Statement/Prospectus
(including any preliminary materials related thereto) and the S-4
(including financial statements and exhibits) and any amendments or
supplements thereto and any fees required to be paid under the HSR Act.
(b) Company Payments.
(i) Company shall pay to Parent in immediately available funds,
within three (3) business days after demand by Parent, an amount equal
to $9,000,000 (the "Termination Fee") if this Agreement is terminated
by Parent pursuant to Section 7.01(g).
(ii) If (A) this Agreement is terminated by Parent or Company, as
applicable, pursuant to Sections 7.01(b) or (d)(i), (B) prior to such
termination a third party shall have announced an Acquisition Proposal
and (C) within twelve (12) months following the termination of this
Agreement a Company Acquisition (as defined below) is consummated or
Company enters into an agreement or letter of intent providing for a
Company Acquisition which is subsequently consummated, then Company
shall pay Parent in immediately available funds at or prior to
consummating such Company Acquisition an amount equal to the
Termination Fee.
(iii) Company acknowledges that the agreements contained in this
Section 7.03(b) are an integral part of the transactions contemplated
by this Agreement, and that, without these agreements, Parent would
not enter into this Agreement; accordingly, if Company fails to pay in
a timely manner the amounts due pursuant to this Section 7.03(b) and,
in order to obtain such payment, Parent makes a claim that results in
a judgment against Company for the amounts set forth in this Section
7.03(b), Company shall pay to Parent its reasonable costs and expenses
(including reasonable attorneys' fees and expenses) in connection with
such suit, together with interest on the amounts set forth in this
Section 7.03(b) at the prime rate of Xxxxx Fargo Bank, National
Association in effect on the date such payment was required to be
made. Payment of the fees described in this Section 7.03(b) shall not
be in lieu of damages incurred in the event of breach of this
Agreement. For the purposes of this Agreement, "Company Acquisition"
shall mean any of the following transactions (other than the
transactions contemplated by this Agreement): (i) a merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving Company pursuant to which
the stockholders of Company immediately preceding such transaction
hold less than 50% of the aggregate equity interests in the surviving
or resulting entity of such transaction, (ii) a sale or other
disposition by Company of assets representing in excess of 50% of the
aggregate fair market value of Company's business immediately prior to
such sale or (iii) the acquisition by any person or group (including
by way of a tender offer or an exchange offer or issuance by Company),
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directly or indirectly, of beneficial ownership or a right to acquire
beneficial ownership of shares representing in excess of 50% of the
voting power of the then outstanding shares of capital stock of
Company.
Section 7.04 Amendment. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of Parent and Company.
Section 7.05 Extension; Waiver. At any time prior to the Effective Time,
any party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Non-Survival of Representations and Warranties. The
representations and warranties of Company, Parent and Merger Sub contained in
this Agreement or in any certificate or instrument delivered pursuant to Article
VI shall terminate at the Effective Time, and only the covenants that by their
terms survive the Effective Time shall survive the Effective Time.
Section 8.02 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given on the day of delivery if delivered
personally or sent via telecopy (receipt confirmed) or on the second business
day after being sent if delivered by commercial delivery service, to the parties
at the following addresses or telecopy numbers (or at such other address or
telecopy numbers for a party as shall be specified by like notice):
(i) if to Parent or Merger Sub, to:
Microchip Technology Incorporated
0000 Xxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: General Counsel
Telecopy No.: (000) 000-0000
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with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
Xxx Xxxxxx, Xxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
(ii) if to Company, to:
Telcom Semiconductor, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy to:
Jenkens & Xxxxxxxxx, Professional Corporation
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Section 8.03 Interpretation.
(i) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement. Unless otherwise
indicated the words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. When reference is made herein to "the
business of" an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity. Reference
to the subsidiaries of an entity shall be deemed to include all direct and
indirect subsidiaries of such entity.
(ii) For purposes of this Agreement, the term "person" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization,
entity or Governmental Entity.
(iii) For purposes of this Agreement, the term "Material Adverse
Effect" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect, individually or when
aggregated with other changes, events, violations, inaccuracies,
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circumstances or effects, that is materially adverse to the business,
assets (including intangible assets), capitalization, financial condition
or results of operations of such entity and its subsidiaries taken as a
whole; provided, however that (i) no change, event, violation, inaccuracy,
circumstance or effect directly attributable to (A) changes in general
economic conditions or changes affecting the semiconductor industry
generally, (B) the loss of current or prospective customers or suppliers
that arose from such entity entering into this Agreement, or (C) any
shareholder litigation or litigation by a Governmental Entity, in each case
brought or threatened against such entity or any member of its board of
directors in respect of this Agreement or the transactions contemplated
hereby, shall constitute a Material Adverse Effect; and (ii) in no event
shall (x) any change in the market price or trading volume of the Company
Common Stock or Parent Common Stock, nor (y) the failure by Company or
Parent to meet revenue or earnings predictions of equity analysts reflected
in the First Call consensus estimate, or any other revenue or earnings
predictions or expectations, for any period ending on or after the date of
this Agreement, in and of itself constitute a Material Adverse Effect (it
being understood that this subsection (ii), as it relates to (y), shall not
exclude any underlying change, circumstance, effect or development which
resulted in such failure to meet such estimates, predictions or
expectations).
(iv) For purposes of this Agreement, an "agreement," "arrangement,"
"contract," "commitment" or "plan" shall mean a legally binding, written
agreement, arrangement, contract, commitment or plan, as the case may be.
Section 8.04 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
Section 8.05 Entire Agreement; Third Party Beneficiaries. This Agreement
and the documents and instruments and other agreements among the parties hereto
as contemplated by or referred to herein, including the Company Schedule and the
Parent Schedule (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being understood, however, that the Confidentiality
Agreement shall continue in full force and effect until the Closing and shall
survive any termination of this Agreement; and (b) except with respect to the
Indemnified Parties under Section 5.10, are not intended to confer upon any
other person any rights or remedies hereunder.
Section 8.06 Severability. In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
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Section 8.07 Other Remedies; Specific Performance. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity. In any action at law or suit in equity to enforce this Agreement or the
rights of any of the parties hereunder, the prevailing party in such action or
suit shall be entitled to receive a reasonable sum for its attorneys' fees and
all other reasonable costs and expenses incurred in such action or suit.
Section 8.08 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof.
Section 8.09 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
Section 8.10 Assignment. No party may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 8.11 Waiver of Jury Trial. EACH OF PARENT, COMPANY AND MERGER SUB
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
[The remainder of this page has been intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
MICROCHIP TECHNOLOGY INCORPORATED
By: /s/ Xxxxx Xxxxxx
-----------------------------------------------
Name: Xxxxx Xxxxxx
Title President and Chief Executive Officer
MATCHBOX ACQUISITION CORP.
By: /s/ Xxxxx Xxxxxx
-----------------------------------------------
Name: Xxxxx Xxxxxx
Title: President and Chief Executive Officer
TELCOM SEMICONDUCTOR, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
[Signature Page to Merger Agreement]
