EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
MICROCHIP TECHNOLOGY INCORPORATED,
MATCHBOX ACQUISITION CORP.
AND
TELCOM SEMICONDUCTOR, INC.
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
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.................................................... 2
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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........................................... 25
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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 No 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................................................ 29
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Section 3.12 Taxes.................................................................................. 30
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Section 3.13 Brokers................................................................................ 30
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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................................................................ 31
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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;
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Board 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..................................................................... 48
Section 7.01 Termination............................................................................ 48
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Section 7.02 Notice of Termination; Effect of Termination........................................... 50
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Section 7.03 Fees and Expenses...................................................................... 50
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Section 7.04 Amendment.............................................................................. 51
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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................................................... 54
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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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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)
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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
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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
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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.
Section 1.04 Certificate of Incorporation; Bylaws.
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(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
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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
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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,
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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
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Ratio shall be .46, and provided, further that if the ACP is less than $28.30,
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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
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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
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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 Option
Plans"), and the Company Option Plans
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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
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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
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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
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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.
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(a) Exchange Agent. Prior to the Effective Time, Parent shall select
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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
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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
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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
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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
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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
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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
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Common Stock or Company Stock 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
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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
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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
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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.
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(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
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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.
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(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 operated by them or the
nature of their activities requires such qualification or licensing, except
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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
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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.
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(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 Stock Option, the
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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 subsidiaries is a party or by which
they are bound with respect to any equity security of any class of Company or
with
-9-
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.
-10-
(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
-11-
Commission ("SEC") since 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
acquire any such shares or other securities
-12-
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
reports
-13-
(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 increase any benefits otherwise
payable
-15-
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,
-16-
if any, that could not reasonably be expected to result 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.
-18-
(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.
-19-
"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.
-20-
(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.
-21-
(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,
-22-
contract or commitment to sell or 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
-23-
Ancillary Agreements and the Merger and the other transactions contemplated
hereby and thereby, (ii) determined that the Merger is 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.
-24-
"Environmental Laws" means all Federal, state, local and 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:
Section 3.01 Organization and Qualification; Subsidiaries.
--------------------------------------------
-25-
(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
violation of any preemptive rights, right of first refusal, or any similar
rights. The shares of
-00-
Xxxxxx Xxxxxx 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.
(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
-27-
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 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
-28-
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.
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
-29-
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.
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
-30-
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."
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
-31-
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;
(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
--------
-32-
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 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
-33-
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;
(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
-34-
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;
(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
-35-
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 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
-36-
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 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
-37-
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 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
-38-
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 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
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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,
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.
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(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 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
-41-
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 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
-42-
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 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.
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(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.
(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.
-44-
(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
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
-45-
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 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.
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(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 (i) 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 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;
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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.
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:
-48-
(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 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
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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.
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
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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), 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.
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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
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
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(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, 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
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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.
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
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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: ___________________________
Name: ___________________________
Title: ___________________________
MATCHBOX ACQUISITION CORP.
By: ___________________________
Name: ___________________________
Title: ___________________________
TELCOM SEMICONDUCTOR, INC.
By: ___________________________
Name: ___________________________
Title: ___________________________
[Signature Page to Merger Agreement]
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