Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
among
MAXIM INTEGRATED PRODUCTS, INC.,
MI ACQUISITION SUB, INC.
and
DALLAS SEMICONDUCTOR CORPORATION
Dated as of January 28, 2001
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER..............................................................................................2
1.1. The Merger......................................................................................2
1.2. Effective Time..................................................................................2
1.3. Effect of the Merger............................................................................2
1.4. Certification of Incorporation; Bylaws..........................................................2
1.5. Directors and Officers..........................................................................2
1.6. Conversion of Company Common Stock, Etc.........................................................3
1.7. Cancellation of Treasury Stock and Parent-Owned Stock...........................................4
1.8. Stock Options and Warrants......................................................................4
1.9. Capital Stock of Merger Sub.....................................................................4
1.10. Adjustments to Exchange Ratio...................................................................5
1.11. Fractional Shares...............................................................................5
1.12. Surrender of Certificates.......................................................................5
1.13. Further Ownership Rights in Company Common Stock................................................7
1.14. Closing.........................................................................................7
1.15. Lost, Stolen or Destroyed Certificates..........................................................7
1.16. Tax Consequences................................................................................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................8
2.1. Organization and Qualification; Subsidiaries....................................................8
2.2. Certificate of Incorporation and Bylaws.........................................................9
2.3. Capitalization..................................................................................9
2.4. Authority; Enforceability......................................................................10
2.5. Required Vote..................................................................................11
2.6. No Conflict; Required Filings and Consents.....................................................11
2.7. Material Agreements............................................................................12
2.8. Compliance.....................................................................................14
2.9. SEC Filings; Financial Statements..............................................................15
2.10. Absence of Certain Changes or Events...........................................................16
2.11. No Undisclosed Liabilities.....................................................................16
2.12. Absence of Litigation..........................................................................17
2.13. Employee Benefit Plans.........................................................................17
2.14. Employment and Labor Matters...................................................................19
2.15. Registration Statement; Proxy Statement/Prospectus.............................................19
2.16. Taxes..........................................................................................20
2.17. Environmental Matters..........................................................................22
2.18. Intellectual Property..........................................................................24
2.19. Insurance......................................................................................25
2.20. No Restrictions on the Merger; Takeover Statutes...............................................25
2.21. Pooling; Tax Matters...........................................................................25
2.22. Brokers........................................................................................26
2.23. Interested Party Transactions..................................................................26
2.24. Opinion of Financial Advisor...................................................................26
2.25. Company Rights Agreement.......................................................................26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..............................................27
3.1. Organization and Qualification.................................................................27
3.2. Capitalization.................................................................................27
3.3. Authority; Enforceability......................................................................29
3.4. No Conflict; Required Filings and Consents.....................................................29
3.5. Compliance.....................................................................................30
3.6. SEC Filings; Financial Statements..............................................................31
3.7. Absence of Certain Changes or Events...........................................................31
3.8. No Undisclosed Liabilities.....................................................................32
3.9. Absence of Litigation..........................................................................32
3.10. Environmental Matters..........................................................................32
3.11. Registration Statement; Proxy Statement/Prospectus.............................................33
3.12. Brokers........................................................................................33
3.13. Pooling; Tax Matters...........................................................................33
3.14. Taxes..........................................................................................33
3.15. Intellectual Property..........................................................................34
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER................................................................35
4.1. Conduct of Business by the Company Pending the Merger..........................................35
4.2. Conduct of Business by Parent Pending the Merger...............................................38
4.3. Solicitation of Other Proposals................................................................38
ARTICLE V ADDITIONAL AGREEMENTS..................................................................................40
5.1. Registration Statement; Proxy Statement/Prospectus.............................................40
5.2. Meeting of Company's Stockholders..............................................................41
5.3. Access to Information; Confidentiality.........................................................42
5.4. Reasonable Best Efforts; Further Assurances....................................................43
5.5. Stock Options and Stock Plan; Options..........................................................44
5.6. Employee Benefits..............................................................................45
5.7. Pooling; Reorganization........................................................................46
5.8. Notification of Certain Matters................................................................47
5.9. Listing on the NASDAQ National Market..........................................................48
5.10. Public Announcements...........................................................................48
5.11. Takeover Laws..................................................................................48
5.12. Accountant's Letter............................................................................48
5.13. Indemnification; Directors and Officer Insurance...............................................48
5.14. Option Agreement...............................................................................49
5.15. Company Rights Agreement.......................................................................49
5.16. Action by Board of Directors...................................................................50
5.17. Board Seat.....................................................................................50
ARTICLE VI CONDITIONS OF MERGER..................................................................................50
6.1. Conditions to Obligation of Each Party to Effect the Merger....................................50
6.2. Additional Conditions to Obligations of Parent and Merger Sub..................................51
6.3. Additional Conditions to Obligations of the Company............................................53
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER....................................................................54
7.1. Termination....................................................................................54
7.2. Effect of Termination..........................................................................55
7.3. Fees and Expenses..............................................................................55
7.4. Amendment......................................................................................56
7.5. Waiver.........................................................................................56
ARTICLE VIII GENERAL PROVISIONS..................................................................................57
8.1. Survival of Representations and Warranties.....................................................57
8.2. Notices........................................................................................57
8.3. Disclosure Schedules...........................................................................58
8.4. Certain Definitions............................................................................58
8.5. Interpretation.................................................................................62
8.6. Severability...................................................................................62
8.7. Entire Agreement...............................................................................62
8.8. Assignment.....................................................................................62
8.9. Parties in Interest............................................................................62
8.10. Failure or Indulgence Not Waiver; Remedies Cumulative..........................................63
8.11. Governing Law; Enforcement.....................................................................63
8.12. Counterparts...................................................................................63
EXHIBITS
EXHIBIT A.................Form of Stock Option Agreement
EXHIBIT B.................Form of Company Affiliate Pooling Agreement
AGREEMENT AND PLAN OF MERGER, dated as of January 28, 2001 (the
"Agreement") among MAXIM INTEGRATED PRODUCTS, INC., a Delaware corporation
("Parent"), MI ACQUISITION SUB, INC., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), and DALLAS SEMICONDUCTOR CORPORATION, a
Delaware corporation (the "Company"). Capitalized terms not elsewhere defined
herein shall have the meaning ascribed to them in Section 8.4 hereof.
WHEREAS, the Board of Directors of the Company has determined that it
is consistent with the Company's long-term strategic plan and in the best
interests of its stockholders and employees for the Company to pursue a
strategic transaction with Parent in order to preserve the existence of the
Company's corporate entity;
WHEREAS, the Board of Directors of Parent, Merger Sub and the Company
have each determined that it is in the best interests of their respective
stockholders for Merger Sub to merge with and into the Company upon the terms
and subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, the Boards of Directors of Parent,
Merger Sub and the Company have each approved the merger (the "Merger") of
Merger Sub with and into the Company, in accordance with the General Corporation
Law of the State of Delaware (the "DGCL") and subject to the conditions set
forth herein, which Merger will result in, among other things, the Company
becoming a wholly-owned subsidiary of Parent;
WHEREAS, as a condition to the willingness of, and an inducement to,
Parent and Merger Sub to enter into this Agreement, contemporaneously with the
execution and delivery of this Agreement, the Company is entering into a Stock
Option Agreement dated as of the date hereof (the "Option Agreement") in the
form of Exhibit A attached hereto, granting Parent an irrevocable option to
purchase up to that number of shares of Company Common Stock as shall represent
14.9% (by voting power) of the total outstanding Company Common Stock (as
defined herein), on the terms and subject to the conditions set forth therein;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall
qualify for "pooling-of-interests" treatment.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Parent, Merger Sub and the Company hereby
agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger.
At the Effective Time (as defined in Section 1.2) and subject to and
upon the terms and conditions of this Agreement and the DGCL, (a) Merger Sub
shall be merged with and into the Company, (b) the separate corporate existence
of Merger Sub shall cease, and (c) the Company shall, as the surviving
corporation in the Merger, continue its existence under Delaware law as a
wholly-owned subsidiary of Parent. The Company as the surviving corporation
after the Merger is hereinafter sometimes referred to as the "Surviving
Corporation."
1.2. Effective Time.
As promptly as practicable after the satisfaction or, to the extent
permitted hereunder, waiver of the conditions set forth in Article VI hereof,
the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as required by and executed in accordance
with the relevant provisions of the DGCL (the date and time of such filing, or
such later date and time as may be specified in the Certificate of Merger by
mutual agreement of Parent, Merger Sub and the Company, being the "Effective
Time").
1.3. Effect of the Merger.
At the Effective Time, the effect of the Merger shall be as provided
in the applicable provisions of the DGCL, including Section 259 thereof. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the assets, property, rights, privileges, immunities, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.4. Certification of Incorporation; Bylaws.
Unless otherwise determined by Parent prior to the Effective Time, at
the Effective Time and without any further action on the part of the parties
hereto, (a) the Certificate of Incorporation of the Company shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided therein and by the DGCL and (b) the Bylaws of Merger Sub
shall be the Bylaws of the Surviving Corporation until thereafter amended as
provided therein and by the DGCL.
1.5. Directors and Officers.
Except as set forth on Section 1.5 of the Company Disclosure Schedule,
the directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and the Bylaws of the Surviving
Corporation until their respective successors are duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and Bylaws. Except
as determined by Parent prior to the Effective Time, the officers of the Company
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation.
1.6. Conversion of Company Common Stock, Etc.
At the Effective Time, by virtue of the Merger and without any action
on the part of the parties hereto or the holders of the following securities:
(a) Subject to the provisions of this Article I, each share of common
stock, par value $0.02 per share, of the Company ("Company Common Stock")
including the associated Company Rights issued and outstanding immediately prior
to the Effective Time (other than any shares of the Company Common Stock to be
canceled pursuant to Section 1.7 and subject to Section 1.10 and Section 1.11),
will be converted automatically into the right to receive from Merger Sub that
number of fully paid and nonassessable shares of Common Stock, par value $0.001
per share (the "Parent Common Stock"), of Parent equal to the Exchange Ratio.
For purposes of this Agreement, "Exchange Ratio" shall mean the decimal
equivalent (rounded to four decimal places) of the quotient obtained by dividing
the Aggregate Parent Share Amount (as defined below) by the Fully Diluted
Company Share Amount (as defined below). For purposes hereof, the "Fully Diluted
Company Share Amount" means the number of shares of Company Common Stock
calculated as of the close of business on the day immediately preceding the
Effective Time pursuant to the Treasury Stock Method (assuming a 35% effective
tax rate) as defined by GAAP (as defined herein), which as of the close of
business on January 26, 2001 and based on outstanding shares and options as of
January 25, 2001, would have resulted in an Exchange Ratio of 0.6163. For
purposes hereof, the "Aggregate Parent Share Amount" means the following:
(i) if the Average Closing Price (as defined below) of Parent Common
Stock is equal to or greater than $61.00 per share, then the Aggregate Parent
Share Amount is 40,000,000;
(ii) if the Average Closing Price of Parent Common Stock is equal to
or less than $52.00 per share, then the Aggregate Parent Share Amount is
42,000,000; and
(iii) if the Average Closing Price of Parent Common Stock is greater
than $52.00 per share but less than $61.00 per share, then the Aggregate Parent
Share Amount is the sum of (x) 40,000,000 plus (y) the product obtained by
multiplying 2,000,000 times the quotient obtained by dividing (1) $61.00 minus
the Average Closing Price of Parent Common Stock by (2) $9.00.
The "Average Closing Price" means the average closing price of Parent Common
Stock (rounded to the nearest cent) on the NASDAQ National Market System for the
10 consecutive trading days ending on the trading day that is two trading days
prior to the Effective Time.
(b) Each share of the Company Common Stock shall be deemed canceled
and shall cease to exist, and each holder of a certificate representing any such
share of Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive that number of shares of Parent Common
Stock equal to the Exchange Ratio upon surrender of the certificate representing
such share of Company Common Stock in the manner provided in Section 1.12
(together with the cash in lieu of fractional shares of Parent Common Stock as
specified in Section 1.11, the "Merger Consideration"). Unless the context
otherwise requires, each reference in this Agreement to shares of Company Common
Stock shall include the associated Company Rights issued pursuant to the Company
Rights Agreement.
1.7. Cancellation of Treasury Stock and Parent-Owned Stock.
Each share of the Company Common Stock held in the treasury of the
Company, if any, and each share of Company Common Stock, if any, owned by Parent
or Merger Sub, in each case immediately prior to the Effective Time, shall be
canceled and extinguished without any conversion thereof and no payment or
distribution shall be made with respect thereto.
1.8. Stock Options and Warrants.
(a) At the Effective Time, all options to purchase Company Common
Stock then outstanding under the Company's (i) 1984 Stock Option Plan, (ii)
Amended 1987 Stock Option Plan and (iii) 1993 Officer and Director Stock Option
Plan (each as amended, collectively, the "Option Plans"), by virtue of the
Merger and without any action on the part of the holder thereof, shall be
assumed by Parent in accordance with Section 5.5.
(b) The Company and its Board of Directors shall promptly take all
actions necessary to ensure that (i) immediately prior to the Effective Time the
Purchase Plan (as defined in Section 2.3) shall be terminated and of no further
force and effect and without any liability of the Company thereunder, and (ii)
following the Effective Time no holder of any options or other rights pursuant
to, nor any participant in or party to, the Option Plans or any other Employee
Plan (as defined herein) or other plan, program, arrangement, agreement or other
commitment providing for the issuance or grant of any interest in respect of the
capital stock of the Company or any Subsidiary of the Company will have any
rights thereunder to acquire equity securities, or any right to payment in
respect of the equity securities, of Parent, the Company, or the Surviving
Corporation or any of their Subsidiaries, except as provided herein.
1.9. Capital Stock of Merger Sub.
Each share of common stock, par value $0.01 per share, of Merger Sub
(the "Merger Sub Common Stock") issued and outstanding immediately prior to the
Effective Time shall be automatically converted into one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation and
shall thereafter constitute all of the issued and outstanding capital stock of
the Surviving Corporation. Each stock certificate of Merger Sub evidencing
ownership of any shares of Merger Sub Common Stock shall continue to evidence
ownership of such shares of capital stock of the Surviving Corporation.
1.10. Adjustments to Exchange Ratio.
Without limiting any other provision of this Agreement, the Exchange
Ratio shall be adjusted to reflect fully the effect of any stock split, reverse
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock), reorganization,
recapitalization or other like change with respect to Parent Common Stock or
Company Common Stock occurring after the date hereof and prior to the Effective
Time.
1.11. Fractional Shares.
No certificates or scrip representing the right to acquire fractional
shares of Parent Common Stock shall be issued in connection with the Merger, and
such fractional interests will not entitle the owner thereof to any rights of a
stockholder of Parent. In lieu thereof, each holder of shares of Company Common
Stock exchanged pursuant to Section 1.6 or of options or warrants exchanged
pursuant to Section 1.8(a) who would otherwise be entitled to a fraction of a
share of Parent Common Stock (after aggregating all fractional shares of Parent
Common Stock to have been otherwise received by such holder) shall receive from
Parent an amount of cash (rounded down to the nearest whole cent and without
interest) equal to the product of such fractional part of a share of Parent
Common Stock multiplied by the Average Closing Price.
1.12. Surrender of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company to act as the Exchange Agent in the Merger.
(b) Parent to Provide Common Stock. When and as needed, Parent shall
make available to the Exchange Agent for exchange in accordance with this
Article I, through such reasonable procedures as Parent may adopt, sufficient
shares of Parent Common Stock (and any cash payable in lieu of any fractional
shares of Parent Common Stock) to be exchanged pursuant to Section 1.6 and
Section 1.11.
(c) Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause to be mailed to each holder of record of a
certificate or certificates (the "Certificates") that represented as of the
Effective Time outstanding shares of Company Common Stock to be exchanged
pursuant to Section 1.6, a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as Parent may reasonably specify)
and instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of a Certificate to the Exchange Agent, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor a certificate representing the number of whole shares of
Parent Common Stock and payment in lieu of fractional shares which such holder
has the right to receive pursuant to Sections 1.6 and 1.11, after giving effect
to any required Tax (as defined herein) withholdings, and the Certificate so
surrendered shall forthwith be canceled. At any time following six months after
the Effective Time, all or any number of shares of Parent Common Stock (and any
or all cash payable in lieu of fractional shares of Parent Common Stock)
deposited with or made available to the Exchange Agent pursuant to Section
1.12(b), which remain undistributed to the holders of the Certificates
representing shares of Company Common Stock, shall be delivered to Parent upon
demand, and thereafter such holders of unexchanged shares of Company Common
Stock shall be entitled to look only to Parent (subject to abandoned property,
escheat or other similar laws) as general creditors thereof with respect to the
shares of Parent Common Stock for payment upon due surrender of their
Certificates.
(d) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
shares of Parent Common Stock with a record date after the Effective Time will
be paid to the holder of any unsurrendered Certificate with respect to the whole
shares of Parent Common Stock represented thereby until the holder of record of
such Certificate shall surrender such Certificate. Following surrender of any
such Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time and payable
between the Effective Time and the time of such surrender with respect to such
whole shares of Parent Common Stock.
(e) Transfers of Ownership. If any certificate for shares of Parent
Common Stock is to be issued in a name other than the name in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that (i) the Certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
Person requesting such exchange will have paid any transfer or other Taxes
required by reason of the issuance of a certificate for shares of Parent Common
Stock in a name other than the name of the registered holder of the Certificate
surrendered or (ii) established to the satisfaction of Parent, or any agent
designated by Parent, that such Tax has been paid or is not applicable.
(f) No Liability. Notwithstanding anything to the contrary in this
Agreement, none of the Exchange Agent, Parent, the Merger Sub or the Surviving
Corporation shall be liable to a holder of a Certificate for any Parent Common
Stock (and any cash payable for fractional shares of Parent Common Stock or any
other amount due, if any) that was properly delivered to a public official
pursuant to any applicable abandoned property, escheat or similar Law.
(g) Withholding of Tax. Parent or the Exchange Agent will be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement or the transactions contemplated hereby to any holder of Company
Common Stock such amounts as Parent (or any Affiliate thereof) or the Exchange
Agent are required to deduct and withhold with respect to the making of such
payment under the Code, or any applicable provision of federal, state, local or
foreign Tax Law (as defined herein). To the extent that amounts are so properly
withheld by Parent or the Exchange Agent, such withheld amounts will be treated
for all purposes of this Agreement as having been paid to the holder of the
Company Common Stock in respect of whom such deduction and withholding were made
by Parent.
1.13. Further Ownership Rights in Company Common Stock.
All shares of Parent Common Stock issued upon the surrender for
exchange of Company Common Stock in accordance with the terms of this Article I
(including any cash paid in respect thereof) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such Company Common Stock. At
the Effective Time, the stock transfer books of the Company shall be closed, and
thereafter there shall be no further registration of transfers of shares of
Company Common Stock on the records of the Surviving Corporation. From and after
the Effective Time, the holders of Certificates evidencing ownership of shares
of Company Common Stock outstanding shall cease to have any rights with respect
to such shares of Company Common Stock except as otherwise provided for herein.
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.
1.14. Closing.
Unless this Agreement shall have been terminated and the transactions
contemplated by this Agreement abandoned pursuant to the provisions of Article
VII, and subject to the provisions of Article VI, the closing of the Merger (the
"Closing") will take place at 10:00 a.m. (Pacific time) on a date (the "Closing
Date") to be mutually agreed upon by the parties, which date shall be not later
than the second Business Day after all the conditions set forth in Article VI
shall have been satisfied (or waived in accordance with Section 7.5, to the
extent the same may be waived), unless another time and/or date is agreed by the
parties hereto. The Closing shall take place at the offices of Xxxxxxx Xxxxxxx &
Xxxxxxxx, 0000 Xxxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 or such other place
as the parties hereto otherwise agree.
1.15. Lost, Stolen or Destroyed Certificates.
In the event any Certificates evidencing Company Common Stock shall
have been lost, stolen or destroyed, the Exchange Agent shall issue in exchange
for such lost, stolen or destroyed Certificates, upon the making of an affidavit
of that fact by the holder thereof, such shares of Parent Common Stock and cash
for fractional shares, if any, as may be required pursuant to Section 1.11;
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, 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 or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
1.16. Tax Consequences.
For federal income tax purposes, the parties intend that the Merger be
treated as a reorganization within the meaning of Section 368(a) of the Code,
and that this Agreement shall be, and is hereby, adopted as a plan of
reorganization for purposes of Section 368 of the Code. The parties shall not
take any action that would prevent or impede the Merger from qualifying as a
reorganization under Section 368(a) of the Code nor take a position on any Tax
Return (as defined herein) inconsistent with this Section 1.16.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
2.1. Organization and Qualification; Subsidiaries.
(a) The Company is a corporation duly organized, validly existing and
in good standing under Delaware law and has all the requisite corporate power
and authority, and is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, waivers, qualifications, certificates,
Orders (as defined herein) and approvals (collectively, "Approvals") necessary
to own, lease and operate its properties and to carry on its business as it is
now being conducted, except for such Approvals, the failure of the Company to be
in possession of which could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. The Company is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except where the failure to be so qualified could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) Each Subsidiary of the Company is a legal entity, duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization and has all the requisite power
and authority, and is in possession of all Approvals necessary to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except for such Approvals, the failure of a Subsidiary of the Company
to be in possession of which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Each Subsidiary is
duly qualified or licensed as a foreign corporation or entity to do business,
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its activities makes
such qualification or licensing necessary, except where the failure to be so
qualified could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(c) Section 2.1(c) of the Company Disclosure Schedule sets forth, as
of the date hereof, a true and complete list of all of the Company's directly
and indirectly owned Subsidiaries, together with the jurisdiction of
incorporation or organization of each Subsidiary and the percentage of each
Subsidiary's outstanding capital stock or other equity or other interest owned
by the Company or another Subsidiary of the Company. Except as set forth in
Section 2.1(c) of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, directly or indirectly, any
equity or similar interest in, any Person.
2.2. Certificate of Incorporation and Bylaws.
The Company has heretofore furnished or made available to Parent a
true and complete copy of each of its and each of its Subsidiaries' Certificate
of Incorporation and Bylaws or equivalent organizational documents, as amended
or restated to the date hereof. Such Certificate of Incorporation and Bylaws or
equivalent organizational documents of the Company and each of its Subsidiaries
are in full force and effect, and no other organizational documents are
applicable to or binding upon the Company or its Subsidiaries.
2.3. Capitalization.
(a) The authorized capital of the Company consists of 105,000,000
shares, divided into 100,000,000 shares of Company Common Stock and 5,000,000
shares of preferred stock, par value $0.10 per share (the "Company Preferred
Stock"). As of January 25, 2001, (i) 62,140,955 shares of Company Common Stock
were issued and outstanding, including the associated Company Rights; (ii) no
shares of Company Preferred Stock were issued or outstanding; (iii) 1,282,052
shares of Company Common Stock were held in the treasury of the Company; (iv) no
shares of Company Common Stock were held by any Subsidiary of the Company; (v)
10,987,128 shares of Company Common Stock were duly reserved for future issuance
pursuant to employee stock options granted pursuant to the Option Plans (the
"Outstanding Employee Options"); (vi) 287,700 shares of Company Common Stock
were duly reserved for future issuance pursuant to the Company's Employee Stock
Purchase Plan (the "Purchase Plan"); (vii) a sufficient number of shares of
Company Preferred Stock were reserved for issuance upon exercise of Company
Rights issued pursuant to the Company Rights Agreement; and (viii) a sufficient
number of shares of Company Common Stock were reserved for issuance pursuant to
the Option Agreement. None of the outstanding shares of Company Common Stock are
subject to, nor were they issued in violation of any, purchase option, call
option, right of first refusal, preemptive right, subscription right or any
similar right. Except as set forth above and in Section 2.3(a) of the Company
Disclosure Schedule, as of the date hereof, no shares of voting or non-voting
capital stock, other equity interests, or other voting securities of the Company
were issued, reserved for issuance or outstanding. Except as described in
Section 2.3(a) of the Company Disclosure Schedule, all outstanding options to
purchase Company Common Stock were granted under the Company's Option Plans and
the Option Agreement. Section 2.3(a) of the Company Disclosure Schedule lists
all outstanding options and warrants to purchase Company Common Stock, the
record holder thereof and the exercise prices thereof. All outstanding shares of
capital stock of the Company are, and all shares which may be issued upon the
exercise of stock options and warrants will be, and all shares which may be
issued pursuant to the Option Agreement will be, when issued pursuant to the
terms thereof, duly authorized, validly issued, fully paid and nonassessable and
not subject to any kind of preemptive (or similar) rights. There are no bonds,
debentures, notes or other indebtedness of the Company with voting rights (or
convertible into, or exchangeable for, securities with voting rights) on any
matters on which stockholders of the Company may vote.
(b) Section 2.3(b) of the Company Disclosure Schedule sets forth the
number of authorized and outstanding shares of capital stock, and ownership
thereof, of each of the Company's Subsidiaries. Except as set forth on Section
2.3(b) of the Company Disclosure Schedule, all of the outstanding shares of
capital stock of each of the Company's Subsidiaries have been duly authorized,
validly issued, fully paid and nonassessable, are not subject to, and were not
issued in violation of, any preemptive (or similar) rights, and are owned, of
record and beneficially, by the Company or one of its direct or indirect
Subsidiaries, free and clear of all Liens whatsoever. Except as set forth in
Section 2.3(b) of the Company Disclosure Schedule, there are no restrictions of
any kind which prevent the payment of dividends by any of the Company's
Subsidiaries, and neither the Company nor any of its Subsidiaries is subject to
any obligation or requirement to provide funds for or to make any investment (in
the form of a loan or capital contribution) to or in any Person.
(c) Except for the Company Rights, the Option Agreement, Outstanding
Employee Options, options outstanding pursuant to the Purchase Plan and as
described in Section 2.3(c) of the Company Disclosure Schedule, as of the date
hereof, there are no outstanding securities, options, warrants, calls, rights,
convertible or exchangeable securities, commitments, agreements, arrangements or
undertakings of any kind (contingent or otherwise) to which the Company or any
of its Subsidiaries is a party or by which any of them is bound obligating the
Company or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other voting
securities of the Company or of any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. Except as described in Section 2.3(c) of the Company Disclosure
Schedule, as of the date hereof, there are no outstanding contractual
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock (or options or warrants to acquire
any such shares) of the Company or its Subsidiaries. Except as described in
Section 2.3(c) of the Company Disclosure Schedule, as of the date hereof, there
are no stock-appreciation rights, stock-based performance units, "phantom" stock
rights or other agreements, arrangements or commitments of any character
(contingent or otherwise) pursuant to which any Person is or may be entitled to
receive any payment or other value based on the revenues, earnings or financial
performance, stock price performance or other attribute of the Company or any of
its Subsidiaries or assets or calculated in accordance therewith (other than
ordinary course payments or commissions to employees or sales representatives of
the Company based upon revenues generated by them without augmentation as a
result of the transactions contemplated hereby) (collectively, "Stock-Based
Rights") or to cause the Company or any of its Subsidiaries to file a
registration statement under the Securities Act, or which otherwise relate to
the registration of any securities of the Company. Except as set forth in
Section 2.3(c) of the Company Disclosure Schedule, there are no voting trusts,
proxies or other agreements, commitments or understandings of any character to
which the Company or any of its Subsidiaries or, to the Knowledge (as defined
herein) of the Company, any of the Company's stockholders is a party or by which
any of them is bound with respect to the issuance, holding, acquisition, voting
or disposition of any shares of capital stock of the Company or any of its
Subsidiaries.
2.4. Authority; Enforceability.
The Company has all necessary corporate power and authority to execute
and deliver this Agreement, the Option Agreement and each instrument required to
be executed and delivered by it at the Closing hereunder and thereunder, perform
its obligations hereunder and thereunder and consummate the transactions
contemplated hereby and thereby. The execution and delivery by the Company of
this Agreement and the Option Agreement, the performance of its obligations
hereunder and thereunder, and the consummation by the Company of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all corporate action and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or the Option
Agreement or to consummate the transactions so contemplated (other than, with
respect to the Merger, the approval and authorization of this Agreement by votes
of the holders of a majority of the outstanding Company Common Stock in
accordance with Delaware law and the Company's Certificate of Incorporation and
Bylaws and the filing of the Certificate of Merger) herein or therein. Each of
this Agreement and the Option Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery thereof by Parent and Merger Sub, constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms (subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing).
2.5. Required Vote.
The Board of Directors of the Company has, at a meeting duly called
and held, (i) approved and declared advisable this Agreement and the Option
Agreement, (ii) determined that the transactions contemplated hereby and thereby
are advisable, fair to and in the best interests of the holders of Company
Common Stock, (iii) resolved to recommend adoption of this Agreement, the
Merger, and the other transactions contemplated hereby to the stockholders of
the Company and (iv) directed that this Agreement be submitted to the
stockholders of the Company for their approval and authorization. The
affirmative vote of a majority of all outstanding shares of Company Common Stock
is the only vote of the holders of any class or series of capital stock of the
Company necessary to approve and authorize this Agreement and the Merger. No
stockholder vote is required to approve or authorize the Option Agreement.
2.6. No Conflict; Required Filings and Consents.
(a) The execution and delivery by the Company of this Agreement, the
Option Agreement or any instrument required by this Agreement to be executed and
delivered by the Company or any of its Subsidiaries at the Closing do not, and
the performance of this Agreement, the Option Agreement or any instrument
required by this Agreement to be executed and delivered by the Company or any of
its Subsidiaries at the Closing, shall not, (i) conflict with or violate the
Certificate of Incorporation or Bylaws or equivalent organizational documents of
the Company or any of its Subsidiaries, (ii) conflict with or violate any Law or
Order in each case applicable to the Company or any of its Subsidiaries or by
which its or any of their respective properties or assets is bound or affected,
or (iii) result in any breach or violation of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or impair the Company's or any of its Subsidiaries' rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration, additional liabilities or fees or
cancellation of, or result in the creation of a Lien on any of the properties or
assets of the Company or any of its Subsidiaries pursuant to, any note, bond,
mortgage, indenture, Contract, permit, franchise or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or its or any of their respective
properties or assets is bound or affected, except (A) as set forth in Section
2.6(a) of the Company Disclosure Schedule or (B) in the case of clause (ii) or
(iii) above, for any such conflicts, breaches, violations, defaults or other
occurrences that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) The execution and delivery by the Company of this Agreement, the
Option Agreement or any instrument required by this Agreement to be executed and
delivered by the Company or any of its Subsidiaries at the Closing do not, and
the performance of this Agreement, the Option Agreement and any instrument
required by this Agreement to be executed and delivered by the Company or any of
its Subsidiaries at the Closing, shall not, require the Company or any of its
Subsidiaries to, except as set forth in Section 2.6(b) of the Company Disclosure
Schedule, obtain any Approval of any Person or Approval of, observe any waiting
period imposed by, or make any filing with or notification to, any Governmental
Authority, domestic or foreign, except for (A) compliance with applicable
requirements 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 rules and regulations at the New York
Stock Exchange and the NASDAQ Stock Market, the pre-merger notification
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), or Foreign Competition Laws, (B) the filing of the
Certificate of Merger in accordance with Delaware law or (C) where the failure
to obtain such Approvals, or to make such filings or notifications, could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
2.7. Material Agreements.
(a) Other than those set out in the Company SEC Reports (as defined
below) filed prior to the date hereof, the Company has delivered to Parent true
and complete copies of (or, with respect to those contracts that consist solely
of purchase orders, has delivered to Parent a materially true and correct list
identifying those purchase orders) all of the following Contracts and other
instruments to which the Company or any of its Subsidiaries is a party or by
which any of them or their properties or assets are bound as of the date hereof
(collectively, the "Material Agreements"):
(i) all equipment leases that involve payments by the Company and/or
its Subsidiaries in excess of $50,000 per year;
(ii) all software maintenance agreements or Intellectual Property
license arrangements that involve payments by the Company and/or its
Subsidiaries in excess of $10,000 per year;
(iii) all material agreements pursuant to which the Company and/or its
Subsidiaries license Company Intellectual Property (as defined below);
(iv) all real property leases that involve payments by the Company
and/or its Subsidiaries in excess of $100,000 per year;
(v) all Contracts (other than those listed in clauses (i) through (iv)
above) that involve payments by the Company and/or its Subsidiaries in excess of
$100,000 per year or $250,000 in the aggregate;
(vi) all collective bargaining agreements;
(vii) promissory notes, loans, agreements, indentures, evidences of
indebtedness or other instruments and Contracts providing for the borrowing or
lending of money, whether as borrower, lender or guarantor, in each case,
relating to indebtedness or obligations in excess of $1,000,000;
(viii) Contracts containing a covenant limiting the freedom of the
Company or any of its Subsidiaries (or which purport to limit the freedom of
Parent after the Merger) to engage in any line of business or compete with any
Person or operate at any location in the world or that prohibits or restricts
the Company or its Subsidiaries (or which purport to prohibit or restrict Parent
after the Merger) from soliciting or retaining the employment of any Person;
(ix) joint venture or partnership agreements or joint development,
distribution or similar agreements pursuant to which any third party is entitled
or obligated to develop or distribute any products on behalf of the Company or
its Subsidiaries or pursuant to which the Company or any of its Subsidiaries is
entitled or obligated to develop or distribute any products on behalf of any
third party;
(x) Contracts for the acquisition, directly or indirectly (by merger
or otherwise) of any business, all or substantially all of the assets of any
Person (whether tangible or intangible) or the capital stock of another Person;
(xi) Contracts involving the issuance or repurchase of any capital
stock of the Company or any of its Subsidiaries (including newly formed
Subsidiaries), other than, with respect to the issuance of Company Common Stock,
the options or warrants listed in Section 2.3(a) of the Company Disclosure
Schedule;
(xii) Contracts under which the Company or any of its Subsidiaries has
granted or received exclusive rights with respect to Company Intellectual
Property or the distribution of the Company's products;
(xiii) any interest rate swaps, caps, floors or option agreements or
any other interest rate risk management arrangement or foreign exchange
Contracts;
(xiv) any employment or consulting agreements for individuals with
total annual compensation in excess of $100,000 pursuant to which the Company or
any of its Subsidiaries may incur any liability;
(xv) all agreements or insurance policies providing for
indemnification of any officer or director of the Company or any of its
Subsidiaries;
(xvi) all agreements evidencing a loan in excess of $25,000 to any
officer or director of the Company or any of its Subsidiaries; and
(xvii) all Contracts relating to split-dollar life insurance policies
for any employee or director of the Company and its Subsidiaries.
(b) (i) Except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, other than Material
Agreements that have terminated or expired in accordance with their terms, each
Material Agreement is in full force and effect, is a valid and binding
obligation of the Company or such Subsidiary and, to the Company's Knowledge, of
each other party thereto and is enforceable, in accordance with its terms,
against each party thereto (other than the Company or such Subsidiary), in each
case except that the enforcement thereof may be limited by (A) the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar Laws affecting creditors' rights generally, (B) general principles
of equity (whether in a proceeding in equity or at law) and (C) an implied
covenant of good faith and fair dealing, and (ii) to the Knowledge of the
Company, neither the Company nor any of its Subsidiaries is or alleged to be,
and, to the Knowledge of the Company, no other party is or alleged to be, in
material default under, or in material breach or material violation of, any
Material Agreement and, to the Knowledge of the Company, no event or failure to
act has occurred which, with the giving of notice or passage of time or both,
would constitute such a material default, breach or violation. The designation
or definition of Material Agreements for purposes of this Section 2.7 and the
disclosures made pursuant thereto will not be construed or utilized to expand,
limit or define the terms "material" and "Material Adverse Effect" as otherwise
referenced and used in this Agreement.
2.8. Compliance.
(a) The Company and each of its Subsidiaries are in compliance with,
and are not in default or violation of, (i) the Certificate of Incorporation and
Bylaws of the Company or the equivalent organizational documents of such
Subsidiary, (ii) any Law or Order by which any of their respective assets or
properties are bound or affected and (iii) the terms of all notes, bonds,
mortgages, indentures, Contracts, permits, franchises and other instruments or
obligations to which any of them are a party or by which any of them or any of
their respective assets or properties are bound or affected, except, in the case
of clauses (ii) and (iii), for any such failures of compliance, defaults and
violations which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. To the Knowledge of the Company, the
Company and its Subsidiaries are in compliance with the terms of all Approvals,
except where the failure to so comply could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. To the
Knowledge of the Company, the Company and its Subsidiaries have conducted their
export transactions in all material respects in accordance with applicable
provisions of United States export control laws and regulations, including but
not limited to (i) the Export Administration Act and the Export Administration
Regulations thereunder and (ii) the Arms Export Control Act and the
International Traffic in Arms Regulations thereunder. Without limiting the
foregoing, the Company represents and warrants that, to its Knowledge, (A) it
and its Subsidiaries have obtained all material export licenses and other
approvals required for their exports of products, software and technologies from
the United States, (B) it and its Subsidiaries are in material compliance with
the terms of all applicable export licenses or other approvals, (C) there are no
pending or threatened material claims against the Company or its Subsidiaries
with respect to such export licenses or other approvals, (D) there are no
actions, conditions or circumstances pertaining to the Company's or its
Subsidiaries' export transactions that may give rise to any future material
claim and (E) no consents or approvals for the transfer of export licenses to
Parent are required, or such consents and approvals can be obtained
expeditiously without material cost. Except as set forth in Section 2.8 of the
Company Disclosure Schedule or as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, neither the Company
nor any of its Subsidiaries has received notice of any revocation or
modification of any federal, state, local or foreign Governmental Authority, or
any Approval of any federal, state, local or foreign Governmental Authority that
is material to the Company or any of its Subsidiaries.
(b) To the Company's Knowledge, as of the date hereof, neither the
Company nor any of its Subsidiaries nor any director, officer, employee or agent
of the Company or any of its Subsidiaries has, except for any of such uses,
payments or transactions as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful payments relating
to political activity, (ii) made any unlawful payment to any foreign or domestic
government official or employee or to any foreign or domestic political party or
campaign or violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended, (iii) consummated any transaction, made any payment, entered into
any agreement or arrangement or taken any other action in violation of Section
1128B(b) of the Social Security Act, as amended, or (iv) made any other unlawful
payment.
2.9. SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports, schedules, statements
and documents required to be filed with the Securities and Exchange Commission
("SEC") since January 1, 1998 (collectively, the "Company SEC Reports") pursuant
to the federal securities Laws and the Regulations of the SEC promulgated
thereunder, and all Company SEC Reports have been filed in all material respects
on a timely basis. The Company SEC Reports were prepared in accordance, and
complied as of their respective filing dates in all material respects, with the
requirements of the Exchange Act, the Securities Act and the Regulations
promulgated thereunder and did not at the time they were filed (or if amended or
superseded by a filing prior to the date hereof, 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 the light of the circumstances under which they were
made, not misleading. None of the Company's Subsidiaries has filed, or is
obligated to file, any forms, reports, schedules, statements or other documents
with the SEC.
(b) Each of the audited and unaudited consolidated financial
statements (including, in each case, any related notes thereto) contained in the
Company SEC Reports (the "SEC Financial Statements") (i) complied as to form in
all material respects with applicable accounting requirements and the published
Regulations of the SEC with respect thereto, (ii) were prepared in accordance
with generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto) and (iii) fairly present in all material respects the
consolidated financial position of the Company as at the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements
included in the Company's Form 10-Q reports were or are subject to normal and
recurring year-end adjustments.
(c) The unaudited consolidated financial statements previously
provided to Parent, as at December 31, 2000 and for the fiscal year then ended
(the "December 31 Financial Statements"), were prepared in accordance with GAAP
(with the exception of the absence of footnotes) applied on a consistent basis
with the SEC Financial Statements, and fairly present in all material respects
the consolidated financial position of the Company as at the date thereof and
the consolidated results of its operations and cash flows for the periods
indicated.
2.10. Absence of Certain Changes or Events.
(a) Except as described in Section 2.10(a) of the Company Disclosure
Schedule or as set forth in the Company SEC Reports filed prior to the date of
this Agreement, since December 31, 2000, the Company and its Subsidiaries have
conducted their businesses only in the ordinary and usual course and in a manner
consistent with past practice, and, since such date, there has not been any
change, development, circumstance, condition, event, occurrence, damage,
destruction or loss that has had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(b) Except as described in Section 2.10(b) of the Company Disclosure
Schedule or as set forth in the Company SEC Reports filed prior to the date of
this Agreement, during the period from December 31, 2000 to the date hereof, (i)
there has not been any change by the Company in its accounting methods,
principles or practices, any revaluation by the Company of any of its assets,
including, writing down the value of inventory or writing off notes or accounts
receivable, and (ii) there has not been any action or event, and neither the
Company nor any of its Subsidiaries has agreed in writing or otherwise to take
any action, that would have required the consent of Parent pursuant to Section
4.1 had such action or event occurred or been taken after the date hereof and
prior to the Effective Time.
2.11. No Undisclosed Liabilities.
Neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether absolute, accrued, fixed, contingent or
otherwise), and there is no existing fact, condition or circumstance which could
reasonably be expected to result in such liabilities or obligations, except
liabilities or obligations (i) reflected in the Company SEC Reports filed and
publicly available prior to the date hereof or in the December 31 Financial
Statements, (ii) disclosed in Section 2.11 of the Company Disclosure Schedule,
or (iii) incurred in the ordinary course of business which do not have, and
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
2.12. Absence of Litigation.
Except as described in Section 2.12 of the Company Disclosure Schedule
or expressly described in the Company SEC Reports filed and publicly available
prior to the date hereof, there is no Litigation pending against or, to the
Knowledge of the Company, threatened against the Company, any of its
Subsidiaries, or any of their respective properties or rights, before or subject
to any Court or Governmental Authority, which, if adversely determined, could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries is subject to
any outstanding Litigation or Order, which, individually or in the aggregate,
has had or could reasonably be expected to have, a Material Adverse Effect.
2.13. Employee Benefit Plans.
(a) Section 2.13(a) of the Company Disclosure Schedule contains a true
and complete list of each "employee benefit plan" (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, multiemployer plans within the meaning
of ERISA Section 3(37)), and all stock purchase, stock option, severance,
employment, change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, legally binding or not,
under which any employee or former employee of the Company or its Subsidiaries
(the "Company Employees") has any present or future right to benefits sponsored
or maintained by the Company or its Subsidiaries or under which the Company or
its Subsidiaries has any present or future liability. All such plans,
agreements, programs, policies and arrangements shall be collectively referred
to as the "Employee Plans".
(b) With respect to each Employee Plan, the Company has provided to
Parent a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof and, to the extent applicable: (i) any
related trust agreement or other funding instrument; (ii) the most recent
determination letter, if applicable; (iii) any summary plan description and
other written communications (or a description of any oral communications) by
the Company or its Subsidiaries to their employees concerning the extent of the
benefits provided under an Employee Plan; and (iv) for the three most recent
years (A) the Form 5500 and attached schedules, (B) audited financial
statements, and (C) actuarial valuation reports.
(c) (i) Each Employee Plan has been established and administered in
substantial compliance with its terms, and in substantial compliance with the
applicable provisions of ERISA, the Code and other applicable laws, rules and
regulations; (ii) each Employee Plan which is intended to be qualified within
the meaning of Code Section 401(a) has received a favorable determination letter
as to its qualification, and to the Knowledge of the Company, nothing has
occurred, whether by action or failure to act, that could reasonably be expected
to cause the loss of such qualification; (iii) to the Knowledge of the Company,
no event has occurred and no condition exists that would subject the Company or
its Subsidiaries, either directly or by reason of their affiliation with any
member of their "Controlled Group" (defined as any organization which is a
member of a controlled group of organizations within the meaning of Code
Sections 414(b), (c), (m) or (o)), to any tax, fine, lien, penalty or other
liability imposed by ERISA, the Code or other applicable laws, rules and
regulations; (iv) no "reportable event" (as such term is defined in ERISA
Section 4043), to the Knowledge of the Company, nonexempt "prohibited
transaction" (as such term is defined in ERISA Section 406 and Code Section
4975) or "accumulated funding deficiency" (as such term is defined in ERISA
Section 302 and Code Section 412 (whether or not waived)) has occurred with
respect to any Employee Plan; (v) except as disclosed in Schedule 2.13(c)(v), no
Employee Plan provides retiree welfare benefits except as defined under Section
4980B of the Code, and except as disclosed on Schedule 2.13(c)(v), neither the
Company nor its Subsidiaries have any obligations to provide any retiree welfare
benefits except as required under Section 4980B of the Code; and (vi) neither
the Company nor any member of its Controlled Group has engaged in, or is a
successor or parent corporation to an entity that has engaged in, a transaction
described in Sections 4069 or 4212(c) of ERISA.
(d) None of the Employee Plans is subject to Title IV of ERISA
(including, without limitation, any multiemployer plan within the meaning of
ERISA Section 4001(a)(3)) and none of the Company, its Subsidiaries or any
member of their Controlled Group has incurred any liability under Title IV of
ERISA which remains unsatisfied.
(e) With respect to any Employee Plan, (i) no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending or,
to the Knowledge of the Company, threatened, (ii) other than routine benefits
processing, to the Knowledge of the Company no facts or circumstances exist that
could give rise to any such actions, suits or claims and (iii) no administrative
investigation, audit or other administrative proceeding by the Department of
Labor, the Pension Benefit Guaranty Corporation, the Internal Revenue Service or
other governmental agencies are pending, in progress or, to the Knowledge of the
Company, threatened.
(f) Except as provided in Section 2.13(f) of the Company Disclosure
Schedule, no Employee Plan exists that could result in the payment to any
present or former employee of the Company or any of its Subsidiaries of any
money or other property or accelerate or provide any other rights or benefits to
any present or former employee of the Company or any of its Subsidiaries as a
result of the transactions contemplated by this Agreement. Except as provided in
Section 2.13(f) of the Company Disclosure Schedule, there is no Contract, plan
or arrangement (written or otherwise) covering any employee or former employee
of the Company or any of its Subsidiaries that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 280G of the Code.
(g) Section 2.13(g) of the Company Disclosure Schedule sets forth a
true and complete list of each current or former employee, officer, director and
investor of the Company or any of its Subsidiaries who holds, as of the date
hereof, any option, warrant or other right to purchase Company Common Stock or
Company Preferred Stock or any shares of restricted stock, if any, together with
the number of shares of Company Common Stock or Company Preferred Stock, if any,
subject to such option, warrant or right, the date of grant or issuance of such
option, warrant or right, the extent to which such option, warrant or right is
vested and/or exercisable, the exercise price of such option, warrant or right,
whether such option is intended to qualify as an incentive stock option within
the meaning of Section 422(b) of the Code, and the expiration date of each such
option, warrant and right. Section 2.13(g) of the Company Disclosure Schedule
also sets forth the total number of such options, warrants and rights.
2.14. Employment and Labor Matters.
(a) Except as set forth in Section 2.14(a) of the Company Disclosure
Schedule, none of the Company's or any Subsidiary's employment policies or
practices is currently being audited or, to the Knowledge of the Company,
investigated by any Governmental Authority or Court. Except as set forth in
Section 2.14(a) of the Company Disclosure Schedule or as could not, individually
or in the aggregate reasonably be expected to have a Material Adverse Effect,
there is no pending or, to the Knowledge of the Company, threatened Litigation,
unfair labor practice charge, or other charge or inquiry against the Company or
any Subsidiary brought by or on behalf of any employee, prospective employee,
former employee, retiree, labor organization or other representative of the
Company's or Subsidiary's employees, or other individual or any Governmental
Authority with respect to employment practices.
(b) Except as set forth in Section 2.14(b) of the Company Disclosure
Schedule, (i) there are no material controversies pending or threatened, between
the Company or any of its Subsidiaries and any of their respective employees;
(ii) neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or other labor union Contract applicable to
Persons employed by the Company or its Subsidiaries nor are there any activities
or proceedings of any labor union to organize any such employees of the Company
or any of its Subsidiaries of which the Company is aware; (iii) during the past
five years there have been no strikes, slowdowns, work stoppages, disputes,
lockouts, or threats thereof, by or with respect to any employees of the Company
or any of its Subsidiaries; and (iv) neither the Company nor any Subsidiary is a
party to, or otherwise bound by, any consent decree with, or citation or other
Order by, any Governmental Authority relating to employees or employment
practices. The Company and each of its Subsidiaries are in compliance in all
material respects with all material Laws, Contracts, and policies relating to
employment, employment practices, wages, hours, and terms and conditions of
employment, including the obligations of the Worker Adjustment and Retraining
Notification Act of 1988, as amended ("WARN"), and all other notification and
bargaining obligations arising under any collective bargaining agreement, by Law
or otherwise. Neither the Company nor any Subsidiary of the Company has
effectuated a "plant closing" or "mass layoff" as those terms are defined in
WARN, affecting in whole or in part any site of employment, facility, operating
unit or employee of the Company, without complying with all material provisions
of WARN or implemented any early retirement, separation or window program within
the past five years, nor has the Company or any Subsidiary planned or announced
any such action or program for the future.
2.15. Registration Statement; Proxy Statement/Prospectus.
None of the information supplied by the Company for inclusion in the
registration statement on Form S-4, or any amendment or supplement thereto,
pursuant to which the shares of Parent Common Stock to be issued in the Merger
will be registered with the SEC (including any amendments or supplements, the
"Registration Statement") shall, at the time such document is filed, at the time
amended or supplemented and at the time the Registration Statement is declared
effective by the SEC, 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. None of the information supplied by the Company for
inclusion in the proxy statement/prospectus to be sent to the stockholders of
the Company in connection with the meeting of the stockholders of the Company to
consider the Merger and vote on a proposal to adopt the Merger Agreement (the
"Company Stockholders' Meeting") (such proxy statement/prospectus, as amended or
supplemented, is referred to herein as the "Proxy Statement") shall, on the date
the Proxy Statement is first mailed to the stockholders of the Company, at the
time of the Company Stockholders' Meeting and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not false or misleading.
The Proxy Statement shall comply in all material respects as to form and
substance with the requirements of the Exchange Act and the Regulations
promulgated thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent or
Merger Sub which is contained or incorporated by reference in the Registration
Statement or Proxy Statement.
2.16. Taxes.
For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes and
governmental impositions of any kind in the nature of (or similar to) taxes,
payable to any federal, state, local or foreign taxing authority, including
those on or measured by or referred to as income, franchise, profits, gross
receipts, capital ad valorem, custom duties, alternative or add-on minimum
taxes, estimated, environmental, disability, registration, value added, sales,
use, service, real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes, and interest, penalties
and additions to tax imposed with respect thereto; and "Tax Returns" shall mean
returns, reports and information statements, including any schedule or
attachment thereto, with respect to Taxes required to be filed with the Internal
Revenue Service or any other governmental or taxing authority or agency,
domestic or foreign, including consolidated, combined and unitary tax returns.
Except as set forth in Section 2.16 of the Company Disclosure Schedule:
(a) All material Tax Returns required to be filed by or on
behalf of the Company, each of its Subsidiaries, and each affiliated,
combined, consolidated or unitary group of which the Company or any of
its Subsidiaries is a member have, to the extent required to be filed
on or before the date hereof, been timely filed, and all such Tax
Returns are true, complete and correct in all material respects.
(b) All material Taxes due and payable by or with respect to
the Company and each of its Subsidiaries shown on any Tax Return have
been timely paid. The Company and each of its Subsidiaries have
established adequate reserves (other than reserves for deferred Taxes
established to reflect timing differences between book and Tax
treatment) in accordance with GAAP on the respective company's Balance
Sheet for any material Taxes not yet due for all periods ending on or
before the date of the latest Balance Sheet. All assessments for
material Taxes due and owing by or with respect to the Company and
each of its Subsidiaries with respect to completed and settled
examinations or concluded litigation have been paid. Neither the
Company nor any of its Subsidiaries has incurred a Tax liability from
the date of the latest Balance Sheet other than a Tax liability in the
ordinary course of business. No material claim for unpaid Taxes has
become a Lien against the property of the Company or any of its
Subsidiaries or is being asserted against the property of the Company
or any of its Subsidiaries other than liens for Taxes not yet due and
payable or for Taxes contested in good faith and for which adequate
reserves have been established.
(c) No action, suit, proceeding, investigation, claim or
audit has formally commenced and no written notice has been received
that such audit or other proceeding is pending or threatened by any
Governmental Authority with respect to the Company or any of its
Subsidiaries or any group of corporations of which any of the Company
and its Subsidiaries has been a member, with regard to years or
periods during which the Company or its Subsidiaries were a member
thereof in respect of any Taxes, and all deficiencies proposed as a
result of such actions, suits, proceedings, investigations, claims or
audits have been paid, reserved against or settled.
(d) Neither the Company nor any of its Subsidiaries has
requested, or been granted any waiver of any federal, state, local or
foreign statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax. No extension or waiver of time
within which to file any Tax Return of, or applicable to, the Company
or any of its Subsidiaries has been granted or requested which has not
since expired.
(e) To the Knowledge of the Company, none of the Company or
any of its Subsidiaries has been a member of an affiliated,
consolidated, combined or unitary group (other than a group the common
parent of which was the Company) or has any material liability for the
Taxes of any Person under Treasury Regulation ss. 1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise.
(f) None of the Company or any of its Subsidiaries is a
party to, or is bound by or has any obligation under any Tax sharing
agreement or similar contract or arrangement. No closing agreement
pursuant to Section 7121 of the Code (or any similar provision of
state, local or foreign law) has been entered into by the Company or
any of its Subsidiaries.
(g) The Company and its Subsidiaries have not made any
material payments, are not obligated to make any material payments,
and are not a party to any agreements that under any circumstances
could obligate any of them to make any material payments, that will
not be deductible under Section 280G or Section 162(m) of the Code.
(h) The Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(i) The Company and each of its Subsidiaries have complied
with all applicable Laws relating to the payment, collection,
withholding and deposit, as the case may be, of Taxes (including,
without limitation, withholding of Taxes pursuant to Sections 1441,
1442 and 3406 of the Code or similar provisions under any foreign
Laws) and, to the extent required, have paid all amounts to the
relevant Governmental Authority, and have, within the time and in the
manner required by Law, withheld from employee wages and paid over to
the proper Governmental Authorities all amounts required to be so
withheld and paid over under all applicable Laws. The Company and its
Subsidiaries have collected all material sales and use taxes required
to be collected, and have remitted, or will remit on a timely basis,
such amounts to the appropriate Governmental Authorities, or have been
furnished properly completed exemption certificates and have
maintained all such records and supporting documents in the manner
required by all applicable sales and use tax statutes an regulations
for all periods for which the statute of limitations has not expired.
(j) Neither the Company nor any of its Subsidiaries has made
an election under Section 341(f) of the Code.
(k) None of the Company and its Subsidiaries will be
required to include any material amount in taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a
result of a change in the method of accounting for a taxable period
ending prior to the Closing Date, any "closing agreement" as described
in Section 7121 of the Code (or any corresponding provision of state,
local or foreign Tax Laws) entered into prior to the Closing Date, any
sale reported on the installment method that occurred prior to the
Closing Date, or any taxable income attributable to any amount that is
economically accrued prior to the Closing Date.
(l) None of the Company nor any of its Subsidiaries has been
a party to any distribution occurring during the last two years in
which the parties to the distribution treated the distribution as one
to which Section 355 of the Code is applicable.
2.17. Environmental Matters.
(a) Except as described on Section 2.17 of the Company Disclosure
Schedule, as expressly described in the written materials provided to the Parent
or as expressly described in any Environmental Report obtained by Parent with
respect to the Company or any of its Subsidiaries, and except as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect: (i) the Company and each of its Subsidiaries complies and have
complied, during all applicable statute of limitations periods, with all
applicable Environmental Laws, and possess and comply, and have possessed and
complied during all applicable statute of limitations periods, with all
Environmental Permits; (ii) to the Knowledge of the Company, there are and have
been no Materials of Environmental Concern or other conditions at any property
owned, operated, or otherwise used by the Company now or in the past, or at any
other location (including without limitation any facility to which Materials of
Environmental Concern from the Company or any of its Subsidiaries), that are in
circumstances that could reasonably be expected to give rise to any liability of
the Company or any of its Subsidiaries, or result in costs to the Company or any
of its Subsidiaries arising out of any Environmental Law; (iii) no Litigation
(including, to the Knowledge of the Company, any notice of violation or alleged
violation), under any Environmental Law or with respect to any Materials of
Environmental Concern to which the Company or any of its Subsidiaries is, or to
the Knowledge of the Company will be, named as a party, or affecting their
business, is pending or, to the Knowledge of the Company, threatened, nor is the
Company or any of its Subsidiaries the subject of any investigation to its
Knowledge or the recipient of any request for information in connection with any
such Litigation or potential Litigation; (iv) there are no Orders or agreements
under any Environmental Law or with respect to any Materials of Environmental
Concern to which the Company or any of its Subsidiaries is a party or affecting
their business; and (v) to the Knowledge of the Company, each of the foregoing
representations and warranties is true and correct with respect to any entity
for which the Company or any of its Subsidiaries has assumed or retained
liability, whether by Contract or operation of Law.
(b) The Company has furnished or made available to Parent true and
complete copies of all Environmental Reports in the possession of the Company or
any of its Subsidiaries.
(c) For purposes of this Agreement, the terms below are defined as
follows:
"Environmental Laws" shall mean any and all Laws, Orders,
guidelines, codes, or other legally enforceable requirement (including,
without limitation, common law) of any foreign government, the United
States, or any state, local, municipal or other Governmental Authority,
regulating, relating to or imposing liability or standards of conduct
concerning protection of the environment or of human health.
"Environmental Permits" shall mean any and all permits,
licenses, registrations, notifications, exemptions and any other
Approvals required of the Company under any Environmental Law.
"Environmental Report" shall mean any report, study,
assessment, audit, or other similar document that addresses any issue
of actual or potential noncompliance with, actual or potential
liability under or cost arising out of, or actual or potential impact
on business in connection with, any Environmental Law or any proposed
or anticipated change in or addition to Environmental Law, that may in
any way affect the Company or any entity for which it may be liable or
any Subsidiary.
"Materials of Environmental Concern" shall mean any gasoline
or petroleum (including crude oil or any fraction thereof) or petroleum
products, polychlorinated biphenyls, urea-formaldehyde insulation,
asbestos, pollutants, contaminants, radioactivity, and any other
substances of any kind, whether or not any such substance is defined as
hazardous or toxic under any Environmental Law, that is regulated
pursuant to or could give rise to liability under any Environmental
Law.
2.18. Intellectual Property.
(a) The Company has provided or made available all material United
States and foreign patent, copyright, trademark, service xxxx, trade dress,
domain name and other registrations, and applications, and all material
unregistered Intellectual Property owned or used by the Company or its
Subsidiaries ("Company Intellectual Property").
(b) To the Knowledge of the Company, all material patents and Company
Intellectual Property (and all applications therefor) are currently in
compliance in all material respects with all applicable legal requirements
(including timely filings, proofs and payments of fees), and to the Knowledge of
the Company, are valid and enforceable, except for such noncompliance,
invalidity or unenforceability that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(c) Except as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, the Company and its Subsidiaries
own or have the valid right to use all of the Intellectual Property used in the
conduct of the Company's and each of its Subsidiaries' business as currently
conducted and for the ownership, maintenance and operation of the Company's and
its Subsidiaries' properties and assets, free of any obligation to pay
royalties, honoraria or other fees, except as set forth in Section 2.18(c) of
the Company Disclosure Schedule. Except as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, the Company
and its Subsidiaries own, free and clear of all Liens or adverse ownership
claims (including by current and former employees and contractors) all their
owned Company Intellectual Property.
(d) Except as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, the Company and each of its
Subsidiaries have taken all commercially reasonable steps to maintain, police
and protect the Intellectual Property which they own or use, including the
execution of all appropriate Intellectual Property assignments and releases,
(including from past and current employees and contractors), true and complete
representative copies of which have been delivered to Parent. To the Knowledge
of the Company, except under written confidentiality agreements, there has been
no disclosure of any confidential Company Intellectual Property to any third
party, which could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Except as disclosed in Section 2.18(d) of the
Company Disclosure Schedule, to the Knowledge of the Company and except as could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (i) the conduct of the Company's and its Subsidiaries'
businesses as currently conducted or planned to be conducted does not infringe
or otherwise impair or conflict with ("Infringe") any Intellectual Property of
any third party, and the Company Intellectual Property is not being Infringed by
any third party, (ii) there is no Litigation or Order pending or outstanding, or
to the Knowledge of the Company, threatened, that seeks to limit or challenge or
that concerns the ownership, use, validity or enforceability of any Company
Intellectual Property.
2.19. Insurance.
The Company's policies of insurance and bonds as currently in effect
are of the type and in amounts customarily carried by Persons conducting
businesses similar to those of the Company and its Subsidiaries. To the
Knowledge of the Company, there is no material claim by the Company or any of
its Subsidiaries pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds. All premiums payable under all such policies and bonds have
been paid and the Company and its Subsidiaries are in material compliance with
the terms of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage), and the Company shall, and shall
cause its Subsidiaries to, maintain in full force and effect all such insurance
during the period from the date hereof through the Closing Date. To the
Knowledge of the Company, there is not any threatened termination of or material
premium increase with respect to any of such policies or bonds.
2.20. No Restrictions on the Merger; Takeover Statutes.
The Board of Directors of the Company has, on or prior to the date
hereof, approved this Agreement, the Option Agreement, the Merger and the other
transactions contemplated hereby and such approval is sufficient to render
inapplicable to this Agreement, the Option Agreement, the Merger and any other
transactions contemplated hereby, the restrictions on business combinations of
Section 203 of the DGCL. To the Company's Knowledge, no other takeover statute
or similar Law applicable to the Company or its Subsidiaries or any Material
Agreement to which any of them is a party (a) would or would purport to impose
restrictions which might adversely affect or delay the consummation of the
transactions contemplated by this Agreement, or the Option Agreement, or (b) as
a result of the consummation of the transactions contemplated by this Agreement
or the Option Agreement or the acquisition of securities of the Company or the
Surviving Corporation by Parent or Merger Sub (i) would or would purport to
restrict or impair the ability of Parent to vote or otherwise exercise the
rights of a stockholder with respect to securities of the Company or any of its
Subsidiaries that may be acquired or controlled by Parent or (ii) would or would
purport to entitle any Person to acquire securities of the Company.
2.21. Pooling; Tax Matters.
(a) To the Knowledge of the Company, neither the Company nor any of
its Affiliates has taken or agreed to take any action, failed to take any action
or is aware of any fact or circumstance that would prevent (i) the Merger from
being treated for financial accounting purposes as a "pooling of interests" in
accordance with GAAP and the Regulations of the SEC or (ii) the Merger from
constituting a reorganization within the meaning of Section 368(a) of the Code.
(b) The Company has no Knowledge of any reason why it may not receive
a letter from KPMG LLP (the "Company's Accountants") dated as of the Closing
Date and addressed to the Company in which the Company's Accountants will concur
with the Company management's conclusion that no conditions exist related to the
Company that would preclude Parent from accounting for the Merger as a "pooling
of interests."
(c) Section 2.21(c) of the Company Disclosure Schedule contains a true
and complete list of all Persons who, to the Knowledge of the Company, may be
deemed to be Affiliates of the Company, excluding all of its Subsidiaries but
including all directors and executive officers of the Company.
2.22. Brokers.
No broker, financial advisor, finder or investment banker or other
Person is entitled to any broker's, financial advisor's, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company, except for
Xxxxxxxxx Xxxxxxxx, Inc. (the "Company Financial Advisors"). Section 2.22 of the
Company Disclosure Schedule sets forth, and the Company has heretofore furnished
to Parent a true and complete copy of, all agreements between the Company and
the Company Financial Advisors pursuant to which such Person would be entitled
to any payment relating to the transactions contemplated hereunder.
2.23. Interested Party Transactions.
Except as disclosed in Section 2.23 of the Company Disclosure Schedule
or in SEC Reports filed prior to the date hereof, there are no existing
Contracts, transactions, indebtedness or other arrangements, or any related
series thereof, between the Company or any of its Subsidiaries, on the one hand,
and any of the directors, officers, stockholders or other Affiliates of the
Company and its Subsidiaries, or any of their respective Affiliates or family
members, on the other (except for amounts due as normal salaries and bonuses and
in reimbursement of ordinary expenses).
2.24. Opinion of Financial Advisor.
The Company has received the written opinion of the Company Financial
Advisors to the effect that, in its opinion, as of the date hereof, the Exchange
Ratio to be used in the Merger is fair to such stockholders of the Company from
a financial point of view, and the Company has provided copies of such opinion
to Parent.
2.25. Company Rights Agreement.
The Company Board of Directors has approved and duly authorized and
the Company has executed an amendment and will amend, within two Business Days
of the date of this Agreement,(substantially in the form provided to Parent) the
Company Rights Agreement to the effect that neither of Parent or Merger Sub or
any of their respective Affiliates shall become an Acquiring Person (as defined
in the Company Rights Agreement), and that no Distribution Date (as defined in
the Company Rights Agreement) will occur, and that the Company Rights will not
separate from the underlying shares of Company Common Stock or give the holders
thereof the right to acquire securities of any party hereto, in each case as a
result of the approval, execution or delivery of this Agreement, the Option
Agreement or the consummation of the transactions contemplated hereby or
thereby. The Company Rights Agreement shall terminate and be of no further force
or effect immediately prior to the Effective Time, without any consideration
being payable with respect to the outstanding Company Rights thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and
warrant to the Company as follows:
3.1. Organization and Qualification.
Each of Parent and Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of Delaware. Parent has all the
requisite corporate power and authority, and is in possession of all Approvals
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted, except where the failure to be so qualified,
existing and in good standing or to have such power, authority and Approvals
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each of Parent and Merger Sub is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Merger Sub
is a newly-formed single purpose entity which has been formed solely for the
purposes of the Merger and will not carry on any business or engage in any
activities other than those reasonably related to the Merger.
3.2. Capitalization.
(a) The authorized capital of Parent consists of 960,000,000 shares of
Parent Common Stock and 2,000,000 shares of preferred stock, par value $0.001
per share ("Parent Preferred Stock"). As of January 25, 2001, (i) 285,248,567
shares of Parent Common Stock were issued and outstanding; (ii) no shares of
Parent Preferred Stock were issued or outstanding; (iii) no shares of Parent
Common Stock were held by any Subsidiary of the Parent; (iv) 74,296,016 shares
of Parent Common Stock were duly reserved for future issuance upon exercise of
options granted to employees under its employee stock option plans (the "Parent
Option Plans"); and (v) a sufficient number of shares of Parent Common Stock
were duly reserved for future issuance pursuant to the Employee Stock
Participation Plan. None of the outstanding shares of Parent Common Stock are
subject to, nor were they issued in violation of any, purchase option, call
option, right of first refusal, preemptive right, subscription right or any
similar right. Except as set forth above and in Section 3.2(a) of the Parent
Disclosure Schedule, as of the date hereof, no shares of voting or non-voting
capital stock, other equity interests, or other voting securities of Parent were
issued, reserved for issuance or outstanding. Except as described in Section
3.2(a) of the Parent Disclosure Schedule, all outstanding options to purchase
Parent Common Stock were granted under the Parent Option Plans. All of the
outstanding shares of Parent Common Stock are, and all shares to be issued as
part of the Merger Consideration will be, when issued in accordance with the
terms hereof, duly authorized, validly issued, fully paid and nonassessable.
There are no bonds, debentures, notes or other indebtedness of Parent with
voting rights (or convertible into, or exchangeable for, securities with voting
rights) on any matters on which stockholders of Parent may vote. As of the date
hereof, the authorized capital stock of Merger Sub consists of 1,000 shares of
Merger Sub Common Stock, of which 100 shares of Merger Sub Common Stock are
outstanding. All of the outstanding shares of Merger Sub Common Stock are owned
by Parent.
(b) Except as set forth on Section 3.2(b) of the Parent Disclosure
Schedule, all of the outstanding shares of capital stock of each of the Parent's
Subsidiaries have been duly authorized, validly issued, fully paid and
nonassessable, are not subject to, and were not issued in violation of, any
preemptive (or similar) rights, and are owned, of record and beneficially, by
Parent or one of its direct or indirect Subsidiaries, free and clear of all
Liens whatsoever. Except as set forth in Section 3.2(b) of the Parent Disclosure
Schedule, there are no restrictions of any kind which prevent the payment of
dividends by any of the Parent's Subsidiaries, and neither Parent nor any of its
Subsidiaries is subject to any obligation or requirement to provide funds for or
to make any investment (in the form of a loan or capital contribution) to or in
any Person.
(c) Except for outstanding options under the Parent Option Plans and
except as described in Section 3.2(c) of the Parent Disclosure Schedule, as of
the date hereof, there are no outstanding securities, options, warrants, calls,
rights, convertible or exchangeable securities, commitments, agreements,
arrangements or undertakings of any kind (contingent or otherwise) to which
Parent or any of its Subsidiaries is a party or by which any of them is bound,
obligating Parent or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or other
voting securities of Parent or of any of its Subsidiaries or obligating Parent
or any of its Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. Except as described in Section 3.2(c) of the Parent Disclosure
Schedule, as of the date hereof, there are no stock-appreciation rights,
stock-based performance units, "phantom" stock rights or other agreements,
arrangements or commitments of any character (contingent or otherwise) pursuant
to which any Person is or may be entitled to receive any payment or other value
based on the revenues, earnings or financial performance, stock price
performance or other attribute of Parent or any of its Subsidiaries or assets or
calculated in accordance therewith (other than ordinary course payments or
commissions to employees or sales representatives of Parent based upon revenues
generated by them without augmentation as a result of the transactions
contemplated hereby) (collectively, "Stock-Based Rights") or to cause Parent or
any of its Subsidiaries to file a registration statement under the Securities
Act, or which otherwise relate to the registration of any securities of Parent.
Except as set forth in Section 3.2(c) of the Parent Disclosure Schedule, there
are no voting trusts, proxies or other agreements, commitments or understandings
of any character to which Parent or any of its Subsidiaries or, to the Knowledge
(as defined herein) of Parent, any of Parent's stockholders is a party or by
which any of them is bound with respect to the issuance, holding, acquisition,
voting or disposition of any shares of capital stock of Parent or any of its
Subsidiaries.
3.3. Authority; Enforceability.
Each of Parent and Merger Sub has all requisite corporate power and
authority to execute and deliver this Agreement and each instrument required
hereby to be executed and delivered by it at the Closing, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by each of Parent
and Merger Sub of this Agreement and each instrument required hereby to be
executed and delivered by Parent and Merger Sub at the Closing and the
performance of their respective obligations hereunder and thereunder have been
duly and validly authorized by the Board of Directors of each of Parent and
Merger Sub and by Parent as the sole stockholder of Merger Sub. Except for
filing of the Certificate of Merger, no other corporate proceedings on the part
of Parent or Merger Sub are necessary to authorize the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and Merger Sub and, assuming due authorization,
execution and delivery hereof by the Company, constitutes a legal, valid and
binding obligation of each of Parent and Merger Sub, enforceable against each of
Parent and Merger Sub in accordance with its terms.
3.4. No Conflict; Required Filings and Consents.
(a) The execution and delivery by Parent and Merger Sub of this
Agreement, the Option Agreement or any instrument required by this Agreement to
be executed and delivered by Parent or Merger Sub at the Closing do not, and the
performance of this Agreement, the Option Agreement or any instrument required
by this Agreement to be executed and delivered by Parent or Merger Sub at the
Closing, shall not, (i) conflict with or violate the Certificate of
Incorporation or Bylaws or equivalent organizational documents of Parent, Merger
Sub or any Subsidiary of Parent, (ii) conflict with or violate any Law or Order
in each case applicable to Parent, Merger Sub or any Subsidiary of Parent or by
which its or any of their respective properties or assets is bound or affected,
or (iii) result in any breach or violation of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or impair Parent's, Merger Sub's or any Subsidiary of Parent's rights or alter
the rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of Parent, Merger Sub or
any Subsidiary of Parent pursuant to, any note, bond, mortgage, indenture,
Contract, permit, franchise or other instrument or obligation to which Parent,
Merger Sub or any Subsidiary of Parent is a party or by which Parent, Merger Sub
or any Subsidiary of Parent or its or any of their respective properties or
assets is bound or affected, except (A) as set forth in Section 3.4(a) of the
Parent Disclosure Schedule or (B) in the case of clause (ii) or (iii) above, for
any such conflicts, breaches, violations, defaults or other occurrences that
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) The execution and delivery by Parent and Merger Sub of this
Agreement do not, and the performance by Parent and Merger Sub of this Agreement
shall not, require Parent, Merger Sub or any Subsidiary of Parent to obtain the
Approval of, observe any waiting period imposed by, or make any filing with or
notification to, any Governmental Authority, domestic or foreign, except for (A)
compliance with applicable requirements of the Securities Act, the Exchange Act,
Blue Sky Laws, or the pre-Merger notification requirements of the HSR Act or
Foreign Competition Laws, (B) the filing of the Certificate of Merger in
accordance with Delaware law, (C) the filing of a listing application or other
documents as required by the New York Stock Exchange and the NASDAQ National
Market System or (D) where the failure to obtain such Approvals, or to make such
filings or notifications, would not individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
3.5. Compliance.
(a) Parent, Merger Sub and each Subsidiary of Parent are in compliance
with, and are not in default or violation of (i) their respective Certificates
of Incorporation and Bylaws or equivalent organizational documents, (ii) any Law
or Order or by which any of their respective assets or properties are bound or
affected and (iii) the terms of all notes, bonds, mortgages, indentures,
Contracts, permits, franchises and other instruments or obligations to which any
of them is a party or by which any of them is or any of their respective assets
or properties are bound or affected, except, in the case of clauses (ii) and
(iii), for any such failures of compliance, defaults and violations which could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. To the Knowledge of Parent, Parent and its Subsidiaries have
conducted their export transactions in all material respects in accordance with
applicable provisions of United States export control laws and regulations,
including but not limited to (A) the Export Administration Act and the Export
Administration Regulations thereunder and (B) the Arms Export Control Act and
the International Traffic in Arms Regulations thereunder. Without limiting the
foregoing, Parent represents and warrants that, to its Knowledge, (1) it and its
Subsidiaries have obtained all material export licenses and other approvals
required for their exports of products, software and technologies from the
United States, (2) it and its Subsidiaries are in material compliance with the
terms of all applicable export licenses or other approvals, (3) there are no
pending or threatened material claims against Parent or its Subsidiaries with
respect to export licenses or other approvals, and (4) there are no actions,
conditions or circumstances pertaining to Parent's or its Subsidiaries' export
transactions that may give rise to any future material claim. Parent, Merger Sub
and each Subsidiary of Parent are in compliance with the terms of all Approvals,
except where the failure to so comply could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Except as
set forth in Section 3.5 of the Parent Disclosure Schedule or as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, neither Parent nor Merger Sub nor any of Parent's Subsidiaries
has received notice of any revocation or modification of any federal, state,
local or foreign Governmental Authority, or any Approval of any federal, state,
local or foreign Governmental Authority that is material to Parent, Merger Sub
or any Subsidiary of Parent.
(b) To Parent's Knowledge, as of the date hereof, none of the Parent,
Merger Sub nor any Subsidiary of Parent, nor any director, officer, employee or
agent of Parent, Merger Sub or any such Subsidiary has, except for any such use,
payment or transaction as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful payments relating
to political activity, (ii) made any unlawful payment to any foreign or domestic
government official or employee or to any foreign or domestic political party or
campaign or violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended, (iii) consummated any transaction, made any payment, entered into
any agreement or arrangement or taken any other action in violation of the
Social Security Act, as amended, or (iv) made any other unlawful payment.
3.6. SEC Filings; Financial Statements.
(a) Parent has filed all reports and documents required to be filed
with the SEC since January 1, 1998 (collectively, the "Parent SEC Reports")
pursuant to the federal securities Laws and Regulations of the SEC promulgated
thereunder, and all Parent SEC Reports have been filed in all material respects
on a timely basis. The Parent SEC Reports were prepared in accordance, and
complied as of their respective filing dates in all material respects, with the
requirements of the Exchange Act and the Regulations promulgated thereunder and
did not at the time they were filed (or if amended or superseded by a filing
prior to the date hereof, 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 the
light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in Parent SEC Reports (i) complied in
all material respects with applicable accounting requirements and the published
Regulations of the SEC with respect thereto, (ii) were prepared in accordance
with GAAP (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis throughout the periods involved
(except as may be expressly described in the notes thereto) and (iii) fairly
presents the consolidated financial position of Parent as at the respective
dates thereof and the consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
included in the Company's Form 10-Q reports were or are subject to normal and
recurring year-end adjustments that have not been and are not expected to be
material in amount to Parent.
3.7. Absence of Certain Changes or Events.
(a) Except as described in Section 3.7(a) of the Parent Disclosure
Schedule, since September 30, 2000, Parent has conducted its businesses in the
ordinary and usual course and in a manner consistent with past practice, and,
since such date, there has not been any change, development, circumstance,
condition, event, occurrence, damage, destruction or loss that has had or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(b) Except as described in Section 3.7(b) of the Parent Disclosure
Schedule, during the period from September 30, 2000 to the date hereof, (i)
there has not been any change by Parent in its accounting methods, principles or
practices, any revaluation by Parent of any of its assets, including, writing
down the value of inventory or writing off notes or accounts receivable, and
(ii) there has not been any action or event, and neither Parent nor any of its
Subsidiaries has agreed in writing or otherwise to take any action, that would
have required the consent of the Company pursuant to Section 4.2 had such action
or event occurred or been taken after the date hereof and prior to the Effective
Time.
3.8. No Undisclosed Liabilities.
Neither Parent nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether absolute, accrued, fixed, contingent or
otherwise), and there is no existing fact, condition or circumstance which could
reasonably be expected to result in such liabilities or obligations, except
liabilities or obligations (i) reflected in Parent SEC Reports filed and
publicly available prior to the date hereof, (ii) disclosed in Section 3.8 of
the Parent Disclosure Schedule, or (iii) incurred in the ordinary course of
business which do not have, and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
3.9. Absence of Litigation.
Except as described in Section 3.8 of the Parent Disclosure Schedule
or expressly described in the Parent SEC Reports filed and publicly available
prior to the date hereof, there is no Litigation pending on behalf of or against
or, to the Knowledge of Parent, threatened against Parent, any of its
Subsidiaries, or any of their respective properties or rights, before or subject
to any Court or Governmental Authority which if adversely determined could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Neither Parent nor any of its Subsidiaries is subject to any
outstanding Litigation or Order which, individually or in the aggregate, has had
or could reasonably be expected to have a Material Adverse Effect.
3.10. Environmental Matters.
Except as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect: (i) Parent and each of its
Subsidiaries complies and have complied, during all applicable statute of
limitations periods, with all applicable Environmental Laws, and possess and
comply, and have possessed and complied during all applicable statute of
limitations periods, with all Environmental Permits; (ii) to the Knowledge of
Parent, there are and have been no Materials of Environmental Concern or other
conditions at any property owned, operated, or otherwise used by Parent now or
in the past, or at any other location (including without limitation any facility
to which Materials of Environmental Concern from Parent or any of its
Subsidiaries), that are in circumstances that could reasonably be expected to
give rise to any liability of Parent or any of its Subsidiaries, or result in
costs to Parent or any of its Subsidiaries arising out of any Environmental Law;
(iii) no Litigation (including, to the Knowledge of Parent, any notice of
violation or alleged violation), under any Environmental Law or with respect to
any Materials of Environmental Concern to which Parent or any of its
Subsidiaries is, or to the Knowledge of Parent will be, named as a party, or
affecting their business, is pending or, to the Knowledge of Parent, threatened;
nor is Parent or any of its Subsidiaries the subject of any investigation or the
recipient of any request for information in connection with any such Litigation
or potential Litigation; (iv) there are no Orders or agreements under any
Environmental Law or with respect to any Materials of Environmental Concern to
which Parent or any of its Subsidiaries is a party or affecting their business;
and (v) to the Knowledge of Parent, each of the foregoing representations and
warranties is true and correct with respect to any entity for which Parent or
any of its Subsidiaries has assumed or retained liability, whether by Contract
or operation of Law.
3.11. Registration Statement; Proxy Statement/Prospectus.
None of the information supplied by Parent for inclusion in the
Registration Statement shall, at the time such document is filed, at the time
amended or supplemented, or at the time the Registration Statement is declared
effective by the SEC, 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. None of the information supplied by Parent for inclusion
in the Proxy Statement shall, on the date the Proxy Statement is first mailed to
the stockholders of the Company, at the time of Company Stockholders' Meeting
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not false or misleading. The Registration Statement will comply as to
form in all material respects with the provisions of the Securities Act.
Notwithstanding the foregoing, Parent makes no representation, warranty or
covenant with respect to any information supplied by the Company which is
contained in the Registration Statement or Proxy Statement.
3.12. Brokers.
No broker, financial advisor, finder or investment banker or other
Person is entitled to any broker's, financial advisor's, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent, except for Xxxxxx Xxxxxx
Partners (the "Parent Financial Advisors").
3.13. Pooling; Tax Matters.
(a) The Parent intends that the Merger be accounted for under the
"pooling of interests" method under the requirements of Opinion No. 16 (Business
Combinations) of the Accounting Principles Board of the American Institute of
Certified Public Accountants, the Financial Accounting Standards Board, and the
Regulations of the SEC.
(b) To the Knowledge of Parent, neither Parent and Merger Sub nor any
of their Affiliates has taken or agreed to take any action or failed to take any
action that would prevent (a) the Merger from being treated for financial
accounting purposes as a "pooling of interests" in accordance with GAAP and the
Regulations of the SEC or (b) the Merger from constituting a reorganization
within the meaning of Section 368(a) of the Code.
(c) Parent has no Knowledge of any reason why it may not receive a
letter from Ernst & Young LLP (the "Parent's Accountants") dated as of the
Closing Date and addressed to Parent in which the Parent's Accountants will
concur with Parent management's conclusion that no conditions exist related to
Parent that would preclude Parent from accounting for the Merger as a "pooling
of interests."
3.14. Taxes.
Except as set forth in Section 3.14 of the Parent Disclosure Schedule:
(a) All material Tax Returns required to be filed by or on
behalf of the Parent, each of its Subsidiaries, and each affiliated,
combined, consolidated or unitary group of which the Parent or any of
its Subsidiaries is a member have, to the extent required to be filed
on or before the date hereof, been timely filed, and all such Tax
Returns are true, complete and correct in all material respects.
(b) All material Taxes due and payable by or with respect to
the Parent and each of its Subsidiaries shown on any Tax Return have
been timely paid. The Parent and each of its Subsidiaries have
established adequate reserves (other than reserves for deferred Taxes
established to reflect timing differences between book and Tax
treatment) in accordance with GAAP on the respective company's Balance
Sheet for any material Taxes not yet due for all periods ending on or
before the date of the latest Balance Sheet. All assessments for
material Taxes due and owing by or with respect to the Parent and each
of its Subsidiaries with respect to completed and settled examinations
or concluded litigation have been paid. Neither the Parent nor any of
its Subsidiaries has incurred a Tax liability from the date of the
latest Balance Sheet other than a Tax liability in the ordinary course
of business. No material claim for unpaid Taxes has become a Lien
against the property of the Parent or any of its Subsidiaries or is
being asserted against the property of the Parent or any of its
Subsidiaries other than liens for Taxes not yet due and payable or for
Taxes contested in good faith and for which adequate reserves have
been established.
(c) No action, suit, proceeding, investigation, claim or
audit has formally commenced and no written notice has been received
that such audit or other proceeding is pending or threatened by any
Governmental Authority with respect to the Parent or any of its
Subsidiaries or any group of corporations of which any of the Parent
and its Subsidiaries has been a member, with regard to years or
periods during which the Parent or its Subsidiaries were a member
thereof in respect of any Taxes, and all deficiencies proposed as a
result of such actions, suits, proceedings, investigations, claims or
audits have been paid, reserved against or settled.
3.15. Intellectual Property
(a) To the Knowledge of the Parent, all material patents and all
material United States and foreign patent, copyright, trademark, service xxxx,
trade dress, domain name and other registrations, and applications, and all
material unregistered Intellectual Property owned or used by the Parent or its
Subsidiaries ("Parent Intellectual Property") (and all application therefor) are
currently in compliance in all material respects with all applicable legal
requirements (including timely filings, proofs and payments of fees), and to the
Knowledge of the Parent, are valid and enforceable, except for such
noncompliance, invalidity or unenforceability that could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Except as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, the Parent and its Subsidiaries
own or have the valid right to use all of the Intellectual Property used in the
conduct of the Parent's and each of its Subsidiaries' business as currently
conducted and for the ownership, maintenance and operation of the Parent's and
its Subsidiaries' properties and assets, free of any obligation to pay
royalties, honoraria or other fees, except as set forth in Section 3.15(b) of
the Parent Disclosure Schedule. Except as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, the Parent
and its Subsidiaries own, free and clear of all Liens or adverse ownership
claims (including by current and former employees and contractors) all their
owned Parent Intellectual Property.
(c) Except as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, the Parent and each of its
Subsidiaries have taken all commercially reasonable steps to maintain, police
and protect the Intellectual Property which they own or use, including the
execution of all appropriate Intellectual Property assignments and releases,
(including from past and current employees and contractors. To the Knowledge of
the Parent, except under written confidentiality agreements, there has been no
disclosure of any confidential Parent Intellectual Property to any third party,
which could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Except as disclosed in Section 3.15(c) of the Parent
Disclosure Schedule, to the Knowledge of Parent, and except as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect , (i) the conduct of the Parent's and its Subsidiaries'
businesses as currently conducted or planned to be conducted does not Infringe
any Intellectual Property of any third party, and the Parent Intellectual
Property is not being Infringed by any third party, (ii) there is no Litigation
or Order pending or outstanding, or to the Knowledge of the Parent, threatened,
that seeks to limit or challenge or that concerns the ownership, use, validity
or enforceability of any Parent Intellectual Property.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1. Conduct of Business by the Company Pending the Merger.
The Company covenants and agrees that, between the date hereof and the
Effective Time, except as expressly required or permitted by this Agreement or
unless Parent shall otherwise agree in writing in advance (which consent shall
not be unreasonably withheld or delayed) or as otherwise set forth on Section
4.1 of the Company Disclosure Schedule prior to the date hereof, the Company
shall conduct and shall cause the businesses of each of its Subsidiaries to be
conducted only in, and the Company and its Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice and in compliance with applicable laws. The Company shall use
its reasonable best efforts to preserve intact the business organization and
assets of the Company and each of its Subsidiaries, to keep available the
services of the present officers, employees and consultants of the Company and
each of its Subsidiaries, to maintain in effect Material Agreements and to
preserve the present relationships of the Company and each of its Subsidiaries
with customers, licensees, suppliers and other Persons with which the Company or
any of its Subsidiaries has significant business relations. Except as set forth
on Section 4.1 of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries shall, between the date hereof and the Effective Time,
directly or indirectly do, or propose to do, any of the following without the
prior written consent of Parent:
(a) other than ministerial changes not adverse to Parent or
Merger Sub, amend or otherwise change the Certificate of Incorporation
or Bylaws or equivalent organizational document of the Company or any
of its Subsidiaries or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or ownership of the Company or any of its Subsidiaries;
(b) issue, grant, sell, transfer, deliver, pledge, promise,
dispose of or encumber, or authorize the issuance, grant, sale,
transfer, deliverance, pledge, promise, disposition or encumbrance of,
any shares of capital stock of any class, or any options, warrants,
convertible or exchangeable securities or other rights of any kind to
acquire any shares of capital stock or any other ownership interest or
Stock-Based Rights of the Company or any of its Subsidiaries (except
for the issuance of Company Common Stock issuable pursuant to the
Outstanding Employee Options and options granted to new employees in
the ordinary source of business consistent with past practice); or
redeem, purchase or otherwise acquire, directly or indirectly, any of
the capital stock of the Company or interest in or securities of any
Subsidiary;
(c) other than regular quarterly dividends of $0.0325 per
share of Company Stock with regular record, declaration and payment
dates in accordance with past practice, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of any of its capital stock
(except that a wholly-owned Subsidiary of the Company may declare and
pay a dividend to its parent); split, combine or reclassify any of its
capital stock, or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of
its capital stock; or amend the terms of, repurchase, redeem or
otherwise acquire, or permit any Subsidiary to repurchase, redeem or
otherwise acquire, any of its securities or any securities of its
Subsidiaries; or propose to do any of the foregoing;
(d) other than (i) as disclosed to and agreed by Parent
prior to the date hereof or (ii) in the ordinary course of business
consistent with past practice, sell, transfer, deliver, lease,
license, sublicense, mortgage, pledge, encumber or otherwise dispose
of (in whole or in part), or create, incur, assume or subject any Lien
on, any of the assets of the Company or any of its Subsidiaries
(including any Intellectual Property) without the prior written
consent of Parent (which consent shall not be unreasonably withheld or
delayed);
(e) acquire (by merger, consolidation, acquisition of stock
or assets or otherwise) any corporation, limited liability company,
partnership, joint venture, trust or other entity or any business
organization or division thereof; incur any indebtedness for borrowed
money or issue any debt securities or any warrants or rights to
acquire any debt security or assume, guarantee or endorse or otherwise
as an accommodation become responsible for, the obligations of any
Person; make any loans, advances or enter into any financial
commitments other than in the ordinary course of business consistent
with past practice or with the prior written consent of Parent (which
consent shall not be unreasonably withheld or delayed); or, without
the prior written consent of Parent (which consent shall not be
unreasonably withheld or delayed) authorize or make any material
capital expenditures other than capital expenditures in the ordinary
course of business; provided, however, that the Company shall review
and consult with Parent and use commercially reasonable efforts in
order to avoid redundant spending with Parent with respect to
fabrication and test equipment;
(f) hire or terminate any employee or consultant, except in
the ordinary course of business consistent with past practice, and
except to the extent required under applicable law or under existing
employee or director benefit plans, agreements or arrangements;
increase the compensation or fringe benefits (including, without
limitation, bonus) payable or to become payable to its directors or
officers, except (i) with the prior written consent of Parent (which
consent shall not be unreasonably withheld or delayed), or (ii) for
increases in salary or wages of employees of the Company or its
Subsidiaries who are not officers of the Company in the ordinary
course of business consistent with past practice, or loan or advance
any money or other asset or property to, or grant any bonus, severance
or termination pay not required under existing severance plans to, or
enter into any employment or severance agreement with, any director,
officer or other employee of the Company or any of its Subsidiaries,
or establish, adopt, enter into, terminate or amend any Employee Plan
or any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, stock purchase, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any current or former directors, officers or employees
other than as required by the terms thereof or applicable law;
(g) change any accounting policies or procedures (including
procedures with respect to reserves, revenue recognition, payments of
accounts payable and collection of accounts receivable) or method of
Tax accounting unless required by a change in Law or GAAP used by it;
(h) without the prior written consent of Parent (which
consent shall not be unreasonably withheld or delayed) (x) enter into
any agreement that if entered into prior to the date hereof would be a
Material Agreement required to have been delivered to Parent pursuant
to Section 2.7; or (y) modify, amend in any material respect, transfer
or terminate any Material Agreement;
(i) without the prior written consent of Parent (which
consent shall not be unreasonably withheld or delayed) make or change
any material Tax election other than an election in the ordinary
course of business consistent with the past practices of the Company,
file any amended Tax Return, settle or compromise any federal, state,
local or foreign income tax liability, agree to an extension of a
statute of limitations, enter into any closing agreement relating to
any Tax or surrender any right to claim a Tax refund;
(j) without the prior written consent of Parent (which
consent shall not be unreasonably withheld or delayed) pay, discharge,
satisfy or settle any Litigation except any settlement that would not:
(A) impose any injunctive or similar Order on the Company or any of
its Subsidiaries or restrict in any way the business of the Company or
any of its Subsidiaries or (B) exceed $250,000 in cost or value to the
Company or any of its Subsidiaries. Without the prior written consent
of Parent (which consent shall not be unreasonably withheld or
delayed), the Company and its Subsidiaries shall not pay, discharge or
satisfy any liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except in the ordinary course of
business consistent with past practice;
(k) without the prior written consent of Parent (which
consent shall not be unreasonably withheld or delayed), engage in,
enter into or amend any Contract, transaction, indebtedness or other
arrangement with, directly or indirectly, any of the directors or
other Affiliates of the Company and its Subsidiaries, or any of their
respective Affiliates or family members, except for (i) amounts due as
normal salaries and bonuses and in reimbursement of ordinary expenses
and (ii) those items existing as of the date hereof and listed in
Section 4.1(k) of the Company Disclosure Schedule;
(l) fail to use commercially reasonable best efforts to
maintain in full force and effect all self-insurance and insurance, as
the case may be, currently in effect; or
(m) authorize, recommend, propose or announce an intention
to do any of the foregoing, or agree or enter into or amend any
Contract or arrangement to do any of the foregoing.
4.2. Conduct of Business by Parent Pending the Merger.
Parent covenants and agrees that, between the date hereof and the
Effective Time, except as expressly required or permitted by this Agreement or
unless the Company shall otherwise agree in writing in advance, Parent shall
conduct and shall cause the business of each of its Subsidiaries to be conducted
only in the ordinary course of business and in a manner consistent with past
practice and in compliance with applicable laws (it being understood that,
except as provided in the immediately succeeding sentence, this Section 4.2
shall not prohibit Parent or its Subsidiaries from taking any action of the
nature specified in Sections 4.1(a) through (l) (inclusive)). Parent shall not,
between the date hereof and the Effective Time, directly or indirectly, or
propose to, without the prior written consent of the Company, declare, set aside
or pay any dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of any of its capital stock; split, combine
or reclassify any of its capital stock.
4.3. Solicitation of Other Proposals.
(a) From the date hereof until the earlier of the Effective Time or
the termination of this Agreement in accordance with its terms, the Company
shall not, nor shall it permit any of its Affiliates or Subsidiaries to, nor
shall it authorize or permit any of its or their respective stockholders,
directors, officers, employees, representatives or agents (collectively, the
"Company Representatives"), to directly or indirectly, (i) solicit, facilitate,
initiate, entertain, knowingly encourage or take any action to solicit,
facilitate, initiate, entertain or knowingly encourage, any inquiries or
communications or the making of any proposal or offer that constitutes or may
constitute an Acquisition Proposal (as defined herein) or (ii) participate or
engage in any discussions or negotiations with, or provide any information to or
take any other action with the intent to facilitate the efforts of, any Person
concerning any possible Acquisition Proposal or any inquiry or communication
which might reasonably be expected to result in an Acquisition Proposal. For
purposes of this Agreement, the term "Acquisition Proposal" shall mean any
inquiry, proposal or offer from any person (other than Parent, Merger Sub or any
of their Affiliates) relating to any merger, consolidation, recapitalization,
liquidation or other direct or indirect business combination, involving the
Company or any Material Subsidiary (as defined herein) or the issuance or
acquisition of shares of capital stock or other equity securities of the Company
or any Material Subsidiary representing 15% or more of the outstanding capital
stock of the Company or such Material Subsidiary or any tender or exchange offer
that if consummated would result in any Person, together with all Affiliates
thereof, beneficially owning shares of capital stock or other equity securities
of the Company or any Material Subsidiary representing 15% or more of the
outstanding capital stock of the Company or such Material Subsidiary, or the
sale, lease, exchange, license (whether exclusive or not), or other disposition
of any significant portion of the business or assets of the Company or any
Material Subsidiary. The Company shall immediately cease and cause to be
terminated, and shall cause its Subsidiaries and all Company Representatives to
immediately terminate and cause to be terminated, all existing discussions or
negotiations with any Persons conducted heretofore with respect to, or that
could reasonably be expected to lead to, an Acquisition Proposal. The Company
shall promptly notify each Company Representative of its obligations under this
Section 4.3.
(b) Notwithstanding the foregoing, the Company may participate in
discussions or negotiations with, or furnish information with respect to the
Company pursuant to a confidentiality agreement with terms no less favorable to
the Company than those in effect between the Company and Parent to, any Person
if and only if (x) such Person has submitted an unsolicited bona fide written
Acquisition Proposal to the Company (y) neither the Company nor any of the
Company Representatives shall have violated Section 4.3(a) and (z) the Board of
Directors of the Company (i) determines by a majority vote in its good faith
judgment, after consultation with outside counsel, that taking such action is
necessary to comply with the fiduciary duties of such Board under applicable Law
and (ii) provides prior written notice to Parent of its decision to so
participate or furnish.
(c) Except as set forth in the following sentence, neither the Board
of Directors of the Company nor any committee thereof shall (1) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal other
than the Merger, (2) withdraw or modify or propose to withdraw or modify in a
manner adverse to Parent or Merger Sub its approval or recommendation of the
Merger, this Agreement or the transactions contemplated hereby, (3) upon a
written request by Parent to reaffirm its approval or recommendation of this
Agreement or the Merger following the delivery, making or announcement of an
Acquisition Proposal, fail to do so within five Business Days after such request
is made, (4) approve, enter, or permit or cause the Company or any Material
Subsidiary to enter, into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Acquisition
Proposal, or (5) resolve or announce its intention to do any of the foregoing.
The immediately preceding sentence notwithstanding, in the event that prior to
the Company Stockholders' Meeting the Board of Directors of the Company receives
a Superior Proposal (as defined herein), the Board of Directors of the Company
may (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Parent or Merger Sub its approval or recommendation of the Merger,
this Agreement or the transactions contemplated hereby, (ii) fail to reaffirm
its approval or recommendation of this Agreement or the Merger within five
Business Days after a written request by Parent to do so, or (iii) resolve or
announce its intention to do any of the actions set forth in the preceding
clauses (i) or (ii), if (x) after consultation with outside counsel, such Board
determines by a majority vote of directors in their good faith judgment that
taking such action is necessary to comply with the fiduciary duties of such
Board under applicable Law and (y) the Company furnishes Parent two Business
Days' prior written notice of the taking of such action (which notice shall
include a description of the material terms and conditions of the Superior
Proposal and identify the person making the same). For purposes of this
Agreement, (A) "Material Subsidiary" means any Subsidiary of the Company whose
consolidated revenues, net income or assets constitute 10% or more of the
revenues, net income or assets of the Company and its Subsidiaries taken as a
whole, and (B) the term "Superior Proposal" means any bona fide Acquisition
Proposal to effect a merger, consolidation, sale of all or substantially all of
the assets of the Company or acquisition of a majority of the outstanding
capital stock of the Company which is on terms which the Board of Directors of
the Company determines by a majority vote of its directors in their good faith
judgment (after consultation with its outside counsel and investment advisors of
nationally recognized reputation), after taking into account all relevant
factors, including any conditions to such Acquisition Proposal, the form of
consideration contemplated by such Acquisition Proposal, the timing of the
closing thereof, the risk of nonconsummation, the ability of the Person making
the Acquisition Proposal to finance the transactions contemplated thereby and
any required filings or Approvals, to be more favorable to the stockholders of
the Company than the Merger (or any revised proposal made by Parent).
(d) In addition to the other obligations of the Company set forth in
this Section 4.3, the Company shall promptly (and in any event within one
Business Day) advise Parent orally and in writing of any request for information
with respect to any Acquisition Proposal, or any inquiry with respect to or
which could result in an Acquisition Proposal, the material terms and conditions
of such request, Acquisition Proposal or inquiry, and the identity of the Person
making the same. The Company shall inform Parent on a prompt and current basis
of the status, terms and content of any discussions regarding any Acquisition
Proposal with a third party. Nothing contained in this Section 4.3(d) shall
prevent the Board of Directors of the Company from complying with Rule 14d-9 and
Rule 14e-2 promulgated under the Exchange Act.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1. Registration Statement; Proxy Statement/Prospectus.
(a) The Company shall, promptly following the date hereof, prepare and
file with the SEC a Proxy Statement relating to the Merger and this Agreement,
obtain and furnish the information required to be included by the SEC in the
Proxy Statement and respond promptly to any comments made by the SEC with
respect to the Proxy Statement, and cause the Proxy Statement and the prospectus
to be included in the Registration Statement, including any amendment or
supplement thereto, to be mailed to its stockholders at the earliest practicable
date after the Registration Statement is declared effective by the SEC. The
Company shall use all reasonable efforts to obtain the necessary approval of the
Merger and this Agreement by its stockholders. Unless the Company shall have
taken action permitted by the second sentence of Section 4.3(c), the Company
shall not file with or supplementally provide to the SEC or mail to its
stockholders the Proxy Statement or any amendment or supplement thereto without
Parent's prior consent, which consent shall not be unreasonably withheld or
delayed. The Company shall allow Parent's full participation in the preparation
of the Proxy Statement and any amendment or supplement thereto and shall consult
with Parent and its advisors concerning any comments from the SEC with respect
thereto.
(b) Parent shall, promptly following the date hereof, prepare and file
with the SEC a Registration Statement on Form S-4, in which the Proxy Statement
shall be included as part of the prospectus, and the parties hereto shall use
all reasonable efforts to have the Registration Statement declared effective by
the SEC as promptly as practicable after such filing. Parent shall obtain and
furnish the information required to be included in the Registration Statement
and, after consultation with the Company, respond promptly to any comments made
by the SEC with respect to the Registration Statement. Parent shall allow the
Company's full participation in the preparation of the Registration Statement
and any amendment or supplement thereto and shall consult with the Company and
its advisors concerning any comments from the SEC with respect thereto.
(c) The Proxy Statement shall include the recommendation of the Board
of Directors of the Company in favor of approval and adoption of this Agreement
and the Merger, except to the extent that the Company shall have withdrawn or
modified its recommendation of this Agreement or the Merger as permitted by
Section 4.3(c).
(d) Parent and the Company shall, as promptly as practicable, make all
necessary filings with respect to the Merger under the Securities Act and the
Exchange Act and the Regulations thereunder and under applicable Blue Sky or
similar securities Laws, and shall use all reasonable efforts to obtain required
Approvals with respect thereto.
(e) Each party hereto agrees to furnish all information concerning
itself as may be reasonably required to prepare the Proxy Statement or
Registration Statement or to make such filings pursuant to Section 5.1(d). Each
party hereto agrees to correct any information provided by it for use in the
Proxy Statement or Registration Statement that has become false or misleading in
any material respect.
5.2. Meeting of Company's Stockholders.
The Company shall promptly after the date hereof take all action
necessary in accordance with the DGCL and its Certificate of Incorporation and
Bylaws to duly call, give notice of and hold the Company Stockholders' Meeting
as soon as practicable following the date upon which the Registration Statement
becomes effective and shall consult with Parent in connection therewith. The
Board of Directors of the Company has declared that this Agreement is advisable
and, subject to Section 4.3(c), shall recommend that this Agreement and the
transactions contemplated hereby be approved and authorized by the stockholders
of the Company and include in the Registration Statement and Proxy Statement a
copy of such recommendations; provided, however, that the Board of Directors of
the Company shall submit this Agreement to the stockholders of the Company
whether or not the Board of Directors of the Company at any time subsequent to
making such declaration takes any action permitted by Section 4.3(c). The
Company shall solicit from its stockholders proxies in favor of the Merger and
shall take all other action reasonably necessary or advisable to secure the vote
or consent of its stockholders to authorize and approve the Merger. Without
limiting the generality of the foregoing, (i) the Company agrees that its
obligation to duly call, give notice of, convene and hold the Company
Stockholders' Meeting as required by this Section 5.2, shall not be affected by
the withdrawal, amendment or modification of the Board of Directors'
recommendation of approval and adoption of this Agreement and the transactions
contemplated hereby, and (ii) the Company agrees that its obligations under this
Section 5.2 shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company of any Acquisition Proposal.
5.3. Access to Information; Confidentiality.
(a) In order to facilitate the consummation of the Merger and the
integration of the operations of Parent and Company after the Effective Time,
during the period prior to the Effective Time, upon reasonable notice, the
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel and other representatives and agents
of Parent (collectively "Parent Representatives"), reasonable access during
normal business hours, to all its properties, books, Contracts, commitments and
records and, during such period, the Company shall (and shall cause each of its
Subsidiaries to) furnish promptly to Parent all information concerning its
business, properties, books, Contracts, commitments, records and personnel as
Parent may reasonably request. All of the activities of Parent Representatives
pursuant to this Section 5.3(a) shall be conducted in a manner that does not
unreasonably interfere with the ongoing operations of the Company and its
Subsidiaries. In addition, Parent Representatives shall present any request for
such access pursuant to this Section 5.3(a) to, and coordinate all such access
with, M.D. Sampels and Xxxx X. Xxxx. The Company shall (and shall cause each of
its Subsidiaries to) make available to Parent the appropriate individuals for
discussion of such entity's business, properties and personnel as Parent or the
Parent Representatives may reasonably request. No investigation pursuant to this
Section 5.3(a) shall affect any representations or warranties of the parties
herein or the conditions to the obligations of the parties hereto.
(b) Parent shall keep all information obtained pursuant to Section 4.1
or Section 5.3(a) confidential in accordance with the terms of the Confidential
Non-Disclosure Agreement, dated January 24, 2001 (the "Confidentiality
Agreement"), between Parent and the Company. Anything contained in the
Confidentiality Agreement to the contrary notwithstanding, the Company and
Parent hereby agree that each such party may issue press release(s) or make
other public announcements in accordance with Section 5.10.
5.4. Reasonable Best Efforts; Further Assurances.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each party hereto shall use its reasonable best efforts to take, or
cause to be taken, all actions, and do, or cause to be done, and to assist and
cooperate with the other party or parties in doing, all things necessary, proper
or advisable to consummate and make effective, the Merger and the other
transactions contemplated hereby (including Section 6.2(g) hereof), and by the
Option Agreement as soon as reasonably practicable after the date hereof. The
Company and Parent shall use its reasonable best efforts to (i) as promptly as
practicable, obtain all Approvals (including those referred to in Sections
2.6(a) and 2.6(b) of the Company Disclosure Schedule), and the Company and
Parent shall make all filings under applicable Law required in connection with
the authorization, execution and delivery of this Agreement and the Option
Agreement by the Company and Parent and the consummation by them of the
transactions contemplated hereby and thereby, including the Merger (in
connection with which Parent and the Company will cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors prior to filings
and, if requested, will accept all reasonable additions, deletions or changes
suggested in connection therewith) or (ii) furnish all information required for
any application or other filing to be made pursuant to the DGCL or any other Law
or any applicable Regulations of any Governmental Authority (including all
information required to be included in the Proxy Statement or the Registration
Statement) in connection with the transactions contemplated by this Agreement
and the Option Agreement. Anything in this Agreement to the contrary
notwithstanding, neither Parent nor any of its Affiliates shall be under any
obligation to (x) make proposals, execute or carry out agreements or submit to
Orders providing for the sale or other disposition or holding separate (through
the establishment of a trust or otherwise) of any assets or categories of assets
of Parent, any of its Affiliates, including its Subsidiaries, the Company or the
holding separate of the Company Common Stock or imposing or seeking to impose
any limitation on the ability of Parent or any of its Affiliates, including its
Subsidiaries, to conduct their business or own such assets or to acquire, hold
or exercise full rights of ownership of Company Common Stock, or (y) otherwise
take any step to avoid or eliminate any impediment which may be asserted under
any Law governing competition, monopolies or restrictive trade practices which,
in the reasonable judgment of Parent, might result in a limitation of the
benefit expected to be derived by Parent as a result of the transactions
contemplated hereby or might adversely affect the Company or Parent or any of
Parent's Affiliates, including its Subsidiaries. Anything in this Agreement to
the contrary notwithstanding, without the prior written consent of Parent
neither the Company nor any of its Subsidiaries will take any action specified
in clause (x) or clause (y) of the immediately preceding sentence.
(b) The parties hereto shall use their reasonable best efforts to
satisfy or cause to be satisfied all of the conditions precedent that are set
forth in Article VI, as applicable to each of them, and to cause the
transactions contemplated by this Agreement to be consummated as soon as
reasonably practicable after the date hereof. Each party hereto, at the
reasonable request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for the consummation of this Agreement and the transactions
contemplated hereby.
(c) The Company and Parent shall cooperate with one another:
(i) in connection with the preparation of the Registration
Statement and the Proxy Statement;
(ii) in connection with the preparation of any filing required by
the HSR Act or any Foreign Competition Laws;
(iii) in determining whether any action by or in respect of, or
filing with, any Governmental Authority or other third party, is required, or
any Approvals are required to be obtained from parties in connection with the
consummation of the transactions contemplated hereby;
(iv) in seeking any Approvals or making any filings, including
furnishing information required in connection therewith or with the Registration
Statement or the Proxy Statement, and seeking timely to obtain any such
Approvals, or making any filings; and
(v) in connection with the listing on the NASDAQ National Market
System of the Parent Common Stock to be issued in the Merger.
5.5. Stock Options and Stock Plan; Options.
(a) At the Effective Time, each Outstanding Employee Option, whether
vested or unvested, will be assumed by Parent. Each such Outstanding Employee
Option so assumed by Parent under this Agreement shall continue to have, and be
subject to, the same terms and conditions set forth in the Option Plans, option
agreements thereunder and other relevant documentation immediately prior to the
Effective Time, except that such Outstanding Employee Option will be exercisable
solely 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 purchasable
under such Outstanding Employee Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Parent Common Stock, and the per-share exercise price for the shares
of Parent Common Stock issuable upon exercise of such assumed Outstanding
Employee Option will be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock at which such Outstanding
Employee Option was exercisable immediately prior to the Effective Time by the
Exchange Ratio, and rounding the resulting exercise price up to the nearest
whole cent.
(b) Parent shall reserve for issuance a sufficient number of shares of
Parent Common Stock for delivery upon exercise of Outstanding Employee Options
assumed by Parent under this Agreement. Parent shall file as soon as practicable
after the Effective Date (but in any event within ten (10) days) a registration
statement on Form S-8 under the Securities Act covering the shares of Parent
Common Stock issuable upon the exercise of the Outstanding Employee Options
assumed by Parent pursuant to Section 5.5(a), and shall use its reasonable
efforts to cause such registration statement to become effective as soon
thereafter as practicable and to maintain such registration in effect until the
exercise or expiration of such assumed Outstanding Employee Options.
(c) Except as set forth in Section 5.5(c) of the Company Disclosure
Schedule, the vesting of each Outstanding Employee Option shall not accelerate
as a result of, or in connection with, the transactions contemplated hereby. In
addition, the Company shall ensure that no discretion is exercised by the Board
of Directors or any committee thereof or any other body or Person so as to cause
the vesting of any Outstanding Employee Option or any other warrant or right to
acquire shares of Company Common Stock to accelerate.
(d) On and after the date hereof, the Company shall ensure that no
options to purchase Company Common Stock shall be granted under the Purchase
Plan. The Company shall provide that the current offering period under the
Purchase Plan shall terminate prior to the Merger.
5.6. Employee Benefits.
(a) Parent agrees that individuals who are employed by the Company or
any Subsidiary of the Company immediately prior to the Effective Time shall
become employees of the Surviving Corporation or one of its Subsidiaries upon
the Effective Time (each such employee, a "Company Employee"); provided,
however, that this Section 5.6(a) shall not be construed to limit the ability of
the Company or any of its Subsidiaries to terminate the employment of any
Company Employee at any time and provided further that prior to the fifth
anniversary of the Effective Date, salaried employees will not be terminated on
less than ninety (90) days notice.
(b) After the Effective Time, the Company Employees shall be eligible
to participate in the employee benefit plans of Parent (other than equity-based
compensation plans) to the same extent as any similarly situated employee of
Parent located in the same country; provided, however, that, Company Employees
may continue to participate in their benefits (without duplication) under the
employee benefits plans of the Company (other than equity-based compensation
plans) provided to such Company Employees immediately prior to the Effective
Time, as elected by the on-site management of the Surviving Corporation. The
Company Employees will be allowed credit for their service with the Company and
its Subsidiaries for purposes of vesting and participation only (and not for
benefit accrual purposes), with respect to the employee benefit plans in which
such Company Employees are entitled to participate following the Effective Time.
(c) With respect to any plan that is a "welfare benefit plan" (as
defined in Section 3(1) of ERISA) maintained by the Parent, Parent shall (i)
cause there to be waived any pre-existing condition limitation to the same
extent such pre-existing condition was waived under an Employee Plan and (ii)
give effect, in determining any deductible and maximum out-of-pocket
limitations, to claims incurred and amounts paid by, and amounts reimbursed to,
such employees with respect to similar plans maintained by Company and its
Affiliates immediately prior to the Closing Date.
(d) 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.
(e) The Company shall terminate, effective as of the day immediately
preceding the Effective Time, any and all 401(k) plans sponsored or maintained
by the Company unless Parent provides written notice to the Company prior to the
Effective Time that any such 401(k) plan shall not be terminated. Parent shall
receive from the Company evidence that the Company's plan(s) and/or program(s)
have been terminated pursuant to resolutions of the 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. The 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.
(f) Parent will negotiate in good faith new employment agreements
with each of Xxxx X. Xxx, Xxxx X. Xxxx, and Xxxxxxx X. Xxxxx, which may include
compensation opportunities in lieu of a portion of the compensation and benefits
to which such employees would be entitled pursuant to those certain Letter
Agreements, dated May 20, 1999, as amended on November 19, 2000 and further
amended on January 28, 2001 (the "Change of Control Agreements"), and which
employment agreements are expected to include customary noncomeptition,
nonsolicitation and confidentiality provisions.
5.7. Pooling; Reorganization.
(a) The Company shall not knowingly take, or knowingly permit any
controlled Affiliate of the Company to take, any action that could prevent the
Merger from being treated (i) for financial accounting purposes as a "pooling of
interests" under GAAP; it being understood and agreed that if the Company's
Accountants and Parent's Accountants both advise the Company and Parent in
writing that such an action would not prevent the Merger from being so treated,
such action will be conclusively deemed not to constitute a breach of this
Section 5.7 or (ii) as a reorganization within the meaning of Section 368(a) of
the Code.
(b) The Company shall use its reasonable best efforts to obtain an
executed affiliate pooling agreement substantially in the form attached hereto
as Exhibit B (each, a "Company Affiliate Pooling Agreement") from each of the
Persons identified in Section 2.21(c) of the Company Disclosure Schedule
concurrently with the execution of this Agreement and thereafter from any other
person who may be deemed an affiliate of the Company regarding compliance with
Rule 145 under the Securities Act and the requirements for accounting treatment
of the Merger as a "pooling of interests."
(c) Parent shall not knowingly take, or knowingly permit any
controlled Affiliate of Parent to take, any action that could prevent the Merger
from being treated (i) for financial accounting purposes as a "pooling of
interests" under GAAP; it being understood and agreed that if Parent's
Accountants, advise Parent in writing that such an action would not prevent the
Merger from being so treated, such action will be conclusively deemed not to
constitute a breach of this Section 5.7; or (ii) as a reorganization within the
meaning of Section 368(a) of the Code.
(d) Parent shall use its reasonable efforts to obtain an executed
affiliate pooling agreement containing substantially the substance of the second
and third paragraphs of the Company Affiliate Pooling Agreement from each of the
Persons identified in Section 5.7(d) of the Parent Disclosure Schedule regarding
compliance with the requirements for accounting treatment of the Merger as a
"pooling of interests."
5.8. Notification of Certain Matters.
(a) The Company shall give prompt notice to Parent, and Parent shall
give prompt notice to the Company, of the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which results in any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect (or, in the case of any representation or warranty qualified by
its terms by materiality or Material Adverse Effect, then untrue or inaccurate
in any respect) and any failure of the Company, Parent or Merger Sub, as the
case may be, to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.8
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
(b) Each of the Company and Parent shall give prompt notice to the
other of (i) any notice or other communication from any Person alleging that the
Approval of such Person is or may be required in connection with the Merger or
the Option Agreement, (ii) any notice or other communication from any
Governmental Authority in connection with the Merger or the Option Agreement;
(iii) any Litigation, relating to or involving or otherwise affecting the
Company or its Subsidiaries or Parent or its Subsidiaries that relates to the
Merger or the Option Agreement; and (iv) any change that could reasonably be
expected to have a Material Adverse Effect or is likely to delay or impede the
ability of either Parent or the Company to consummate the transactions
contemplated by this Agreement or the Option Agreement or to fulfill their
respective obligations set forth herein or therein.
(c) Each of the Company and Parent shall give (or shall cause their
respective Subsidiaries to give) any notices to third Persons, and use, and
cause their respective Subsidiaries to use, its reasonable best efforts to
obtain any consents from third Persons (i) necessary, proper or advisable to
consummate the transactions contemplated by this Agreement, (ii) otherwise
required under any Contracts in connection with the consummation of the
transactions contemplated hereby or (iii) required to prevent a Material Adverse
Effect from occurring. If any party shall fail to obtain any such consent from a
third Person, such party shall use its reasonable best efforts, and will take
any such actions reasonably requested by the other parties, to limit the adverse
effect upon the Company and Parent, their respective Subsidiaries, and their
respective businesses resulting, or which would result after the Effective Time,
from the failure to obtain such consent.
(d) Recognizing that the retention of the Company's employees is to
the material benefit of Parent, in the event that the Company receives any
written or oral indication from any engineer or other key employee that such
person is considering or has decided to terminate his or her employment with the
Company or any of its Subsidiaries, the Company shall notify Parent by the next
Business Day in order that Parent may meet with such employee.
5.9. Listing on the NASDAQ National Market.
Parent shall use its reasonable best efforts to cause the Parent
Common Stock to be issued in the Merger and pursuant to Parent's options to be
issued pursuant to Section 5.5 to be approved for listing on the NASDAQ National
Market System, subject to official notice of issuance, prior to the Effective
Time.
5.10. Public Announcements.
Parent and the Company shall consult with and obtain the approval of
the other party before issuing any press release or other public announcement
with respect to the Merger or this Agreement and shall not issue any such press
release prior to such consultation and approval, except as may be required by
Law or any listing agreement related to the trading of the shares of either
party on any national securities exchange or national automated quotation
system, in which case the party proposing to issue such press release or make
such public announcement shall use its reasonable best efforts to consult in
good faith with the other party before issuing any such press release or making
any such public announcement.
5.11. Takeover Laws.
If any form of anti-takeover statute, Regulation or charter provision
or Contract is or shall become applicable to the Merger or the transactions
contemplated hereby or by the Option Agreement, the Company and the Board of
Directors of the Company shall grant such Approvals and take such actions as are
necessary under such Laws and provisions so that the transactions contemplated
hereby and thereby may be consummated as promptly as practicable on the terms
contemplated hereby and thereby and otherwise act to eliminate or minimize the
effects of such Law, provision or Contract on the transactions contemplated
hereby or thereby.
5.12. Accountant's Letter.
The Company shall use its reasonable best efforts to cause to be
delivered to Parent a "comfort" letter of the Company's Accountants, dated a
date within two business days before the date on which the Registration
Statement shall become effective and addressed to Parent and the Company, in
form and substance reasonably satisfactory and customary in scope and substance
for letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
5.13. Indemnification; Directors and Officer Insurance.
(a) All rights to indemnification, advancement of Litigation expenses
and limitation of personal liability existing in favor of the directors and
officers of the Company and its Subsidiaries under the provisions existing on
the date hereof in their respective certificates of incorporation, bylaws or
similar organizational documents, as well as related director indemnification
agreements in accordance with their terms in existence on the date hereof as
well as officer and other indemnification agreements listed on Section 5.13 of
the Company Disclosure Schedule in accordance with their terms, shall, with
respect to any matter existing or occurring at or prior to the Effective Time
(including the transactions contemplated by this Agreement), survive the
Effective Time for a period of not less than six years.
(b) For six years after the Effective Time, Parent and the Surviving
Corporation shall cause to be maintained in effect the current policies of the
directors' and officers' liability insurance maintained by the Company (provided
that Parent may substitute therefore policies of at least the same coverage
containing terms and conditions which are not materially less advantageous) with
respect to matters or events occurring prior to the Effective Time to the extent
available (the "D&O Insurance"); provided, however, that in no event shall
Parent be required to expend more than an amount per year equal to 1.50 times
the premium paid by the Company as of the date hereof to maintain or procure the
D&O Insurance pursuant hereto; and, provided, further that if the annual
premiums of the D&O Insurance coverage exceed such amount, Parent shall be
obligated to obtain a policy with the greatest coverage reasonably available for
a cost not exceeding such amount.
(c) After the Effective Time, Parent agrees that it will cause the
Surviving Corporation to indemnify and hold harmless each present and former
director and officer of the Company, determined as of the Effective Time (the
"Indemnified Parties"), against any costs or expenses (including reasonable
attorney's fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters relating to their duties or actions in their
capacity as officers and directors and existing or occurring at or prior to the
Effective Time (including as a result of this Agreement), whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent
permitted under applicable Law (and Parent shall, or shall cause the Surviving
Corporation to, also advance fees and expenses (including reasonable attorney's
fees) as incurred to the fullest extent permitted under applicable Law provided
the Person to whom expenses are advanced provides a customary undertaking
complying with applicable Law to repay such advances if it is ultimately
determined that such Person is not entitled to indemnification). To the extent
not satisfied by the D&O Insurance or the Surviving Corporation, Parent hereby
unconditionally guarantees the obligations of the Surviving Corporation under
this Section 5.13(c).
(d) Nothing in this Agreement is intended to, shall be construed to or
shall release, waive or impair any rights to directors' and officers' insurance
claims under any policy that is or has been in existence with respect to the
Company or any of its officers, directors or employees, it being understood and
agreed that the indemnification provided for in this Section 5.13 is not prior
to or in substitution for any such claims under such policies.
5.14. Option Agreement.
Contemporaneously with the execution and delivery of this Agreement,
the Company shall deliver to Parent an executed version of the Option Agreement.
The Company agrees to fully perform to the fullest extent permitted under
applicable Law its obligations under the Option Agreement.
5.15. Company Rights Agreement.
The Board of Directors of the Company shall take all action (in
addition to that referred to in Section 2.25) necessary or desirable (including
amending the Company Rights Agreement) in order to render the Company Rights
inapplicable to the Merger and the other transactions contemplated by this
Agreement and the Option Agreement. Except in connection with the foregoing
sentence, the Board of Directors of the Company shall not, without the prior
written consent of Parent, (i) amend the Company Rights Agreement or (ii) take
any action with respect to, or make any determination under, the Company Rights
Agreement, in each case in order to facilitate any Acquisition Proposal with
respect to the Company.
5.16. Action by Board of Directors.
Prior to the Effective Time, the Boards of Directors of Parent and/or
Company, as applicable, 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 Outstanding Employee Options held 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 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").
5.17. Board Seat.
Promptly following the Effective Time, consistent with applicable law
and its Bylaws, the number of directors on Parent's Board shall be increased by
one (unless a current vacancy exists, in which case no new vacancy need be
created), and M.D. Sampels shall be elected to fill such vacancy, to serve as
such until the next annual meeting of Parent's stockholders or such time as his
successor shall have been duly elected or appointed and qualified.
ARTICLE VI
CONDITIONS OF MERGER
6.1. Conditions to Obligation of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective; no stop order suspending the
effectiveness of the Registration Statement or the use of the Proxy Statement
shall have been issued by the SEC, and no proceedings for that purpose shall
have been initiated or, to the Knowledge of Parent or the Company, threatened by
the SEC.
(b) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the stockholders of the
Company in accordance with the DGCL and the Certificate of Incorporation and
Bylaws of the Company.
(c) NASDAQ National Market. The shares of Parent Common Stock issuable
to the stockholders of the Company pursuant to this Agreement shall have been
approved for listing on the NASDAQ National Market System subject to official
notice of issuance.
(d) HSR Act and Foreign Competition Laws. All applicable waiting
periods or approvals under the HSR Act and Foreign Competition Laws shall have
expired or been terminated or received.
(e) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other Order (whether temporary,
preliminary or permanent) issued by any Court of competent jurisdiction or other
legal restraint or prohibition shall be in effect which prevents the
consummation of the Merger on substantially the same terms as contemplated
herein, and there shall not be any action taken, or any Law or Order enacted,
entered, enforced or deemed applicable to the Merger, which makes the
consummation of the Merger on substantially the same terms as contemplated
herein illegal.
(f) Tax Opinion. The Company shall have received a written opinion of,
Jenkens & Xxxxxxxxx, P.C., dated as of the Closing Date, in form and substance
reasonably satisfactory to the Company to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code.
The issuance of such opinion shall be conditioned on the receipt by such tax
counsel of representation letters from each of Parent, Merger Sub and the
Company. The specific provisions of each such representation letter shall be in
form and substance reasonably satisfactory to such tax counsel, and such
representation letter shall be dated on or before the date of such opinion and
shall not have been withdrawn or modified in any material respect.
6.2. Additional Conditions to Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company contained in this Agreement and the Option Agreement
that are qualified as to Material Adverse Effect shall be true and correct as of
the date of this Agreement and as of immediately prior to the Effective Time
(other than representations and warranties which address matters only as of a
particular date, in which case such representations and warranties shall be true
and correct, on and as of such particular date), with the same force and effect
as if then made and (ii) the representations and warranties of the Company
contained in this Agreement and the Option Agreement that are not qualified as
to Material Adverse Effect shall be true and correct as of the date of this
Agreement and as of immediately prior to the Effective Time (other than
representations and warranties which address matters only as of a particular
date, in which case such representations and warranties shall be true and
correct, on and as of such particular date), with the same force and effect as
if then made, except where the failure of such representations and warranties
(other that the representation contained in Section 2.3, which shall be true and
correct in all material respects) to be true and correct would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company; and Parent and Merger Sub shall have received a certificate to such
effect signed by a member of the Interim Office of the Chief Executive and by
the Chief Financial Officer of the Company.
(b) Agreements and Covenants. The Company shall have performed or
complied with all agreements and covenants required by this Agreement and the
Option Agreement to be performed or complied with by it on or prior to the
Effective Time except for such failures to perform or comply with such
agreements and covenants that do not and will not have any material effects that
are adverse to either the Company or Parent (after giving effect to the Merger);
and Parent and Merger Sub shall have received a certificate to such effect
signed by a member of the Interim Office of the Chief Executive and by the Chief
Financial Officer of the Company.
For purposes of this Section 6.2(b), any failures to perform or comply
with Section 4.1(h) relating to Contracts of the type described in clauses (i),
(ii), (iii), (iv), (v), (viii), (xii) or (xiv) of Section 2.7 shall not be
considered to have a material effect unless the aggregate effect of all such
failures to perform or comply would result in the incurrence of (i) additional
consolidated expenses and/or reductions in consolidated revenues of the Company
or Parent (after giving effect to the Merger) in excess of $5,000,000 in the
aggregate in any fiscal quarter or (ii) additional consolidated liabilities of
the type required to be reflected or reserved against in accordance with GAAP
and/or reductions in consolidated assets of the type set forth on a balance
sheet in accordance with GAAP of the Company or Parent (after giving effect to
the Merger) in the aggregate of more than $20,000,000.
(c) Third Party Consents. Parent shall have received evidence, in form
and substance reasonably satisfactory to it, that those Approvals of
Governmental Authorities and other third parties set forth in Section 2.6(a) or
(b) of the Company Disclosure Schedule (or not described in Section 2.6(a) or
(b) of the Company Disclosure Schedule but required to be so described) have
been obtained, except where failure to have been so obtained, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company.
(d) Letter from Parent's Accountants; Pooling of Interests. Parent
shall have received a letter from Parent's Accountants in form and substance
reasonably satisfactory to Parent, dated the Closing Date, concurring with
management's conclusions that the transactions contemplated by this Agreement,
including the Merger, will qualify as a "pooling of interests" business
combination in accordance with GAAP and the criteria of Accounting Principles
Board Opinion No. 16 and the Regulations of the SEC.
(e) Company Affiliate Pooling Agreements. Each of the Persons
identified in Section 2.21(c) of the Company Disclosure Schedule shall have
executed and delivered Company Affiliate Pooling Agreement with Parent which
shall be in full force and effect.
(f) Option Agreement. The Option Agreement shall be in full force and
effect as of the Effective Time and become effective in accordance with the
terms thereof.
(g) Change of Control Agreements. The Change of Control Agreements
shall be amended (in addition to any other amendments effected pursuant to
Section 5.6(f) hereof) to provide that (i) the amounts payable thereunder as a
result of the consummation of the transactions contemplated by this Agreement
shall be reduced by $498,462, $793,846, and $1,007,728, with respect to Messrs.
Xxxx X. Xxxx, Xxxxxxx X. Xxxxx and Xxxx X. Xxx, respectively; and (ii) in
consideration for their continued services to the Surviving Corporation after
the Effective Time, Messrs. Xxxx, Xxxxx and Mai shall be entitled to receive
$249,231, $396,923, and $553,864, respectively, on the earlier to occur of (A)
the first anniversary of the Effective Time or (B) the date of the Constructive
Termination (as defined below) of such person, subject to the condition that,
with respect to clause (A) above, such person is employed by the Company, the
Parent, or an affiliate thereof, on such date, unless the failure to be so
employed is the result of the termination by the Company, the Parent or an
affiliate thereof, of such person's employment for any reason (other than such
employees' voluntary termination of his own employment). For purposes hereof,
"Constructive Termination" means (i) the adverse change in such person's
responsibilities or direct report as described on Section 6.2(g) of the Company
Disclosure Schedule; or (ii) a decrease in such person's salary, benefits or
perquisites (other than equity-based awards or grants), other than as a result
of any amendment or termination of any employee and/or executive benefit plan or
arrangement, which amendment or termination is applicable to all qualifying
executives of the Company.
6.3. Additional Conditions to Obligations of the Company.
The obligation of the Company to effect the Merger is also subject to
the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Parent and Merger Sub contained in this Agreement and the Option
Agreement that are qualified as to Material Adverse Effect shall be true and
correct as of the date of this Agreement and as of immediately prior to the
Effective Time (other than representations and warranties which address matters
only as of a particular date, in which case such representations and warranties
shall be true and correct, on and as of such particular date), with the same
force and effect as if then made and (ii) the representations and warranties of
Parent contained in this Agreement and the Option Agreement that are not
qualified as to Material Adverse Effect shall be true and correct as of the date
of this Agreement and as of immediately prior to the Effective Time (other than
representations and warranties which address matters only as of a particular
date, in which case such representations and warranties shall be true and
correct, on and as of such particular date), with the same force and effect as
if then made, except where the failure of such representations and warranties
(other that the representation contained in Section 3.2, which shall be true and
correct in all material respects) to be true and correct would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent; and the Company shall have received a certificate to such effect signed
by the Chief Executive Officer and Chief Financial Officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to the Effective
Time except for such failures to perform or comply that do not and will not have
any material effects that are adverse to the Company; and the Company shall have
received a certificate to such effect signed by the Chief Executive Officer and
Chief Financial Officer of Parent.
(c) Certain Obligations. (i) To the extent not satisfied by the
Company prior to the Closing, Purchaser shall have made arrangements for the
payment at Closing of the obligations set forth on Section 6.3(c) of the Company
Disclosure Schedules. (ii) Parent shall have expressly assumed the obligations
set forth in Section 6.3(c)(ii) of the Company Disclosure Schedule.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1. Termination.
This Agreement may be terminated and the Merger contemplated hereby
may be abandoned at any time prior to the Effective Time, notwithstanding
approval thereof by the stockholders of the Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent and the Company;
(b) By either Parent or the Company if the Merger shall not have been
consummated on or before June 30, 2001; provided, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to any
party whose willful failure to fulfill any material obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger to
have been consummated on or before such date;
(c) By either Parent or the Company, if a Court or Governmental
Authority shall have issued an Order or taken any other action, in each case
which has become final and non-appealable and which restrains, enjoins or
otherwise prohibits the Merger;
(d) By either Parent or the Company, if, at the Company Stockholders'
Meeting (including any adjournment or postponement thereof), the requisite vote
of the stockholders of the Company to approve and adopt this Agreement and to
consummate the Merger shall not have been obtained;
(e) By Parent, if the Board of Directors of the Company or any
committee thereof shall have (i) approved or recommended, or proposed to approve
or recommend, any Acquisition Proposal other than the Merger, (ii) failed to
present and recommend the approval and adoption of this Agreement and the Merger
to the stockholders of the Company, or withdrawn or modified, or proposed to
withdraw or modify, in a manner adverse to Parent or Merger Sub, its
recommendation or approval of the Merger, this Agreement or the transactions
contemplated hereby, (iii) failed to mail the Proxy Statement to the
stockholders of the Company within a reasonable time of when the Proxy Statement
was available for mailing or failed to include therein such approval and
recommendation (including the recommendation that the stockholders of the
Company vote in favor of the adoption of this Agreement), (iv) upon a written
request by Parent to publicly reaffirm the approval and recommendation of the
Merger, this Agreement and the transactions contemplated hereby following the
delivery, making or announcement of an Acquisition Proposal, failed to do so
within five Business Days after such request is made, (v) entered, or caused the
Company or any Material Subsidiary to enter, into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement related
to any Acquisition Proposal, (vi) taken any other action prohibited by Section
4.3, (vii) materially breached the Option Agreement or (viii) resolved or
announced its intention to do any of the foregoing;
(f) By Parent, if any Person (other than Parent or an Affiliate of
Parent) acquires beneficial ownership of or the right to acquire 15% or more of
the outstanding shares of capital stock or other equity interests of the
Company;
(g) By Parent, if neither Parent nor Merger Sub is in material breach
of its obligations under this Agreement, and if (i) at any time that any of the
representations and warranties of the Company herein become untrue or inaccurate
such that Section 6.2(a) would not be satisfied (treating such time as if it
were the Effective Time for purposes of this Section 7.1(g)) or (ii) there has
been a breach on the part of the Company of any of its covenants or agreements
contained in this Agreement such that Section 6.2(b) would not be satisfied
(treating such time as if it were the Effective Time for purposes of this
Section 7.1(g)), and, in both case (i) and case (ii), such breach (if curable)
has not been cured within 30 days after notice to the Company; or
(h) By the Company, if it is not in material breach of its obligations
under this Agreement, and if (i) at any time that any of the representations and
warranties of Parent or Merger Sub herein become untrue or inaccurate such that
Section 6.3(a) would not be satisfied (treating such time as if it were the
Effective Time for purposes of this Section 7.1(h)) or (ii) there has been a
breach on the part of Parent or Merger Sub of any of their respective covenants
or agreements contained in this Agreement such that Section 6.3(b) would not be
satisfied (treating such time as if it were the Effective Time for purposes of
this Section 7.1(h)), and such breach (if curable) has not been cured within 30
days after notice to Parent.
7.2. Effect of Termination.
Except as provided in this Section 7.2, in the event of the
termination of this Agreement pursuant to Section 7.1, this Agreement (other
than this Section 7.2 and Sections 5.3(b), 5.10, 7.3 and Article VIII, which
shall survive such termination) will forthwith become void, and there will be no
liability on the part of Parent, Merger Sub or the Company or any of their
respective officers or directors to the other and all rights and obligations of
any party hereto will cease, except that nothing herein will relieve any party
from liability for any breach, prior to termination of this Agreement in
accordance with its terms, of any representation, warranty, covenant or
agreement contained in this Agreement.
7.3. Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall and are permitted to be paid by the party incurring such expenses,
whether or not the Merger is consummated, including, but not limited to, legal
and accounting fees and expenses and the fees payable to the Parent Financial
Advisors and the Company Financial Advisors, as the case may be; provided,
however, that Parent and the Company shall share equally all fees and expenses,
other than attorneys' fees, incurred in relation to the printing and filing of
the Proxy Statement (including any preliminary materials related thereto), the
Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto and all filing fees payable in connection with
filings made under the HSR Act or Foreign Competition Laws.
(b) If (A) (I) Parent shall terminate this Agreement pursuant to (x)
Section 7.1(d), Section 7.1(f), or Section 7.1(g) or (y) pursuant to Section
7.1(b) without the Company Stockholders' Meeting having occurred, (II) at any
time after the date of this Agreement and before such termination an Acquisition
Proposal with respect to the Company shall have been publicly announced or
otherwise communicated to the Board of Directors and stockholders of the Company
and not withdrawn prior to (1) the Company Stockholders' Meeting having
occurred, in the case of a termination pursuant to Section 7.1(d) only or (2)
such termination in the case of a termination pursuant to Section 7.1(b),
Section 7.1(f) or Section 7.1(g) only (a "Company Public Proposal") and (III)
within twelve months of such termination the Company or any of its Subsidiaries
enters into a definitive agreement with respect to, or consummates, any
Acquisition Proposal or (B) Parent shall terminate this Agreement pursuant to
Section 7.1(e); then the Company shall promptly, but in no event later than the
date of such termination (or in the case of clause (A), if later, the date the
Company or its Subsidiary enters into such agreement with respect to, or
consummates, such Acquisition Proposal), pay Parent an amount equal to
$75,000,000 by wire transfer of immediately available funds).
7.4. Amendment.
This Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective Boards of Directors at any time prior to the
Effective Time; provided, however, that, after approval of the Merger by the
stockholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each share of Company
Common Stock shall be converted upon consummation of the Merger. This Agreement
may not be amended except by an instrument in writing signed by all of the
parties hereto.
7.5. Waiver.
At any time prior to the Effective Time, any party hereto may extend
the time for the performance of any of the obligations or other acts required
hereunder, waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and waive
compliance with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Survival of Representations and Warranties.
The representations, warranties and agreements of each party hereto
will remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any Person
controlling any such party or any of their officers, directors, representatives
or agents whether prior to or after the execution of this Agreement. The
representations and warranties in this Agreement will terminate at the Effective
Time.
8.2. Notices.
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
nationally recognized overnight courier or by registered or certified mail,
postage prepaid, return receipt requested, or by electronic mail, with a copy
thereof to be delivered or sent as provided above or by facsimile or telecopier,
as follows:
(a) If to Parent or Merger Sub:
Maxim Integrated Products, Inc.
000 Xxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, President
With copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
(a) If to the Company:
Dallas Semiconductor Corporation
0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxx, President
With copies to:
Jenkens & Xxxxxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such notices
or communications shall be deemed to be received (i) in the case of personal
delivery, nationally recognized overnight courier or registered or certified
mail, on the date of such delivery and (ii) in the case of facsimile or
telecopier or electronic mail, upon confirmed receipt.
8.3. Disclosure Schedules.
The Company Disclosure Schedule and the Parent Disclosure Schedule
each shall be divided into sections corresponding to the sections and
subsections of this Agreement. Disclosure of any fact or item in any section of
a party's Disclosure Schedule shall, if such disclosure reasonably appears to do
so, be deemed to be disclosed with respect to all other relevant sections.
8.4. Certain Definitions.
For purposes of this Agreement, the term:
(a) "Affiliate" means any Person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned Person, including, with respect to the
Company, any corporation, partnership, limited liability company or joint
venture in which the Company (either alone, or through or together with any
other Subsidiary) has, directly or indirectly, an interest of 10% or more.
(b) "Balance Sheet" means, as the context requires, either (i) the
balance sheet of the Company contained in the Company's December 31 Financial
Statements or (ii) the balance sheet of the Parent contained in the Parent's
Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.
(c) "beneficial owner" (including the terms "beneficial ownership" and
"to beneficially own") with respect to a Person's ownership of any securities
means such Person or any of such Person's Affiliates or associates (as defined
in Rule 12b-2 under the Exchange Act) is deemed to beneficially own, directly or
indirectly, within the meaning of Rule 13d-3 under the Exchange Act.
(d) "Business Day" means any day other than a Saturday, Sunday or day
on which banks are permitted to close in the State of California.
(e) "Company Disclosure Schedule" means a schedule of even date
herewith delivered by the Company to Parent concurrently with the execution of
this Agreement, which, among other things, will identify exceptions and other
matters with respect to the representations, warranties and covenants of the
Company contained herein.
(f) "Company Rights" means the rights issued pursuant to the Company
Rights Agreement.
(g) "Company Rights Agreement" means that certain Rights Agreement,
dated as of September 10, 1999, between the Company and ChaseMellon Shareholder
Services, L.L.C.
(h) "Contract" means any contract, plan, undertaking, understanding,
agreement, license, lease, note, mortgage or other binding commitment, whether
written or oral.
(i) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of stock, as trustee or executor, by Contract or
otherwise.
(j) "Court" means any court or arbitration tribunal of the United
States, any domestic state, or any foreign country, and any political
subdivision or agency thereof.
(k) "Exchange Agent" means any bank or trust company organized under
the Laws of the United States or any of the states thereof and having a net
worth in excess of $100 million designated and appointed to act as the exchange
agent in the Merger.
(l) "Foreign Competition Laws" means any foreign statutes, rules,
Regulations, Orders, administrative and judicial directives, and other foreign
Laws, that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization, lessening of competition or
restraint of trade.
(m) "Governmental Authority" means any governmental agency or
authority of the United States, any domestic state, or any foreign country, and
any political subdivision or agency thereof, and includes any authority having
governmental or quasi-governmental powers, including any administrative agency
or commission.
(n) "Intellectual Property" means all United States and foreign
intellectual property, including, without limitation, all trademarks, service
marks, trade names, brand names, URLs and Internet domain names, designs,
slogans, logos, trade dress and all other source indicators, together with all
goodwill related to the foregoing; patents, copyrights and copyrightable works
(including Software), technology, trade secrets and confidential or proprietary
information, customer lists, know-how, processes, formulae, algorithms, models,
user interfaces, inventions, semiconductors, mask works, systems, networks,
hardware, firmware, middleware, and all registrations, applications, recordings,
renewals, continuations, continuations-in-part, divisions, reissues,
reexaminations, foreign counterparts, and other legal protections and rights
related to the foregoing.
(o) "Knowledge" means (i) with respect to the Company, the actual
knowledge of any of the individuals listed on Section 8.4(o)(i) of the Company
Disclosure Schedule and (ii) with respect to Parent, the actual knowledge of any
of the individuals listed on Section 8.4(o)(ii) of the Parent Disclosure
Schedule.
(p) "Law" means all laws, statutes, ordinances and Regulations of any
Governmental Agency including all decisions of Courts having the effect of law
in each such jurisdiction.
(q) "Lien" means any mortgage, pledge, security interest, attachment,
encumbrance, lien (statutory or otherwise), license, claim, option, conditional
sale agreement, right of first refusal, first offer, termination, participation
or purchase or charge of any kind (including any agreement to give any of the
foregoing); provided, however, that the term "Lien" shall not include (i)
statutory liens for Taxes, which are not yet due and payable or are being
contested in good faith by appropriate proceedings, (ii) statutory or common law
liens to secure landlords, lessors or renters under leases or rental agreements
confined to the premises rented, (iii) deposits or pledges made in connection
with, or to secure payment of, workers' compensation, unemployment insurance,
old age pension or other social security programs mandated under applicable
Laws, (iv) statutory or common law liens in favor of carriers, warehousemen,
mechanics and materialmen, to secure claims for labor, materials or supplies and
other like liens, and (v) restrictions on transfer of securities imposed by
applicable state and federal securities Laws.
(r) "Litigation" means any claim, suit, action, arbitration, cause of
action, claim, complaint, criminal prosecution, investigation, demand letter, or
proceeding, whether at law or at equity, before or by any Court or Governmental
Authority, any arbitrator or other tribunal.
(s) "Material Adverse Effect" means any fact, event, change,
development, circumstance or effect (i) that, when such term is used in relation
to the Company, is materially adverse to the business, condition (financial or
otherwise), results of operations, assets, liabilities, properties or prospects
of the Company and its Subsidiaries, taken as a whole, or (ii) that, when such
term is used in relation to Parent or Merger Sub, is materially adverse to the
business, condition (financial or otherwise), results of operations, assets,
liabilities, properties or prospects of Parent and its Subsidiaries, taken as a
whole; provided, however, that a Material Adverse Effect with respect to any
party hereto shall not include any fact, event, change, development,
circumstance or effect resulting from (A) general economic conditions, (B)
conditions generally affecting the semiconductor industry, (C) actions
contemplated by the parties in connection with, or which is attributable to, the
announcement of this Agreement and the transactions contemplated hereby
(including loss of customers, suppliers or employees or the delay or
cancellation of orders for products to the extent attributable to such factors),
or (D) any litigation or litigation by any Government Authority, in each case
brought or threatened against such entity or any member of its Board of
Directors in respect of this Agreement or the transaction contemplated hereby;
and provided, further, that neither (x) any change in the market price or
trading volume of the Company Common Stock or Parent Common Stock nor (y) a
failure by the Company or Parent to meet the revenue or earnings predictions or
expectations, for any period ending on or after the date of this Agreement
shall, in and of itself, constitute a Material Adverse Effect (it being
understood that this proviso, as it relates to (y), shall not exclude any
underlying fact, event, change, development, circumstance or event which
resulted in such failure to meet such estimates, predictions or expectations).
(t) "Order" means any judgment, order, writ, injunction, ruling or
decree of, or any settlement under the jurisdiction of, any Court or
Governmental Authority.
(u) "Person" means an individual, corporation, partnership,
association, trust, unincorporated organization, limited liability company,
other entity or group (as defined in Section 13(d)(3) of the Exchange Act).
(v) "Regulation" means any rule or regulation of any Governmental
Authority having the effect of Law.
(w) "Software" means any and all (i) computer programs, including any
and all software implementations of algorithms, models and methodologies,
whether in source code or object code, (ii) databases and compilations,
including any and all data and collections of data, whether machine readable, on
paper or otherwise, (iii) descriptions, flow-charts and other work product used
to design, plan, organize and develop any of the foregoing, (iv) the technology
supporting, and the contents and audiovisual displays of any Internet site(s)
operated by or on behalf of Company or any of its Subsidiaries, and (v) all
documentation and other works of authorship, including user manuals and training
materials, relating to any of the foregoing.
(x) "Subsidiary" or "Subsidiaries" of the Company, the Surviving
Corporation, Parent or any other Person means any corporation, partnership,
joint venture, limited liability company or other legal entity of which the
Company, the Surviving Corporation, Parent or such other Person, as the case may
be, owns, directly or indirectly, greater than 50% of the stock or other equity
interests the holder of which is generally entitled to vote as a general partner
or for the election of the board of directors or other governing body of a
corporation, partnership, joint venture, limited liability company or other
legal entity.
8.5. Interpretation.
When a reference is made in this Agreement to sections, subsections,
Schedules or Exhibits, such reference shall be to a section, subsection,
Schedule or Exhibit to 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 word "herein" and
similar references mean, except where a specific section or Article reference is
expressly indicated, the entire Agreement rather than any specific section or
Article. The table of contents and the headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.6. Severability.
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of Law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
8.7. Entire Agreement.
This Agreement and the Option Agreement (including all exhibits and
schedules hereto and thereto) and other documents and instruments delivered in
connection herewith constitute the entire agreement and supersedes all prior
agreements and undertakings (other than the Confidentiality Agreement), both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof and thereof.
8.8. Assignment.
This Agreement shall not be assigned by operation of Law or otherwise.
8.9. Parties in Interest.
This Agreement shall be binding upon and inure solely to the benefit
of each party hereto, and, except as set forth in Section 5.6(a), Section 5.6(f)
and Section 5.13, nothing in this Agreement, express or implied, is intended to
or shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
8.10. Failure or Indulgence Not Waiver; Remedies Cumulative.
No failure or delay on the part of any party hereto in the exercise of
any right hereunder will impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor will any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive to, and not exclusive
of, any rights or remedies otherwise available.
8.11. Governing Law; Enforcement.
This Agreement and the rights and duties of the parties hereunder
shall be governed by, and construed in accordance with the Law of the State of
Delaware applicable to contracts executed and to be performed entirely within
that state. The parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement or the Option 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 an injunction or
injunctions to prevent breaches of this Agreement or the Option Agreement and to
enforce specifically the terms and provisions of this Agreement or the Option
Agreement in the United Stated District Court for the District of Delaware, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto, (a) consents to submit itself
to the personal jurisdiction of the United Stated District Court for the
District of Delaware in the event any dispute arises out of this Agreement or
the Option Agreement or any transaction contemplated hereby or thereby, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, (c) agrees that it will
not bring any action relating to this Agreement or the Option Agreement or any
transaction contemplated hereby or thereby in any other court and (d) waives any
right to trial by jury with respect to any action related to or arising out of
this Agreement or the Option Agreement or any transaction contemplated hereby or
thereby.
8.12. Counterparts.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[Remainder of this page intentionally left blank]
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
MAXIM INTEGRATED PRODUCTS, INC.
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
MI ACQUISITION SUB, INC.
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Xxxx X. Xxx
------------------------------------
Name: Xxxx X. Xxx
Title: President
EXHIBIT A
STOCK OPTION AGREEMENT, dated as of January 28, 2001 (the "Agreement"),
between Maxim Integrated Products, Inc., a Delaware corporation (the "Grantee"),
Dallas Semiconductor Corporation, a Delaware corporation (the "Issuer").
RECITALS
WHEREAS, Grantee and Issuer are, concurrently with the execution and
delivery of this Agreement, entering into an Agreement and Plan of Merger, dated
as of the date hereof (the "Merger Agreement"), pursuant to which the parties
will engage in a business combination (the "Merger") (capitalized terms not
otherwise defined herein shave have the meanings assigned to them in the Merger
Agreement).
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Grantee has required that Issuer agree, and believing it to be in the
best interests of Issuer, Issuer has agreed, among other things, to grant to
Grantee the Option (as hereinafter defined) to purchase shares of common stock,
par value $0.02 per share, of Issuer ("Issuer Common Stock") at a price per
share equal to the Exercise Price (as hereinafter defined).
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
OPTION TO PURCHASE SHARES
1.1 Grant of Option.
(a) Issuer hereby grants to Grantee an irrevocable option to purchase,
in whole or in part, an aggregate of up to 9,259,002 duly authorized, validly
issued, fully paid and nonassessable shares of Issuer Common Stock (representing
14.9% of the issued and outstanding shares of Issuer Common Stock as of January
25, 2001), on the terms and subject to the conditions set forth herein (the
"Option"); provided, however, that in no event shall the number of shares of
Issuer Common Stock, for which this Option is exercisable, exceed 14.9% of the
issued and outstanding shares of Issuer Common Stock at the time of exercise
without giving effect to the issuance of any Option Shares (as defined below).
The number of shares of Issuer Common Stock that may be received upon the
exercise of the Option and the Exercise Price are subject to adjustment as
herein set forth.
(b) In the event that any additional shares of Issuer Common Stock are
issued or otherwise become outstanding after January 25, 2001 (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 3.1 hereof), the number of shares of Issuer Common Stock subject to the
Option shall be increased so that, after such issuance, such number together
with any shares of Issuer Common Stock previously issued pursuant hereto, equals
14.9% of the number of shares of Issuer Common Stock then issued and
outstanding, without giving effect to any shares subject or issued pursuant to
the Option. Nothing contained in this Section 1.1(b) or elsewhere in this
Agreement shall be deemed to authorize Issuer to breach or fail to comply with
any provision of the Merger Agreement. As used herein, the term "Option Shares"
means the shares of Issuer Common Stock issuable pursuant to the Option, as the
number of such shares shall be adjusted pursuant to the terms hereof.
1.2 Exercise of Option.
(a) The Option may be exercised by Grantee, in whole or in part, at
any time, or from time to time, commencing upon the Exercise Date and prior to
the Expiration Date. As used herein, the term "Exercise Date" means the date on
which Grantee becomes unconditionally entitled to receive a termination fee
pursuant to Section 7.3(b) of the Merger Agreement (the "Termination Fee"). As
used herein, the term "Expiration Date" means the first to occur prior to
Grantee's exercise of the Option pursuant to Section 1.2(b) of:
(i) the Effective Time;
(ii) written notice of termination of this Agreement by Grantee to
Issuer;
(iii) 12 months after the first occurrence of an Exercise Date; or
(iv) the date of termination of the Merger Agreement, unless, in the
case of this clause (iv), Grantee has the right to receive the Termination Fee
either (x) upon, or (y) following, such termination upon the occurrence of
certain events, in which case the Option will not terminate until the later of
(A) 15 business days following the time the Termination Fee becomes
unconditionally payable, and (B) the expiration of the period referred to in
Section 7.3(b)(A)(III) of the Merger Agreement.
Notwithstanding the termination of the Option, Grantee shall be entitled to
purchase those Option Shares with respect to which it may have exercised the
Option by delivery of an Option Notice (as defined below) prior to the
Expiration Date, and the termination of the Option will not affect any rights
hereunder that by their terms do not terminate or expire prior to or at the
Expiration Date.
(b) In the event Grantee wishes to exercise the Option, Grantee shall
send a written notice to Issuer of its intention to so exercise the Option (an
"Option Notice"), specifying the number of Option Shares to be purchased (and
the denominations of the certificates, if more than one), whether the aggregate
Exercise Price will be paid in cash or by surrendering a portion of the Option
in accordance with Section 1.3(b) or a combination thereof, and the place in the
United States, time and date of the closing of such purchase (the "Option
Closing" and the date of such Closing, the "Option Closing Date"), which date
shall not be less than two Business Days nor more than ten Business Days from
the date on which an Option Notice is delivered; provided, however, that the
Option Closing shall be held only if (i) such purchase would not otherwise
violate or cause the violation of, any applicable material law, statute,
ordinance, rule or regulation (including the HSR Act) (individually, a "Law" and
collectively, "Laws"), and (ii) no material judgment, order, writ, injunction,
ruling or decree of any Governmental Authority (collectively, "Orders") shall
have been promulgated, enacted, entered into, or enforced by any Governmental
Authority that prohibits delivery of the Option Shares, whether temporary,
preliminary or permanent; provided, however, that the parties hereto shall use
their reasonable best efforts to (x) promptly make and process all necessary
filings and applications and obtain all consents, approvals, Orders,
authorizations, registrations and declarations or expiration or termination of
any required waiting periods (collectively, "Approvals") and to comply with any
such applicable Laws and (y) have any such Order vacated or reversed. In the
event the Option Closing is delayed pursuant to clause (i) or (ii) above, the
Option Closing shall be within ten Business Days following the cessation of such
restriction, violation, Law or Order or the receipt of any necessary Approval,
as the case may be (so long as the Option Notice was delivered prior to the
Expiration Date); provided further, that, notwithstanding any prior Option
Notice, Grantee shall be entitled to rescind such Option Notice and shall not be
obligated to purchase any Option Shares in connection with such exercise upon
written notice to such effect to Issuer.
(c) At any Option Closing, (i) Issuer shall deliver to Grantee all of
the Option Shares to be purchased by delivery of a certificate or certificates
evidencing such Option Shares in the denominations designated by Grantee in the
Option Notice, and (ii) if the Option is exercised in part and/or surrendered in
part to pay the aggregate Exercise Price pursuant to Section 1.3(b), Issuer and
Grantee shall execute and deliver an amendment to this Agreement reflecting the
Option Shares for which the Option has not been exercised and/or surrendered. If
at the time of issuance of any Option Shares pursuant to an exercise of all or
part of the Option hereunder, Issuer shall have issued any rights or other
securities which are attached to or otherwise associated with the Issuer Common
Stock, then each Option Share issued pursuant to such exercise shall also
represent such rights or other securities with terms substantially the same as
and at least as favorable to Grantee as are provided under any shareholder
rights agreement or similar agreement of Issuer then in effect. At the Option
Closing, Grantee shall pay to Issuer by wire transfer of immediately available
funds to an account specified by Issuer to Grantee in writing at least two
Business Days prior to the Option Closing an amount equal to the Exercise Price
multiplied by the number of Option Shares to be purchased for cash pursuant to
this Article I; provided, however, that the failure or refusal of Issuer to
specify an account shall not affect Issuer's obligation to issue the Option
Shares.
(d) Upon the delivery by Grantee to Issuer of the Option Notice and
the tender of the applicable aggregate Exercise Price in immediately available
funds or the requisite portion of the Option in accordance with Section 1.3,
Grantee shall be deemed to be the holder of record of the Option Shares issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer may
then be closed, that certificates representing such Option Shares may not then
have been actually delivered to Grantee, or Issuer may have failed or refused to
take any action required of it hereunder. Issuer shall pay all expenses that may
be payable in connection with the preparation, issuance and delivery of stock
certificates or an amendment to this Agreement under this Section 1.2 and any
filing fees and other expenses arising from the performance of the transactions
contemplated hereby.
1.3 Payments.
(a) The purchase and sale of the Option Shares pursuant to Section 1.2
of this Agreement shall be at a purchase price equal to $26.8125 per share (as
such amount may be adjusted pursuant to the terms hereof, the "Exercise Price"),
payable at Grantee's option in cash, by surrender of a portion of the Option in
accordance with Section 1.3(b), or a combination thereof.
(b) Grantee may elect to purchase Option Shares issuable, and pay some
or all of the aggregate Exercise Price payable, upon an exercise of the Option
by surrendering a portion of the Option with respect to such number of Option
Shares as is determined by dividing (i) the aggregate Exercise Price payable in
respect of the number of Option Shares being purchased in such manner by (ii)
the excess of the Fair Market Value (as defined below) per share of Issuer
Common Stock as of the last trading day preceding the date Grantee delivers its
Option Notice (such date, the "Option Exercise Date") over the per share
Exercise Price. The "Fair Market Value" per share of Issuer Common Stock shall
be (x) if the Issuer Common Stock is listed on the New York Stock Exchange (the
"NYSE") or any other nationally recognized exchange or trading system as of the
Option Exercise Date, the average of last reported sale prices per share of
Issuer Common Stock thereon for the ten trading days commencing on the 12th
trading day immediately preceding the Option Exercise Date, or (y) if the Issuer
Common Stock is not listed on the NYSE or any other nationally recognized
exchange or trading system as of the Option Exercise Date, the amount determined
by a mutually acceptable independent investment banking firm as the value per
share the Issuer Common Stock would have if publicly traded on a nationally
recognized exchange or trading system (assuming no discount for minority
interest, illiquidity or restrictions on transfer). That portion of the Option
so surrendered under this Section 1.3(b) shall be canceled and shall thereafter
be of no further force and effect.
(c) Certificates for the Option Shares delivered at an Option Closing
will have typed or printed thereon a restrictive legend which will read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE STOCK OPTION
AGREEMENT DATED AS OF JANUARY 28, 2001, A COPY OF WHICH MAY BE OBTAINED
FROM THE SECRETARY OF STAR CORPORATION AT ITS PRINCIPAL EXECUTIVE
OFFICES."
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend will be removed by delivery of substitute
certificate(s) without such reference if such Option Shares have been registered
pursuant to the Securities Act, such Option Shares have been sold in reliance on
and in accordance with Rule 144 under the Securities Act or Grantee has
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act and (ii) the reference to restrictions pursuant to this Agreement
in the above legend will be removed by delivery of substitute certificate(s)
without such reference if the Option Shares evidenced by certificate(s)
containing such reference have been sold or transferred in compliance with the
provisions of this Agreement under circumstances that do not require the
retention of such reference.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that any Option Shares or other securities
acquired by Grantee upon exercise of the Option will not be taken with a view to
the public distribution thereof and will not be transferred or otherwise
disposed of except in a transaction registered or exempt from registration under
the Securities Act.
2.2 Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Option Shares. Issuer has taken all necessary corporate and other
action to authorize and reserve for issuance, and, subject to receipt of any
Approvals, to permit it to issue, the Option Shares and all additional shares or
other securities that may be issued pursuant to Section 3.1 upon exercise of the
Option, and, at all times from the date hereof until such time as the obligation
to deliver Option Shares hereunder terminates, will have reserved for issuance
upon exercise of the Option the Option Shares and such other additional shares
or securities, if any. All of the Option Shares and all additional shares or
other securities or property that may be issuable pursuant to Section 3.1, upon
exercise of the Option and issuance pursuant hereto, shall be duly authorized,
validly issued, fully paid and nonassessable, shall be delivered free and clear
of all Liens of any nature whatsoever, and shall not be subject to any
preemptive or similar right of any Person.
(b) No Restrictions. No Delaware law or other takeover statute or
similar Law and no provision of the Restated Certificate of Incorporation or
Bylaws of Issuer or any agreement to which Issuer is a party (i) would or would
purport to impose restrictions that might adversely affect or delay the
consummation of the transactions contemplated by this Agreement, or (ii) as a
result of the consummation of the transactions contemplated by this Agreement,
(x) would or would purport to restrict or impair the ability of Grantee to vote
or otherwise exercise the rights of a stockholder with respect to securities of
Issuer or any of its Subsidiaries that may be acquired or controlled by Grantee,
or (y) would or would purport to entitle any Person to acquire securities of
Issuer.
ARTICLE III
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
3.1 In addition to the adjustment in the number of shares of Issuer
Common Stock that may be purchased upon exercise of the Option pursuant to
Section 1.1, the number of shares of Issuer Common Stock that may be purchased
upon the exercise of the Option and the Exercise Price shall be subject to
adjustment from time to time as provided in this Section 3.1. In the event of
any change in the number of issued and outstanding shares of Issuer Common Stock
by reason of any stock dividend, split-up, merger, recapitalization,
combination, conversion, exchange of shares, spin-off or other change in the
corporate or capital structure of Issuer that would have the effect of diluting
or otherwise diminishing Grantee's rights hereunder, the number and kind of
Option Shares or other securities subject to the Option and the Exercise Price
therefor shall be appropriately adjusted so that Grantee shall receive upon
exercise of the Option (or, if such a change occurs between exercise and the
Option Closing, upon the Option Closing) the number and kind of shares or other
securities or property that Grantee would have received in respect of the Option
Shares that Grantee is entitled to purchase upon exercise of the Option if the
Option had been exercised (or the purchase thereunder had been consummated, as
the case may be) immediately prior to such event or the record date for such
event, as applicable. The rights of Grantee under this Article III shall be in
addition to, and shall in no way limit, its rights against Issuer for breach of
or the failure to perform any provision of the Merger Agreement.
ARTICLE IV
REGISTRATION RIGHTS
4.1 Registration of Option Shares Under the Securities Act.
(a) If requested by Grantee at any time and from time to time within
two years after receipt by Grantee of Option Shares (the "Registration Period"),
Issuer shall use its reasonable best efforts, as promptly as practicable, to
effect the registration under the Securities Act and any applicable state law (a
"Demand Registration") of such number of Option Shares or such other Issuer
securities owned by or issuable to Grantee in accordance with the method of sale
or other disposition contemplated by Grantee, including a "shelf" registration
statement under Rule 415 of the Securities Act or any successor provision, and
to obtain all consents or waivers of other parties that are required therefor.
Except with respect to such a "shelf" registration, Issuer shall keep such
Demand Registration effective for a period of not less than 180 days, unless, in
the written opinion of counsel to Issuer, which opinion shall be delivered to
Grantee and which shall be reasonably satisfactory in form and substance to
Grantee and its counsel, such registration under the Securities Act is not
required in order to lawfully sell and distribute such Option Shares or other
Issuer securities in the manner contemplated by Grantee. Issuer shall only have
the obligation to effect three Demand Registrations pursuant to this Section
4.1; provided, however, that only requests relating to a registration statement
that has become effective under the Securities Act shall be counted for purposes
of determining the number of Demand Registrations made. Issuer shall be entitled
to postpone for up to 90 days from receipt of Grantee's request for a Demand
Registration the filing of any registration statement in connection therewith if
the Board of Directors of Issuer determines in its good faith reasonable
judgment that such registration would materially interfere with any material
event involving the Issuer or require premature disclosure of any material
non-public information, the disclosure of which would materially and adversely
affect the Issuer; provided, however, that Issuer shall not have postponed any
Demand Registration pursuant to this sentence during the twelve month period
immediately preceding the date of delivery of Grantee's request for a Demand
Registration.
(b) If Issuer effects a registration under the Securities Act of
Issuer Common Stock for its own account or for any other stockholders of Issuer
(other than on Form S-4 or Form S-8, or any successor form), Grantee shall have
the right to participate in such registration and include in such registration
the number of shares of Issuer Common Stock or such other Issuer securities as
Grantee shall designate by notice to Issuer (an "Incidental Registration" and,
together with a Demand Registration, a "Registration"); provided, however, that,
if the Incidental Registration is in connection with an underwritten public
offering, the managing underwriters of such offering advise Issuer in writing
that, in their opinion, the number of shares of Issuer Common Stock or other
Issuer securities requested to be included in such Incidental Registration
exceeds the number which can be sold in such offering, Issuer shall include
therein (i) first, all shares proposed to be included therein by Issuer, (ii)
second, subject to the rights of any other holders of registration rights in
effect as of the date hereof, the shares requested to be included therein by
Grantee, and (iii) third, shares proposed to be included therein by any other
stockholder of Issuer. Participation by Grantee in any Incidental Registration
shall not affect the obligation of Issuer to effect Demand Registrations under
this Section 4.1. Issuer may withdraw any registration under the Securities Act
that gives rise to an Incidental Registration without the consent of Grantee.
(c) In connection with any Registration pursuant to this Section 4.1
that is an underwritten public offering, (i) Issuer and Grantee shall provide
each other and any underwriter of the offering with customary representations,
warranties, covenants, indemnification and contribution obligations in
connection with such Registration, (ii) Issuer shall use reasonable best efforts
to cause any Option Shares included in such Registration to be approved for
listing on the NYSE or any other nationally recognized exchange or trading
system upon which Issuer's securities are then listed, subject to official
notice of issuance, which notice shall be given by Issuer upon issuance, and
(iii) Grantee shall provide all information reasonably requested by Issuer that
is required for inclusion in any registration statement covering the Option
Shares. Grantee will provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder. The costs and
expenses incurred by Issuer in connection with any Registration pursuant to this
Section 4.1 (including any fees related to qualifications under Blue Sky Laws
and SEC filing fees) (the "Registration Expenses") shall be borne by Issuer,
excluding legal fees of Grantee's counsel and underwriting discounts or
commissions with respect to Option Shares to be sold by Grantee included in a
Registration.
4.2 Transfers of Option Shares.
(a) The Option Shares may not be sold, assigned, transferred, or
otherwise disposed of except (i) as provided in Section 4.1 or (ii) other than
in accordance with Section 5.3 hereof, to any purchaser or transferee who would
not, to the knowledge of Grantee after reasonable inquiry, immediately following
such sale, assignment, transfer or disposal beneficially own more than five
percent (5%) of the then-outstanding voting power of the Issuer; provided,
however, that Grantee shall be permitted to sell any Option Shares if such sale
is made pursuant to a tender or exchange offer that has been approved or
recommended by a majority of the members of the Board of Directors of Issuer
(which majority shall include a majority of directors who were directors as of
the date hereof).
ARTICLE V
REPURCHASE RIGHTS; SUBSTITUTE OPTION; FIRST REFUSAL
5.1 Repurchase Rights.
(a) At any time on or after the Exercise Date and prior to the
Expiration Date, Grantee shall have the right (the "Repurchase Right") to
require Issuer to repurchase from Grantee (i) the Option or any part thereof as
Grantee shall designate at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the
Exercise Price, multiplied by the number of Option Shares as to which the Option
is to be repurchased, and (ii) such number of Option Shares as Grantee shall
designate at a price (the "Option Share Repurchase Price") equal to the
Market/Offer Price multiplied by the number of Option Shares so designated. The
term "Market/Offer Price" shall mean the highest of (x) the highest price per
share of Issuer Common Stock offered or paid in any Acquisition Proposal (as
defined in the Merger Agreement), or (y) the highest closing price for shares of
Issuer Common Stock during the six-month period immediately preceding the date
Grantee gives the Repurchase Notice (as hereinafter defined). In determining the
Market/Offer Price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by
Grantee and reasonably acceptable to Issuer, which determination, absent
manifest error, shall be conclusive for all purposes of this Agreement.
(b) Grantee shall exercise its Repurchase Right by delivering to
Issuer written notice (a "Repurchase Notice") stating that Grantee elects to
require Issuer to repurchase all or a portion of the Option and/or the Option
Shares as specified therein. The closing of the Repurchase Right (the
"Repurchase Closing") shall take place in the United States at the place, time
and date specified in the Repurchase Notice, which date shall not be less than
two Business Days nor more than ten Business Days from the date on which the
Repurchase Notice is delivered. At the Repurchase Closing, subject to the
receipt of a writing evidencing the surrender of the Option and/or certificates
representing Option Shares, as the case may be, Issuer shall deliver to Grantee
the Option Repurchase Price therefor or the Option Share Repurchase Price
therefor, as the case may be, or the portion thereof that Issuer is not then
prohibited under applicable Law from so delivering. At the Repurchase Closing,
(i) Issuer shall pay to Grantee the Option Repurchase Price for the portion of
the Option that is to be repurchased or the Option Shares Repurchase Price for
the number of Option Shares to be repurchased, as the case may be, by wire
transfer of immediately available funds to an account specified by Grantee at
least 24 hours prior to the Repurchase Closing, and (ii) if the Option is
repurchased only in part, Issuer and Grantee shall execute and deliver an
amendment to this Agreement reflecting the Option Shares for which the Option is
not being repurchased.
(c) To the extent that Issuer is prohibited under applicable Law from
repurchasing the portion of the Option or the Option Shares designated in such
Repurchase Notice, Issuer shall immediately so notify Grantee and thereafter
deliver, from time to time, to Grantee the portion of the Option Repurchase
Price and the Option Share Repurchase Price, respectively, that it is no longer
prohibited from delivering, within five Business Days after the date on which
Issuer is no longer so prohibited; provided, however, that if Issuer at any time
after delivery of a Repurchase Notice is prohibited under applicable Law from
delivering to Grantee the full amount of the Option Repurchase Price and the
Option Share Repurchase Price for the Option or Option Shares to be repurchased,
respectively, Grantee may rescind the exercise of the Repurchase Right, whether
in whole, in part or to the extent of the prohibition, and, to the extent
rescinded, no part of the amounts, terms or the rights with respect to the
Option or Repurchase Right shall be changed or affected as if such Repurchase
Right were not exercised. Issuer shall use its reasonable best efforts to obtain
all required regulatory and legal approvals and to file any required notices to
permit Grantee to exercise its Repurchase Right and shall use its reasonable
best efforts to avoid or cause to be rescinded or rendered inapplicable any
prohibition on Issuer's repurchase of the Option or the Option Shares.
5.2 Substitute Option.
(a) In the event that Issuer enters into an agreement (i) to
consolidate with or merge into any Person, other than Grantee or any Subsidiary
of Grantee (each an "Excluded Person"), and Issuer is not the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
Person, other than an Excluded Person, to merge into Issuer and Issuer shall be
the continuing or surviving or acquiring corporation, but, in connection with
such merger, the then outstanding shares of Issuer Common Stock shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property or the then outstanding shares of Issuer Common Stock shall
after such merger represent less than 50% of the outstanding voting securities
of the merged or acquiring company, or (iii) to sell or otherwise transfer all
or substantially all of its assets to any Person, other than an Excluded Person,
then, and in each such case, the agreement governing such transaction shall make
proper provision so that, unless earlier exercised by Grantee, the Option shall,
upon the consummation of any such transaction and upon the terms and conditions
set forth herein, be converted into, or exchanged for, an option with identical
terms appropriately adjusted to acquire the number and class of shares or other
securities or property that Grantee would have received in respect of Issuer
Common Stock if the Option had been exercised immediately prior to such
consolidation, merger, sale, or transfer, or the record date therefor, as
applicable and make any other necessary adjustments; provided, however, that if
such a conversion or exchange cannot, because of applicable Law be the same as
the Option, such terms shall be as similar as possible and in no event less
advantageous to Grantee than the Option.
(b) In addition to any other restrictions or covenants, Issuer agrees
that it shall not enter or agree to enter into any transaction described in
Section 5.2(a) unless the Acquiring Corporation (as hereinafter defined) and any
Person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder and agree for the benefit of Grantee to comply
with this Article V.
(c) For purposes of this Section 5.2, the term "Acquiring Corporation"
shall mean (i) the continuing or surviving Person of a consolidation or merger
with Issuer (if other than Issuer), (ii) Issuer in a consolidation or merger in
which Issuer is the continuing or surviving or acquiring Person, and (iii) the
transferee of all or substantially all of Issuer's assets.
5.3 First Refusal.
(a) If Grantee desires to sell, assign, transfer or otherwise dispose
of all or any of the shares of Issuer Common Stock or other securities acquired
by it pursuant to the exercise of the Option, it will give Issuer written notice
of the proposed transaction (the "Offeror's Notice"), identifying the proposed
transferee, the proposed purchase price and the terms of such proposed
transaction. For ten business days following receipt of such notice, Issuer
shall have the option to elect by written notice to purchase all, but not less
than all, of the Issuer Common Stock or other securities specified in Offeror's
Notice at the price and upon the terms set froth in such notice.
(b) The closing of any repurchase of Option Shares pursuant to this
Section 5.3 shall take place within ten business days of Issuer's election to
purchase such Option Shares. On such closing date, Issuer shall pay the purchase
price to Grantee in immediately available funds, and Grantee shall thereupon
surrender to Issuer the certificate or certificates evidencing the shares of
Issuer Common Stock or other securities repurchased by the Issuer pursuant to
this Section 5.3.
(c) If Issuer does not elect to purchase the shares of Issuer Common
Stock or other securities designated in the Offeror's Notice, Grantee may,
within 60 days from the date of the Offeror's Notice, sell such shares of Issuer
Common Stock or other securities to the proposed transferee at no less than the
price specified and on terms not more favorable to the transferee than those set
forth in the Offeror's Notice; provided, however, that the provisions of this
Section 5.3(c) will not limit the rights Grantee many otherwise have if Issuer
has elected to purchase such shares of Issuer Common Stock or other securities
and wrongfully refuses to complete such purchase.
(d) The requirements of this Section 5.3 will not apply to (i) any
sale, assignment, transfer or disposition to an affiliate of Grantee; provided,
however, that such affiliate agrees to be bound by the terms hereof, (ii) any
sale, assignment, transfer or disposition as a result of which the proposed
transferee would own beneficially not more than 5% of the outstanding voting
power of the Issuer, or (iii) any sales or transfers by Grantee in a registered
underwritten offering.
ARTICLE VI
MISCELLANEOUS
6.1 Total Profit.
(a) Notwithstanding any other provision of this Agreement, in no event
shall Grantee's Total Profit (as hereinafter defined) plus any termination fees
paid by Issuer pursuant to Section 7.3(b) of the Merger Agreement (such fees,
collectively, the "Total Issuer Fees") exceed in the aggregate an amount (the
"Limitation Amount") equal to $75,000,000, and, if the total amount that would
otherwise be received by Grantee otherwise would exceed such amount, Grantee, at
its sole election, shall either (i) reduce the number of shares of Issuer Common
Stock subject to this Option, (ii) deliver to Issuer for cancellation Option
Shares previously purchased by Grantee, (iii) reduce the amount of the Option
Repurchase Price or the Option Share Repurchase Price, (iv) pay cash to Issuer,
or (v) any combination thereof, so that Grantee's actually realized Total
Profit, when aggregated with the Total Issuer Fees so paid to Grantee, shall not
exceed the Limitation Amount after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, the Option
may not be exercised for a number of Option Shares as would, as of the date of
exercise, result in a Notional Total Profit (as defined below) which, together
with the Total Issuer Fees theretofore paid to Grantee, would exceed the
Limitation Amount; provided, however, that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by Grantee
pursuant to Issuer's repurchase of the Option (or any portion thereof) pursuant
to Section 5.1, (ii) (x) the amount received by Grantee pursuant to Issuer's
repurchase or purchase of Option Shares pursuant to Section 5.1 or Section 5.3,
as the case may be, less (y) Grantee's purchase price for such Option Shares,
and (iii) (x) the net cash amounts or the fair market value of any property
received by Grantee pursuant to any consummated arm's-length sales of Option
Shares (or any other securities into which such Option Shares are converted or
exchanged) to any unaffiliated party, less (y) Grantee's purchase price of such
Option Shares.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of Option Shares as to which Grantee may propose to exercise the
Option shall be the Total Profit determined as of the date of such proposal
assuming that the Option was exercised on such date for such number of Option
Shares and assuming that such Option Shares, together with all other Option
Shares held by Grantee and its affiliates as of such date, were sold for cash at
the closing market price (less customary brokerage commissions) for shares of
Issuer Common Stock on the preceding trading day on the NASDAQ National Market
System (or on any other nationally recognized exchange or trading system on
which shares of Issuer Common Stock are then so listed or traded).
6.2 Further Assurances; Listing.
(a) From time to time, at the other party's request and without
further consideration, each party hereto shall execute and deliver such
additional documents and take all such further action as may be necessary or
desirable to consummate the transactions contemplated by this Agreement,
including, without limitation, to vest in Grantee good and marketable title,
free and clear of all Liens, to any Option Shares purchased hereunder. Issuer
agrees not to avoid or seek to avoid (whether by charter amendment or through
reorganization, consolidation, merger, issuance of rights or securities, the
Company Rights Agreement or similar agreement, dissolution or sale of assets, or
by any other voluntary act) the observance or performance of any of the
covenants, agreements or conditions to be observed or performed hereunder by it.
(b) If the Issuer Common Stock or any other securities to be acquired
upon exercise of the Option are then listed on the NYSE (or any other national
securities exchange or trading system), Issuer, upon the request of Grantee,
will promptly file an application to list the shares of Issuer Common Stock or
such other securities to be acquired upon exercise of the Option on the NYSE
(and any other national securities exchange or trading system) and will use
reasonable best efforts to obtain approval of such listing as promptly as
practicable.
6.3 Division of Option; Lost Options. The Agreement (and the Option
granted hereby) are exchangeable, without expense, at the option of Grantee,
upon presentation and surrender of this Agreement at the principal office of
Issuer, for other agreements providing for Options of different denominations
entitling Grantee to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of Option
Shares purchasable hereunder. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft or destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new agreement of like
tenor and date.
6.4 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
6.5 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the tenth Business
Day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) if to Grantee to:
Maxim Integrated Products
000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
(b) if to Issuer to:
Dallas Semiconductor Corporation
0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxx, President
with a copy to:
Jenkens & Xxxxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
6.6 Interpretation. When a reference is made in this Agreement to
Articles, Sections, Exhibits or Schedules, such reference shall be to an Article
or Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
6.7 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 both
parties need not sign the same counterpart.
6.8 Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement and the other agreements of the parties referred to
herein constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
6.9 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware applicable to contracts
executed and to be performed entirely within that State.
6.10 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
6.11 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other party, and any attempt to make any such
assignment without such consent shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
6.12 Submission to Jurisdiction; Waivers. Each of Grantee and Issuer
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns may be brought
and determined in the Chancery or other Courts of the State of Delaware, and
each of Grantee and Issuer hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of Grantee and Issuer hereby irrevocably waives, and agrees not to assert, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to lawfully serve process, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), (c) to the fullest extent permitted by applicable law, that (i) the
suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper, and (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts, and (d) any right to a trial by jury.
6.13 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
6.14 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of any party hereto in the exercise of any right hereunder
will impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor will any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive to, and not exclusive of, any
rights or remedies otherwise available.
IN WITNESS WHEREOF, Grantee and Issuer have caused this Stock Option
Agreement to be duly executed as of the date first above written.
GRANTEE: MAXIM INTEGRATED PRODUCTS, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
ISSUER: DALLAS SEMICONDUCTOR CORPORATION
By:_____________________________________
Name:___________________________________
Title:__________________________________
EXHIBIT B
AFFILIATE POOLING AGREEMENT
January 28, 2001
Maxim Integrated Systems, Inc.
000 Xxx Xxxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
The undersigned has been advised that, as of the date hereof, the
undersigned may be deemed to be an "affiliate"("Affiliate") of Dallas
Semiconductor Corporation., a Delaware corporation (the "Company"), as that term
is defined for purposes of paragraphs (c) and (d) of Rule 145 of the Regulations
of the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").
Pursuant to the terms and subject to the conditions of that certain
Agreement and Plan of Merger by and among Maxim Integrated Systems, Inc., a
Delaware corporation ("Parent"), MI Acquisition Sub, Inc., a newly formed
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and
the Company, dated as of January 28, 2001 (the "Merger Agreement"), providing
for, among other things, the merger of Merger Sub with and into the Company (the
"Merger"), the undersigned will be entitled to receive shares of common stock of
Parent [or options or warrants to acquire Parent Common Stock] (collectively
"Parent Common Stock") in exchange for shares of common stock of the Company [or
options or warrants to acquire Company Common Stock] (collectively "Company
Common Stock") owned by the undersigned at the Effective Time of the Merger as
determined pursuant to the Merger Agreement. Capitalized terms used but not
defined herein are defined in the Merger Agreement and are used herein with the
same meanings ascribed to them therein.
The undersigned understands that the Merger will be treated for
financial accounting purposes as a "pooling of interests" in accordance with
GAAP, and that the staff of the SEC has issued certain guidelines that should be
followed to ensure the application of pooling of interests accounting to the
Merger.
In consideration of the agreements contained herein, Parent's reliance
on this letter in connection with the consummation of the Merger and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned hereby agrees that the undersigned will not make
any sale, pledge, transfer or other disposition of, or hedge or reduce its risk
with respect to, (i) Company Common Stock during the period from the 30th day
prior to the Effective Time until the earlier of the Effective Time or the
termination of the Merger Agreement or (ii) Parent Common Stock now owned or
hereafter acquired by the undersigned, including, without limitation, Parent
Common Stock to be received by the undersigned pursuant to the Merger, until
such time as financial statements that include at least 30 days of combined
operations of the Company and Parent after the Merger will have been publicly
reported, unless the undersigned delivers to Parent, prior to any such sale,
transfer or other disposition, written advice from Ernst & Young LLP,
independent public accountants for Parent, or a written no-action letter from
the accounting staff of the SEC, in either case in form and substance reasonably
satisfactory to Parent, to the effect that such sale, transfer or other
disposition will not cause the Merger not to be treated as a "pooling of
interests" for financial accounting purposes in accordance with GAAP and the
Regulations of the SEC.
The undersigned has been advised that the offering, sale and delivery
of the shares of Parent Common Stock pursuant to the Merger will have been
registered with the SEC under the Securities Act on a Registration Statement on
Form S-4. The undersigned also has been advised, however, that, because the
undersigned may be deemed to be an Affiliate of the Company at the time the
Merger is submitted for a vote of the stockholders of the Company, Parent Common
Stock received by the undersigned pursuant to the Merger can be sold by the
undersigned only (i) pursuant to an effective registration statement under the
Securities Act, (ii) in conformity with the volume and other limitations of Rule
145 promulgated by the SEC under the Securities Act or (iii) in reliance upon an
exemption from registration that is available under the Securities Act.
The undersigned also understands that "stop transfer" instructions will
be given to the transfer agent for the Company Common Stock with respect to
shares of the Company Common Stock now owned or hereafter acquired by the
undersigned and that there will be placed on the certificates representing such
shares of Company Common Stock, or any substitutions therefor, a legend stating
in substance as follows:
"These shares may be transferred only in accordance with the
terms of an Affiliate Pooling Agreement between the original holder of
such shares and Sun, Inc., a copy of which agreement is on file at the
principal offices of Maxim Integrated Systems, Inc."
It is understood and agreed that the legend set forth above will be removed upon
surrender of certificates bearing such legend by delivery of substitute
certificates without such legend (i) if the undersigned will have delivered to
Parent the above-referenced advice of Ernst & Young LLP, or the above-referenced
no-action letter from the accounting staff of the SEC or (ii) upon the
termination of the Merger Agreement.
The undersigned also understands that "stop transfer" instructions will
be given to the transfer agent for Parent Common Stock with respect to shares of
Parent Common Stock to be received by the undersigned pursuant to the Merger and
that there will be placed on the certificates representing such shares of Parent
Common Stock, or any substitutions therefor, a legend stating in substance as
follows:
"These shares were issued in a transaction to which Rule 145
promulgated under the Securities Act of 1933, as amended, applies.
These shares may be transferred only in accordance with the terms of
such Rule and an Affiliate Pooling Agreement between the original
holder of such shares and Sun, Inc., a copy of which agreement is on
file at the principal offices of Sun, Inc."
It is understood and agreed that the legend set forth above will be removed upon
surrender of certificates bearing such legend by delivery of substitute
certificates without such legend if the undersigned will have delivered to
Parent an opinion of counsel, in form and substance reasonably satisfactory to
Parent, to the effect that (i) the sale or disposition of the shares represented
by the surrendered certificates may be effected without registration of the
offering, sale and delivery of such shares under the Securities Act, and (ii)
the undersigned will have delivered to Parent the above-referenced advice of
Ernst & Young LLP or the above-referenced no-action letter from the accounting
staff of the SEC.
Parent agrees that it will not unreasonably refuse to consent to, or
unreasonably delay, the removal of the foregoing legends.
By its execution hereof, Parent agrees that it will, as long as the
undersigned owns any Parent Common Stock to be received by the undersigned
pursuant to the Merger, take all reasonable efforts to make timely filings with
the SEC of all reports required to be filed by it pursuant to the Exchange Act
of 1934, as amended, and will promptly furnish upon written request of the
undersigned a written statement confirming that such reports have been so timely
filed.
[Remainder of this page intentionally left blank]
If you are in agreement with the foregoing, please so indicate by
signing below and returning a copy of this Affiliate Pooling Agreement to the
undersigned, and this Affiliate Pooling Agreement will become a binding
agreement between us as of the date first above written.
Very truly yours,
------------------------
Name
ACCEPTED by:
MAXIM INTEGRATED PRODUCTS, INC.
By:
-----------------------------
Name:
--------------------------
Title:
--------------------------
