Exhibit 99(d)(6)
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
MENTOR GRAPHICS CORPORATION,
FRESNO CORPORATION
AND
IKOS SYSTEMS, INC.
DATED AS OF
JANUARY ___, 2002
EXECUTION COPY
TABLE OF CONTENTS
PAGE
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ARTICLE I. DEFINITIONS....................................................... 1
Section 1.1 Definitions................................................ 1
ARTICLE II. THE MERGER....................................................... 7
Section 2.1 The Merger................................................. 7
Section 2.2 Closing; Effective Time.................................... 7
Section 2.3 Effect of the Merger....................................... 7
Section 2.4 Certificate of Incorporation; Bylaws....................... 8
Section 2.5 Directors and Officers..................................... 8
Section 2.6 Effect on Capital Stock.................................... 8
Section 2.7 Surrender of Certificates.................................. 9
Section 2.8 Transfer Books; No Further Ownership Rights in the
Shares of Company Common Stock............................. 10
Section 2.9 Lost, Stolen or Destroyed Certificates..................... 10
Section 2.10 Accounting Consequences................................... 10
Section 2.11 Withholding Rights........................................ 10
Section 2.12 Taking of Necessary Action; Further Action................ 11
Section 2.13 Dissenters' Rights........................................ 11
Section 2.14 The Offer................................................. 11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF COMPANY...................... 11
Section 3.1 Organization, Standing and Power.......................... 12
Section 3.2 Capital Structure......................................... 12
Section 3.3 Authority; No Conflicts................................... 13
Section 3.4 SEC Documents; Financial Statements....................... 14
Section 3.5 Absence of Certain Changes................................ 15
Section 3.6 Absence of Undisclosed Liabilities........................ 16
Section 3.7 Litigation................................................ 16
Section 3.8 Restrictions on Business Activities....................... 16
Section 3.9 Governmental Authorization................................ 16
Section 3.10 Title to Property........................................ 16
Section 3.11 Intellectual Property.................................... 17
Section 3.12 Environmental Matters.................................... 19
Section 3.13 Taxes.................................................... 20
Section 3.14 Employee Benefit Plans................................... 21
Section 3.15 Interested Party Transactions............................ 24
Section 3.16 Certain Agreements Affected by the Merger................ 24
Section 3.17 Employee Matters......................................... 24
Section 3.18 Insurance................................................ 26
Section 3.19 Compliance with Laws..................................... 26
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Section 3.20 Information to be Supplied............................... 27
Section 3.21 Vote Required............................................ 27
Section 3.22 Synopsys Agreement....................................... 27
Section 3.23 Board Approval; Rights Agreement; State
Takeover Statutes........................................ 27
Section 3.24 Brokers' and Finders' Fees; Opinion of
Financial Adviser........................................ 28
Section 3.25 Customers and Suppliers; Backlog......................... 28
Section 3.26 No Default............................................... 28
Section 3.27 Other Agreements......................................... 28
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB......... 29
Section 4.1 Organization, Standing and Power.......................... 29
Section 4.2 Authority................................................. 29
Section 4.3 Litigation................................................ 30
Section 4.4 Information to be Supplied................................ 30
Section 4.5 Board Approval............................................ 30
Section 4.6 Broker's and Finders' Fees................................ 30
Section 4.7 Parent Owned Shares of Company Common Stock............... 30
Section 4.8 No Financing Condition.................................... 31
ARTICLE V. CONDUCT PRIOR TO THE EFFECTIVE TIME.............................. 31
Section 5.1 Conduct of Business of Company............................ 31
Section 5.2 No Solicitation........................................... 34
ARTICLE VI. ADDITIONAL AGREEMENTS........................................... 36
Section 6.1 Preparation of Proxy Statement............................ 36
Section 6.2 Meeting of Stockholders................................... 36
Section 6.3 Access to Information..................................... 37
Section 6.4 Confidentiality........................................... 37
Section 6.5 Public Disclosure......................................... 40
Section 6.6 Consents; Cooperation..................................... 40
Section 6.7 Legal Requirements........................................ 41
Section 6.8 Intentionally omitted..................................... 41
Section 6.9 Employee Benefit Plans.................................... 41
Section 6.10 Form S-8................................................. 44
Section 6.11 Intentionally omitted.................................... 44
Section 6.12 Indemnification.......................................... 44
Section 6.13 Intentionally omitted.................................... 45
Section 6.14 Stockholder Litigation................................... 45
Section 6.15 Employee Agreements...................................... 45
Section 6.16 Injunctions or Restraints................................ 45
Section 6.17 Intentionally omitted.................................... 45
Section 6.18 Further Assurances....................................... 45
Section 6.19 Existing Litigation Termination.......................... 45
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ARTICLE VII. CONDITIONS TO THE MERGER....................................... 45
Section 7.1 Conditions to Obligations of Each Party to Effect the
Merger.................................................... 45
Section 7.2 Additional Conditions to Obligations of the Company....... 46
Section 7.3 Additional Conditions to the Obligations of Parent
and Merger Sub............................................ 46
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER............................. 47
Section 8.1 Termination............................................... 47
Section 8.2 Effect of Termination..................................... 49
Section 8.3 Expenses and Termination Fees............................. 49
Section 8.4 Amendment................................................. 50
Section 8.5 Extension; Waiver......................................... 50
ARTICLE IX. GENERAL PROVISIONS.............................................. 50
Section 9.1 Non-Survival at Effective Time............................ 50
Section 9.2 Notices................................................... 50
Section 9.3 Interpretation............................................ 51
Section 9.4 Counterparts.............................................. 52
Section 9.5 Entire Agreement; Nonassignability; Parties in
Interest.................................................. 52
Section 9.6 Severability.............................................. 52
Section 9.7 Remedies Cumulative....................................... 52
Section 9.8 Governing Law............................................. 52
Section 9.9 Rules of Construction..................................... 53
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SCHEDULES
Company Disclosure Schedule
EXHIBITS
Exhibit A - Intentionally Omitted
Exhibit B - Form of Certificate of Merger
Exhibit C - Form of Certificate of Incorporation of the Surviving
Corporation
Exhibit D - Form of Employee Agreement for employees of the Company
listed on Schedule 6.15(a)
Exhibit E - Form of Employee Agreement for employees of the Company
listed on Schedule 6.15(b)
Exhibit F - Form of Amendment to Severance Agreement for employees of
the Company listed on Schedule 6.15(c)
Exhibit G - Form of Amendment to Severance Agreement for employees of
the Company listed on Schedule 6.15(d)
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this
"Agreement") is made and entered into as of January ___, 2002, by and among
Mentor Graphics Corporation, an Oregon corporation ("Parent"), Fresno
Corporation, a Delaware corporation ("Merger Sub") and wholly owned subsidiary
of Parent, and IKOS Systems, Inc., a Delaware corporation (the "Company").
RECITALS WHEREAS the Boards of Directors of the Company, Parent and Merger Sub
each have determined that it is advisable and in the best interests of each
corporation and their respective stockholders to consummate the acquisition of
the Company by Parent, upon the terms and subject to the conditions set forth
herein;
RECITALS
WHEREAS in furtherance thereof, it is proposed that Merger Sub amend
its cash tender offer commenced on December 7, 2001 (as amended prior to the
date hereof and as it may be amended from time to time as permitted under this
Agreement, the "Offer") to acquire any and all shares of the issued and
outstanding common stock, $0.01 par value, of the Company (the "Company Common
Stock"), including the related Rights (as hereinafter defined), for $11.00 per
share, net to the seller in cash, upon the terms and conditions set forth in
this Agreement, including Annex I and Annex II hereto; WHEREAS also in
furtherance of such acquisition, the Boards of Directors of each of Parent,
Merger Sub and the Company have approved this Agreement and the transactions
contemplated hereby, including the merger of Merger Sub with and into the
Company (the "Merger"), with the Company as the surviving corporation following
the Merger; and WHEREAS the Company, Parent and Merger Sub desire to make
certain representations, warranties, covenants and other agreements in
connection with the Merger.
NOW, THEREFORE, in consideration of the premises, and the
representations, warranties, covenants, agreements and additional agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 DEFINITIONS . As used in this Agreement, the following
capitalized terms shall have the meanings indicated below:
"Agreement" has the meaning ascribed to it in the forepart of this
Agreement.
"Antitrust Laws" has the meaning ascribed to it in Section 6.6(b).
"Authorized Option Shares" means the sum of (a) the number of
options granted under the Company Stock Option Plans which are outstanding as of
June 15, 2001; (b) the number of
shares of Company Common Stock remaining available for grant under the Company
Stock Option Plans as of June 15, 2001; and (c) such number of additional shares
of Company Common Stock (if any) that are made available for issuance under the
1995 Stock Option Plan on October 1, 2001 pursuant to Section 4.1 thereof if the
Closing Date is after October 1, 2001.
"Backlog" as of June 30, 2001 or June 30, 2002, means (a) the dollar
amount of all non-cancelable orders for products and services that (i) are not
discounted in excess of historical discounts consistent with past practice, (ii)
satisfy all criteria of the Company's orders acceptance policy as it existed on
June 6, 2001, as amended by the Company with Parent's consent prior to the date
of this Agreement (but excluding any orders for which an exception to the order
acceptance policy was approved by an officer of the Company, regardless of
whether the orders acceptance policy grants such officer authority to make such
exceptions), and (iii) have not been invoiced, plus (b) all deferred revenue, as
reflected in audited financial statements prepared in accordance with GAAP
applied on a consistent basis throughout the periods indicated and consistent
with the Company's annual fiscal year-end audited financial statements,
attributable to products and services that have been invoiced; provided,
however, that (AA), for the avoidance of doubt, items that are included in the
above clause (a) of this paragraph shall not be included in the above clause (b)
of this paragraph, (BB) in the case of hardware and software, such products must
have a scheduled ship date within six (6) months of the applicable Backlog date
(i.e. June 30, 2001 or June 30, 2002, as the case may be) and (CC) in the case
of software maintenance and support, consulting and training, such services must
be scheduled to be performed within six (6) months of such date.
"Bonus Plan" has the meaning ascribed to it in Section 6.9(g).
"CERCLA" has the meaning ascribed to it in Section 3.12(b).
"Certificate" has the meaning ascribed to it in Section 2.7(b).
"Certificate of Incorporation" has the meaning ascribed to it in
Section 3.1.
"Certificate of Merger" has the meaning ascribed to it in Section
2.2.
"Closing" has the meaning ascribed to it in Section 2.2.
"Closing Date" has the meaning ascribed to it in Section 2.2.
"COBRA" has the meaning ascribed to it in Section 3.14(d).
"Company" has the meaning ascribed to it in the forepart to this
Agreement.
"Company Authorizations" has the meaning ascribed to it in Section
3.9.
"Company Balance Sheet" has the meaning ascribed to it in Section
3.6.
"Company Balance Sheet Date" has the meaning ascribed to it in
Section 3.5.
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"Company Common Stock" has the meaning ascribed to it in the
Recitals to this Agreement.
"Company Confidential Information" has the meaning ascribed to it in
Section 6.4(e).
"Company Disclosure Schedule" has the meaning ascribed to it in the
forepart of Article III.
"Company Employee Plans" has the meaning ascribed to it in Section
3.14(a).
"Company ESPP" has the meaning ascribed to it in Section 3.2.
"Company Financial Statements" has the meaning ascribed to it in
Section 3.4.
"Company Material Adverse Effect" means any event, matter, change,
condition, circumstance or effect that is materially adverse to the business,
condition (financial or otherwise), properties, assets (including intangible
assets), liabilities, operations or results of operations of the Company (or,
after the Effective Time, the Surviving Corporation) and its Subsidiaries,
taking the Company (or, after the Effective Time, the Surviving Corporation)
together with its Subsidiaries as a whole; provided, however, that none of the
following, in and of themselves, either alone or in combination, shall
constitute a Company Material Adverse Effect: (a) a decrease in the trading
price of Company Common Stock; (b) any event, matter, change, condition,
circumstance or effect which the Company successfully bears the burden of
proving results from changes affecting any of the industries or economies in
which the Company operates as a whole (which changes do not materially and
disproportionately affect the Company); (c) any adverse event, matter, change,
condition, circumstance or effect which the Company successfully bears the
burden of proving is directly and primarily caused by the announcement or
pendency of the Offer or the Merger; (d) any adverse event, matter, change,
condition, circumstance or effect which the Company successfully bears the
burden of proving is directly and primarily caused by the taking of any action
expressly required by this Agreement; (e) any adverse event, matter, change,
condition, circumstance or effect which the Company successfully bears the
burden of proving is directly and primarily caused by any matter for which
Parent has agreed (other than in this Agreement) to indemnify the Company; or
(f) a failure in and of itself of results of operations of the Company and its
Subsidiaries (on a consolidated basis) to meet internal projections or forecasts
or published revenue or earnings predictions for any fiscal quarterly or annual
period of the Company after the date hereof and prior to the Closing Date, but
not either the underlying causes of such failure or the consequences of such
failure.
"Company Representatives" has the meaning ascribed to it in Section
5.2.
"Company SEC Documents" has the meaning ascribed to it in Section
3.4.
"Company Stock Option Plans" has the meaning ascribed to it in
Section 2.6(c).
"Company Stockholders Meeting" has the meaning ascribed to it in
Section 6.2.
"Competing Bidder" has the meaning ascribed to it in Section 5.2.
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"Confidential Information" has the meaning ascribed to it in Section
3.11(g).
"Continuing Employees" has the meaning ascribed to it in Section
6.9(d).
"Dissenting Stockholders" has the meaning ascribed to it in Section
2.6(a).
"DGCL" has the meaning ascribed to it in Section 2.1.
"Effective Time" has the meaning ascribed to it in Section 2.2.
"Environmental and Safety Laws" has the meaning ascribed to it in
Section 3.12(a).
"ERISA Affiliate" has the meaning ascribed to it in Section 3.14(a).
"ERISA" has the meaning ascribed to it in Section 3.14(a).
"Exchange Act" has the meaning ascribed to it in Section 3.4.
"Facilities" has the meaning ascribed to it in Section 3.12(a).
"Final Date" has the meaning ascribed to it in Section 8.1(b).
"Foreign Plan" has the meaning ascribed to it in Section 3.14(j).
"GAAP" has the meaning ascribed to it in Section 3.4.
"Governmental Entity" has the meaning ascribed to it in Section 3.3.
"Hazardous Materials" has the meaning ascribed to it in Section
3.12(a).
"HSR Act" has the meaning ascribed to it in Section 3.3.
"Indemnified Parties" has the meaning ascribed to it in Section
6.12.
"Intellectual Property" has the meaning ascribed to it in Section
3.11(a).
"Internal Revenue Code" has the meaning ascribed to it in Section
2.11.
"Knowledge" with respect to a party means such party's actual
knowledge after reasonable inquiry of officers, directors, vice presidents,
persons of higher authority than, or equivalent authority to, a vice president,
and all persons directly reporting to any of the foregoing.
"Merger" has the meaning ascribed to it in the Recitals to this
Agreement. "Merger Consideration" has the meaning ascribed to it in Section
2.6(a).
"Merger Sub" has the meaning ascribed to it in the forepart of this
Agreement.
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"Merger Sub Common Stock" has the meaning ascribed to it in Section
2.6(d).
"Minimum Condition" has the meaning ascribed to it in Section 1.1(a)
of Annex I.
"NASD" has the meaning ascribed to it in Section 3.3.
"Xxxxxxx Letter" means Xxxxxxx & Co.'s letter agreement with the
Company dated as of June 28, 2000.
"Offer" has the meaning ascribed to it in the forepart of this
Agreement.
"Offer Documents" has the meaning ascribed to it in Section 1.1(b)
of Annex I.
"Offer Price" has the meaning ascribed to it in Section 1.1(a) of
Annex I.
"Order" has the meaning ascribed to it in Section 6.6(b).
"Parent" has the meaning ascribed to it in the forepart to this
Agreement.
"Parent Confidential Information" has the meaning ascribed to it in
Section 6.4(b).
"Paying Agent" has the meaning ascribed to it in Section 2.7(a).
"PCBs" has the meaning ascribed to it in Section 3.12(b).
"Property" has the meaning ascribed to it in Section 3.12(a).
"Proxy Statement" has the meaning ascribed to it in Section 6.1(a).
"Recommendation" has the meaning ascribed to it in Section 8.1(e).
"Rights" means the preferred share purchase rights issued by the
Company pursuant to the Rights Agreement.
"Rights Agreement" has the meaning ascribed to it in Section 3.23.
"Schedule 14D-9" has the meaning ascribed to it in Section 1.2(b) of
Annex I.
"Schedule TO" has the meaning ascribed to it in Section 1.1(b) of
Annex I.
"SEC" has the meaning ascribed to it in Section 3.3.
"Securities Act" has the meaning ascribed to it in Section 3.2.
"Subsidiary" and "Subsidiaries" mean, with respect to any person,
any corporation or other organization, whether incorporated or unincorporated,
of which (i) such person or any other subsidiary of such person is a general
partner (excluding partnerships, the general partnership interests of which held
by such person or any subsidiary of such person do not have a majority of the
voting interest in such partnership) or (ii) at least a majority of the
securities or
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other interests having by their terms ordinary voting power to elect a majority
of the board of directors, or others performing similar functions with respect
to such corporation or other organization, is directly or indirectly owned or
controlled by such person or by one or more of its subsidiaries.
"Superior Proposal" has the meaning ascribed to it in Section 5.2.
"Surviving Corporation" has the meaning ascribed to it in Section
2.1.
"Synopsys Agreement" means the Agreement and Plan of Merger and
Reorganization dated July 2, 2001, as amended, among the Company, Synopsys, Inc.
("Synopsys") and Oak Merger Corporation.
"Takeover Proposal" means any agreement, offer or proposal for, or
any indication of interest, written or oral, in (A) a merger, reorganization,
share exchange, consolidation, or other business combination involving the
Company or any of its Subsidiaries, which would result in the holders of the
Company's Common Stock immediately prior to the consummation of such transaction
holding less than eighty five percent (85%) of the outstanding shares of any
class of capital stock or voting power of the surviving, resulting or acquiring
entity immediately following the consummation of such transaction; or (B) a
tender offer for securities of the Company, which, if successful, would result
in the tender offeror, either alone or as part of a group, holding beneficial
ownership of fifteen percent (15%) or more of the outstanding shares of any
class of capital stock or voting power of the Company immediately following the
consummation of such tender offer; (C) the acquisition of fifteen percent (15%)
or more of the outstanding shares of any class of capital stock or voting power
of the Company; or (D) the acquisition of fifteen percent (15%) or more of the
assets of the Company and its Subsidiaries (either on the basis of book value or
fair market value, calculated in each case on a consolidated basis), other than,
in each case, the transactions contemplated by this Agreement. For purposes of
this definition, the terms "person", "group" and "beneficial ownership" have the
meanings ascribed to them in the Securities Exchange Act of 1934, as amended and
the rules and regulations of the SEC thereunder.
"Tax" (and, with correlative meaning, "Taxes" and "Taxable") means
(i) any net income, alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Tax Authority; (ii) any liability for the payment of any amounts
of the type described in clause (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period; and
(iii) any liability for the payment of any amounts of the type described in
clause (i) or clause (ii) as a result of being a transferee of or successor to
any person or as a result of any express or implied obligation to indemnify any
other person, including pursuant to any Tax sharing or Tax allocation agreement.
"Tax Authority" means any Governmental Entity responsible for the
imposition of any Tax (domestic or foreign).
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"Tax Return" means any return, statement, report or form (including
estimated Tax returns and reports, withholding Tax returns and reports and
information reports and returns) required to be filed with respect to Taxes.
"Third Party Intellectual Property Rights" has the meaning ascribed to it in
Section 3.11(b).
"Trigger Event" means the acquisition by any person or group of
beneficial ownership of securities representing fifteen percent (15%) or more of
the outstanding shares of any class of capital stock or voting power of the
Company, or the commencement or public announcement of a tender or exchange
offer, other publicly announced initiative or open market purchase program
following the successful consummation of which such person or group would have
beneficial ownership of securities representing fifteen percent (15%) or more of
the outstanding shares of any class of capital stock or voting power of the
Company. For purposes of this definition, the terms "person", "group" and
"beneficial ownership" have the meanings ascribed to them in the Securities
Exchange Act of 1934 as amended and the rules and regulations of the SEC
thereunder.
ARTICLE II.
THE MERGER
SECTION 2.1 THE MERGER . At the Effective Time (as defined in
Section 2.2) and upon the terms and subject to the conditions set forth in this
Agreement and the applicable provisions of the General Corporation Law of the
State of Delaware (the "DGCL"), Merger Sub shall be merged with and into the
Company, the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation. The Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
SECTION 2.2 CLOSING; EFFECTIVE TIME . The closing of the Merger (the
"Closing") shall take place as soon as reasonably practicable (and in any event
not later than two business days) after the satisfaction or waiver of each of
the conditions set forth in Article VII hereof or at such other time as the
parties hereto agree (the "Closing Date"). The Closing shall take place at the
offices of Xxxxxx & Xxxxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx,
Xxxxxxxxxx, 00000, or at such other location as the parties hereto agree. As
part of the Closing, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger in the form attached hereto as Exhibit B (the
"Certificate of Merger") with the Secretary of State of the State of Delaware,
in accordance with the relevant provisions of the DGCL (the time of the filing
of such document, or such later time as may be agreed to by the parties and
specified in the Certificate of Merger in accordance with Section 103(d) of the
DGCL, being the "Effective Time").
SECTION 2.3 EFFECT OF THE MERGER . At the Effective Time, the effect
of the Merger shall be as provided in this Agreement, the Certificate of Merger
and the applicable provisions of the DGCL. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all property, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, without revision or impairment, and debts,
liabilities and
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duties of the Company and Merger Sub shall be the debts, liabilities and duties
of the Surviving Corporation.
SECTION 2.4 CERTIFICATE OF INCORPORATION; BYLAWS . At the Effective
Time, the Certificate of Incorporation of the Surviving Corporation shall be
amended in its entirety to read as set forth in Exhibit C hereto. From and after
the Effective Time, Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended in accordance with the DGCL, the Certificate of Incorporation
of the Surviving Corporation and such Bylaws.
SECTION 2.5 DIRECTORS AND OFFICERS . From and after the Effective
Time, the directors and officers of Merger Sub immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation,
in each case until their successors are elected or appointed and qualified or
until their earlier resignation or removal.
SECTION 2.6 EFFECT ON CAPITAL STOCK . By virtue of the Merger and
without any action on the part of Merger Sub, the Company or the holders of any
of the following securities:
(a) Exchange of Shares of Company Common Stock. At the
Effective Time, each share of Company Common Stock (other than shares to be
cancelled in accordance with Section 2.6(b) and any shares which are held by
stockholders exercising appraisal rights pursuant to Section 262 of the DGCL
("Dissenting Stockholders")) issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive the Offer Price in
cash, payable to the holder thereof, without interest (the "Merger
Consideration"), upon surrender of the certificate formerly representing such
share in the manner provided in Section 2.7. All such shares, when so converted,
shall no longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate representing any such
shares shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration therefor upon the surrender of such certificate
in accordance with Section 2.7, without interest, or the right, if any, to
receive payment from the Surviving Corporation of the "fair value" of such
shares of Company Common Stock as determined in accordance with Section 262 of
the DGCL.
(b) Cancellation of Company Common Stock Owned by Parent or
Company. At the Effective Time, all shares of Company Common Stock that are
owned by the Company as treasury stock and each share of Company Common Stock
owned by Parent or any direct or indirect wholly owned Subsidiary of Parent or
the Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof or any other consideration paid or
issued therefore.
(c) Company Stock Option Plans; Company ESPP. At the
Effective Time, the Company's 1995 Stock Option Plan, 1995 Outside Directors
Stock Option Plan, 2000 Nonstatutory Stock Option Plan, Virtual Machine Works
1994 Incentive Stock Option Plan and the non-plan options to purchase Company
Common Stock set forth in Section 2.6(c) of the Company Disclosure Schedule
(collectively the "Company Stock Option Plans") and all options to purchase
Company Common Stock then outstanding under the Company Stock Option Plans
8
shall be assumed by Parent in accordance with Section 6.9. The Company ESPP (as
defined in Section 3.2) shall be terminated in accordance with Section 6.9(c).
(d) Capital Stock of Merger Sub. At the Effective Time, each
share of common stock, $0.01 par value, of Merger Sub ("Merger Sub Common
Stock") issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation, and the
Surviving Corporation shall be a wholly owned Subsidiary of Parent. Each stock
certificate of Merger Sub evidencing ownership of any such shares shall continue
to evidence ownership of such shares of capital stock of the Surviving
Corporation.
SECTION 2.7 SURRENDER OF CERTIFICATES.
(a) Paying Agent. Prior to the Effective Time, Parent shall
designate a New York City-based bank or trust company reasonably acceptable to
the Company to act as agent for the holders of shares of Company Common Stock in
connection with the Merger (the "Paying Agent") to receive the funds to which
holders of such shares shall become entitled pursuant to Section 2.6(a). Prior
to the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware, Parent shall deposit with the Paying Agent cash in U.S.
dollars in an amount sufficient to pay the consideration to be paid in the
Merger as provided herein. The Paying Agent shall invest such funds as directed
by the Surviving Corporation on a daily basis; provided that no such investment
or loss thereon shall affect the amounts payable to the Company's stockholders
pursuant to this Article II. Any interest and other income resulting from such
investments shall be paid promptly to the Surviving Corporation. For purposes of
determining the Merger Consideration to be made available, Parent shall assume
that no holder of shares of Company Common Stock will perfect its right to
appraisal of such shares.
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates"),
whose shares were converted pursuant to Section 2.6(a) into the right to receive
the Merger Consideration (i) 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 Paying Agent and shall be in
such form and have such other provisions as Parent and the Company may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by Parent, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration for each share formerly
represented by such Certificate and the Certificate so surrendered shall
forthwith be cancelled. If payment of the Merger Consideration is to be made to
a person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid any
transfer and other Taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the
9
satisfaction of the Surviving Corporation that such tax either has been paid or
is not applicable. Until surrendered as contemplated by this Section 2.7, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive the Merger Consideration in cash, without interest, as
contemplated by this Section 2.7. The right of any stockholder to receive the
Merger Consideration shall be subject to and reduced by any applicable
withholding Tax obligation.
(c) Termination of Fund; No Liability. At any time following
seven months after the Effective Time, Parent shall be entitled to require the
Paying Agent to deliver to it any funds (including any interest received with
respect thereto) which had been made available to the Paying Agent and which
have not been disbursed to holders of Certificates, and thereafter such holders
shall be entitled to look to Parent (subject to abandoned property, escheat or
other similar laws) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates, without any
interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving
Corporation or the Paying Agent shall be liable to any holder of a Certificate
for Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
SECTION 2.8 TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN THE
SHARES OF 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 the shares of Company Common Stock on the records
of the Company. From and after the Effective Time, the holders of Certificates
evidencing ownership of the shares of Company Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of Company Common Stock, except as otherwise provided for
herein or by applicable law. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be cancelled
and exchanged as provided in this Article II.
SECTION 2.9 LOST, STOLEN OR DESTROYED CERTIFICATES . In the event
any Certificate shall have been lost, stolen or destroyed, the Paying Agent
shall issue in exchange for such lost, stolen or destroyed Certificate, upon the
making of an affidavit of that fact by the holder thereof, the Merger
Consideration as may be required pursuant to Section 2.6; provided, however,
that Parent may, in its discretion and as a condition precedent to the payment
thereof, require the owner of such lost, stolen or destroyed Certificate to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent, the Surviving Corporation or the Paying
Agent with respect to the Certificate alleged to have been lost, stolen or
destroyed.
SECTION 2.10 ACCOUNTING CONSEQUENCES . It is intended by the parties
hereto that the Merger shall be accounted for as a purchase.
SECTION 2.11 WITHHOLDING RIGHTS . Parent and the Surviving
Corporation shall be entitled to deduct and withhold from the Merger
Consideration otherwise deliverable under this Agreement, and from any other
payments made pursuant to this Agreement, such amounts as Parent and the
Surviving Corporation are required to deduct and withhold with respect to such
delivery and payment under the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code") or any provision of United States federal, state,
local, or foreign national,
10
provincial, local or other Tax law. To the extent that amounts are so withheld,
such withheld amounts shall be treated for all purposes of this Agreement as
having been delivered and paid to the holder of shares of Company Common Stock
in respect of which such deduction and withholding was made by Parent and the
Surviving Corporation.
SECTION 2.12 TAKING OF NECESSARY ACTION; FURTHER ACTION . If, at any
time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving Corporation
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of the Company and Merger Sub, the officers
and directors of the Company and Merger Sub are fully authorized in the name of
their respective corporations or otherwise to take, and will take, all such
lawful and necessary action, as long as such action is not inconsistent with
this Agreement.
SECTION 2.13 DISSENTERS' RIGHTS.
(a) Notwithstanding anything in this Agreement to the
contrary, if any Dissenting Stockholder shall demand to be paid the "fair value"
of such holder's shares of Company Common Stock, as provided in Section 262 of
the DGCL, such shares shall not be converted into or be exchangeable for the
right to receive the Merger Consideration except as provided in this Section
2.13, and the Company shall give Parent notice thereof. Parent shall have the
right to participate in all negotiations and proceedings with respect to any
such demands. Neither the Company nor the Surviving Corporation shall, except
with the prior written consent of Parent, voluntarily make any payment with
respect to, or settle or offer to settle, any such demand for payment. If any
Dissenting Stockholder shall fail to perfect or shall have effectively withdrawn
or lost the right to dissent, the shares of Company Common Stock held by such
Dissenting Stockholder shall thereupon be treated as though such shares had been
converted into the Merger Consideration pursuant to Section 2.6.
(b) Any portion of the Merger Consideration made available
to the Paying Agent pursuant to Section 2.7(a) to pay for shares of Company
Common Stock for which appraisal rights have been perfected shall be returned to
Parent, upon demand.
SECTION 2.14 THE OFFER . Certain provisions of this Agreement
relating to the Offer are set forth in Annex I hereto.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to Parent and Merger Sub that
the statements contained in this Article III are true and correct as of July 2,
2001 (except where a representation is specifically stated as of the date of
this Agreement and except for the representations and warranties set forth in
Section 3.3, Section 3.22, Section 3.23 and Section 3.27 which shall be true and
correct as of the date of this Agreement) except as set forth herein and in the
disclosure schedule dated as of and delivered by the Company to Parent on the
date of this Agreement (the "Company Disclosure Schedule"). The disclosures set
forth in the Company Disclosure Schedule shall qualify only the disclosure under
the section number referred to in the Company Disclosure Schedule.
11
SECTION 3.1 ORGANIZATION, STANDING AND POWER . Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization. Each of the
Company and its Subsidiaries has the corporate power to own its properties and
to carry on its business as now being conducted and as presently proposed to be
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified and in good standing could
reasonably be expected to have a Company Material Adverse Effect. The Company
will deliver to Parent a true and correct copy of the Certificate of
Incorporation, (the "Certificate of Incorporation"), and Bylaws or other charter
documents, as applicable, of the Company and each of its Subsidiaries, each as
amended to date. Neither the Company nor any of its Subsidiaries is in violation
of any of the provisions of its respective charter or bylaws or equivalent
organizational documents. The Company is the owner of all outstanding shares of
capital stock of each of its Subsidiaries and all such shares are duly
authorized, validly issued, fully paid and nonassessable. All of the outstanding
shares of capital stock of each such Subsidiary are owned by the Company free
and clear of all liens, charges, claims or encumbrances or rights of others and
are not subject to preemptive rights or rights of first refusal created by
statute, the certificate of incorporation, or Bylaws of such Subsidiary or any
agreement to which such Subsidiary is a party or by which it is bound. There are
no outstanding subscriptions, options, warrants, puts, calls, rights,
exchangeable or convertible securities or other commitments or agreements of any
character relating to the issued or unissued capital stock or other securities
of any such Subsidiary, or otherwise obligating the Company or any such
Subsidiary to issue, transfer, sell, purchase, redeem or otherwise acquire any
such securities. The Company does not directly or indirectly own any equity or
similar interest in, or any interest convertible or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, limited
liability company, joint venture or other business association or entity
(excluding the Subsidiaries and securities in publicly traded companies held for
passive investment and comprising less than one percent (1%) of the outstanding
stock of such company).
SECTION 3.2 CAPITAL STRUCTURE . The authorized capital stock of the
Company consists of fifty million (50,000,000) shares of Common Stock, $0.01 par
value, of which there were issued and outstanding as of the close of business on
June 15, 2001, 9,061,620 shares, and ten million (10,000,000) shares of
Preferred Stock $0.01 par value of which five hundred thousand (500,000) shares
have been designated as Series G Preferred Stock. As of the close of business on
June 15, 2001 there were no shares of Preferred Stock issued and outstanding. No
shares of Company Common Stock are held in treasury of the Company or by its
Subsidiaries. There are no other outstanding shares of capital stock or voting
securities and no outstanding commitments to issue any shares of capital stock
or voting securities after June 15, 2001, except upon the exercise of options
outstanding as of such date under the Company Stock Option Plans (as defined in
Section 2.6(c)) or pursuant to the Company's 1996 Employee Stock Purchase Plan
(the "Company ESPP"). All outstanding shares of Company Common Stock are duly
authorized, validly issued, fully paid and non-assessable and are free and clear
of any liens or encumbrances, other than any liens, charges, claims,
encumbrances or rights of others, and are not subject to preemptive rights or
rights of first refusal created by statute, the Certificate of Incorporation, or
Bylaws of the Company or any agreement to which the Company is a party or by
which it is bound. As of the close of business on June 15, 2001, the Company had
reserved (i) 5,736,884 shares of Common Stock for issuance to employees,
consultants and directors pursuant to the Company Stock Option Plans, of which
2,264,058 shares had been issued
12
pursuant to option exercises or direct stock purchases, 3,155,594 shares were
subject to outstanding, unexercised options, no shares were subject to
outstanding stock purchase rights, and 316,872 shares were available for
issuance thereunder and (ii) 1,050,000 shares of Common Stock for issuance to
employees pursuant to the Company ESPP, of which 535,153 shares had been issued.
Between June 15, 2001 and July 2, 2001, Company has not (i) issued or granted
additional options under the Company Stock Option Plans, or (ii) accepted
enrollments in the Company ESPP. Except for (i) the rights created pursuant to
this Agreement, the Company Stock Option Plans and the Company ESPP and (ii) the
Company's rights to repurchase any unvested shares under the Company Stock
Option Plans, there are no other options, warrants, calls, rights, commitments
or agreements of any character to which the Company is a party or by which it is
bound obligating the Company to issue, deliver, sell, repurchase or redeem, or
cause to be issued, delivered, sold, repurchased or redeemed, any shares of
capital stock of the Company or obligating the Company to grant, extend,
accelerate the vesting of, change the price of, or otherwise amend or enter into
any such option, warrant, call, right, commitment or agreement. There are no
contracts, commitments or agreements relating to voting, purchase or sale of the
Company's capital stock (other than those granting the Company the right to
purchase unvested shares upon employment or service termination) (i) between or
among the Company and any of its stockholders and (ii) to the Company's
Knowledge, between or among any of the Company's stockholders. The terms of the
Company Stock Option Plans permit the assumption or substitution of options to
purchase Parent Common Stock as provided in this Agreement, without the consent
or approval of the holders of such securities, stockholders, or otherwise. The
current Offering Period (as defined in the Company ESPP) commenced under the
Company ESPP on February 1, 2001 and will end on July 31, 2001, and except for
the purchase rights granted on such commencement date to participants in the
current Purchase Period (as defined in the Company ESPP), there are no other
purchase rights or options outstanding under the Company ESPP. True and complete
copies of all forms of agreements and instruments relating to or issued under
the Company Stock Option Plans or Company ESPP (and true and complete copies of
all such agreements and instruments which differ in any material respect from
any of such forms) will be provided to Parent. The shares of Company Common
Stock issued under the Company Stock Option Plans, as amended and under all
prior versions thereof, have either been registered under the Securities Act of
1933, as amended (the "Securities Act"), or were issued in transactions which
qualified for exemptions under either Section 4(2) of, or Rule 701 under, the
Securities Act for stock issuances under compensatory benefit plans.
SECTION 3.3 AUTHORITY; NO CONFLICTS . The Company has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company, subject
only to the approval of the Merger by the Company's stockholders holding a
majority of the outstanding shares of Company Common Stock as contemplated by
Section 7.1(a), if required. This Agreement has been duly executed and delivered
by the Company and, assuming the due authorization, execution and delivery of
this Agreement by Parent and Merger Sub, constitutes the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as enforceability may be limited by bankruptcy and other similar
laws affecting the rights and remedies of creditors generally and general
principles of equity. The execution and delivery of this Agreement by the
Company do not, and the consummation of the transactions contemplated hereby
will not, conflict with, or
13
result in any violation of, or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any benefit under, or require the
consent or approval of any person in respect of: (i) any provision of the
Certificate of Incorporation or Bylaws of the Company or any of its
Subsidiaries, as amended, or (ii) any material mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of their properties
or assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, arbitrator, tribunal, administrative
agency or commission or other governmental authority or instrumentality, stock
exchange or market system, in each case whether domestic or foreign (each a
"Governmental Entity"), is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution and delivery of this
Agreement, or the consummation of the transactions contemplated hereby, except
for (i) the filing of the Certificate of Merger as provided in Section 2.2; (ii)
the filing with the Securities and Exchange Commission (the "SEC") and the
National Association of Securities Dealers, Inc. (the "NASD") of the Proxy
Statement (as defined in Section 6.1) relating to the Company Stockholders
Meeting (as defined in Section 6.1), if required; (iii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws and the securities laws
of any foreign country; (iv) such filings as may be required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"); (v) the filing of an amendment to the Schedule 14D-9 with the SEC in
accordance with the Securities Act; (vi) the filing of a Current Report on Form
8-K with the SEC; (vii) filings pursuant to Rule 165 and Rule 425 of the
Securities Act; and (viii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have a
Company Material Adverse Effect and would not prevent, or materially alter or
delay any of the transactions contemplated by this Agreement.
SECTION 3.4 SEC DOCUMENTS; FINANCIAL STATEMENTS . The Company will
provide (or make available if publicly available at xxx.xxx.xxx or
xxx.00xxxxxxx.xxx or other widely available online XXXXX retrieval service) to
Parent a true and complete copy of each statement, report, registration
statement (with the prospectus in the form filed pursuant to Rule 424(b) of the
Securities Act), definitive proxy statement and other filings made with the SEC
by the Company since March 31, 2001 and, prior to the Effective Time, the
Company will have provided (or made available if publicly available at
xxx.xxx.xxx or xxx.00xxxxxxx.xxx or other widely available online Xxxxx
retrieval service) to Parent true and complete copies of any additional
documents filed with the SEC by the Company prior to the Effective Time
(collectively, the "Company SEC Documents"). The Company has timely filed all
forms, statements and documents required to be filed by it with the SEC and The
Nasdaq Stock Market since March 31, 2001. In addition, the Company will provide
(or make available if publicly available at xxx.xxx.xxx or xxx.00xxxxxxx.xxx or
other widely available online Xxxxx retrieval service) to Parent true and
complete copies of all exhibits to the Company SEC Documents filed prior to July
2, 2001, and will promptly provide (or make available if publicly available at
xxx.xxx.xxx or xxx.00xxxxxxx.xxx or other widely available online Xxxxx
retrieval service) to Parent true and complete copies of all exhibits to any
additional Company SEC Documents filed prior to the Effective Time. All
documents required to be filed as exhibits to the Company SEC Documents have
been so filed, and all material contracts so filed as exhibits are in full force
and effect, except those which have expired in accordance with their terms. As
of their respective filing
14
dates, the Company SEC Documents complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Securities Act, and none of the Company SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading, except to
the extent corrected by a subsequently filed Company SEC Document. The financial
statements of the Company, including the notes thereto, included in the Company
SEC Documents (the "Company Financial Statements") were complete and correct in
all material respects as of their respective dates, complied as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto as of their respective
dates, and have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods indicated and consistent with each other (except as may be indicated
in the notes thereto or, in the case of unaudited statements included in
Quarterly Reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The
Company Financial Statements fairly present the consolidated financial condition
and operating results of the Company and its Subsidiaries at the dates and
during the periods indicated therein (subject, in the case of unaudited
statements, to normal, recurring year-end adjustments none of which
individually, or in the aggregate, are material). There has been no change in
Company accounting policies since March 31, 2001.
SECTION 3.5 ABSENCE OF CERTAIN CHANGES . Since March 31, 2001 (the
"Company Balance Sheet Date"), the Company has conducted its business in the
ordinary course consistent with past practice and there has not occurred: (i)
any change, event or condition (whether or not covered by insurance) that has
resulted in, or could reasonably be expected to result in, a Company Material
Adverse Effect; (ii) any acquisition, sale or transfer of any material asset of
the Company or any of its Subsidiaries other than in the ordinary course of
business and consistent with past practice; (iii) any change in accounting
methods or practices (including any change in depreciation or amortization
policies or rates) by the Company or any revaluation by the Company of any of
its or any of its Subsidiaries' assets; (iv) any declaration, setting aside, or
payment of a dividend or other distribution with respect to the shares of the
Company, or any direct or indirect redemption, purchase or other acquisition by
the Company of any of its shares of capital stock other than the purchase of
unvested shares upon employment or service termination; (v) any entering into by
the Company or any of its Subsidiaries of any material contract or agreement, or
any material amendment or termination of, other than in the ordinary course of
business, or default by the Company or any of its Subsidiaries under, any
material contract or agreement to which the Company or any of its Subsidiaries
is a party or by which it is bound (or, to the Knowledge of the Company, by any
other party thereto); (vi) any amendment or change to the Certificate of
Incorporation or Bylaws; or (vii) any increase in or modification of the
compensation or benefits payable, or to become payable, by the Company to any of
its directors, consultants or employees, other than pursuant to scheduled annual
performance reviews, provided that any resulting modifications are in the
ordinary course of business and consistent with the Company's past practices.
The Company has not agreed since March 31, 2001 to effect any changes, events,
or conditions or take any of the actions described in the preceding clauses (i)
through (vii) and is not currently involved in any negotiations to do any of the
things described in the preceding clauses (i) through (vii) (other than
negotiations with Synopsys and its representatives regarding the transactions
contemplated by the Synopsys Agreement).
15
SECTION 3.6 ABSENCE OF UNDISCLOSED LIABILITIES . The Company has no
material obligations or liabilities of any nature (matured or unmatured, fixed
or contingent) other than (i) those set forth or adequately provided for in the
Consolidated Balance Sheets or in the related Notes to Consolidated Financial
Statements included in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2001 (the "Company Balance Sheet"), (ii) those incurred
in the ordinary course of business since the Company Balance Sheet Date which
are consistent with past practice and which could not reasonably be expected to
have a Company Material Adverse Effect; and (iii) those incurred in connection
with the execution of the Synopsys Agreement.
SECTION 3.7 LITIGATION . There is no litigation, arbitration or
investigation pending before any Governmental Entity, or, to the Knowledge of
the Company or any of its Subsidiaries, threatened against the Company or any of
its Subsidiaries or any of their respective properties or any of their
respective officers or directors (in their capacities as such) that,
individually or in the aggregate, could reasonably be expected to have a Company
Material Adverse Effect or an adverse impact on the ability of the Company to
consummate the transactions contemplated by this Agreement. There is no
judgment, decree or order against the Company or any of its Subsidiaries, or, to
the Knowledge of the Company and its Subsidiaries, any of their respective
directors or officers (in their capacities as such), that could prevent, enjoin,
alter or materially delay any of the transactions contemplated by this
Agreement, or that could reasonably be expected to have a Company Material
Adverse Effect.
SECTION 3.8 RESTRICTIONS ON BUSINESS ACTIVITIES . There is no
agreement, judgment, injunction, order or decree binding upon the Company or any
of its Subsidiaries which has or reasonably could be expected to have, whether
before or after consummation of the Merger, the effect of prohibiting or
materially impairing any current business practice of the Company or any of its
Subsidiaries, any contemplated acquisition of property by the Company or any of
its Subsidiaries or the conduct by the Company or any of its Subsidiaries of its
business as currently conducted or as currently proposed to be conducted.
SECTION 3.9 GOVERNMENTAL AUTHORIZATION . The Company and each of its
Subsidiaries have obtained each federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization of a
Governmental Entity (i) pursuant to which the Company or any of its Subsidiaries
currently operates or holds any interest in any of its properties or (ii) that
is required for the operation of the Company's or any of its Subsidiaries'
business or the holding of any such interest ((i) and (ii) herein collectively
called "Company Authorizations"), and all of such Company Authorizations are in
full force and effect, except where the failure to obtain or have any of such
Company Authorizations could not reasonably be expected to have a Company
Material Adverse Effect.
SECTION 3.10 TITLE TO PROPERTY . The Company and its Subsidiaries
have good and valid title to all of their respective properties, interests in
properties and assets, real and personal, reflected in the Company Balance Sheet
or acquired after the Company Balance Sheet Date (except properties, interests
in properties and assets sold or otherwise disposed of since the Company Balance
Sheet Date in the ordinary course of business), or in the case of leased
properties and assets, valid leasehold interests in, in each case free and clear
of all mortgages, liens, pledges, charges or encumbrances of any kind or
character, except (i) the lien of current
16
taxes not yet due and payable, (ii) such imperfections of title, liens and
easements as do not and will not materially detract from or interfere with the
use of the properties subject thereto or affected thereby, or otherwise
materially impair business operations involving such properties, and (iii)
purchase money liens incurred in the ordinary course of business and liens
securing debt which is reflected on the Company Balance Sheet. The plants,
property and equipment of the Company and its Subsidiaries that are used in the
operations of their businesses are in good operating condition and repair,
ordinary wear and tear excepted, and except where the failure to be in good
condition or repair would not have a Company Material Adverse Effect. Section
3.10 of the Company Disclosure Schedule identifies each parcel of real property
owned or leased by the Company or any of its Subsidiaries. No lease relating to
a foreign parcel contains any extraordinary payment obligation.
SECTION 3.11 INTELLECTUAL PROPERTY.
(a) The Company and its Subsidiaries own, or are licensed or
otherwise possess legally enforceable and unencumbered rights to use all
patents, trademarks, trade names, service marks, domain names, database rights,
copyrights, and any other similar intellectual property rights or applications
therefor, maskworks, net lists, schematics, technology, know-how, trade secrets,
inventions, ideas, algorithms, processes, computer software programs or
applications (in both source code and/or object code form), and tangible or
intangible proprietary information or material ("Intellectual Property") that
are used, or currently proposed to be used, in the business of the Company and
its Subsidiaries as currently conducted, or currently proposed to be conducted.
The Company has not (i) licensed any of its Intellectual Property in source code
form to any person or (ii) entered into any exclusive agreements relating to its
Intellectual Property to with any person.
(b) Section 3.11(b) of the Company Disclosure Schedule lists
(i) all patents and patent applications and all registered trademarks, trade
names and service marks, registered copyrights, registered domain names, and
registered maskworks included in the Intellectual Property owned by the Company,
including the jurisdictions in which each such Intellectual Property right has
been issued or registered or in which any application for such issuance and
registration has been filed, (ii) all licenses (both in-bound and outbound),
sublicenses and other agreements as to which the Company is a party and pursuant
to which any person is authorized to use any Intellectual Property, and (iii)
all licenses, sublicenses and other agreements (other than licenses for standard
commercially available off-the-shelf software) as to which the Company is a
party and pursuant to which the Company is authorized to use any third party
patents, trademarks or copyrights, including software ("Third Party Intellectual
Property Rights") which are incorporated in, are, or form a part of any the
Company product.
(c) To the Company's Knowledge, there is no unauthorized
use, disclosure, infringement or misappropriation of any Intellectual Property
rights of the Company or any of its Subsidiaries, or any Third Party
Intellectual Property Rights by any third party, including any employee or
former employee of the Company or any of its Subsidiaries. Neither the Company
nor any of its Subsidiaries has entered into any agreement to indemnify any
other person against any charge of infringement of any Intellectual Property,
other than indemnification provisions contained in purchase orders or license
agreements arising in the ordinary course of business.
17
No royalties or other continuing payment obligations are due in respect of Third
Party Intellectual Property Rights.
(d) The Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any material license, sublicense or other
agreement relating to the Intellectual Property or Third Party Intellectual
Property Rights.
(e) All patents, trademarks, service marks and copyrights
held by the Company are valid and subsisting and have been properly assigned to
the Company by the inventors, authors or previous owners thereof. The Company
(i) has not been sued in any suit, action or proceeding (or received any notice
or, to the Company's Knowledge, threat) which involves a claim of infringement
of any patents, trademarks, service marks, copyrights or violation of any trade
secret or other proprietary right of any third party and (ii) has not brought
any action, suit or proceeding for infringement of Intellectual Property or
breach of any license or agreement involving Intellectual Property against any
third party. The manufacture, marketing, licensing or sale of the Company's
products does not infringe any patent, trademark, service xxxx, copyright, trade
secret or other proprietary right of any third party and, to the Knowledge of
the Company, there is no substantial basis for a claim that any of the Company'
past or current products are infringing or have infringed on any Third Party
Intellectual Property Rights.
(f) The Company has secured valid written assignments from
all consultants and employees who contributed to the creation or development of
Intellectual Property of the rights to such contributions that the Company does
not already own by operation of law.
(g) The Company has taken all necessary and appropriate
steps to protect and preserve the confidentiality of all Intellectual Property
not otherwise protected by patents or copyright ("Confidential Information").
All use, disclosure or appropriation of Confidential Information owned by the
Company by or to a third party has been pursuant to the terms of a written
agreement between the Company and such third party. All use, disclosure or
appropriation of Confidential Information not owned by the Company has been
pursuant to the terms of a written agreement between Company and the owner of
such Confidential Information, or is otherwise lawful.
(h) There are no actions that must be taken by the Company
or any Subsidiary within ninety (90) days of the Closing Date that, if not
taken, will result in the loss of any Intellectual Property, including the
payment of any registration, maintenance or renewal fees or the filing of any
responses to the U.S. Patent and Trademark Office actions, documents,
applications or certificates for the purposes of obtaining, maintaining,
perfecting or preserving or renewing any Intellectual Property.
(i) The Company has not received any opinion of counsel that
any third party patents apply to the Company's products.
18
(j) The period of exclusivity under Section 2.5 of the Patent
License Agreement between MIT and Virtual Machine Works, Inc., dated December
22, 1993, extends until December, 2004.
(k) Neither the Company nor any of its Subsidiaries is a party to
any non-competition or non-solicitation or other similar restrictive agreement
or arrangement relating to any business or service anywhere in the world.
(l) The Company and its Subsidiaries have not disclosed or
delivered, or permitted the disclosure or delivery, to any escrow holder or
other third party, all or any part of the source code (including, without
limitation, any algorithm or documentation contained in or relating to any
source code) of its Intellectual Property.
SECTION 3.12 ENVIRONMENTAL MATTERS.
(a) The following terms shall be defined as follows:
(i) "Environmental and Safety Laws" means any
federal, state or local laws, ordinances,
codes, regulations, rules, policies and
orders that are intended to assure the
protection of the environment, or that
classify, regulate, call for the remediation
of, require reporting with respect to, or
list or define air, water, groundwater,
solid waste, hazardous or toxic substances,
materials, wastes, pollutants or
contaminants, or which are intended to
assure the safety of employees, workers or
other persons, including the public.
(ii) "Hazardous Materials" means any toxic or
hazardous substance, material or waste or
any pollutant or contaminant, or infectious
or radioactive substance or material,
including those substances, materials and
wastes defined in or regulated under any
Environmental and Safety Laws.
(iii) "Property" means all real property leased or
owned by the Company or its Subsidiaries
either currently or in the past.
(iv) "Facilities" means all buildings and
improvements on the Property of the Company
or its Subsidiaries.
(b) Except in all cases as, in the aggregate, would not have
a Company Material Adverse Effect, (i) no methylene chloride or asbestos is
contained in or has been used at or released from the Facilities; (ii) all
Hazardous Materials and wastes have been disposed of in accordance with all
Environmental and Safety Laws; (iii) the Company and its Subsidiaries have
received no notice (verbal or written) of any noncompliance of the Facilities or
its past or present operations with Environmental and Safety Laws; (iv) no
notices, administrative actions or suits are pending or, to the Company's
Knowledge, threatened relating to a violation of any Environmental and Safety
Laws; (v) to the Company's Knowledge, neither the Company nor its Subsidiaries
have been or are a potentially responsible party under the federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), or state
analog statute;
19
(vi) there have not been in the past, and are not now, any Hazardous Materials
on, under or migrating to or from the Facilities or Property; (vii) there have
not been in the past, and are not now, any underground tanks or underground
improvements at, on or under the Property including treatment or storage tanks,
sumps, or water, gas or oil xxxxx; (viii) there are no polychlorinated biphenyls
("PCBs") deposited, stored, disposed of or located on the Property or Facilities
or any equipment on the Property containing PCBs at levels in excess of fifty
(50) parts per million; (ix) there is no formaldehyde on the Property or in the
Facilities, nor any insulating material containing urea formaldehyde in the
Facilities; (x) the Facilities and the Company's and its Subsidiaries uses and
activities therein have at all times complied with all Environmental and Safety
Laws; and (xi) the Company and its Subsidiaries have all the permits and
licenses required to be issued and are in full compliance with the terms and
conditions of those permits.
SECTION 3.13 TAXES. The Company and each of its Subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax (as defined below)
purposes of which the Company or any of its Subsidiaries is or has been a
member, have properly completed and timely filed all Tax Returns required to be
filed by them and have paid all Taxes shown thereon to be due. All unpaid taxes
of the Company and its Subsidiaries for periods through the Company Balance
Sheet Date are reflected on the Company Balance Sheet. The Company has no
liability for unpaid Taxes accruing after the Company Balance Sheet Date other
than Taxes arising in the ordinary course of its business subsequent to the
Company Balance Sheet Date. There is (i) no material claim for Taxes that is a
lien against the property of the Company or any of its Subsidiaries or is being
asserted against the Company or any of its Subsidiaries other than liens for
Taxes not yet due and payable; (ii) no audit of any Tax Return of the Company or
any of its Subsidiaries that is being conducted by a Tax authority; and (iii) no
extension of the statute of limitations on the assessment of any Taxes that has
been granted by the Company or any of its Subsidiaries and that is currently in
effect. Neither the Company nor any of its Subsidiaries has been or will be
required to include any material adjustment in Taxable income for any Tax period
(or portion thereof) pursuant to Section 481 or 263A of the Internal Revenue
Code or any comparable provision under state or foreign Tax laws solely as a
result of transactions, events or accounting methods employed prior to the
Merger other than as reported in the Tax Returns that have been provided to
Parent. The Company has not been distributed in a transaction qualifying under
Section 355 of the Internal Revenue Code within the last two years, nor has
Company distributed any corporation in a transaction qualifying under Section
355 of the Internal Revenue Code within the last two years. There is no
agreement, plan or arrangement to which Company or any of its Subsidiaries is a
party, including this Agreement, covering any employee or former employee of
Company or any of its Subsidiaries that, individually or collectively, would be
reasonably likely to give rise to the payment of any amount that would not be
deductible pursuant to Section 280G, 404 or 162(m) of the Internal Revenue Code.
There is no contract, agreement, plan or arrangement to which Company is a party
or by which it is bound to compensate any individual for excise taxes pursuant
to Section 4999 of the Internal Revenue Code. The Company and each of its
Subsidiaries have withheld or collected and paid over to the appropriate Tax
Authorities (or are properly holding for such timely payment) all Taxes required
by law to be withheld or collected. Neither the Company nor any of its
Subsidiaries has filed or will file any consent to have the provisions of
paragraph 341(f)(2) of the Internal Revenue Code (or comparable provisions of
any state Tax laws) apply to the Company or any of its Subsidiaries. Neither the
Company nor any of its Subsidiaries is a party to, nor does the Company or any
of its Subsidiaries have any liability under, any Tax sharing or Tax allocation
20
agreements. Neither the Company nor any of its Subsidiaries has filed any
disclosures under Section 6662 of the Internal Revenue Code or comparable
provisions of state, local or foreign law to prevent the imposition of penalties
with respect to any Tax reporting position taken on any Tax Return. Neither the
Company nor any of its Subsidiaries has refrained from filing any disclosures
under Section 6662 of the Internal Revenue Code or comparable provisions of
state, local or foreign law to prevent the imposition of penalties with respect
to any Tax reporting position taken on any Tax Return based on or in substantial
reliance on advice of outside counsel or other consultants. Neither the Company
nor any of its Subsidiaries has ever been a United States real property holding
corporation within the meaning of Section 897 of the Internal Revenue Code.
Neither the Company nor any of its Subsidiaries has ever been a member of a
consolidated, combined or unitary group of which the Company was not the
ultimate parent corporation. The Company and each of its Subsidiaries have in
their possession receipts for any Taxes paid to foreign Tax authorities.
SECTION 3.14 EMPLOYEE BENEFIT PLANS.
(a) Section 3.14(a) of the Company Disclosure Schedule lists, with
respect to the Company, any Subsidiary of the Company and any trade or business
(whether or not incorporated) which is treated as a single employer with the
Company (an "ERISA Affiliate") within the meaning of Section 414(b), (c), (m) or
(o) of the Internal Revenue Code, (i) all material employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), (ii) any such employee benefit plan that has been
adopted, maintained, contributed to, or required to be contributed to by the
Company or any Subsidiary, whether formally or informally, for the benefit of
employees outside the United States; (iii) each loan to a non-officer employee
in excess of fifty thousand dollars ($50,000), loans to officers and directors
and any stock option, stock purchase, phantom stock, stock appreciation right,
supplemental retirement, severance, sabbatical, medical, dental, vision care,
disability, employee relocation, cafeteria benefit (Internal Revenue Code
Section 125) or dependent care (Internal Revenue Code Section 129), life
insurance or accident insurance plans, programs or arrangements; (iv) all bonus,
pension, profit sharing, savings, deferred compensation or incentive plans,
programs or arrangements; (v) other fringe or employee benefit plans, programs
or arrangements that apply to senior management of the Company and that do not
generally apply to all employees; and (vi) any current or former employment or
executive compensation or severance agreements, written or otherwise, as to
which unsatisfied obligations of the Company of greater than fifty thousand
dollars ($50,000) remain for the benefit of, or relating to, any present or
former employee, consultant or director of the Company (collectively, the
"Company Employee Plans").
(b) The Company will provide to Parent a copy of each of the Company
Employee Plans and related plan documents (including trust documents, insurance
policies or contracts, employee booklets, summary plan descriptions and other
authorizing documents, and any material employee communications relating
thereto) and will, with respect to each Company Employee Plan which is subject
to ERISA reporting requirements, provide copies of the Form 5500 reports filed
for the last three (3) plan years. Any Company Employee Plan intended to be
qualified under Section 401(a) of the Internal Revenue Code either (i) has
obtained from the Internal Revenue Service a favorable determination letter as
to its qualified status under the Internal Revenue Code, including all
amendments to the Internal Revenue Code effected by the
21
Tax Reform Act of 1986 and subsequent legislation other than the Uruguay Round
Agreements Act of 1994, the Uniformed Services Employment and Reemployment
Rights Act of 1994, the Small Business Job Protection Act of 1996, and the
Taxpayer Relief Act of 1997, or (ii) has applied to the Internal Revenue Service
for such a determination letter prior to the expiration of the requisite period
under applicable Treasury Regulations or Internal Revenue Service pronouncements
in which to apply for such determination letter and to make any amendments
necessary to obtain a favorable determination or (iii) the requisite period for
application has not expired. The Company will also furnish Parent with the most
recent Internal Revenue Service determination, opinion, advisory, or
notification letter issued with respect to each such Company Employee Plan, and
nothing has occurred since the issuance of each such letter which would
reasonably be expected to cause the loss of the tax-qualified status of any
Company Employee Plan subject to Internal Revenue Code Section 401(a). The
Company will also provide to Parent all registration statements and prospectuses
prepared in connection with each Company Employee Plan.
(c) (i) None of the Company Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, except as required by
applicable law; (ii) there has been no "prohibited transaction," as such term is
defined in Section 406 of ERISA and Section 4975 of the Internal Revenue Code,
with respect to any Company Employee Plan, which would reasonably be expected to
have, in the aggregate, a Company Material Adverse Effect; (iii) each Company
Employee Plan has been administered in accordance with its terms and in
compliance with the requirements prescribed by any and all statutes, rules and
regulations (including ERISA and the Internal Revenue Code), except as would not
have, in the aggregate, a Company Material Adverse Effect, and the Company and
each Subsidiary or ERISA Affiliate have performed in all material respects all
obligations required to be performed by them under, are not in default in any
material respect under or violation of, and have no Knowledge of any material
default or violation by any other party to, any of the Company Employee Plans;
(iv) neither the Company nor any Subsidiary or ERISA Affiliate is subject to any
material liability or material penalty under Sections 4976 through 4980 of the
Internal Revenue Code or Title I of ERISA with respect to any of the Company
Employee Plans; (v) all material contributions required to be made by the
Company or any Subsidiary or ERISA Affiliate to any Company Employee Plan have
been made on or before their due dates and a reasonable amount has been accrued
for contributions to each Company Employee Plan for the current plan years; (vi)
with respect to each Company Employee Plan, no "reportable event" within the
meaning of Section 4043 of ERISA (excluding any such event for which the thirty
(30) day notice requirement has been waived under the regulations to Section
4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 or ERISA
has occurred; (vii) no Company Employee Plan is covered by, and neither the
Company nor any Subsidiary or ERISA Affiliate has incurred or expects to incur
any liability under Title IV of ERISA or Section 412 of the Internal Revenue
Code; and (viii) each Company Employee Plan can be amended, terminated or
otherwise discontinued after the Effective Time in accordance with its terms,
without liability to Parent (other than for benefits accrued through the date of
termination and ordinary administrative expenses typically incurred in a
termination event). With respect to each Company Employee Plan subject to ERISA
or applicable foreign law as an employee pension plan within the meaning of
Section 3(2) of ERISA, an employee welfare benefit plan within the meaning of
Section 3(1) of ERISA, or an employee compensation, pension, welfare, or other
benefit plan under applicable foreign law, the Company has prepared in good
faith and timely filed all
22
requisite governmental reports (which were true and correct as of the date
filed) and has properly and timely filed and distributed or posted all notices
and reports to employees required to be filed, distributed or posted with
respect to each such Company Employee Plan, except where the failure to do so
would not have a Company Material Adverse Effect. No suit, administrative
proceeding, action or other litigation has been brought, or to the Knowledge of
the Company is threatened, against or with respect to any such Company Employee
Plan, including any audit or inquiry by the IRS or United States Department of
Labor.
(d) With respect to each Company Employee Plan, the Company and each of
its United States Subsidiaries have complied except to the extent that such
failure to comply would not, individually or in the aggregate, have a Company
Material Adverse Effect, with (i) the applicable health care continuation and
notice provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") and the regulations (including proposed regulations) thereunder, (ii)
the applicable requirements of the Family Medical and Leave Act of 1993 and the
regulations thereunder, and (iii) the applicable requirements of the Health
Insurance Portability and Accountability Act of 1996 and the regulations
(including proposed regulations) thereunder.
(e) The consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee or other service provider of
the Company, any Company Subsidiary or any other ERISA Affiliate to severance
benefits or any other payment, except as expressly provided in this Agreement,
or (ii) accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or service provider, except as may be
required by Section 6.9 of this Agreement. Without limiting the generality of
the foregoing, the execution and delivery of this Agreement, without more, does
not constitute a change in or of control or a termination or constructive
termination of employment within the meaning of any severance or option plan or
agreement to which the Company or any of its Subsidiaries is a party.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company, any Company Subsidiary or
other ERISA Affiliate relating to, or change in participation or coverage under,
any Company Employee Plan which would materially increase the expense of
maintaining such Plan above the level of expense incurred with respect to that
Plan for the most recent fiscal quarter included in the Company's financial
statements.
(g) The Company does not currently maintain, sponsor, participate in or
contribute to, nor has it ever maintained, established, sponsored, participated
in, or contributed to, any pension plan (within the meaning of Section 3(2) of
ERISA) which is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of
ERISA or Section 412 of the Internal Revenue Code.
(h) Neither the Company nor any Company Subsidiary or other ERISA
Affiliate is a party to, or has made any contribution to or otherwise incurred
any obligation under, any "multiemployer plan" as defined in Section 3(37) of
ERISA.
23
(i) There is no agreement, contract or arrangement to which the Company
or any of its Subsidiaries is a party that may result in the payment of any
amount that would not be deductible by reason of Section 280G or Section 404 of
the Internal Revenue Code.
(j) Each compensation and benefit plan adopted, maintained or
contributed to or required to be maintained or contributed to by the Company or
any of its Subsidiaries by the law or applicable custom or rule of a
jurisdiction outside of the United States (the "Foreign Plans") is listed in
Section 3.14(j) of the Company Disclosure Schedule. In regards to each such
Foreign Plan (i) all material contributions to, and material payments from, the
Foreign Plans which may have been required to be made in accordance with the
terms of any such Foreign Plan, and, when applicable, the law, custom and rule
of the jurisdiction in which such Foreign Plan is maintained, have been timely
made or shall be made by the Closing Date, and all such contributions to the
Foreign Plans, and all payments under the Foreign Plans, for any period ending
before the Closing Date that are not yet, but will be, required to be made, are
reflected as an accrued liability on the Company Balance Sheet, (ii) the Company
and each of its Subsidiaries have complied in all material respects with all
applicable reporting and notice requirements, and each of the Foreign Plans has
obtained from the Governmental Entity having jurisdiction with respect to such
plan all required determinations, if any, that such Foreign Plan is in
compliance with the laws, customs and rules of the relevant jurisdiction if such
determination is required in order to give effect to such Foreign Plan; (iv)
each of the Foreign Plans has been administered in all material respects at all
times in accordance with its terms and applicable law and regulations.
SECTION 3.15 INTERESTED PARTY TRANSACTIONS. Except as disclosed in the
Company SEC Documents, neither the Company nor any of its Subsidiaries is
indebted to any director, officer or employee of the Company or any of its
Subsidiaries (except for amounts due as normal salaries and bonuses and in
reimbursement of ordinary expenses), and no such person is indebted to the
Company or any of its Subsidiaries, and there are no other transactions of the
type required to be disclosed pursuant to Item 404 of Regulation S-K under the
Securities Act and the Exchange Act.
SECTION 3.16 CERTAIN AGREEMENTS AFFECTED BY THE MERGER. At the Closing
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will: (i) result in any payment (including
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any, current or former, director or employee or service provider
of the Company or any of its Subsidiaries; (ii) increase any benefits otherwise
payable by the Company or its Subsidiaries; or (iii) result in the acceleration
of the time of payment or vesting of any such benefits.
SECTION 3.17 EMPLOYEE MATTERS.
(a) Neither the Company nor any of its Subsidiaries is a party
to any collective bargaining or other labor union contract applicable to
employees of the Company or any of its Subsidiaries, no collective bargaining
agreement is being negotiated by the Company or any of its Subsidiaries and
neither the Company nor any of its Subsidiaries has any duty to bargain with any
labor organization with respect to such persons. There is no pending demand for
recognition or any other request or demand from a labor organization for
representative status with respect to any persons employed by the Company or any
of its Subsidiaries. There is no
24
labor dispute, strike or work stoppage against the Company or any of its
Subsidiaries pending or, to the Knowledge of the Company, threatened which may
interfere with the respective business activities of the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries, or, to the
Knowledge of the Company, any of their respective representatives or employees,
has committed any unfair labor practices in connection with the operation of the
respective businesses of the Company or any of its Subsidiaries, and there is no
charge or complaint against the Company or any of its Subsidiaries by the
National Labor Relations Board or any comparable Governmental Entity pending or,
to the Knowledge of the Company, threatened. Neither the Company nor any of its
Subsidiaries have any pending contract grievances under any collective
bargaining agreements, other administrative charges, claims, grievances or
lawsuits before any Governmental Entity or arbiter or arbitrator arising under
any laws govern employment and, to the Knowledge of the Company and its
Subsidiaries, there exist no facts that could reasonably be expected to give
rise to such a claim.
(b) The Company and each of its Subsidiaries are in compliance
in all material respects with all currently applicable laws and regulations
respecting employment, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment
practices. The Company has in all material respects withheld all amounts
required by law or by agreement to be withheld from the wages, salaries, and
other payments to employees; and is not liable for any material arrears of wages
or any material taxes or any material penalty for failure to comply with any of
the foregoing. The Company is not liable for any material payment to any trust
or other fund or to any Governmental Entity, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no pending claims against
the Company or any of its Subsidiaries for any material amounts under any
workers compensation plan or policy or for long term disability. Neither the
Company nor any of its Subsidiaries has any obligations under COBRA with respect
to any former employees or qualifying beneficiaries thereunder, except for
obligations that are not material in amount. There are no material controversies
pending or, to the Knowledge of the Company or any of its Subsidiaries,
threatened, between the Company or any of its Subsidiaries and any of their
respective employees, which controversies have or could reasonably be expected
to result in an action, suit, proceeding, claim, arbitration or investigation
before any Governmental Entity.
(c) To the Company's Knowledge, no employees of the Company or
any of its Subsidiaries are in violation of any term of any employment contract,
patent disclosure agreement, noncompetition agreement, or any restrictive
covenant to a former employer relating to the right of any such employee to be
employed by the Company or its Subsidiaries because of the nature of the
business conducted or presently proposed to be conducted by the Company or any
of its Subsidiaries, or to the use of trade secrets or proprietary information
of others. No employees of the Company or any of its Subsidiaries material to
the conduct of their respective businesses have given written notice to the
Company, nor is the Company otherwise aware, that any such employee intends to
terminate his or her employment with the Company or any of its Subsidiaries.
(d) The Company and its Subsidiaries will provide to Parent a
list of the names, positions, rates and elements of compensation for all
officers, directors, employees,
25
advisory board members and consultants of the Company and its Subsidiaries who
are currently receiving compensation or other benefits or remuneration from the
Company and its Subsidiaries, showing each such person's name, positions, an
annual remuneration, bonuses and benefits for the current fiscal year and the
most recently completed fiscal year.
(e) With respect to any persons employed by the Company or any
of its Subsidiaries, (i) the Company and the Company's Subsidiaries have not
violated any legal requirement prohibiting discrimination on the basis of race,
color, national origin, sex, religion, age, marital status, or handicap in its
employment conditions or practices; and (ii) there are no pending or, to the
Knowledge of the Company and the Company's Subsidiaries, threatened
discrimination complaints relating to race, color, national origin, sex,
religion, age, marital status, or handicap against the Company or its
Subsidiaries, before any governmental entity nor, to the Knowledge of the
Company and its Subsidiaries, does any basis therefor exist.
(f) The Company and its Subsidiaries have complied, in all
material respects, with all laws governing the employment of personnel by U.S.
companies and the employment of non-U.S. nationals in the United States,
including the Immigration and Nationality Act 8 U.S.C. Sections 1101 et seq. and
its implementing regulations.
(g) Intentionally omitted.
(h) Section 3.17(h) of the Company Disclosure Schedule lists
all non-U.S. employees of the Company or its Subsidiaries showing each such
person's name, title (if applicable), city/country of employment, rate of annual
remuneration, citizenship, stock option grants, terms and conditions of
employment not in the ordinary course of business, manager's name and work
location.
SECTION 3.18 INSURANCE. Section 3.18 of the Company Disclosure Schedule
lists all Company insurance policies as of the July 2, 2001. The Company and
each of its Subsidiaries have policies of insurance and bonds of the type and in
amounts customarily carried by persons conducting businesses or owning assets
similar to those of the Company and its Subsidiaries. There is no material claim
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 due and payable under all such policies and bonds have been paid
and the Company and its Subsidiaries are otherwise in compliance in all material
respects with the terms of such policies and bonds. The Company has no Knowledge
of any threatened termination of, or material premium increase with respect to,
any of such policies.
SECTION 3.19 COMPLIANCE WITH LAWS. Each of the Company and its
Subsidiaries has complied in all material respects with, are not in violation
of, and have not received any written or, to the Knowledge of the Company, other
notices of violation with respect to, any federal, state, local or foreign
statute, law or regulation with respect to the conduct of its business, or the
ownership or operation of its business. Without limiting the generality of the
foregoing, the Company has conducted its export transactions in accordance with
applicable provisions of United States export control laws and regulations,
including to the Export Administration Act and implementing Export
Administration Regulations, except for such violations which could not
reasonably be expected to have a Company Material Adverse Effect. Without
limiting the
26
foregoing, except as could not reasonably be expected to have a Company Material
Adverse Effect:
(a) the Company has obtained all export licenses and other
approvals required for its exports of products, software and technologies from
the United States;
(b) the Company is in compliance with the terms of all
applicable export licenses or other approvals;
(c) there are no pending or, to the Knowledge of the Company,
threatened claims against the Company with respect to such export licenses or
other approvals;
(d) there are no actions, conditions or circumstances
pertaining to the Company's export transactions that may give rise to any future
claims; and
(e) no consents or approvals for the transfer of export
licenses to Parent are required, or such consents and approvals can be obtained
without material cost and without undue delay.
SECTION 3.20 INFORMATION TO BE SUPPLIED.
No representation or warranty is made by the Company with respect to
statements made or incorporated by reference in the Proxy Statement or the
Schedule 14D-9 based on information supplied by Parent or Merger Sub expressly
for inclusion or incorporation by reference therein or based on information
which is not made in or incorporated by reference in such documents but which
should have been disclosed pursuant to Section 4.4.
SECTION 3.21 VOTE REQUIRED. If required, the affirmative vote of the
holders of a majority of the shares of the Company Common Stock outstanding on
the record date set for the Company Stockholders Meeting is the only vote of the
holders of any of the Company's capital stock necessary to adopt this Agreement.
SECTION 3.22 SYNOPSYS AGREEMENT. The Synopsys Agreement has been
terminated in accordance with its terms, and the Company's only liability for
such termination was the payment of the termination fee as set forth in Section
8.3 of the Synopsys Agreement.
SECTION 3.23 BOARD APPROVAL; RIGHTS AGREEMENT; STATE TAKEOVER STATUTES.
The Board of Directors of the Company has unanimously (i) approved this
Agreement, the Offer and the Merger, (ii) determined that this Agreement, the
Offer and the Merger are advisable and in the best interests of the stockholders
of the Company and are on terms that are fair to such stockholders, (iii)
recommended that the stockholders of the Company adopt this Agreement and
approve the consummation of the Offer and the Merger and (iv) taken all action
to the extent necessary so that neither Parent nor Merger Sub will become an
"Acquiring Person" and that no "Triggering Event," "Distribution Date," "Flip-In
Event," "Flip-Over Event" or "Stock Acquisition Date" (as such terms are defined
in the Amended and Restated Rights Agreement dated as of January 22, 1999
between the Company and Bank Boston, N.A. (as Rights Agent) (the "Rights
Agreement")) will occur as a result of the approval, execution, delivery or
performance of this Agreement and the Offer, or the consummation of the Offer
and the Merger
27
pursuant to this Agreement, or the consummation of the transactions contemplated
hereby or thereby. Assuming the accuracy of Parent's representation set forth in
Section 4.5 of this Agreement, the Board of Directors' approval of this
Agreement, the Offer and the Merger is sufficient to render inapplicable to this
Agreement, the Offer, the Merger, and the transactions contemplated by this
Agreement, the restrictions of Section 203 of the DGCL to the extent, if any,
such Section is applicable to this Agreement, the Offer, the Merger, or the
transactions contemplated by this Agreement. No other state takeover statute or
similar statute or regulation applies to or purports to apply to this Agreement,
the Offer, the Merger, or the transactions contemplated by this Agreement.
SECTION 3.24 BROKERS' AND FINDERS' FEES; OPINION OF FINANCIAL ADVISER.
The Company has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or investment
bankers' fees or any similar charges in connection with this Agreement or any
transaction contemplated hereby, except as specified in the Xxxxxxx Letter. The
Company further represents that Xxxxxxx & Company, Inc. has delivered to the
Company's Board of Directors its written opinion that the consideration to be
paid in the Offer and the Merger is fair to the holders of shares of Company
Common Stock (other than Parent, Merger Sub or their affiliates) from a
financial point of view.
SECTION 3.25 CUSTOMERS AND SUPPLIERS; BACKLOG. As of July 2, 2001, none
of the Company's customers which individually accounted for more than five
percent (5%) of the Company's gross revenues during the 12-month period
preceding the Company Balance Sheet Date has terminated or materially reduced,
or indicated in writing, or to the Knowledge of the Company, otherwise to the
Company that it intends to terminate or materially reduce, any agreement with
the Company. As of July 2, 2001, no material supplier of the Company has
indicated in writing, or to the Knowledge of the Company, otherwise that it will
stop, or decrease the rate of, supplying materials, products or services to the
Company. All orders contained in Backlog have been accepted by the Company and
the customer without exception to any of the original terms of the order and the
Company has received no notice that any such customer intends to cancel its
order, nor does the Company have a substantial basis to believe any such
cancellation is likely.
SECTION 3.26 NO DEFAULT. Neither the Company nor any of its
Subsidiaries is, and has not received written, or to the Knowledge of the
Company, other notice that it is or would be with the passage of time, (a) in
violation of any provision of its Certificate of Incorporation or Bylaws or
other organizational documents, or (b) in default or violation with any term,
condition or provisions of (i) any judgment, decree, order, injunction or
stipulation applicable to the Company or its Subsidiaries or (ii) any agreement,
note, mortgage, indenture, contract, lease, instrument, permit, concession,
franchise or license to which the Company or its Subsidiaries are party or by
which their assets or properties are bound, except where such default or
violation could not reasonably be expected to result in a Company Material
Adverse Effect.
SECTION 3.27 OTHER AGREEMENTS. As of the date hereof, neither the
Company nor any of its Subsidiaries has entered into any agreement or
transaction with any person or entity who is a competitor of Parent having the
effect of materially diminishing the expected economic value to Parent of the
acquisition of the Company, including any agreement by which such a competitor
is granted original equipment manufacturing, marketing or other rights.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that the
statements contained in this Article IV are true and correct except as set forth
herein.
SECTION 4.1 ORGANIZATION, STANDING AND POWER. Each of Parent and Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization. Each of Parent and Merger Sub has
the corporate power to own its properties and to carry on its business as now
being conducted and as proposed to be conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified and in good standing could reasonably be expected to have a Parent
Material Adverse Effect. Neither Parent nor Merger Sub is in violation of any of
the provisions of its Certificate of Incorporation or Bylaws or equivalent
organizational documents.
SECTION 4.2 AUTHORITY. Parent and Merger Sub have all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub. This Agreement has been duly executed and delivered by Parent and Merger
Sub and, assuming the due authorization, execution and delivery of this
Agreement by the Company, constitutes the valid and binding obligation of Parent
and Merger Sub enforceable against Parent and Merger Sub in accordance with its
terms, except as enforceability may be limited by bankruptcy and other similar
laws affecting the rights and remedies of creditors generally and general
principles of equity. The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under (i) any provision of
the Certificate of Incorporation or Bylaws of Parent or any of its Subsidiaries,
as amended, or (ii) any material mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or any of its Subsidiaries or any of their properties or assets. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity, is required by or with respect to Parent or any
of its Subsidiaries in connection with the execution and delivery of this
Agreement by Parent and Merger Sub or the consummation by Parent and Merger Sub
of the transactions contemplated hereby, except for (i) the filing of the
Certificate of Merger provided in Section 2.2; (ii) the filing with the SEC and
the NASD of an amendment to the Schedule TO and Schedule 13D; (iii) the filing
of a Form 8-K and Schedule 13D with the SEC and the NASD within fifteen (15)
days after the Closing Date; (iv) any filings as may be required under
applicable state securities laws and the securities laws of any foreign country;
(v) such filings as may be required under the HSR Act; (vi) filings pursuant to
Rule 165 and Rule 425 of the Securities Act; and (vii) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not have a Parent Material Adverse Effect and would not prevent or
materially alter or delay any of the transactions contemplated by this
Agreement.
29
SECTION 4.3 LITIGATION. There is no litigation, arbitration or
investigation pending against Parent or any of its Subsidiaries before any
Governmental Entity, or, to the Knowledge of Parent, threatened against Parent
or any of its Subsidiaries or any of their respective properties that,
individually or in the aggregate, could reasonably be expected to materially and
adversely affect the ability of Parent or its Subsidiaries to consummate the
transactions contemplated by this Agreement. There is no judgment, decree or
order against Parent or any of its Subsidiaries, or, to the Knowledge of Parent,
any of their respective directors or officers (in their capacities as such),
that would prevent, enjoin, alter or materially delay any of the transactions
contemplated by this Agreement.
SECTION 4.4 INFORMATION TO BE SUPPLIED.
(a) Each of the Offer Documents and the other documents
required to be filed by Parent with the SEC in connection with the Offer, the
Merger and the other transactions contemplated hereby will comply as to form, in
all material respects, with the requirements of the Exchange Act and will not,
on the date of its filing, and none of the information supplied or to be
supplied by Parent or Merger Sub expressly for inclusion or incorporation by
reference in the Schedule 14D-9 or the Proxy Statement will, in the case of the
Schedule 14D-9, at the time the Schedule 14D-9 is filed with the SEC and first
published, sent or given to the Company's stockholders or, in the case of the
Proxy Statement on the dates the Proxy Statement is mailed to stockholders of
the Company and at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section
4.4, no representation or warranty is made by Parent with respect to statements
made or incorporated by reference in the Offer Documents, the Schedule 14D-9 or
Proxy Statement based on information supplied by the Company expressly for
inclusion or incorporation by reference therein.
SECTION 4.5 BOARD APPROVAL. The Boards of Directors of Parent and
Merger Sub, as the case may be, have (i) approved this Agreement and the Merger,
(ii) determined that the Offer and the Merger are advisable and in the best
interests of their respective stockholders and are on terms that are fair to
such stockholders and (iii) recommended that the stockholder of Merger Sub adopt
this Agreement and approve the consummation of the Offer and the Merger. The
stockholder of Merger Sub has adopted this Agreement and approved the
consummation of the Offer and the Merger. No vote of the stockholders of Parent
is required under applicable law or Nasdaq National Market rules in connection
with this Agreement, the Offer or the Merger.
SECTION 4.6 BROKER'S AND FINDERS' FEES. Parent has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or investment bankers' fees or any similar charges
in connection with this Agreement or any transaction contemplated hereby.
SECTION 4.7 PARENT OWNED SHARES OF COMPANY COMMON STOCK. Parent, Merger
Sub and their respective Subsidiaries beneficially own an aggregate of 841,600
shares of Company Common Stock.
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SECTION 4.8 NO FINANCING CONDITION. Parent and Merger Sub have adequate
funds available to fund all obligations hereunder.
ARTICLE V.
CONDUCT PRIOR TO THE EFFECTIVE TIME
SECTION 5.1 CONDUCT OF BUSINESS OF COMPANY. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, the Company agrees (except to the extent
expressly contemplated by this Agreement), to carry on its and its Subsidiaries'
business in the ordinary course in substantially the same manner as heretofore
conducted, to pay and to cause its Subsidiaries to pay debts and Taxes when due
subject to good faith disputes over such debts or taxes, to pay or perform other
material obligations when due, and to use its commercially reasonable efforts
consistent with past practice and policies to preserve intact its and its
Subsidiaries' present business organizations, use its commercially reasonable
efforts consistent with past practice to keep available the services of its and
its Subsidiaries' present officers and key employees and use its commercially
reasonable efforts consistent with past practice to preserve its and its
Subsidiaries' relationships with customers, suppliers, distributors, licensors,
licensees, and others having business dealings with it or its Subsidiaries, to
the end that its and its Subsidiaries' goodwill and ongoing businesses shall be
unimpaired at the Effective Time. The Company agrees to promptly notify Parent
of any material event or occurrence not in the ordinary course of its or its
Subsidiaries' business, and of any event which could reasonably be expected to
have a Company Material Adverse Effect. Without limiting the generality of the
foregoing, during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time,
the Company shall not do, cause or permit any of the following actions, or
allow, cause or permit any of its Subsidiaries to do, cause or permit any of the
following actions:
(a) Charter Documents. cause or permit any amendments to its
Certificate of Incorporation or Bylaws;
(b) Dividends; Changes in Capital Stock. declare or pay any
cash or property dividends on or make any other cash or property distributions
in respect of any of its capital stock, or repurchase or otherwise acquire,
directly or indirectly, any shares of its capital stock except from former
employees, directors and consultants in accordance with the Company's standard
or usual (as at the date hereof) agreements providing for the repurchase of
shares in connection with any termination of service to it or its Subsidiaries;
(c) Stock Option Plans, Etc. take any action to accelerate,
amend or change the period of exercisability or vesting, or waive any repurchase
rights, in respect of options or other rights granted under the Company Stock
Option Plans or authorize cash payments in exchange for any options or other
rights granted under any of such plans or with respect to any restricted stock.
(d) Material Contracts. enter into any contract or commitment
involving payments by the Company or its Subsidiaries in excess of five hundred
thousand dollars ($500,000) individually or three million dollars ($3,000,000)
in the aggregate or which are
31
otherwise material to the Company and its Subsidiaries (excluding sales of
products or purchases of supplies in the ordinary course of business consistent
with past practice), or violate, amend or otherwise modify or waive any of the
terms of any of its material contracts;
(e) Issuance of Securities. issue, deliver, encumber or, sell,
authorize or propose the issuance, delivery, encumbrance, or sale of, or
purchase or propose the purchase of, any shares of its or its Subsidiaries'
capital stock or securities convertible into, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities, other
than (i) the issuance of shares of its Common Stock pursuant to the exercise of
stock options, warrants or other rights therefor outstanding as of the date of
this Agreement, (ii) the grant of stock options under Company Stock Option Plans
to employees and non-employee directors in the ordinary course of business (not
to exceed the Authorized Option Shares), with an exercise price equal to the
fair market value of the Company Common Stock on the date of grant and otherwise
on terms (including vesting schedules) consistent with the Company's past
practice with similarly situated employees, (iii) issuance of shares of Company
Common Stock to participants in the Company ESPP pursuant to the terms thereof
and (iv) the repurchase of Company Common Stock from former employees, directors
and consultants in accordance with the Company's standard or usual (as at the
date hereof) agreements providing for the repurchase of shares in connection
with any termination of service;
(f) Intellectual Property. transfer or license to any person
or entity any rights to its Intellectual Property other than the license of
non-exclusive rights to its Intellectual Property except for standard tool
integrations, joint marketing and joint promotional arrangements entered into by
the Company and another entity, in each case in the ordinary course of business
consistent with past practice;
(g) Exclusive Rights. enter into or amend any agreements
pursuant to which any other party is granted exclusive marketing or other
exclusive rights of any type or scope with respect to any of its products or
technology;
(h) Indebtedness. incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others other than pursuant to the Modification
of Revolving Credit and Security Agreement, dated March 27, 2001 by and between
the Company and Comerica Bank;
(i) Insurance. materially reduce the amount or scope of any
material insurance coverage provided by existing insurance policies;
(j) Termination or Waiver. terminate or waive any right or
claim of substantial value under contracts listed under Section 3.11(b) of the
Company Disclosure Schedule or in connection with any litigation disclosed in
the Company SEC Documents;
(k) Employee Benefit Plans; Pay Increases. adopt or amend any
employee benefit or stock purchase or option plan, pay any special bonus or
special remuneration to any employees or consultants or directors (except as in
accordance with the Bonus Plan), or increase the salaries, wage rates, target
incentive percentages or fringe benefits or otherwise increase the
32
benefits of its employees or consultants or directors other than pursuant to
scheduled annual performance reviews, except, in each case, for modifications in
the ordinary course of business consistent with the Company's past practices,
any amendments to any Company Employee Plan that may be required by applicable
law, and any other incentive or retention bonuses or amendments or modifications
to any Company Employee Plan that (i) the Company's board of directors approves
and reasonably believes necessary in order for the Company to compete
effectively with businesses of a similar nature to the Company's business and
(ii) are paid or accrued on the Company's Financial Statements for a period
ending not later than June 30, 2002.
(l) Labor Agreements. enter into any employment contract
(other than an offer letter for at will employment) or, except if required by
applicable law, any collective bargaining agreement.
(m) Severance Arrangements. grant any severance or termination
pay, or any additional notice of termination, to, or grant any acceleration or
extension of the exercisability or vesting of any equity securities held by, (i)
any director or officer, or (ii) any other employee except, payments and stock
option grants required by standard written agreements which are in force on the
date hereof or are in the ordinary course of business consistent with past
practice in nature and amount and provided, in each case, that such amounts
shall be paid or accrued on the Company's Financial Statements for a period
ending not later than June 30, 2002;
(n) Lawsuits. commence a lawsuit other than (i) for the
routine collection of obligations, (ii) in such cases where it in good faith
determines that failure to commence suit would result in the material impairment
of a valuable aspect of its business, or (iii) for a breach of this Agreement;
(o) Acquisitions. acquire or agree to acquire any business,
corporation, limited liability company, partnership, association, entity, or
other business organization or division thereof (whether by merger,
consolidation, share exchange, reorganization, stock purchase, asset purchase,
or otherwise) or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to its and its Subsidiaries'
business, taking the Company together with its Subsidiaries as a whole (except
for purchases of supplies and components in the ordinary course of business
consistent with past practice), or acquire or agree to acquire any equity
securities of or interests in any corporation, partnership, limited liability
company, association, entity, or business organization, or enter into any
material strategic relationships or alliances, except for standard tool
integrations, joint marketing and joint promotional arrangements entered into by
the Company and another entity in the ordinary course of business consistent
with past practice;
(p) Taxes. make or change any material election in respect of
Taxes, adopt or change any accounting method in respect of Taxes, file any
material Tax Return or any amendment to a material Tax Return, enter into any
closing agreement, settle any claim or assessment in respect of Taxes, or
consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes;
33
(q) Revaluation. write down the value of inventory or write
off notes or accounts receivable or otherwise revalue any of its assets except
in a manner consistent with past practice;
(r) Accounting Policies and Procedures. make any change to its
accounting methods, principles, assumptions, policies (including reserve
policies), procedures or practices, except as may be required by GAAP,
Regulation S-X promulgated by the SEC or applicable statutory accounting
principles; or
(s) Other Agreements. enter into any agreement or transaction
with any person or entity who is a competitor of Parent having the effect of
materially diminishing the expected economic value to Parent of the acquisition
of the Company, including any agreement by which such a competitor is granted
original equipment manufacturing, marketing or other rights.
(t) Other. take or agree in writing or otherwise to take any
of the actions described in Section 5.1(a) through (s).
SECTION 5.2 NO SOLICITATION. From and after the date hereof until the
earlier of the Effective Time or the termination of this Agreement in accordance
with Article VIII, the Company and each of its Subsidiaries and the officers,
directors, and other agents, representatives and advisors (including any
investment bankers, attorneys or accountants) of the Company or any of its
Subsidiaries (collectively, "Company Representatives") shall not, directly or
indirectly (and the Company shall not permit any of its or its Subsidiaries'
other employees to), (a) take any action to solicit, initiate, intentionally
encourage, or facilitate any Takeover Proposal, or (b) subject to the terms of
the immediately following sentence, engage in any discussions or negotiations
with, or disclose any nonpublic information relating to the Company or any of it
Subsidiaries to, or afford access to the properties, books or records of the
Company or any of its Subsidiaries to, any person that has advised the Company
that such person may be considering making a Takeover Proposal (or that the
Board of Directors or officers of the Company has reason to believe is seeking
to make, or that has made, a Takeover Proposal) (each such person, a "Competing
Bidder"), or endorse, approve or recommend any Takeover Proposal or enter into
any agreement (including any letter of intent, preliminary agreement or similar
arrangement) providing for any Takeover Proposal; provided that nothing herein
shall prohibit the Board of Directors of the Company from complying with Rules
14d-9 and 14e-2 promulgated under the Exchange Act. If prior to the acceptance
for payment of shares of Company Common Stock pursuant to the Offer (i) a bona
fide unsolicited written Takeover Proposal shall be received by the Board of
Directors of the Company, and (ii) the Board of Directors of the Company
determines in good faith (after consultation with its outside financial advisor
and after considering all terms and conditions of such Takeover Proposal,
including the likelihood and timing of its consummation) that such Takeover
Proposal would result in a transaction more favorable to the Company's
stockholders from a financial point of view than the Merger as contemplated by
this Agreement (any such more favorable Takeover Proposal being referred to in
this Agreement as a "Superior Proposal"), and (iii) the Board of Directors of
the Company determines in good faith, after consultation with outside legal
counsel, that it is necessary in order for the Board of Directors of the Company
to comply with its fiduciary duties to stockholders under applicable law, and
(iv) the Company has notified Parent of such
34
determination by the Board of Directors of the Company and has provided Parent
with true and complete copies of the Takeover Proposal received from the
Competing Bidder and the financial assumptions and projections reviewed and
relied upon by the Board of Directors of the Company in determining that a
Takeover Proposal constitutes a Superior Proposal, then Company Representatives
may engage in discussions and negotiations with the Competing Bidder, disclose
nonpublic information relating to the Company and its Subsidiaries to the
Competing Bidder, afford access to the properties, books or records of the
Company and its Subsidiaries to the Competing Bidder, modify or withdraw its
Recommendation, recommend such Superior Proposal to the stockholders of the
Company, and (subject to Section 8.3(b)) approve the entering (but not enter)
into an agreement for a Superior Proposal in accordance with Section 8.1(g),
subject to compliance with each of the following requirements: (X) prior to
furnishing such information, engaging in such discussions or negotiations,
disclosing such nonpublic information, or affording such access, the Company
shall provide to Parent all documents containing or referring to non-public
information of the Company that are supplied to the Competing Bidder; and (Y)
the Company shall enter into a nondisclosure agreement with the Competing Bidder
containing, and shall provide such non-public information subject to, terms at
least as restrictive on the Competing Bidder as the confidentiality agreement
contained in Section 6.4(e)-(g) is on Parent; and (Z) the Company shall provide
Parent at least three (3) business days prior notice before any modification or
withdrawal of its Recommendation or any recommendation of a Superior Proposal or
any approval of the entering into of an agreement for a Superior Proposal in
accordance with Section 8.1(g) and Section 8.3(b). The Company shall immediately
notify Parent after receipt of any Takeover Proposal, any inquiry looking toward
a Takeover Proposal, or any request for non-public information relating to the
Company or any of its Subsidiaries or for access to the properties, books or
records of the Company or any of its Subsidiaries by any person that has made
(or that the Company has reason to believe is considering making), a Takeover
Proposal (such notice to include the identity of the person or persons making
such proposal, inquiry, or request), and will keep Parent fully informed of the
status and details of any such proposal, inquiry, or request (including all
terms and conditions and modifications thereto) and shall provide Parent with a
true and complete copy of such proposal, inquiry, or request and any amendment
thereto, if it is in writing, or a written summary of the material terms
thereof, if it is not in writing. The Company shall immediately cease and cause
to be terminated all existing discussions or negotiations with any persons
(other than Parent) conducted heretofore with respect to a Takeover Proposal.
Promptly following the signing and delivery of this Agreement the Company shall
inform all employees of the Company and its Subsidiaries of the actions which
the Company is prohibited from taking by the first sentence of this Section 5.2
and shall direct each such employee to refrain from taking any such action. The
Company shall further inform all such employees that any violation of such
direction shall be grounds for immediate termination of employment. The Company
shall not be considered to be in breach of the first sentence of this Section
5.2 with respect to the acts of any employee who is not a Company Representative
unless such acts were performed at the direction or with the knowledge of a
Company Representative.
35
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.1 PREPARATION OF PROXY STATEMENT.
(a) If required by applicable law in order to consummate the
Offer and the Merger, at the request of Parent and in accordance with applicable
law, the Company and Parent shall prepare and the Company shall file with the
SEC (if necessary), preliminary proxy materials relating to the approval of the
Merger and the adoption of this Agreement by the stockholders of the Company. As
promptly as practicable following receipt of SEC comments thereon, if any, or
upon receipt of notification that the SEC will not comment thereon, the Company
shall file with the SEC definitive proxy materials (such proxy materials as
amended or supplemented are referred to herein as the "Proxy Statement") which
comply in form with applicable SEC requirements. The Company and Parent will
notify each other promptly of the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff or any other government
officials for amendments or supplements to the Proxy Statement or any other
filing or for additional information and will supply each other with copies of
all correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the Proxy Statement or other filing. Whenever any event
occurs that is required to be set forth in an amendment or supplement to the
Proxy Statement or any other filing, the Company shall promptly inform Parent of
such occurrence and cooperate in filing with the SEC or its staff or any other
government officials, and/or mailing to stockholders of the Company, such
amendment or supplement. If required, the Proxy Statement shall solicit the
approval of the Merger and adoption of this Agreement by the stockholders of the
Company and shall include the approval of this Agreement and the Merger by the
Board of Directors of the Company and, subject to the fiduciary duties of the
directors of the Company and the provisions of Section 5.2, Section 8.1(e), and
Section 8.3(b)(i), the recommendation of the Board of Directors of the Company
to the Company's stockholders that they vote in favor of the adoption of this
Agreement (provided that the Board of Directors of the Company may exclude such
recommendation if, pursuant to Section 5.2, it is permitted to endorse or
recommend a Superior Proposal) and shall include the opinion of the Company's
financial advisors as described in Section 3.24 (unless subsequently withdrawn).
(b) Each of Parent and the Company shall provide promptly to
the other such information concerning its business and financial statements and
affairs as, in the reasonable judgment of the providing party or its counsel,
may be required or appropriate for inclusion in the Proxy Statement, or in any
amendments or supplements thereto, and to cause its counsel and auditors to
cooperate with the other with the other's counsel and auditors in the
preparation of the Proxy Statement. Each of the Company and Parent will respond
to any comments of the SEC and the Company will cause the Proxy Statement to be
mailed to its stockholders at the earliest practicable time after clearance by
the SEC.
SECTION 6.2 MEETING OF STOCKHOLDERS. If required by applicable law in
order to consummate the Offer and the Merger, at the request of Parent, the
Company shall promptly take all action necessary in accordance with the DGCL and
its Certificate of Incorporation and Bylaws to convene a meeting of the
Company's stockholders, to consider the Merger (the
36
"Company Stockholders Meeting"). The Company shall consult with Parent regarding
the date of the Company Stockholders Meeting and shall not postpone or adjourn
(other than for the absence of a quorum) the Company Stockholders Meeting
without the consent of Parent. Subject to Section 6.1, if required the Company
shall use its commercially reasonable efforts to solicit from stockholders of
the Company proxies in favor of adoption of this Agreement and shall take all
other action reasonably necessary or advisable to secure the vote or consent of
stockholders required to effect the Merger.
SECTION 6.3 ACCESS TO INFORMATION.
(a) The Company shall afford Parent and its accountants,
counsel and other representatives, reasonable access during normal business
hours during the period prior to the Effective Time to (i) all of the Company's
and its Subsidiaries' properties, books, contracts, commitments and records, and
(ii) all other information concerning the business, properties and personnel of
the Company and its Subsidiaries as Parent may reasonably request. The Company
agrees to provide to Parent and its accountants, counsel and other
representatives copies of internal financial statements promptly upon request.
(b) No information or knowledge obtained in any investigation
pursuant to this Section 6.3 shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Offer and the Merger.
(c) The Company shall provide Parent and its accountants,
counsel and other representatives reasonable access, during normal business
hours during the period prior to the Effective Time, to all of the Company's and
Subsidiaries Tax Returns and other records and workpapers relating to Taxes, and
shall also provide the following information upon the request of Parent or its
Subsidiaries: (i) a schedule of the types of Tax Returns being filed by the
Company and each of its Subsidiaries in each taxing jurisdiction, (ii) a
schedule of the year of the commencement of the filing of each such type of Tax
Return, (iii) a schedule of all closed years with respect to each such type of
Tax Return filed in each jurisdiction, (iv) a schedule of all material Tax
elections filed in each jurisdiction by the Company and each of its
Subsidiaries, (v) a schedule of any deferred intercompany gain with respect to
transactions to which the Company or any of its Subsidiaries has been a party,
and (vi) receipts for any Taxes paid to foreign Tax authorities. The Company
shall also, promptly upon Parent's request during the period prior to the
Effective Time, prepare and provide the following information to Parent and its
accountants, counsel and other representatives in a form reasonably acceptable
to Parent: (i) such transfer-pricing information, studies and documentation as
may be requested by Parent relating to transactions between the Company and any
of its Subsidiaries (and any other related parties); (ii) such information,
studies and documentation relating to the amount and use of net operating losses
and Tax credits by Company and its Subsidiaries as may be requested by Parent
and (iii) such records and information as may be requested by Parent
substantiating any Tax credits claimed or to be claimed by the Company and any
of its Subsidiaries.
SECTION 6.4 CONFIDENTIALITY.
(a) Intentionally omitted.
37
(b) The Company shall keep confidential all information and
knowledge concerning Parent obtained from Parent or any of its advisers in
connection with this Agreement or the consideration by the Company of a possible
transaction with the Parent, or the effectuation of the transactions
contemplated by this Agreement, including all notes, analyses, compilations,
studies, interpretations, or other documents prepared by the Company which
contain, reflect or are based upon, in whole or in part, the information
furnished to the Company (the "Parent Confidential Information"); provided,
however, that the foregoing shall not apply to information or knowledge which
(i) the Company can demonstrate was already lawfully in its possession prior to
the disclosure thereof by Parent, (ii) has been approved in writing for use or
disclosure by Parent, (iii) is or becomes generally known to the public and does
not become so known through any violation of law or this Agreement by the
Company, (iv) is later lawfully acquired by the Company from other sources, (v)
is required to be disclosed by order of court or government agency after seeking
any reasonably available protection against general disclosure, (vi) is required
to be disclosed in the course of any litigation between any of the parties
hereto and is disclosed in accordance with any protective order or
confidentiality order or arrangement applicable thereto, or (vii) is
independently developed by the Company without the use of any Parent
Confidential Information; it being understood that the Company may disclose
relevant information and knowledge to its employees and agents on a "need to
know" basis, provided that the Company causes such employees and agents to treat
such information and knowledge confidentially.
(c) The Company agrees that it shall use the Parent
Confidential Information solely for the purpose of effectuating the transactions
contemplated by this Agreement, that the Parent Confidential Information shall
be kept confidential and that the Company shall not disclose any of the Parent
Confidential Information in any manner whatsoever except as permitted in Section
6.4. The Company agrees to be responsible for any breach of Section 6.4 and
agrees, at its sole expense, to take all reasonable measures (including court
proceedings) to restrain its representatives (including attorneys, accountants,
consultants, bankers, and financial advisors) from prohibited or unauthorized
disclosure of the Parent Confidential Information.
(d) In the event that the Company is requested or required (by
deposition, interrogatories, requests for information or documents or other
discovery mechanism in legal proceedings, subpoena, civil investigative demand
or other similar process) to disclose any of the Parent Confidential
Information, the Company shall provide Parent with prompt written notice of any
such request or requirement so that Parent may seek a protective order or other
appropriate remedy or waive compliance with the provisions of this Agreement.
If, in the absence of a protective order or other remedy or the receipt of a
waiver by Parent, the Company is nonetheless, in the written opinion of its
counsel, legally compelled to disclose the Parent Confidential Information to
any court or tribunal or else stand liable for contempt or suffer other censure
or penalty, the Company may, without liability hereunder, disclose to such court
or tribunal only that portion of the Parent Confidential Information which such
counsel advises the Company is legally required to be disclosed, provided that
the Company exercises its commercially reasonable efforts to preserve the
confidentiality of the Parent Confidential Information, including by cooperating
with Parent to obtain an appropriate protective order or other assurance that
confidential treatment will be accorded the Parent Confidential Information by
such court or tribunal.
38
(e) Parent shall keep confidential all information and
knowledge concerning the Company obtained from the Company or any of its
advisers in connection with this Agreement or the consideration by Parent of a
possible transaction with the Company, or the effectuation of the transactions
contemplated by this Agreement, including all notes, analyses, compilations,
studies, interpretations, or other documents prepared by Parent which contain,
reflect or are based upon, in whole or in part, the information furnished to
Parent (the "Company Confidential Information"); provided, however, that the
foregoing shall not apply to information or knowledge which (i) Parent can
demonstrate was already lawfully in its possession prior to the disclosure
thereof by the Company, (ii) has been approved in writing for use or disclosure
by the Company, (iii) is or becomes generally known to the public and does not
become so known through any violation of law or this Agreement by Parent, (iv)
is later lawfully acquired by Parent from other sources, (v) is required to be
disclosed by order of court or government agency after seeking any reasonably
available protection against general disclosure, (vi) is required to be
disclosed in the course of any litigation between any of the parties hereto and
is disclosed in accordance with any protective order or confidentiality order or
arrangement applicable thereto, or (vii) is independently developed by Parent
without the use of any Company Confidential Information; it being understood
that Parent may disclose relevant information and knowledge to its employees and
agents on a "need to know" basis, provided that Parent causes such employees and
agents to treat such information and knowledge confidentially.
(f) Parent agrees that it shall use the Company Confidential
Information solely for the purpose of effectuating the transactions contemplated
by this Agreement, that the Company Confidential Information shall be kept
confidential and that Parent shall not disclose any of the Company Confidential
Information in any manner whatsoever except as permitted in Section 6.4. Parent
agrees to be responsible for any breach of Section 6.4 and agrees, at its sole
expense, to take all reasonable measures (including court proceedings) to
restrain its representatives (including attorneys, accountants, consultants,
bankers, and financial advisors) from prohibited or unauthorized disclosure of
the Company Confidential Information.
(g) In the event that Parent is requested or required (by
deposition, interrogatories, requests for information or documents or other
discovery mechanism in legal proceedings, subpoena, civil investigative demand
or other similar process) to disclose any of the Company Confidential
Information, Parent shall provide the Company with prompt written notice of any
such request or requirement so that the Company may seek a protective order or
other appropriate remedy or waive compliance with the provisions of this
Agreement. If, in the absence of a protective order or other remedy or the
receipt of a waiver by the Company, Parent is nonetheless, in the written
opinion of its counsel, legally compelled to disclose the Company Confidential
Information to any court or tribunal or else stand liable for contempt or suffer
other censure or penalty, Parent may, without liability hereunder, disclose to
such court or tribunal only that portion of the Company Confidential Information
which such counsel advises Parent is legally required to be disclosed, provided
that Parent exercises its commercially reasonable efforts to preserve the
confidentiality of the Company Confidential Information, including by
cooperating with the Company to obtain an appropriate protective order or other
assurance that confidential treatment will be accorded the Company Confidential
Information by such court or tribunal.
39
(h) In the event this Agreement is terminated pursuant to
Section 8.1 this Section 6.4 shall survive indefinitely and otherwise shall
survive until the Effective Time.
SECTION 6.5 PUBLIC DISCLOSURE. Unless otherwise permitted by this
Agreement, Parent and the Company shall consult with each other before issuing
any press release or otherwise making any public statement or making any other
public (or non-confidential) disclosure (whether or not in response to an
inquiry) about the other party or their relationship or activities or regarding
the terms of this Agreement and the transactions contemplated hereby, and
neither shall issue any such press release or make any such statement or
disclosure without the prior approval of the other (which approval shall not be
unreasonably withheld), except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange or with
the NASD, in which case the party proposing to issue such press release or make
such public statement or disclosure shall use its commercially reasonable
efforts to consult with the other party before issuing such press release or
making such public statement or disclosure.
SECTION 6.6 CONSENTS; COOPERATION.
(a) Each of Parent and the Company shall promptly apply for or
otherwise seek, and use its commercially reasonable efforts to obtain, all
consents and approvals required to be obtained by it for the consummation of the
Merger, including those required under the HSR Act; provided, however, that
neither party shall be required to make any out-of-pocket expenditures (other
than filing or similar fees) to any Governmental Entity or third party in
connection therewith. The Company shall use its commercially reasonable efforts
to obtain all necessary consents, waivers and approvals under any of its
material contracts in connection with the Merger for the assignment thereof or
otherwise. The parties hereto will consult and cooperate with one another, and
consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to the HSR Act or any other federal or state
antitrust or fair trade law.
(b) Each of Parent and the Company shall use its commercially
reasonable efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the transactions contemplated by this
Agreement under the HSR Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the Federal Trade Commission Act, as amended, and any other Federal,
state or foreign statutes, rules, regulations, orders or decrees that are
designed to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, each of Parent
and the Company shall cooperate and use its commercially reasonable efforts
vigorously to contest and resist any such action or proceeding and to have
vacated, lifted, reversed, or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent (each, an "Order"),
that is in effect and that prohibits, prevents, or restricts consummation of the
Merger or any such other transactions, unless by mutual agreement Parent and the
Company decide that litigation is not in their respective best interests.
Notwithstanding the provisions of the immediately preceding sentence, it is
expressly understood and agreed that
40
neither Parent nor the Company shall have any obligation to litigate or contest
any administrative or judicial action or proceeding or any Order beyond the
Final Date (as defined in Section 8.1(b)). Each of Parent and the Company shall
use its commercially reasonable efforts to take such action as may be required
to cause the expiration of the notice periods under the HSR Act or other
Antitrust Laws with respect to such transactions as promptly as possible after
the execution of this Agreement. Parent and the Company also agree to take any
and all of the following actions to the extent necessary to obtain the approval
of any Governmental Entity with jurisdiction over the enforcement of any
applicable laws regarding the transactions contemplated hereby: entering into
negotiations; providing information required by law or governmental regulation;
and substantially complying with any second request for information pursuant to
the Antitrust Laws.
(c) Notwithstanding anything to the contrary in this
Agreement, (i) neither Parent nor any of its Subsidiaries shall be required to
divest any of their respective businesses, product lines or assets, or the
Company's or any of its Subsidiaries' respective businesses, product lines or
assets or to qualify to do business in any jurisdiction in which it is not now
so qualified, or to file a general consent to service of process under any
applicable state laws, and (ii) without the prior written consent of Parent,
neither the Company nor its Subsidiaries shall, or shall be required to, divest
any of their respective businesses, product lines or assets, or to take or agree
to take any other action or agree to any limitation that would reasonably be
expected to have a Company Material Adverse Effect or a Parent Material Adverse
Effect.
SECTION 6.7 LEGAL REQUIREMENTS. Subject to the provisions and provisos
of Section 6.6, each of Parent, Merger Sub and the Company will, and will cause
their respective Subsidiaries to, (a) take all requisite commercially reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on them with respect to the consummation of the transactions
contemplated by this Agreement, (b) cooperate with and furnish information to
any party hereto necessary in connection with any such requirements imposed upon
such other party in connection with the consummation of the transactions
contemplated by this Agreement, and (c) subject to Section 6.6(c) take all
requisite commercially reasonable actions necessary to obtain (and cooperate
with the other parties hereto in obtaining) any consent, approval, order or
authorization of, or any registration, declaration or filing with, any
Governmental Entity required to be obtained or made in connection with the
taking of any action contemplated by this Agreement.
SECTION 6.8 INTENTIONALLY OMITTED.
SECTION 6.9 EMPLOYEE BENEFIT PLANS.
(a) At the Effective Time, the Company Stock Option Plans and
each outstanding option to purchase shares of Company Common Stock under the
Company Stock Option Plans, whether vested or unvested, shall be assumed by
Parent. The Company represents and warrants to Parent that Section 6.9(a) of the
Company Disclosure Schedule hereto sets forth a true and complete list as of
July 2, 2001, of all holders of outstanding options under the Company Stock
Option Plans, including the number of shares of the Company's capital stock
subject to each such option, the exercise or vesting schedule, the exercise
price per share and the term of each such option. On the Closing Date, the
Company shall deliver to Parent an updated
41
Section 6.9(a) of the Company Disclosure Schedule hereto current as of such
date. Each such 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
Company Stock Option Plans and the applicable stock option agreements,
immediately prior to the Effective Time, except that (i) such option will be
exercisable for that number of whole shares of Parent Common Stock equal to the
product of the number of shares of Company Common Stock that were issuable upon
exercise of such option immediately prior to the Effective Time multiplied by
the Option Exchange Ratio (as defined below) and rounded down to the nearest
whole number of shares of Parent Common Stock, and (ii) the per share exercise
price for the shares of Parent Common Stock issuable upon exercise of such
assumed option shall be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock at which such option was
exercisable immediately prior to the Effective Time by the Option Exchange
Ratio, rounded up to the nearest whole cent. The Merger shall not terminate any
of the outstanding options under the Company Stock Option Plans or accelerate
the exercisability or vesting of such options or the shares of Parent Common
Stock which shall be subject to those options upon Parent's assumption of the
options in the Merger. It is the intention of the parties that the options so
assumed by Parent qualify, to the maximum extent permissible, following the
Effective Time as incentive stock options as defined in Section 422 of the
Internal Revenue Code to the extent such options qualified as incentive stock
options prior to the Effective Time. Within ten (10) business days after the
Effective Time, Parent will issue to each person who, immediately prior to the
Effective Time was a holder of an outstanding option under the Company Stock
Option Plans a document evidencing the foregoing assumption of such option by
Parent, and Parent may prohibit option exercises prior to the filing of the
registration statement on Form S-8 in accordance with Section 6.10. The Option
Exchange Ratio shall mean the quotient obtained by dividing (i) $11.00 per share
by (ii) the average last sale price per share of the Parent Common Stock on the
Nasdaq Stock Market as reported in The Wall Street Journal (or, if either party
disputes the accuracy of the prices therein reported, another mutually agreeable
authoritative source) for the ten (10) full trading-day period ending on the
fifth (5th) full trading day prior to the Closing Date (e.g., if the Closing
Date falls on a Sunday, the ten (10) trading day period used to calculate this
on such date would end on, and include, the previous Monday, assuming that
Monday through Friday are full trading days).
(b) All outstanding rights of the Company which it may hold
immediately prior to the Effective Time to repurchase unvested shares of Company
Common Stock shall lapse immediately prior to the Effective Time.
(c) Outstanding purchase rights under the Company ESPP shall
be exercised immediately prior to the Effective Time, and each participant in
the Company ESPP shall accordingly be issued shares of Company Common Stock at
that time which shall be converted into the right to receive $11.00 per share.
The Company ESPP shall terminate with such exercise date (after the purchase
described in the preceding sentence has been effected), and no purchase rights
shall be subsequently granted or exercised under the Company ESPP and no Company
ESPP payroll deductions from Company employees shall be made thereafter. Company
employees who meet the eligibility requirements for participation in the Parent
Employee Stock Purchase Plan shall be eligible to begin payroll deductions under
that plan as of the start date of the first offering period thereunder beginning
after the Effective Time and prior to such date, Parent shall name the Surviving
Corporation as a subsidiary whose employees may participate in
42
the Parent ESPP, provided that such employees satisfy the eligibility
requirements for participation.
(d) On or as soon as practicable following the Effective Time,
continuing employees of the Company and its Subsidiaries ("Continuing
Employees") shall be eligible to participate in those benefit plans and programs
maintained for similarly situated employees of Parent (or in substantially
similar programs), on the same terms applicable to similarly situated employees
of Parent and to the extent that such plans and programs provide the following
benefits: medical/dental/vision care, life insurance, disability income, sick
pay, holiday and vacation pay, 401(k) plan coverage, Internal Revenue Code
Section 125 benefit arrangements, bonus, profit-sharing or other incentive
plans, pension or retirement programs, dependent care assistance and severance
benefits. Each Continuing Employee shall be given credit, for purposes of any
service requirements for participation or vesting, for his or her period of
service with the Company or any of its Subsidiaries credited under a similar
plan prior to the Effective Time, subject to appropriate break in service rules.
Each such employee shall, with respect to any Parent plans or programs which
have co-payment, deductible or other co-insurance features, receive credit for
any amounts such individual has paid to date in the plan year of the Effective
Time under comparable plans or programs maintained by the Company or any of its
Subsidiaries prior to the Effective Time. Each Continuing Employee and eligible
dependent who, at the Effective Time, was participating in an employee group
health plan maintained by the Company or any of its Subsidiaries shall not be
excluded from Parent's employee group health plan or limited in coverage
thereunder by reason of any waiting period restriction or pre-existing condition
limitation.
(e) The Company shall take all action necessary to terminate,
or cause to terminate, before the Effective Time, any Company Benefit Plan that
is a 401(k) plan or other defined contribution retirement plan or the Company
ESPP. With respect to each Company Employee Plan subject to ERISA as an employee
pension plan within the meaning of Section 3(2) of ERISA, and to the Company's
knowledge, no partial termination could be deemed to have occurred as a result
of a reduction in the Company's workforce.
(f) Within five (5) business days following the date of this
Agreement, the Company shall set forth on Section 6.9(f) of the Company
Disclosure Schedule a list of all persons who the Company reasonably believes
are, with respect to the Company and as of the date of this Agreement,
"disqualified individuals" (within the meaning of Section 280G of the Internal
Revenue Code and the regulations promulgated thereunder). Within a reasonable
period of time after the last business day of the month prior to the expected
Closing Date and on or about the date five (5) business days prior to the
expected Closing Date, the Company shall revise Section 6.9(f) of the Company
Disclosure Schedule to reflect the most recently available closing price of
Company Common Stock as of the last business day of such month and to reflect
any additional information which the Company reasonably believes would impact
the determination of persons who are, with respect to the Company and as of the
each such date, "disqualified individuals" (within the meaning of Section 280G
of the Internal Revenue Code and the regulations promulgated thereunder).
(g) For purposes of this Section 6.9(g), the definitions of
"Revenue," "Net Backlog," and "PBT" will have the same meanings as those
assigned to them in the Synopsys
43
Agreement. Promptly following calculation, certain employees of the Company or
its Subsidiaries shall be eligible to participate in a bonus plan, which shall
be accrued by the Company prior to the Closing Date, in substantially the form
attached hereto as Schedule 6.9(g) (the "Bonus Plan"). The dollar amount
available for distribution to such employees under the Bonus Plan shall be as
set forth in Schedule 6.9(g) and shall be calculated pursuant to the Bonus Plan
based on Revenue plus Net Backlog, or PBT, whichever produces a lower total
Bonus Plan dollar amount, except that if PBT produces a lower total Bonus Plan
dollar amount than Revenue plus Net Backlog but the same or higher total Bonus
Plan dollar amount than Revenue, the total Bonus Plan dollar amount shall be
calculated based upon Revenue plus Net Backlog. The aggregate dollar amount to
be distributed to management and non-management employees shall be as set forth
on Schedule 6.9(g). The identification of employees to participate in the Bonus
Plan, as well as the amounts payable to each shall be determined solely by the
Company.
SECTION 6.10 FORM S-8. Parent agrees to file, no later than ten (10)
business days after the Effective Time (provided that Parent has received within
five (5) business days after the Effective Time all option documentation it
reasonably requires relating to the outstanding options) a registration
statement on Form S-8 under the Securities Act covering the shares of Parent
Common Stock issuable pursuant to outstanding options and shares granted to
employees, officers, and directors of, and bona fide consultants to, the Company
if they are individuals for whom a Form S-8 registration statement is available
and are listed on Section 6.10 of the Company Disclosure Schedule. The Company
shall cooperate with and assist Parent in the preparation of such registration
statement.
SECTION 6.11 INTENTIONALLY OMITTED.
SECTION 6.12 INDEMNIFICATION.
(a) For not less than six (6) years after the Effective Time,
Parent will indemnify and hold harmless the present and former officers,
directors, employees and agents of Company (the "Indemnified Parties") in
respect of acts or omissions occurring on or prior to the Effective Time to the
extent provided for under Company's Certificate of Incorporation and Bylaws and
each indemnification agreement with Company officers and directors to which
Company is a party, in each case in effect on the date hereof; provided that
such indemnification shall be subject to any limitation imposed from time to
time under applicable law.
(b) For six (6) years after the Effective Time, Parent will
provide officers' and directors' liability insurance in respect of acts or
omissions occurring on or prior to the Effective Time covering each such person
currently covered by Company's officers' and directors' liability insurance
policy on terms at least as favorable as the coverage currently in effect on the
date hereof, provided that, in satisfying its obligation under this Section
6.12(b), Parent shall not be obligated to pay, or to cause the Surviving
Corporation to pay, premiums in excess of one hundred fifty percent (150%) of
the amount per annum Company paid in its last full fiscal year, which amount has
been disclosed to Parent, and if the Parent or the Surviving Corporation is
unable to obtain the insurance required by this Section 6.12(b) it shall obtain
as much comparable insurance as possible for an annual premium equal to such
maximum amount.
44
(c) The provisions of this Section 6.12 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs.
SECTION 6.13 INTENTIONALLY OMITTED.
SECTION 6.14 STOCKHOLDER LITIGATION. Unless and until the Board of
Directors of the Company has withdrawn its Recommendation (as defined in Section
8.1(e)), the Company shall give Parent the opportunity to participate at its own
expense in the defense of any stockholder litigation against the Company and/or
its directors relating to the transactions contemplated by this Agreement.
SECTION 6.15 EMPLOYEE AGREEMENTS. The Company shall use its
commercially reasonable efforts to obtain the signatures of (i) the employees of
the Company specified in Schedules 6.15(a) and (b) to the Employee Agreements in
the forms attached as Exhibits D and E, respectively, and (ii) the employees of
the Company specified in Schedules 6.15(c) and (d) to the amendments to their
existing severance agreements in the forms attached as Exhibits F and G,
respectively, prior to the Closing Date.
SECTION 6.16 INJUNCTIONS OR RESTRAINTS. In the event an injunction or
other order preventing the consummation of the Merger shall have been issued,
each party agrees to use commercially reasonable efforts to have such injunction
or other order lifted.
SECTION 6.17 INTENTIONALLY OMITTED.
SECTION 6.18 FURTHER ASSURANCES. Subject to Section 5.2, Section 6.1
and Section 6.6(c), (a) each of the parties to this Agreement shall use its
commercially reasonable efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to closing under
this Agreement, and (b) 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 reasonably desirable
for effecting completely the consummation of this Agreement and the transactions
contemplated hereby. Nothing in this Agreement shall be construed to require
Parent to seek the approval of its stockholders for any of the transactions
contemplated by this Agreement.
SECTION 6.19 EXISTING LITIGATION TERMINATION. Upon consummation of the
Merger, the parties shall promptly take such actions as required to cause the
dismissal with prejudice of the litigations currently pending before the
Delaware Court of Chancery and the United States District Court for the District
of Delaware relating to the Synopsys Agreement and the Offer.
ARTICLE VII.
CONDITIONS TO THE MERGER
SECTION 7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to this Agreement to consummate
and effect the Merger shall be subject to the satisfaction at or prior to the
Closing of each of the following conditions, any of which may be waived, in
writing, by agreement of all the parties hereto:
45
(a) Stockholder Approval. If required, this Agreement and the
Merger shall have been approved by the requisite vote of the stockholders of the
Company under the DGCL and the Certificate of Incorporation of the Company.
(b) Purchase of Company Common Stock. Merger Sub shall have
purchased pursuant to the Offer all shares of Company Common Stock duly tendered
and not withdrawn; provided, however, that neither Parent nor Merger Sub shall
be entitled to rely on the condition in this clause (b) if either of them shall
have failed to purchase shares of Company Common Stock pursuant to the Offer in
breach of their obligations under this Agreement.
(c) No Injunctions, Restraints or Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger shall be in effect, nor
shall any proceeding brought by an administrative agency or commission or other
Governmental Entity seeking any of the foregoing be pending, threatened; and no
action shall have been taken by any Governmental Entity, and no statute, rule,
regulation or order shall have been enacted, entered, enforced or deemed
applicable to the Merger, which makes the consummation of the Merger illegal.
SECTION 7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligations of the Company to consummate and effect the Merger shall be subject
to the satisfaction at or prior to the Closing of each of the following
additional conditions, any of which may be waived, in writing, by the Company:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of Parent and Merger Sub in this Agreement shall
be true and correct in all material respects (except for such representations
and warranties that are qualified by their terms by a reference to materiality
or Parent Material Adverse Effect, which representations and warranties as so
qualified shall be true and correct in all respects) on and as of the Closing
Date as though such representations and warranties were made on and as of the
Closing Date, except where the failure to be so true and correct, without regard
to any materiality or Parent Material Adverse Effect qualifications contained
therein, could not reasonably be expected, either individually or in the
aggregate, to have a Parent Material Adverse Effect; and (ii) Parent and Merger
Sub shall have performed and complied in all material respects with all
covenants, agreements and obligations in this Agreement required to be performed
and complied with by them prior to the Effective Time; and (iii) the Company
shall have received a certificate of an appropriate officer of Parent certifying
that the conditions set forth in this Section 7.2(a) are satisfied.
SECTION 7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PARENT AND
MERGER SUB.
The obligations of Parent and Merger Sub to consummate and effect the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing of each of the following additional conditions, any of
which may be waived, in writing, by Parent:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of the Company in this Agreement shall be true
and correct in all material respects (except for such representations and
warranties that are qualified by their terms by a reference to
46
materiality or Company Material Adverse Effect, which representations and
warranties as so qualified shall be true and correct in all respects) on and as
of the Closing Date as though such representations and warranties were made on
and as of the Closing Date, except, in the case of the representations and
warranties of the Company in Section 3.1 through Section 3.20, Section 3.25 and
Section 3.26, where the failure to be so true and correct, without regard to any
materiality or Company Material Adverse Effect qualifications contained therein,
could not reasonably be expected, either individually or in the aggregate, to
have a Company Material Adverse Effect, (ii) the Company shall have performed
and complied in all material respects with all covenants, agreements and
obligations in this Agreement required to be performed and complied with by it
prior to the Effective Time, and (iii) Parent shall have received a certificate
of the chief executive officer and chief financial officer of the Company
certifying that the conditions set forth in this Section 7.3(a) are satisfied.
(b) Intentionally omitted.
(c) Third Party Consents. Parent shall have received evidence
reasonably satisfactory to it of the consent or approval of those persons whose
consent or approval shall be required in connection with the Merger under each
material contract of the Company or any of its Subsidiaries set forth on
Schedule 7.3(c).
(d) Injunctions or Restraints on Conduct of Business. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint or prohibition materially limiting or restricting Parent's ownership,
conduct or operation of the business of the Company and its Subsidiaries
following the Effective Time shall be in effect, nor shall any proceeding
brought by an administrative agency or commission or other Governmental Entity,
seeking the foregoing be pending or threatened.
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 TERMINATION. At any time prior to the Effective Time,
whether before or after approval of the matters presented in connection with the
Merger by the stockholders of the Company, this Agreement may be terminated and
the Merger abandoned:
(a) by mutual consent of the Boards of Directors of Parent and
the Company;
(b) by either Parent or the Company, by written notice to the
other party, if the Closing shall not have occurred on or before September 14,
2002 or such later date as may be agreed upon in writing by the parties hereto
(the "Final Date");
(c) by Parent, by written notice to the Company, if (i) any of
the Company's representations and warranties in the Agreement would be
inaccurate if made as of the time of such notice, or the Company shall have
breached any of its covenants, agreements or obligations in this Agreement, and
(ii) the condition set forth in Section 7.3(a) would not be satisfied if such
inaccuracy or breach were to remain uncured, and (iii) such inaccuracy or
breach, if curable, shall not have been cured within thirty (30) business days
after receipt by the Company of written notice of such inaccuracy or breach;
47
(d) by the Company, by written notice to Parent, if (i) any of
Parent's representations and warranties in this Agreement would be inaccurate if
made as of the time of such notice, or Parent shall have breached any of its
covenants, agreements or obligations in this Agreement, and (ii) the condition
set forth in Section 7.2(a) would not be satisfied if such inaccuracy or breach
were to remain uncured, and (iii) such inaccuracy or breach shall not have been
cured within thirty (30) business days after receipt by Parent of written notice
of such inaccuracy or breach;
(e) by Parent, by written notice to the Company, if: (i) a
Trigger Event shall have occurred or a Takeover Proposal shall have been made
and, in either case, shall not have been absolutely and unconditionally
abandoned or withdrawn, and the Board of Directors of the Company, if so
requested by Parent, does not within ten (10) business days of such request, (A)
reconfirm its unanimous recommendation of this Agreement and the transactions
contemplated hereby, and (B) (in the case of a Takeover Proposal or Trigger
Event involving a tender or exchange offer) reject such Takeover Proposal or
Trigger Event; (ii) the Board of Directors of the Company shall have failed to
unanimously recommend that the Company's stockholders vote to approve the Merger
and adopt this Agreement (a "Recommendation"), or shall have withdrawn
(including by failing to include such Recommendation in the Proxy Statement) or
modified its Recommendation in a manner adverse to Parent, or shall have
resolved to do any of the foregoing; (iii) the Board of Directors of the Company
shall have recommended, endorsed, accepted, approved, or otherwise agreed to a
Takeover Proposal or shall have resolved to do any of the foregoing; or (iv) the
Company or any Company Representative shall have failed to comply with Section
5.2.
(f) by either Parent or the Company, by written notice to the
other party, if: (i) any permanent injunction or other order of a court or other
competent authority preventing the consummation of the Merger shall have become
final and nonappealable, provided such party used commercially reasonable
efforts to have such injunction or other order lifted or (ii) any required vote
of the stockholders of the Company shall not have been obtained at a duly held
meeting of stockholders or at any adjournment thereof (provided that the right
to terminate this Agreement under this clause (ii) shall not be available to the
Company where the failure to obtain such stockholder approval shall have been
caused by the action or failure to act of the Company and such action or failure
constitutes a breach of this Agreement); or
(g) by the Company, by written notice to Parent and compliance
with the provisions of this Section 8.1(g), if (i) the Company has received a
Takeover Proposal constituting a Superior Proposal, the Board of Directors of
the Company in accordance with Section 5.2 has determined that it desires to
approve entering into a written agreement providing for such Superior Proposal
and has notified Parent in writing of such desire; and (ii) five (5) business
days have elapsed after Parent's receipt of such written notification (which
notification shall include a copy of such Superior Proposal and a description of
any additional material non-written modifications thereof), and during such five
(5) business day period the Company has reasonably cooperated with Parent with
the intent of enabling Parent to make an offer that is at least as favorable to
the stockholders of the Company as such Superior Proposal; and (iii) prior to
6:00 p.m. California time on the fifth business day of such five (5) business
day period Parent has not made an offer that is at least as favorable to the
Company's stockholders as such Superior Proposal; and (iv) at the end of such
five (5) business day period the Board of Directors
48
of the Company reasonably believes that such Takeover Proposal continues to be a
Superior Proposal; and (v) the Company prior to such termination pays to Parent
in immediately available funds all amounts required to be paid pursuant to
Section 8.3(b). The Company agrees to notify Parent promptly if its desire to
enter into a written agreement with respect to the Superior Proposal referred to
in its notification shall change at any time after giving such notification.
SECTION 8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent, Merger Sub
or the Company or their respective officers, directors, stockholders or
affiliates; provided that (a) the provisions of Section 6.4 and Section 8.3,
this Section 8.2 and Article IX shall remain in full force and effect and
survive any termination of this Agreement, and (b) nothing herein shall relieve
any party from liability in connection with a willful or intentional breach of
any of such party's representations or warranties set forth in this Agreement or
the breach of any such party's covenants or agreements set forth in this
Agreement.
SECTION 8.3 EXPENSES AND TERMINATION FEES.
(a) Except as provided in subsections (b) and (c) of this
Section 8.3, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby (including the fees and expenses of its advisers, accountants and legal
counsel) shall be paid by the party incurring such expense, except that expenses
incurred in connection with printing the proxy materials and the Offer
Documents, registration, and filing fees incurred in connection with the Offer
Documents, the Schedule 14D-9 and the proxy materials shall be shared equally by
the Company and Parent.
(b) In the event that: (i) Parent shall terminate this
Agreement pursuant to Section 8.1(e); (ii) the Company shall terminate this
Agreement pursuant to Section 8.1(g); or (iii) Parent or the Company shall
terminate this Agreement pursuant to Section 8.1(b) or Section 8.1(f)(ii) and,
prior to such termination pursuant to Section 8.1(b) or Section 8.1(f)(ii),
there shall have been (A) a Trigger Event with respect to the Company, or (B) a
Takeover Proposal with respect to the Company, in either case which at the time
of such termination shall not have been absolutely and unconditionally withdrawn
or abandoned by the other party thereto, then, in each such event, in addition
to any other remedies Parent may have, the Company shall pay to Parent (1) in
the case of a termination described in Section 8.3(b)(i) or Section 8.3(b)(ii),
the sum of three million eight hundred thousand dollars ($3,800,000), and (2) in
the case of a termination described in Section 8.3(b)(iii), if within twelve
(12) months of a termination described in Section 8.3(b)(iii) any Takeover
Proposal or any Trigger Event shall be consummated or any letter of intent or
preliminary or definitive agreement with respect thereto shall be signed, the
sum of three million eight hundred thousand dollars ($3,800,000) (provided,
however, that the amount payable by the Company shall be three million five
hundred thousand dollars ($3,500,000) if the Takeover Proposal or Trigger Event
shall be consummated with a person or entity other than the person or entity
making the Takeover Proposal or Trigger Event which originally triggered the
right of termination under Section 8.1(b) or Section 8.1(f)(ii) or with an
affiliate of such person or entity). The payments required by this Section
8.3(b) shall be made within two (2) business days after termination in the case
of a termination by Parent pursuant to Section 8.1(e), prior to termination in
the event of a termination by the Company
49
pursuant to Section 8.1(g), and upon the earlier of the consummation of a
Trigger Event or Takeover Proposal or the execution and delivery of any letter
of intent or preliminary or definitive agreement with respect to a Takeover
Proposal in the event of termination pursuant to Section 8.1(b) or Section
8.1(f)(ii). Solely for purposes of Section 8.3(b), all references to fifteen
percent (15%) in the definition of the term "Takeover Proposal" shall be
increased to forty percent (40%) and all references to eighty five percent (85%)
therein shall be reduced to sixty percent (60%).
SECTION 8.4 AMENDMENT. Subject to Section 251(d) of the DGCL, the
boards of directors of the parties hereto may cause this Agreement to be amended
at any time by execution of an instrument in writing signed on behalf of each of
the parties hereto.
SECTION 8.5 EXTENSION; WAIVER. At any time prior to the Effective Time
any party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.1 NON-SURVIVAL AT EFFECTIVE TIME. The representations,
warranties, covenants and agreements set forth in this Agreement shall terminate
at the Effective Time, except that the agreements set forth in Article II,
Section 6.4 (Confidentiality), Section 6.5 (Public Disclosure), Section 6.9
(Employee Benefit Plans), Section 6.10 (Form S-8), Section 6.12
(Indemnification), Section 6.18 (Further Assurances), Section 8.2 (Effect of
Termination), Section 8.3 (Expenses and Termination Fees), Section 8.4
(Amendment), and this Article IX shall survive the Effective Time.
SECTION 9.2 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be addressed to the intended
recipient as set forth below):
(a) if to Parent or Merger Sub, to:
Mentor Graphics Corporation
0000 XX Xxxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
50
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) if to the Company, to:
IKOS Systems, Inc.
00 Xxxxx Xxxx Xxxx.
Xxx Xxxx, XX 00000
Attention: CEO
Telephone No.: (000) 000-0000
Facsimile No: (000) 000-0000
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Xxxxx Xxxx Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
All notices so given shall be effective upon receipt, and shall in any event be
deemed received (a) three (3) calendar days after deposit with the U.S. Postal
Service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, (c) one (1) business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid or (d) upon
telephonic confirmation of delivery, if delivered by facsimile transmission
SECTION 9.3 INTERPRETATION.
(a) Prior to the Effective Time: (i) nothing in this Agreement
shall be construed as establishing a joint venture, strategic alliance, or
license between Parent or any of its Subsidiaries, on the one hand, and the
Company or any of its Subsidiaries, on the other hand, and (ii) nothing in this
Agreement shall be construed to require Parent or any of its Subsidiaries to
make any investment of cash or other property in or any loan to the Company or
any of its Subsidiaries.
(b) When a reference is made in this Agreement to Exhibits or
Schedules, such reference shall be to an Exhibit or Schedule to this Agreement
unless otherwise indicated. The words "include," "includes" and "including" when
used in this Agreement shall be deemed in each case to be followed by the words
"without limitation." The phrase "provided to," "furnished to," and terms of
similar import in this Agreement means that a paper copy of the
51
information referred to has been furnished to the party to whom such information
is to be provided. In this Agreement, the phrases "the date of this Agreement",
"the date hereof", and terms of similar import, unless the context otherwise
requires, shall be deemed to refer to date this Agreement is executed by the
Company. The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.4 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 parties, it being understood that all
parties need not sign the same counterpart.
SECTION 9.5 ENTIRE AGREEMENT; NONASSIGNABILITY; PARTIES IN INTEREST.
This Agreement and the documents and instruments and other agreements
specifically referred to herein or delivered pursuant hereto, including the
Exhibits, the Schedules, including the Company Disclosure Schedule (a)
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof;
(b) shall not be assigned by operation of law or otherwise except as otherwise
specifically provided; and (c) are not intended to, and shall not be construed
as, conferring upon any person other than the parties hereto any rights or
remedies.
SECTION 9.6 SEVERABILITY. In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
SECTION 9.7 REMEDIES CUMULATIVE. Except as otherwise provided herein,
any and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy.
SECTION 9.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
regard to the laws that might otherwise govern under applicable principles of
conflicts of law. Each of the parties hereto irrevocably consents to the
exclusive jurisdiction and venue of any court located within the County of New
Castle in the State of Delaware, in connection with any matter based upon or
arising out of this Agreement or the matters contemplated herein, agrees that
process may be served upon them in any manner authorized by the laws of the
State of Delaware for such persons and waives and covenants not to assert or
plead any objection which they might otherwise have to such jurisdiction and
such process.
52
SECTION 9.9 RULES OF CONSTRUCTION. The parties hereto agree that they
have been represented by counsel during the preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
[Signature page follows.]
53
EXECUTION COPY
IN WITNESS WHEREOF, the Company, Parent and Merger Sub have caused this
Agreement and Plan of Merger and Reorganization to be executed and delivered by
their respective officers thereunto duly authorized, all as of the date first
written above.
MENTOR GRAPHICS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President and Chief Operating
Officer
IKOS SYSTEMS, INC.
By:
------------------------------------
Name:
Title:
FRESNO CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
SIGNATURE PAGE TO AGREEMENT AND
PLAN OF MERGER AND REORGANIZATION
54
ANNEX I
THE OFFER
SECTION 1.1 THE OFFER.
(a) Provided that this Agreement shall not have been
terminated pursuant to Section 8.1 of the Agreement, following the public
announcement of the terms of the Agreement (which public announcement shall
occur no later than the first business day following the execution of the
Agreement), as soon as reasonably practicable, Merger Sub shall, and Parent
shall cause Merger Sub to amend (within the meaning of Rule 14d-2 under the
Exchange Act) the Offer to provide for the purchase of any and all of the shares
of Company Common Stock outstanding (including the related Rights pursuant to
the Rights Agreement) at a price of $11.00 per share, net to the seller in cash
(such price, or such higher price per share of Company Common Stock as may be
paid in the Offer, being referred to herein as the "Offer Price"). The Offer
shall be subject solely to the condition that there shall be validly tendered in
accordance with the terms of the Offer, prior to the expiration date of the
Offer and not withdrawn, a number of shares of Company Common Stock that,
together with the shares of Company Common Stock then owned by Parent and/or
Merger Sub, represents at least a majority of the shares of Company Common Stock
outstanding on a fully-diluted basis (the "Minimum Condition") and to the other
conditions set forth in Annex II to the Agreement. The Offer shall be made by
means of an offer to purchase (the "Offer to Purchase") and the related letter
of transmittal containing the terms set forth in this Agreement and the
conditions set forth in Annex II.
Merger Sub expressly reserves the right, subject to compliance
with the Exchange Act, to waive any of the conditions to the Offer and to make
any change in the terms of the Offer; provided that (i) the Minimum Condition
may be waived only with the prior written consent of the Company and (ii) no
change may be made that changes the form of consideration to be paid, decreases
the Offer Price, decreases the number of shares of Company Common Stock sought
in the Offer, adds to or modifies, in a manner adverse to the stockholders of
the Company, the conditions to the Offer set forth in Annex II or any other term
of the Offer, or (except as provided in the next sentence) changes the
expiration date of the Offer, without the prior written consent of the Company.
Without the consent of the Company, Merger Sub shall have the right to extend
the expiration date of the Offer in compliance with the requirements of the
Exchange Act (which extension shall initially be ten business days from and
after the date of announcement of the execution of Merger Agreement to provide
for the purchase of all of the outstanding shares of Company Common Stock in
accordance with the terms hereof), (i) from time to time thereafter if, at the
scheduled or extended expiration date of the Offer, any of the conditions to the
Offer shall not have been satisfied or waived, until such conditions are
satisfied or waived, (ii) for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to the
Offer or any period required by applicable law, or (iii) for up to ten
additional business days, if, immediately prior to the scheduled or extended
expiration date of the Offer, the Company Common Stock tendered and not
withdrawn pursuant to the Offer constitute more than 50% but less than 90% of
the outstanding Company Common Stock.
I-1
If any of the conditions to the Offer is not satisfied or
waived on any scheduled or extended expiration date of the Offer, Merger Sub
shall, and Parent shall cause Merger Sub to, extend the Offer, if such condition
or conditions could reasonably be expected to be satisfied, from time to time
until such conditions are satisfied or waived; provided that Merger Sub shall
not be required to extend the Offer beyond September 14, 2002. Subject to the
foregoing and upon the terms and subject to the conditions of the Offer, Merger
Sub shall, and Parent shall cause it to, accept for payment and pay for, as
promptly as practicable after the expiration of the Offer, all shares of Company
Common Stock validly tendered and not withdrawn pursuant to the Offer.
(b) As soon as reasonably practicable following the date
hereof, Parent and Merger Sub shall file with the SEC an amendment to their
Tender Offer Statement on Schedule TO initially filed on December 7, 2001 (the
"Schedule TO") with respect to the Offer in accordance with the terms hereof
(such Schedule TO and such documents included therein pursuant to which the
Offer will be made, including the Offer to Purchase and the related letter of
transmittal, together with any supplements or amendments thereto, the "Offer
Documents"). Parent, Merger Sub and the Company each agrees promptly to correct
any information provided by it for use in the Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect. Parent and Merger Sub agree to take all steps necessary to
cause the Schedule TO as so corrected to be filed with the SEC and the other
Offer Documents as so corrected to be disseminated to holders of shares of
Company Common Stock, in each case as and to the extent required by applicable
federal securities laws. Merger Sub also agrees to provide the Company and its
counsel in writing with any comments Merger Sub and its counsel may receive from
the SEC or its staff after the date hereof with respect to the Offer Documents
promptly after the receipt of such comments and shall provide the Company and
its counsel a reasonable opportunity to review and comment on the response of
Merger Sub to such comments.
SECTION 1.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer
and represents that its Board of Directors, at a meeting duly called and held,
has (i) determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are advisable and are fair to and in the
best interests of the Company's stockholders, (ii) approved and adopted this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, in accordance with the requirements of the DGCL, and (iii) resolved to
recommend acceptance of the Offer and approval and adoption of this Agreement
and the Merger by its stockholders. The Company further represents that Xxxxxxx
& Company, Inc. has delivered to the Company's Board of Directors its written
opinion that the consideration to be paid in the Offer and the Merger is fair to
the holders of shares of Company Common Stock (other than Parent, Merger Sub or
their affiliates) from a financial point of view. The Company will promptly
furnish Parent with a list of its stockholders, mailing labels and any available
listing or computer file containing the names and addresses of all holders of
shares of Company Common Stock and lists of securities positions of shares of
Company Common Stock held in stock depositories, in each case true and correct
as of the most recent practicable date, and will provide to Parent such
additional information (including updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent may
reasonably request in
I-2
connection with the Offer. Subject to the requirements of applicable law and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Merger, Parent and Merger Sub
and each of their respective affiliates and associates shall (a) hold in
confidence the information contained in any of such labels and lists, (b) use
such information only in connection with the Offer and the Merger and (c) if the
Agreement is terminated, promptly deliver to the Company all copies of such
information then in their possession.
(b) As soon as reasonably practicable following the date
hereof, the Company shall file with the SEC and disseminate to holders of shares
of Company Common Stock, in each case as and to the extent required by
applicable federal securities laws, an amendment to the
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") that shall reflect the
recommendations of the Company's Board of Directors referred to above (subject
to the right of the Company's Board of Directors to withdraw, amend or modify
such recommendation in accordance with the terms of the Agreement). The Company,
Parent and Merger Sub each agree promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect. The Company agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to holders of shares of Company Common Stock, in each
case as and to the extent required by applicable federal securities laws. Parent
and its counsel shall be given a reasonable opportunity to review and comment on
the Schedule 14D-9 prior to its being filed with the SEC. The Company also
agrees to provide Parent and its counsel in writing with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments and shall provide
Parent and its counsel a reasonable opportunity to review and comment on the
response of the Company to such comments.
SECTION 1.3 MERGER WITHOUT A MEETING OF STOCKHOLDERS. In the event that
Merger Sub shall acquire at least 90% of the outstanding shares of Company
Common Stock pursuant to the Offer or otherwise, each of the parties hereto
shall take all necessary and appropriate action to cause the Merger to become
effective as soon as reasonably practicable after such acquisition, without the
Company Stockholders Meeting, in accordance with Section 253 of the DGCL.
I-3
ANNEX II
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, but subject to
compliance with Section 1.1(a) of Annex I to the Agreement and Plan of Merger
and Reorganization dated as of January ___, 2002 among Parent, Merger Sub and
the Company (the "Merger Agreement") (each defined term used herein shall have
the meaning assigned to such term in the Merger Agreement), Merger Sub shall not
be required to accept for payment or pay for any shares of Company Common Stock
(the "Shares") tendered pursuant to the Offer to Purchase dated December 7,
2001, as amended from time to time (the "Offer to Purchase") and the related
Letter of Transmittal (the "Letter of Transmittal" which, together with the
Offer to Purchase, as each may be amended and supplemented from time to time,
constitute the "Offer"), and may terminate or amend the Offer in accordance with
the Merger Agreement, if:
(1) prior to the expiration date of the Offer, any of the following
conditions has not been satisfied:
(a) the Company's stockholders validly tender and do not
withdraw prior to the expiration date of the Offer the number of Shares
(including the associated Rights) representing, together with the Shares owned
by Parent, at least a majority of the total number of outstanding Shares on a
fully diluted basis;
(b) (i) the Company shall have breached or failed to perform
in all material respects any of its covenants or other obligations under the
Merger Agreement, (ii) any of the representations and warranties of the Company
contained in the Merger Agreement that are qualified by reference to a Company
Material Adverse Effect shall not be true when made or at any time prior to the
consummation of the Offer as if made at and as of such time (except for
representations and warranties which speak as of a particular date, shall not be
true as of such particular date), or (iii) any of the representations and
warranties of the Company contained in the Merger Agreement that are not so
qualified shall not be true in all material respects when made or at any time
prior to the consummation of the Offer as if made at and as of such time (except
for representations and warranties which speak as of a particular date, shall
not be true as of such particular date);
(2) at any time on or after the date of the Offer to Purchase and prior
to the expiration date of the Offer, any of the following conditions exists:
(a) there shall have been any law or order promulgated,
entered, enforced, enacted, issued or deemed applicable to the Offer or the
Merger Agreement by any court of competent jurisdiction or other competent
governmental or regulatory authority which, directly or indirectly, (1)
prohibits, or imposes any material limitations on, Parent's or Merger Sub's
ownership or operation (or that of any of their respective subsidiaries or
affiliates) of any portion of their or the Company's businesses or assets which
is material to the business of all such entities taken as a whole, or compels
Parent or Merger Sub (or their respective subsidiaries or affiliates) to dispose
of or hold separate any portion of their or the Company's business or assets
which is material to the business of all such entities taken as a whole, (2)
prohibits, restrains or makes or seeks to make illegal the acceptance for
payment, payment for or purchase of Shares
II-1
pursuant to the Offer or the consummation of the Merger Agreement, (3) imposes
material limitations on the ability of Merger Sub or Parent (or any of their
respective subsidiaries or affiliates) effectively to acquire or to hold or to
exercise full rights of ownership of the Shares purchased pursuant to the Offer
including, without limitation, the right to vote such Shares on all matters
properly presented to the Company's stockholders, (4) imposes material
limitations on the ability of Merger Sub or Parent (or any of their respective
subsidiaries or affiliates) effectively to control in any material respect any
material portion of the business, assets, liabilities, capitalization,
stockholder's equity, condition (financial or otherwise), licenses or franchises
or results of operations of the Company and its subsidiaries taken as a whole,
(5) seeks to require divestiture by Parent, Merger Sub or any affiliate of
Parent of any Share, (6) in the reasonable discretion of Parent, imposes or
seeks to impose any material condition to the Offer which is unacceptable to
Parent or Merger Sub, (7) in the reasonable discretion of Parent, might result
in a diminution of the value of the Shares or the benefits expected to be
derived by Parent as a result of the Offer or the Merger Agreement, (8)
restrains or prohibits or seeks to restrain or prohibit the performance of any
of the contracts or other arrangements entered into by Parent, Merger Sub or any
of their affiliates in connection with the acquisition of the Company or obtains
or seeks to obtain any material damages or otherwise directly or indirectly
relates to the Offer, or (9) otherwise materially adversely affects the Company
and its subsidiaries or Parent or any of its subsidiaries, including Merger Sub,
taken as a whole;
(b) there shall be threatened, instituted or pending any
action, suit, proceeding, application, claim or counterclaim brought by a
governmental or regulatory authority or by any other person, domestic or foreign
(whether brought by the Company, an affiliate of the Company, or any other
person) (1) challenging or seeking to make illegal the acquisition by Parent or
Merger Sub of Shares or otherwise seeking to restrain, delay or prohibit the
making or consummation of the Offer, the Merger Agreement or any other
subsequent business transaction with the Company, (2) challenging or seeking to,
or which is reasonably likely to, make illegal, materially delay or otherwise
directly or indirectly restrain or prohibit or seeking to, or which is
reasonably likely to, impose voting, procedural, price or other requirements,
including any such requirements under California law, in addition to those
required by the federal securities laws and the DGCL (each as in effect on the
date of the Offer to Purchase), in connection with making the Offer, the
acceptance for payment of, or payment for, any Shares by Merger Sub or any other
affiliate of Parent of the Merger Agreement or other business combination with
the Company, or seeking to obtain material damages in connection therewith, or
(3) that could reasonably be expected to result, directly or indirectly, in any
of the consequences referred to in clauses (1) through (9) of paragraph (a)
above;
(c) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on any United States
national securities exchange or in the over-the-counter market in excess of one
day, (2) any limitation (whether or not mandatory) by any United States
governmental or regulatory authority on the extension of credit by banks or
other financial institutions, (3) any decline in either the Dow Xxxxx Industrial
Average, the Standard & Poor's 500 Index or the Nasdaq National Market by an
amount in excess of 10% measured from the close of business on the date of the
Offer to Purchase or (4) in the case of any of the foregoing (other than clause
(3)) existing at the time of the Offer, a material acceleration or worsening
thereof;
II-2
(d) there shall have occurred a Company Material Adverse
Effect;
(e) the Agreement shall have been terminated in accordance
with its terms, or Parent, Merger Sub and the Company shall have agreed that
Merger Sub shall amend the Offer, to terminate the Offer or postpone the payment
for Shares thereunder;
(f) any required approval, permit, authorization or consent of
any governmental authority or agency (including under applicable antitrust laws
and those described or referred to in the Offer to Purchase) shall not have been
obtained on terms satisfactory to Parent in its reasonable discretion; or
(g) the Company shall have entered into any agreement or
transaction with any person or entity who is a competitor of Parent having the
effect of materially diminishing the expected economic value to Parent of the
acquisition of the Company, including any agreement by which such a competitor
is granted original equipment manufacturing, marketing or other rights;
which, in the reasonable judgment of Parent or Merger Sub in any such case, and
regardless of the circumstances (including any action or inaction by Parent or
Merger Sub or any of their affiliates) giving rise to any such condition, makes
it inadvisable to proceed with the Offer or with such acceptance for payment.
Subject to the provisions of the Merger Agreement, the foregoing
conditions are for the sole benefit of Parent and Merger Sub and may be asserted
by Parent or Merger Sub, subject to the terms of the Merger Agreement, or may be
waived by Parent or Merger Sub in whole or in part at any time and from time to
time in their reasonable discretion. The failure by Parent or Merger Sub at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right; the waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other facts
and circumstances; and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time. In compliance with the
requirements of the Exchange Act, Merger Sub has the right to extend the Offer
for up to ten business days, if, immediately prior to the scheduled or
extended expiration date of the Offer, the Company Common Stock tendered and not
withdrawn pursuant to the Offer constitute more than 50% but less than 90% of
the outstanding Company Common Stock.
II-3
