EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
NOVELLUS SYSTEMS, INC.
NEPTUNE ACQUISITION-SUB, INC.
AND
GASONICS INTERNATIONAL CORPORATION
October 25, 2000
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER......................................................................................... 1
1.1 The Merger........................................................................................ 1
1.2 Closing; Effective Time........................................................................... 2
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1.3 Effect of the Merger.............................................................................. 2
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1.4 Certificate of Incorporation; Bylaws.............................................................. 2
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1.5 Directors and Officers............................................................................ 3
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1.6 Effect on Capital Stock........................................................................... 3
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1.7 Surrender of Certificates......................................................................... 5
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1.8 No Further Ownership Rights in Company Capital Stock.............................................. 6
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1.9 Tax and Accounting Consequences................................................................... 7
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1.10 Withholding Rights................................................................................ 7
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1.11 Taking of Necessary Action; Further Action........................................................ 7
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ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY......................................................... 7
2.1 Organization, Standing and Power.................................................................. 8
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2.2 Capital Structure................................................................................. 9
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2.3 Authority......................................................................................... 10
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2.4 SEC Documents, Financial Statements............................................................... 11
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2.5 Absence of Certain Changes........................................................................ 12
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2.6 Absence of Undisclosed Liabilities................................................................ 12
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2.7 Litigation........................................................................................ 12
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2.8 Governmental Authorization........................................................................ 13
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2.9 Title to Personal Property........................................................................ 13
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2.10 Intellectual Property............................................................................. 13
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2.11 Environmental Matters............................................................................. 16
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2.12 Taxes............................................................................................. 17
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2.13 Employee Benefit Plans............................................................................ 18
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2.14 Certain Agreements Affected by the Merger......................................................... 21
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2.15 Employee Matters.................................................................................. 21
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2.16 Insurance......................................................................................... 22
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2.17 Compliance With Laws.............................................................................. 22
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2.18 Brokers' and Finders' Fees........................................................................ 22
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2.19 Affiliates Agreements; Stockholder Voting Agreements; Irrevocable Proxies......................... 22
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2.20 Vote Required..................................................................................... 23
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2.21 Board Approval.................................................................................... 23
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2.22 Customers and Suppliers........................................................................... 23
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2.23 Material Contracts................................................................................ 23
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2.24 No Breach of Material Contracts................................................................... 24
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2.25 Material Third Party Consents..................................................................... 25
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2.26 Real Property..................................................................................... 25
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2.27 Registration Statement; Proxy Statement/Proxy..................................................... 26
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2.28 Tax Matters....................................................................................... 26
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2.29 Opinion of Financial Advisor...................................................................... 26
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.......................................... 26
3.1 Organization, Standing and Power.................................................................. 28
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3.2 Capital Structure................................................................................. 28
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3.3 Authority......................................................................................... 29
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3.4 SEC Documents; Financial Statements............................................................... 31
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3.5 Tax Matters....................................................................................... 31
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3.6 Absence of Undisclosed Liabilities................................................................ 31
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3.7 Litigation........................................................................................ 31
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3.8 Board and Shareholder Approval.................................................................... 32
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3.9 Registration Statement; Proxy Statement/Proxy..................................................... 32
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3.10 Opinion of Financial Advisor...................................................................... 32
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3.11 Investigation by Parent; Company's Liability...................................................... 32
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3.12 Absence of Certain Changes........................................................................ 33
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ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME............................................................... 33
4.1 Conduct of Business of Company.................................................................... 33
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4.2 Restriction on Conduct of Business of Company..................................................... 33
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4.3 No Solicitation................................................................................... 36
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ARTICLE V ADDITIONAL AGREEMENTS.............................................................................. 38
5.1 Proxy Statement/Prospectus; Registration Statement................................................ 38
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5.2 Meeting of Stockholders........................................................................... 38
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5.3 Access to Information; Disclosure Schedule Updates................................................ 39
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5.4 Confidentiality................................................................................... 40
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5.5 Public Disclosure................................................................................. 40
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5.6 Consents; Cooperation............................................................................. 40
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5.7 Affiliates Agreements............................................................................. 41
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5.8 Stockholder Voting Agreement...................................................................... 42
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5.9 FIRPTA............................................................................................ 42
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5.10 Legal Requirements................................................................................ 42
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5.11 Employee Benefit Plans............................................................................ 42
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5.12 Indemnification................................................................................... 45
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5.13 Form S-8.......................................................................................... 46
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5.14 NASDAQ Quotation.................................................................................. 46
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5.15 Treatment as Reorganization....................................................................... 46
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5.16 Takeover Statutes................................................................................. 47
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5.17 Pooling Accounting............................................................................... 47
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5.18 Pooling Letters.................................................................................. 47
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5.19 Notices.......................................................................................... 48
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5.20 Listing of Additional Shares..................................................................... 48
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5.21 Further Assurances............................................................................... 48
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5.22 Rights Agreement................................................................................. 48
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ARTICLE VI CONDITIONS TO THE MERGER......................................................................... 48
6.1 Conditions to Obligations of Each Party to Effect the Merger..................................... 48
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6.2 Additional Conditions to Obligations of Company.................................................. 49
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6.3 Additional Conditions to the Obligations of Parent............................................... 50
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ARTICLE VII TERMINATION, AMENDMENT AND WAIVER............................................................... 51
7.1 Termination...................................................................................... 51
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7.2 Effect of Termination............................................................................ 52
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7.3 Expenses and Termination Fees.................................................................... 52
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7.4 Amendment........................................................................................ 55
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7.5 Extension; Waiver................................................................................ 55
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ARTICLE VIII GENERAL PROVISIONS............................................................................. 55
8.1 Non-Survival at Effective Time................................................................... 55
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8.2 Notices.......................................................................................... 55
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8.3 Interpretation; Certain Definitions.............................................................. 57
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8.4 Counterparts; Facsimile Delivery................................................................. 57
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8.5 Entire Agreement; Nonassignability; Parties in Interest.......................................... 57
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8.6 Severability..................................................................................... 57
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8.7 Remedies Cumulative.............................................................................. 57
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8.8 Governing Law.................................................................................... 58
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8.9 Rules of Construction............................................................................ 58
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8.10 Assignment....................................................................................... 58
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8.11 Attorneys' Fees.................................................................................. 58
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SCHEDULES
Company Disclosure Schedule
Schedule 2.2 - Company Voting Agreements
Schedule 2.4 - Company Balance Sheet
Schedule 2.6 - Undisclosed Liabilities
Schedule 2.7 - Company Litigation
Schedule 2.9 - Company Assets
Schedule 2.10 - Company Intellectual Property
Schedule 2.11 - Company Environmental Matters
Schedule 2.13 - Company Employee Benefit Plans
Schedule 2.22 - Company Top 10 Customers
Schedule 2.23 - List of Material Contracts
Schedule 2.25 - Material Third Party Consents
Schedule 2.26 - Real Property
Parent Disclosure Schedule
Schedule 3.6 - Undisclosed Liabilities
Schedule 3.7 - Parent Litigation
Other Schedules
Schedule 5.7(a) - List of Company Affiliates
Schedule 5.7(b) - List of Parent Affiliates
Schedule 5.11 - Holders of Outstanding Company Options
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EXHIBITS
Exhibit A - Form of Certificate of Merger
Exhibit B-1 - Form of Company Affiliates Agreement
Exhibit B-2 - Form of Parent Affiliates Agreement
Exhibit C - Form of Stockholder Voting Agreement
Exhibit D - Confidentiality Agreement
Exhibit E - Form of FIRPTA Notice
Exhibit F - Form of IRS Notice
Exhibit G-1 - Form of Certificate of Officer of Company
Exhibit G-2 - Form of Certificate of Officer of Parent
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
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of October 25, 2000 (the "Execution Date") by and among NOVELLUS SYSTEMS, INC.,
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a California corporation ("Parent"), NEPTUNE ACQUISITION-SUB, INC., a Delaware
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corporation ("Merger Sub"), and GASONICS INTERNATIONAL CORPORATION, a Delaware
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corporation ("Company").
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RECITALS
A. The Boards of Directors of Parent, Merger Sub and Company each
have determined that the business combination between Parent and Company through
the merger of Merger Sub with and into Company pursuant to the terms and subject
to the conditions set forth herein (the "Merger") is in the best interests of
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their respective companies, stockholders and shareholders.
B. Merger Sub is a wholly-owned subsidiary of Parent.
C. Pursuant to the Merger, among other things, each outstanding
share of capital stock of Company shall be converted into a fraction of a share
of common stock of Parent, at the rate set forth herein.
D. Company and Parent desire to make certain representations,
warranties, covenants and other agreements in connection with the Merger.
E. The parties intend, by executing this Agreement, to adopt a plan
of reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code"), and to cause the Merger to qualify as a
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reorganization under the provisions of Sections 368(a) of the Code.
F. The parties intend that, for financial accounting purposes, the
Merger shall be accounted for as a pooling-of-interests.
G. As an inducement to Parent to enter into this Agreement, certain
officers, and directors of Company have concurrently herewith entered into an
agreement to vote the shares of Company's Capital Stock owned by such persons to
approve the Merger and this Agreement.
NOW, THEREFORE, in consideration of the covenants and representations
set forth herein, and for other good and valuable consideration, the parties
agree as follows:
ARTICLE I
THE MERGER
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1.1 The Merger. Subject to and in accordance with the terms and
conditions set forth in this Agreement, at the "Effective Time" (as defined in
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Section 1.2 hereof), Merger Sub
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shall be merged with and into Company, which shall be the surviving corporation
(the "Surviving Corporation") in the Merger, and the separate existence of
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Merger Sub shall thereupon cease. The name of the Surviving Corporation shall
remain "Globe Corporation". The Merger shall have the effects set forth in the
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applicable provisions of the Delaware General Corporation Law ("Delaware Law").
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1.2 Closing; Effective Time. The closing of the transactions
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contemplated hereby (the "Closing") shall take place as soon as practicable and
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in any event not later than two business days after the satisfaction or waiver
of each of the conditions set forth in Article VI hereof or at such other time
as the parties hereto agree (the "Closing Date"). The Closing shall take place
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at the offices of Xxxxxxxx & Xxxxxxxx, LLP, 755 Page Mill Road, Palo Alto,
California, or at such other location as the parties hereto agree. In
connection with the Closing, the parties hereto shall cause the Merger to be
consummated by filing the Certificate of Merger, in the form attached hereto as
Exhibit A (the "Certificate of Merger"), together with the required officers'
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certificates, with the Secretary of State of the State of Delaware, in
accordance with the relevant provisions of Delaware Law (the time of such filing
with the Secretary of State of Delaware being the "Effective Time").
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1.3 Effect of the Merger. At the Effective Time, the effect of the
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Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of Delaware Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of Company and the Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Company and
the Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 Certificate of Incorporation; Bylaws.
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(a) At the Effective Time, the Certificate of Incorporation
of Company, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by Delaware Law and such Certificate of Incorporation;
provided, that as of the Effective Time, Company's Certificate of Incorporation
shall be amended as set forth in Exhibit A to the Certificate of Merger.
(b) The Bylaws of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving Corporation
until thereafter amended as provided by Delaware Law and such Bylaws.
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1.5 Directors and Officers. At the Effective Time, the directors of
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Merger Sub, serving in such capacity immediately prior to the Effective Time,
shall be the directors of the Surviving Corporation, until their respective
successors are duly elected or appointed and qualified. The officers of Merger
Sub, holding office immediately prior to the Effective Time, shall be the
officers of the Surviving Corporation, until their respective successors are
duly elected or appointed and qualified.
1.6 Effect on Capital Stock.
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(a) Certain Definitions.
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"Company Capital Stock" shall mean all outstanding
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shares of Company Common Stock and all outstanding shares of any other capital
stock of Company as of the Effective Time.
"Company Common Stock" shall mean shares of the
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common stock of Company, $0.001 par value.
"Company ESPP" shall mean the Company 1994
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Employee Stock Purchase Plan.
"Company Options" shall mean any and all options
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or other rights to purchase or otherwise acquire shares of Company Capital
Stock, whether or not presently exercisable or subject to additional conditions
prior to exercise, under and pursuant to the (i) Company Supplemental Stock
Option Plan, (ii) Company 1994 Stock Option/Stock Issuance Plan, and (iii) Gamma
Precision Technology 1998 Stock Option Plan (each, a "Company Stock Option
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Plan," and collectively, the "Company Stock Option Plans").
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"Company Convertible Securities" shall mean any
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and all warrants, rights or other convertible securities to purchase or
otherwise acquire shares of Company Capital Stock, whether or not presently
exercisable or subject to additional conditions prior to exercise, not including
the Company Options.
"Exchange Ratio" shall mean 0.52 as may be
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adjusted pursuant to Section 1.6(e) hereof.
"Parent Common Stock" shall mean shares of the
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common stock of Parent, no par value.
(b) Conversion of Company Capital Stock. By virtue of the
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Merger and without any further action on the part of Parent, Company, the Merger
Sub or the holders of any of Company's securities, at the Effective Time, each
share of Company Capital Stock issued and outstanding immediately prior to the
Effective Time, but excluding any shares canceled pursuant to Section 1.6(c)),
will be automatically canceled, extinguished and converted into the right to
receive a fraction of a share of Parent Common Stock equal to the Exchange Ratio
and cash in lieu of fractional shares in accordance with Section 1.6(f).
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(c) Cancellation of Company Capital Stock Owned by Company.
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At the Effective Time, all shares of Company Capital Stock that are owned by
Company as treasury stock and each share of Company Capital Stock owned by
Parent or any direct or indirect wholly-owned subsidiary of Company or Parent
shall be canceled and extinguished without any rights to conversion thereof and
no consideration shall be delivered in exchange therefore. At the Effective
Time, any shares of Company Capital Stock that are owned by Parent, Merger Sub
or any other wholly-owned subsidiary of Parent shall be canceled and retired and
extinguished without any conversion thereof and no consideration shall be
delivered in exchange therefor.
(d) Treatment of Company Options and Company ESPP Rights.
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(i) at the Effective Time, the Company Stock Option Plans and all Company
Options then outstanding under the Company Stock Option Plans shall be assumed
by Parent and converted into Parent Options in accordance with Section 5.11
hereof; and (ii) all purchase rights for shares of Company Common Stock
outstanding under the Company ESPP immediately prior to the Effective Time shall
be exercised in accordance with Section 5.11(b) hereof, and the purchased shares
of Company Common Stock shall at the Effective Time be converted into shares of
Parent Common Stock and cash in lieu of fractional shares, as provided in
Section 1.6(c) hereof.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall
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only be adjusted to reflect fully the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Capital Stock),
reclassification, reorganization, recapitalization or other like change with
respect to Parent Common Stock or Company Capital Stock occurring after the date
hereof and prior to the Effective Time, so as to provide holders of Company
Common Stock and Parent the same economic effect as contemplated by this
Agreement prior to such stock split, reverse split, stock dividend,
reorganization, recapitalization, like change or increase.
(f) Fractional Shares. No fraction of a share of Parent
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Common Stock will be issued, but in lieu thereof each holder of shares of
Company Capital Stock who would otherwise be entitled to a fraction of a share
of Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock to be received by such holder) shall receive from Parent an amount of cash
(rounded to the nearest whole cent) equal to the product of (i) such fraction,
multiplied by (ii) the average closing price per share of Parent's Common Stock
as quoted on Nasdaq for the twenty (20) trading days ending on the day which is
two days before the Closing Date, less any amount required to be withheld under
foreign, federal, state or local tax laws.
(g) Capital Stock of Merger Sub. At the Effective Time,
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each share of common stock of Merger Sub 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. 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.
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1.7 Surrender of Certificates.
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(a) Exchange Agent. Parent's transfer agent, ChaseMellon
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Shareholder Services, shall act as the exchange agent (the "Exchange Agent") in
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the Merger.
(b) Parent to Provide Common Stock and Cash. Parent shall
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use commercially reasonable efforts to make available to the Exchange Agent
promptly, but in no event later than three (3) business days after the Effective
Time, for exchange in accordance with this Article I, through such reasonable
procedures as Parent may adopt, (i) the shares of Parent Common Stock issuable
pursuant to Section 1.6(b) (provided that delivery of any shares that are
subject to vesting shall be in book entry form only until such vesting
restrictions have lapsed) in exchange for shares of Company Capital Stock
outstanding immediately prior to the Effective Time, and (ii) cash in an amount
sufficient to permit payment of cash in lieu of fractional shares pursuant to
Section 1.6(f), less any amounts required to be withheld from such cash under
foreign, federal, state or local laws.
(c) Exchange Procedures.
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(i) Parent shall use commercially reasonable
efforts to cause to be mailed, as soon as reasonably practical, but within ten
(10) business days, to each holder of record of a certificate or certificates
(the "Certificates") which immediately prior to the Effective Time represented
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outstanding shares of Company Capital Stock, whose shares were converted into
the right to receive shares of Parent Common Stock (and cash in lieu of
fractional shares, less any amount required to be withheld from such cash under
foreign, federal, state or local tax laws), (1) a letter of transmittal in
customary form (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon receipt of the
Certificates by the Exchange Agent, and shall be in such form and have such
other provisions as Parent may reasonably specify), and (2) instructions for use
in effecting the surrender of the Certificates in exchange for certificates (or
book entries in the case of shares that have not yet vested) representing shares
of Parent Common Stock (and cash in lieu of fractional shares, less any amount
required to be withheld from such cash under foreign, federal, state or local
tax laws).
(ii) Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, (A) the holder
of such Certificate shall be entitled to receive in exchange therefor a
certificate (or a book entry in the case of shares that have not yet vested in
full) representing the number of whole shares of Parent Common Stock equal to
the product of (i) the number of Company shares represented by such certificate
multiplied by (ii) the Exchange Ratio, and, if applicable, payment in lieu of
fractional shares which such holder has the right to receive pursuant to Section
1.6(f), and (B) the Certificate so surrendered shall forthwith be canceled.
(iii) In the event that any Certificate shall
have been lost stolen or destroyed, upon the making of an affidavit of that fact
by the stockholder claiming such Certificate to be lost, stolen or destroyed,
the Exchange Agent will issue or cause to be issued to
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such Person in exchange for such lost, stolen or destroyed Certificate, a new
certificate into which the shares of such Person's Company Capital Stock that
are converted on the Effective Date and/or, if applicable, deliver or cause to
be delivered to such Person a check in respect of any fractional share interests
or dividends or distributions, which such Person shall be entitled to receive
pursuant to Section 1.6(f). When authorizing such issuance in exchange therefor,
Parent and/or the Exchange Agent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed Certificate to give Parent and/or the Exchange Agent a reasonable form
of bond as indemnity, as it shall direct, against any claim that may be made
against Parent or the Exchange Agent with respect to the Certificate alleged to
have been lost, stolen or destroyed.
(d) Distributions With Respect to Unexchanged Shares.
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No dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time will be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby until the holder of record of such Certificate shall
surrender such Certificate. Subject to applicable law, following surrender of
any such Certificate, there shall be paid to the record holder of the
Certificate representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, at the time of such surrender, the amount of any
such dividends or other distributions with a record date after the Effective
Time theretofore payable (but for the provisions of this Section 1.7(d)) with
respect to such shares of Parent Common Stock.
(e) Transfers of Ownership. If any certificate for shares
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of Parent Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the Person
requesting such exchange will have paid to the Exchange Agent, Parent or any
other agent designated by Parent, as applicable, any transfer or other taxes
required by reason of the issuance of a certificate for shares of Parent Common
Stock in any name other than that of the registered holder of the Certificate
surrendered, or established to the satisfaction of the Exchange Agent, Parent or
any other agent designated by Parent, as applicable, that such tax has been paid
or is not payable.
(f) No Liability. Notwithstanding anything to the contrary
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in this Section 1.7, none of the Exchange Agent, Parent, the Surviving
Corporation or any other party hereto shall be liable to any Person for any
amount properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
1.8 No Further Ownership Rights in Company Capital Stock. All shares
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of Parent Common Stock issued upon the surrender for exchange of shares of
Company Capital Stock in accordance with the terms hereof (including any cash
paid in lieu of fractional shares) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Capital Stock,
and after the Effective Time there shall be no further registration of transfers
on the records of the Surviving Corporation of shares of Company Capital Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are
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presented to the Surviving Corporation for any reason, they shall be exchanged
and canceled as provided in this Article I.
1.9 Tax and Accounting Consequences. It is intended by the parties
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hereto that the Merger shall (a) constitute a reorganization within the meaning
of Section 368 of the Code and (b) qualify for accounting treatment as a
pooling-of-interests. The parties to this Agreement hereby adopt this Agreement
as a "plan of reorganization" within the meaning of sections 1.368-2(g) and
1.368-3(a) of the United States Treasury Regulations.
1.10 Withholding Rights. Parent and the Surviving Corporation shall be
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entitled to deduct and withhold from the number of shares of Parent Common Stock
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 Code or any provision of state, local, provincial or foreign 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.
1.11 Taking of Necessary Action; Further Action. If, at any time after
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the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company, the officers and directors of Company, Parent and the
Surviving Corporation are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action, so long as such action is not inconsistent with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
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In this Agreement, any reference to any event, change, condition or
effect being "material" with respect to any entity or group of entities means
any material event, change, condition or effect related to the condition
(financial or otherwise), properties, assets (including intangible assets),
liabilities, business, operations or results of operations of such entity and
its subsidiaries taken as a whole.
In this Agreement, any reference to a "Company Material Adverse
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Effect" means any change, event or effect that is materially adverse to the
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condition (financial or otherwise), properties, assets (including intangible
assets), liabilities, business, operations or results of operations of Company
and its subsidiaries, taken as a whole; provided, however, that none of the
following shall be deemed in themselves, either alone or in combination, to
constitute, and none of the following shall be taken into account in determining
whether there has been or will be, a Company Material Adverse Effect: (a) any
change in the market price or trading volume of Company's stock after the date
hereof; (b) any adverse change, effect, event, occurrence, state of facts or
development to the extent attributable to the announcement or pendency of the
Merger
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(including any cancellation of or delays in customer orders, any reduction in
sales, any disruption in supplier, distributor, partner or similar relationships
or any loss of employees); (c) any adverse change, effect, event, occurrence,
state of facts or development attributable to conditions affecting the
industries as a whole in which Company participates, the U.S. economy as a whole
or the foreign economies as a whole in any locations where Company or any of its
Subsidiaries has material operations or sales; or (d) any adverse change,
effect, event, occurrence, state of facts or development arising from or
relating to compliance with the terms of, or the taking of any action required
by, this Agreement.
In this Agreement, any reference to a party's "knowledge" means actual
knowledge of such party's officers and directors, provided that officers shall
have made reasonable due and diligent inquiry of those employees of such party
whom such officers reasonably believe would have actual knowledge of the matters
represented.
In this Agreement, any reference to a party conducting its business or
other affairs or taking any action in the "ordinary course of business" means
that such an action taken by or on behalf of such party shall not be deemed to
have been taken in the "ordinary course of business" unless such action is taken
in the ordinary course of such party's normal day to day operations and is
similar in nature and magnitude to actions customarily taken, without any
separate or special authorization.
Except as disclosed in a document of even date herewith and attached
to this Agreement and delivered by Company to Parent prior to the execution and
delivery of this Agreement and referring by section number to the
representations and warranties in this Agreement (the "Company Disclosure
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Schedule"), provided that any disclosure shall qualify the disclosure under the
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section number referred to in the Company Disclosure Schedule as well as all
other sections in this Agreement, when it is reasonably apparent from a reading
of such disclosure that it also qualifies or applies to such other sections,
provided further that Company shall make all reasonable efforts to specifically
cross reference in the Company Disclosure Schedule all sections where a
particular disclosure qualifies or applies, Company represents and warrants to
Parent as follows:
2.1 Organization, Standing and Power. Each of Company and its
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subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Each of Company and
its subsidiaries has the corporate power to own its properties and to carry on
its business as now being conducted and as currently 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 would
have a Company Material Adverse Effect. Company has delivered or made available
a true and correct copy of the Certificate of Incorporation and Bylaws or other
charter documents, as applicable, of Company and each of its subsidiaries, each
as amended to date, to Parent. Neither Company nor any of its subsidiaries is in
violation of any of the provisions of its Certificate of Incorporation or Bylaws
or equivalent organizational documents. 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. Except as disclosed in
the Company SEC Documents (as defined
8
in Section 2.4 hereof), 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, joint venture or other business association or entity, excluding
securities in any publicly traded company held for investment by Company or any
of it subsidiaries in accordance with and pursuant to the Company's formal
investment policy and comprising less than 5% of the outstanding stock of such
company.
2.2 Capital Structure.
-----------------
(a) The authorized capital stock of Company consists of
60,000,000 shares of Common Stock, par value $0.001 per share, of which there
were 17,690,241 shares issued and outstanding as of the close of business on the
day two days prior to the Execution Date. On the Execution Date, there are no
other outstanding shares of capital stock or voting securities, and as of the
Effective Time there will be no, outstanding commitments to issue any shares of
capital stock or voting securities, other than pursuant to the exercise of
Company Options outstanding as of such date under the Company Stock Option
Plans, outstanding as of the Execution Date.
(b) All outstanding shares of Company Capital Stock are
duly authorized, validly issued, fully paid and non-assessable and are free of
any liens or encumbrances, other than any liens or encumbrances created by or
imposed upon the holders thereof, and are not subject to preemptive rights or
rights of first refusal created by statute, the Certificate of Incorporation or
Bylaws of Company or any agreement to which Company is a party or by which it is
bound. All outstanding shares of Company Capital Stock were issued in compliance
in all material respects with all applicable federal and state securities laws.
As of the date hereof, Company has reserved (i) 200,000 shares of Common Stock
for issuance to directors, employees and consultants pursuant to the Company
Supplemental Stock Option Plan, of which no shares have been issued pursuant to
option exercises or direct stock purchases, no shares are subject to
outstanding, unexercised options, and 200,000 shares are available for issuance
thereunder; (ii) 3,650,000 shares of Common Stock for issuance to directors,
employees and consultants pursuant to the Company 1994 Stock Option/Stock
Issuance Plan, of which 1,055,555 shares have been issued pursuant to option
exercises or direct stock purchases, 2,581,957 shares are subject to
outstanding, unexercised options, and 12,488 shares are available for issuance
thereunder; (iii) 64,769 shares of Common Stock for issuance to directors,
employees and consultants pursuant to the Gamma Precision Technology 1998 Stock
Option Plan, of which no shares have been issued pursuant to option exercises or
direct stock purchases, no shares are subject to outstanding, unexercised
options, and 64,769 shares are available for issuance thereunder; and (iv)
1,100,000 shares of Common Stock for issuance to pursuant to the Company ESPP,
of which 920,688 shares have been issued. On the Execution Date, except for (i)
the rights created pursuant to this Agreement and the Company Stock Option
Plans, and (ii) Company's right to repurchase any unvested shares under the
Company Stock Option Plans or the stock option agreements thereunder, there are
no, and as of the Effective Time, there will be no, other options, warrants,
calls, rights, commitments or agreements of any character to which Company is a
party or by which it is bound obligating Company to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any
9
shares of Company Capital Stock or obligating 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, except as may be
permitted under Section 4.2 hereof. Except for the agreements contemplated by
this Agreement and the agreements set forth on Schedule 2.2(b) to the Company
---------------
Disclosure Schedule, there are no contracts, commitments or agreements relating
to voting, purchase or sale of Company Capital Stock (i) between or among
Company and any of its securityholders and (ii) to Company's knowledge, between
or among any of Company's securityholders.
(c) The terms of the Company Stock Option Plans permit the
assumption of the Company Options by Parent as provided for in this Agreement,
without the consent or approval of the holders of the Company Stock Options, the
Company Stockholders, or otherwise, without any acceleration of the exercise
schedule or vesting provisions with respect to those options. The current
"Purchase Period," as defined in the Company ESPP commenced under the Company
ESPP on June 30, 2000 and will end prior to the Effective Time as provided in
this Agreement, and except for the purchase rights granted on such commencement
date to participants in the current Purchase Period, there are no other purchase
rights or options outstanding under the Company ESPP. Except as set forth on
Schedule 2.2(c), none of the outstanding Company Options permit any accelerated
---------------
vesting or exercisability of those options by reason of the Merger or any other
transactions contemplated by this Agreement. True and complete copies of all
agreements and instruments relating to or issued under the Company Stock Option
Plans, or otherwise relating to the issuance of Company Options have been
provided or made available to Parent and such agreements and instruments have
not been amended, modified or supplemented, and, except as otherwise expressly
contemplated herein, there are no agreements to amend, modify or supplement such
agreements or instruments in any case from the forms provided to Parent.
2.3 Authority.
---------
(a) 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 Company, other than approval by the Company
stockholders.
(b) This Agreement has been duly executed and delivered by
Company and constitutes the valid and binding obligation of Company enforceable
against Company by Parent in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar laws and
equitable principles relating to or limiting creditors' rights generally and by
general principles of equity. The execution and delivery of this Agreement by
Company does not, and the execution of the other agreements contemplated by this
Agreement and the consummation of the transactions contemplated hereby and
thereby 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 any
benefit under (i) any provision of the Certificate of Incorporation or Bylaws of
10
Company, 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 Company or any of its properties or assets, except where such conflict,
violation, default, termination, cancellation or acceleration with respect to
the foregoing provisions in subsection (ii) would not be reasonably expected to
have a Company Material Adverse Effect.
(c) Except as would not otherwise have a Company Material
Adverse Effect, no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality, foreign, federal,
state or local (each, a "Governmental Entity") is required with respect to
-------------------
Company 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, together with the required officers' certificates,
as provided in Section 1.2, (ii) the filing with the Securities and Exchange
Commission (the "SEC") and the National Association of Securities Dealers, Inc.
---
("NASD") of the Proxy Statement (as defined in Section 2.29) relating to the
----
Company Stockholders Meeting (as defined in Section 2.29), (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 ("HSR"); (v) the
---
filing of a Form S-4 Registration Statement with the SEC in accordance with the
Securities Act of 1933 (the "Securities Act"), as amended; (vi) the filing of a
--------------
current report on Form 8-K with the SEC; (vii) any notice described in Section
5.19 hereof; and (viii) such other consents, authorizations, filings, approvals
and registrations which, if not obtained or made, would not prevent, materially
alter or delay any of the transactions contemplated by this Agreement.
2.4 SEC Documents, Financial Statements.
-----------------------------------
(a) Company has made available 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 filed with the SEC by Company
(collectively, the "Company SEC Documents"). In addition, Company has made
---------------------
available or provided to Parent complete copies of all exhibits to the Company
SEC Documents filed prior to the date hereof, and will promptly make available
to Parent all exhibits to any additional Company SEC Documents filed prior to
the Effective Time. To the knowledge of Company, all documents required to be
filed as exhibits to the Company SEC Documents have been so filed. As of their
respective filing 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, to Company's knowledge,
------------
none of the Company SEC Documents contained any untrue statement of 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,
supplemented or superseded by a subsequently filed Company SEC Document.
11
(b) The financial statements of Company, including the
notes thereto, included in the Company SEC Documents (the "Company Financial
-----------------
Statements") and the unaudited balance sheet of Company, dated as of June 30,
-----------
2000 (the "Company Balance Sheet Date") 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 U.S. generally accepted
accounting principles ("GAAP") applied on a basis consistent 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 Company as of the dates and for the periods indicated
therein (subject, in the case of unaudited statements, to normal, recurring
year-end adjustments). There has been no change in Company accounting policies
except as described in the notes to the Company Financial Statements.
2.5 Absence of Certain Changes. Except as set forth in the Company
--------------------------
SEC Documents prior to the date hereof or as expressly contemplated by this
Agreement, since the Company Balance Sheet Date there has not occurred, (except
as permitted by Section 4.2 hereof): (i) any change, event or condition (whether
or not covered by insurance or similar indemnification agreement) that has
resulted in, or would reasonably be expected to result in, a Company Material
Adverse Effect, (ii) any acquisition, sale or transfer of any material asset of
Company or any of its subsidiaries, (iii) any change in accounting methods or
practices (including any change in depreciation or amortization policies or
rates) by Company or any revaluation by 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 Company, or any
direct or indirect redemption, purchase or other acquisition by Company of any
of its shares of capital stock, (v) any action to amend or change the
Certificate of Incorporation or Bylaws of Company, or (vi) any negotiation or
agreement by Company or any of its subsidiaries to do any of the things
described in the preceding clauses (i) through (v) (other than negotiations with
Parent and its representatives regarding the transactions contemplated by this
Agreement).
2.6 Absence of Undisclosed Liabilities. Except as set forth on
----------------------------------
Schedule 2.6, 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 balance sheet or in the notes to the Company
Financial Statements included in the Company Financial Statements in Company's
Quarterly Report on Form 10-Q for the period ended on the Company Balance Sheet
Date, (ii) those incurred in the ordinary course of business since the Company
Balance Sheet Date, (iii) those incurred in connection with the execution of
this Agreement, and (iv) those disclosed on Schedule 2.6.
------------
2.7 Litigation.
----------
Except as set forth in the Company SEC Documents, as of the date of
this Agreement, there is no material private or governmental action, suit,
proceeding, claim,
12
arbitration, governmental investigation, or to the knowledge of Company any
private investigation, pending before any agency, court or tribunal, foreign or
domestic, or, to the knowledge of Company or any of its subsidiaries, threatened
against Company, any of its subsidiaries or any of their respective properties
or any of their respective officers or directors (in their capacities as such).
There is no judgment, decree or order against Company or any of its
subsidiaries, or, to the knowledge of Company, or any of its subsidiaries, or
any of their respective directors or officers (in their capacities as such),
that could prevent, enjoin, or materially alter or delay any of the transactions
contemplated by this Agreement, or that could reasonably be expected to have a
Company Material Adverse Effect. Schedule 2.7 of the Company Disclosure
------------
Schedule also lists all material litigation that Company has pending as of the
date of this Agreement against other parties which is not disclosed in the
Company SEC Documents.
2.8 Governmental Authorization. Company and each of its subsidiaries,
--------------------------
has obtained each federal, state, county, local or foreign governmental consent,
license, permit, grant, or other authorization of a Governmental Entity (i)
pursuant to which 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 Company's or any of its subsidiaries' business or the holding of any such
interest ((i) and (ii) herein collectively called the "Company Authorizations"),
----------------------
and all of such Company Authorizations are in full force and effect, except
where the failure to obtain or have any such Company Authorizations could not
reasonably be expected to have a Company Material Adverse Effect.
2.9 Title to Personal Property. Company and each of its subsidiaries
--------------------------
has good, valid and marketable title to all of their respective material
personal properties, interests in material personal properties and material
assets reflected in the Company Balance Sheet or acquired after the Company
Balance Sheet Date, which properties and assets with a book value of $200,000 or
above are listed on Schedule 2.9 (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 with respect to leased properties and assets,
valid leasehold interests, free and clear of all mortgages, liens, pledges,
charges or encumbrances of any kind or character, except (i) a lien for current
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, (iii) liens
securing debt which are reflected on the Company Balance Sheet, and (iv) liens
that in the aggregate would not have a Material Adverse Effect on Company. To
Company's knowledge, the material plants, property and equipment of Company that
are used in the operations of its business are in good operating condition and
repair, subject to normal wear and tear. All personal properties used in the
operations of Company are reflected in the Company Balance Sheet to the extent
GAAP requires the same to be reflected.
2.10 Intellectual Property.
---------------------
(a) Company and its subsidiaries own (free and clear of all
liens and encumbrances), or are licensed or have valid rights to use (or
otherwise possess legally
13
enforceable rights to use) all the U.S. or foreign patent, patent application,
trademark (whether registered or unregistered), trademark application, trade
name, domain name, fictitious business name, service xxxx (whether registered or
unregistered), service xxxx application, copyright (whether registered or
unregistered and whether or not relating to a published work), copyright
registration application, maskwork, maskwork registration application, trade
secret, know how, rights in data or databases, invention, or other proprietary
right, all licenses, sublicenses and agreements related to the foregoing, and
any other intellectual property right or intangible asset ("Intellectual
------------
Property") that is used, subject to a pending application for registration, or
--------
necessary for the conduct of the business of Company and its subsidiaries as
currently conducted or proposed to be conducted by Company and its subsidiaries.
(b) Neither Company nor its subsidiaries has (i) to the
knowledge of Company, licensed any of its Intellectual Property in source code
form to any party, (ii) entered into any exclusive agreements relating to its
Intellectual Property with any party, or (iii) to the knowledge of Company,
entered into any source code escrow agreements. To the knowledge of Company, the
source code and system documentation relating to any software included in the
Intellectual Property have at all times been maintained in confidence and have
been disclosed only to employees and consultants having a "need to know" of the
contents thereof in connection with their duties to Company or its subsidiaries
and such employees and consultants have executed appropriate confidentiality
agreements in connection therewith.
(c) Schedule 2.10(c) lists (i) all issued patents, all
----------------
registered and common law trademarks, all registered and common law trade names,
all registered and common law service marks, all registered and common law
copyrights, all registered maskworks, and all pending applications relating to
any of the foregoing all patents and patent applications and all registered and
unregistered trademarks, trade names and service marks, registered and
unregistered copyrights, and maskworks, included in the Intellectual Property,
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 material licenses, sublicenses and other
agreements as to which Company or its subsidiaries is a party and pursuant to
which any Person is authorized to use any Intellectual Property, and (iii) all
material licenses, sublicenses and other agreements as to which Company or its
subsidiaries is a party and pursuant to which Company or any subsidiary is
authorized to use any third party Intellectual Property, other than end-user
licenses entered into in the ordinary course of business relating to off-the-
shelf "shrink-wrap" software with a purchase price per copy of less than $10,000
("Third Party Intellectual Property Rights").
----------------------------------------
(d) To the best of Company's knowledge, there is no, nor has
there been any, unauthorized use, disclosure, infringement or misappropriation
of any Intellectual Property rights of Company or any of its subsidiaries, or
any Third Party Intellectual Property Rights, by any third party, including any
employee or former employee of Company or any subsidiary. Neither Company nor
any subsidiary 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
14
ordinary course of business, containing such terms as are typical for the
business, services and products of Company.
(e) To the best of Company's knowledge, 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 material breach of any
license, sublicense or other agreement to which it is a party relating to the
Intellectual Property or Third Party Intellectual Property Rights.
(f) To the best of Company's knowledge, all patents and
registered trademarks, service marks and copyrights held by Company or any of
its subsidiaries are valid and subsisting. To the best of Company's knowledge,
neither Company nor any of its subsidiaries are infringing and has at any time
infringed (either through the conduct of its business or by the manufacturing,
marketing, licensing, use or sale of its products and services) any license,
patent, copyright, service xxxx, trademark, trade name, trade secret or other
Intellectual Property or proprietary rights of any other Person or third party.
Neither Company nor any of its subsidiaries has received any notice or other
communication (in writing or otherwise) of any actual, alleged, possible or
potential infringement of any Intellectual Property or other proprietary right
owned or licensed to any other Person or third party. Neither Company nor any of
its subsidiaries has been sued or threatened to be sued in any suit, action or
proceeding that involves a claim of infringement or violation of any
Intellectual Property or other proprietary right of any third party. Neither
Company nor any of its subsidiaries has brought any action, suit or proceeding
for infringement of Intellectual Property of Company or any of its subsidiaries
or breach of any license or agreement involving Intellectual Property of Company
or any of its subsidiaries against any third party which is not disclosed in the
Company SEC Documents.
(g) To the best of Company's knowledge, Company has secured
valid written assignments from all consultants and employees who contributed to
the creation or development of the Intellectual Property of the rights to such
contributions that Company does not already own by operation of law.
(h) To the best of Company's knowledge, Company has taken
necessary and appropriate steps to protect and preserve the confidentiality of
all Intellectual Property not otherwise protected by patents, patent
applications or copyrights ("Confidential Information"). To the best of
------------------------
Company's knowledge, all use, disclosure or appropriation of Confidential
Information owned by Company by or to a third party has been pursuant to the
terms of a written agreement between Company and such third party. To the best
of Company's knowledge, all use, disclosure or appropriation of Confidential
Information not owned by Company has been pursuant to the terms of a written
agreement between Company and the owner of such Confidential Information, or is
otherwise lawful.
(i) Schedule 2.10(i) of the Disclosure Schedule, sets forth all
-----------------
actions that must be taken by Company by February 28, 2001 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 United States Patent and Trademark Office actions, documents,
15
applications or certificates for the purposes of obtaining, maintaining,
perfecting or preserving or renewing any Intellectual Property.
2.11 Environmental Matters.
---------------------
(a) The following terms shall be defined as follows:
(i) "Environmental and Safety Laws" shall mean 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, Hazardous Materials or releases (as defined in 42 U.S.C. (S)
9601(22)) of Hazardous Materials to air, water or groundwater, or which are
intended to assure the health and safety of employees, workers or other persons,
including the public.
(ii) "Hazardous Materials" shall mean any toxic or
-------------------
hazardous substance, material or waste or any pollutant or contaminant, or
infectious or radioactive substance or material, including without limitation,
those substances, materials and wastes or regulated under any Environmental and
Safety Laws.
(iii) "Property" shall mean all real property leased
--------
or owned by Company or its subsidiaries either currently or in the past,
including the Leased Premises (as defined in Section 2.32).
(iv) "Facilities" shall mean all buildings and
----------
improvements on the Property.
(b) Company represents and warrants as follows: (i) to its
knowledge, 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)
neither Company nor any subsidiary has received notice (oral or written) of any
noncompliance of the Facilities or its past or present operations with
Environmental and Safety Laws by Company or any such subsidiary, (iv) no
notices, administrative actions or suits are pending or, to Company's knowledge,
threatened relating to a violation of any Environmental and Safety Laws, (v) to
Company's knowledge, Company is not a potentially responsible party under the
federal Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA), or state analog statute, arising out of events occurring prior to the
Closing Date, (vi) there are not now, nor to the best of Company's knowledge,
have there been in the past, any Hazardous Materials on, under or migrating to
or from the Facilities or Property, (vii) there are not now, nor to the best of
Company's knowledge, have there been in the past any underground tanks or
underground improvements at, on or under the Property, including without
limitation, treatment or storage tanks, sumps, or water, gas or oil xxxxx,
(viii) to Company's knowledge, 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) Company's uses and activities in and of the Facilities have at
all times
16
complied in all material respects with all Environmental and Safety Laws, and
(xi) except as disclosed on Schedule 2.11(b) Company has all the permits and
----------------
licenses required to be issued under Federal, State or local laws regarding
Environmental and Safety Laws and is in full compliance with the terms and
conditions of those permits except where such non-compliance would not have a
Company Material Adverse Effect.
2.12 Taxes.
-----
(a) Company and each of its subsidiaries has timely filed all
Tax Returns (as defined below) that it was required to file, and such Tax
Returns are true, correct and complete in all material respects. All Taxes (as
defined below) shown to be payable on such Tax Returns or on subsequent
assessments with respect thereto have been paid in full on a timely basis, and
no other Taxes are payable by Company or any subsidiary with respect to any
period ending prior to the date of this Agreement, whether or not shown due or
reportable on such Tax Returns, other than Taxes for which adequate accruals
have been provided in the Company Financial Statements or amounts payable with
respect to periods or portions of periods after the Company Balance Sheet Date.
Company and each of its subsidiaries has withheld and paid over all Taxes
required to have been withheld and paid over, and complied with all information
reporting and backup withholding requirements, including maintenance of required
records with respect thereto. Neither Company nor any subsidiary has any
material liability for unpaid Taxes accruing after the date of its latest
Financial Statements except for Taxes incurred in the ordinary course of
business. Except as disclosed in the Company SEC Documents, there are no liens
for Taxes on the properties of Company or any of its subsidiaries, other than
liens for Taxes not yet due and payable.
(b) Except as disclosed in the Company SEC Documents, no Tax
Returns of Company or any subsidiary have been audited. Company has delivered or
made available to Parent correct and complete copies of all Tax Returns filed,
examination reports, and statements of deficiencies assessed or agreed to by
Company or any of its subsidiaries for the last five (5) years. Except as
disclosed in the Company SEC Documents, neither Company nor any of its
subsidiaries has waived any statute of limitations in respect of any Tax or
agreed to an extension of time with respect to any Tax assessment or deficiency.
(c) Except as disclosed in the Company SEC Documents, neither
Company nor any of its subsidiaries is a party to or bound by any tax indemnity
agreement, tax sharing agreement or similar contract. Neither Company nor any of
its subsidiaries is a party to any joint venture, partnership, or other
arrangement or contract which could be treated as a partnership or "disregarded
entity" for United States federal income tax purposes.
(d) Neither Company nor any of its subsidiaries is obligated
under any agreement, contract or arrangement that may result in the payment of
any amount that would not be deductible by reason of Sections 162(m) or 280G of
the Code.
(e) Neither Company nor any of its subsidiaries has been or, to
its knowledge, 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 Code or any comparable
17
provision under state or foreign Tax laws as a result of transactions, events or
accounting methods employed prior to the Merger other than any such adjustments
required as a result of the Merger. Neither Company nor any of its subsidiaries
has filed or will file any consent to have the provisions of paragraph 341(f) of
the Code (or comparable provisions of any state Tax laws) apply to Company or
such subsidiaries. Neither Company nor any of its subsidiaries has filed any
disclosures under Section 6662 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 Company nor any of its
subsidiaries is currently or has been a United States real property holding
corporation (within the meaning of Section 897(c)(2) of the Code) during the
applicable periods specified in Section 897(c)(1)(A)(ii) of the Code.
(f) Neither Company nor any of its subsidiaries has incurred any
liability for Taxes pursuant to Section 1374 or 1375 of the Code (and any
predecessor provision and any similar provision of applicable state or local or
other Tax law).
(g) Neither Company nor any of its subsidiaries has been the
"distributing corporation" (within the meaning of Section 355(c)(2) of the Code)
with respect to a transaction described in Section 355 of the Code within the
three (3) year period ending as of the date of this Agreement.
(h) For purposes of this Agreement, the following terms have the
following meanings: "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 Governmental Entity (a "Tax Authority") responsible for the
-------------
imposition of any such tax (domestic or foreign), (ii) any liability for the
payment of any amounts of the type described in (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 (i) or (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. As used herein, "Tax Return" shall mean any return, statement,
----------
report or form (including, without limitation, estimated tax returns and
reports, withholding tax returns and reports and information reports and
returns) required to be filed with respect to Taxes.
2.13 Employee Benefit Plans.
----------------------
(a) The following terms shall be defined as follows:
(i) "Defined Benefit Plan" shall mean either a plan
--------------------
described in Section 3(35) of ERISA or a plan subject to the minimum funding
standards set forth in Section 302 of ERISA and Section 412 of the Code.
18
(ii) "ERISA" shall mean the Employee Retirement Income
-----
Security Act of 1974, as amended.
(iii) "Member of the Controlled Group" shall mean each
------------------------------
trade or business, whether or not incorporated, that would be treated as a
single employer with Company under Section 4001 of ERISA or Section 414(b), (c),
(m) or (o) of the Code.
(iv) "Multiemployer Plan" shall mean a plan described in
------------------
Section 3(37) of ERISA.
(b) Schedule 2.13(b) lists (i) all material "employee benefit
----------------
plans" within the meaning of Section 3(3) of ERISA, (ii) all employment
agreements, including, but not limited to, any individual benefit arrangement,
policy or practice with respect to any current or former employee or director of
Company or Member of the Controlled Group, and (iii) all other employee benefit,
bonus or other incentive compensation, stock option, stock purchase, stock
appreciation, severance pay, lay-off or reduction in force, change in control,
sick pay, vacation pay, salary continuation, retainer, leave of absence,
educational assistance, service award, employee discount, fringe benefit plans,
arrangements, policies or practices, whether legally binding or not, which
Company or any Member of the Controlled Group maintains, to which any of them
contributes, or for which any of them has any obligation or liability
(collectively, the "Plans").
-----
(c) None of the Plans is a Defined Benefit Plan, and neither
Company nor any Member of the Controlled Group has ever sponsored, maintained or
contributed to, or ever been obligated to contribute to, a Defined Benefit Plan.
(d) None of the Plans is a Multiemployer Plan, and neither
Company nor any Member of the Controlled Group has ever contributed to, or ever
been obligated to contribute to, a Multiemployer Plan.
(e) Company does not maintain or contribute to any plan that
provides health benefits to an employee after the employee's termination of
employment or retirement except as required under Section 4980B of the Code and
Sections 601 through 608 of ERISA.
(f) Each Plan which is an "employee benefit plan," as defined in
Section 3(3) of ERISA, complies in all material respects by its terms and in
operation with the requirements provided by any and all statutes, orders or
governmental rules and regulations currently in effect and applicable to the
Plan, including but not limited to ERISA and the Code.
(g) All reports, forms and other documents required to be filed
with any government entity or furnished to employees, former employees or
beneficiaries with respect to any Plan (including without limitation, summary
plan descriptions, Forms 5500 and summary annual reports) have been timely filed
and furnished and are accurate, except for those instances which, either
individually or in the aggregate, would not have a Company Material Adverse
Effect.
19
(h) Each of the Plans that is intended to qualify under Section
401(a) of the Code has been determined by the Internal Revenue Service so to
qualify after January 1, 1989, and each trust maintained pursuant thereto has
been determined by the Internal Revenue Service to be exempt from taxation under
Section 501 of the Code. Nothing has occurred since the date of the Internal
Revenue Service's favorable determination letter that could adversely affect the
qualification of the Plan and its related trust. Company and each Member of the
Controlled Group have timely amended and operated each of the Plans to comply
with the Small Business and Job Protection Act of 1996 and subsequent
legislation enacted through the date hereof, and Section 501 of the Code.
(i) All contributions for all periods ending prior to the
Closing Date (including periods from the first day of the current plan year to
the Closing Date) have been made prior to the Closing Date by Company or have
been reserved against on the Company Financial Statements.
(j) All insurance premiums have been paid in full, subject only
to normal retrospective adjustments in the ordinary course, with regard to the
Plans for plan years ending on or before the Closing Date, except for those
instances which, either individually or in the aggregate, would not have a
Company Material Adverse Effect.
(k) With respect to each Plan: (i) to Company's knowledge, no
prohibited transactions (as defined in Section 406 or 407 of ERISA or Section
4975 of the Code) have occurred for which a statutory exemption is not
available; (ii) no action or claims (other than routine claims for benefits made
in the ordinary course of Plan administration for which Plan administrative
review procedures have not been exhausted) are pending, or to the knowledge of
Company, threatened or imminent against or with respect to the Plan, any
employer who is participating (or who has participated) in any Plan or any
fiduciary (as defined in Section 3(21) of ERISA), of the Plan; (iii) neither
Company, nor any fiduciary has any knowledge of any facts that could give rise
to any such action or claim; and (iv) it provides that it may be amended or
terminated at any time and, except for benefits protected under Section 411(d)
of the Code, all benefits payable to current, terminated employees or any
beneficiary may be amended or terminated by Company at any time without
liability other than ordinary administrative expenses.
(l) Neither Company nor, to the knowledge of Company, any Member
of the Controlled Group has any material liability or is, to the knowledge of
Company, threatened with any material liability (whether joint or several) (i)
for any excise tax imposed by Sections 4971, 4975, 4976, 4977 or 4979 of the
Code, or (ii) to a fine under Section 502 of ERISA.
(m) All of the Plans, to the extent applicable, are in material
compliance with the continuation of group health coverage provisions contained
in Section 4980B of the Code and Sections 601 through 608 of ERISA.
(n) True, correct and complete copies of all documents creating
or evidencing any Plan have been delivered or made available to Purchaser, and
true, correct and
20
complete copies of all reports, forms and other documents required to be filed
with any governmental entity or furnished to employees, former employees or
beneficiaries (including, without limitation, summary plan descriptions, Forms
5500 and summary annual reports for all plans subject to ERISA, but excluding
individual account statements and tax forms) have been delivered to Purchaser.
There are no negotiations, demands or proposals which are pending or have been
made which concern matters now covered, or that would be covered, by the type of
agreements required to be listed in Schedule 2.13(b).
----------------
(o) All expenses and liabilities relating to all of the Plans
have been, and will on the Closing Date be fully and properly accrued on
Company's books and records and disclosed in accordance with GAAP and in Plan
financial statements.
2.14 Certain Agreements Affected by the Merger. Neither the execution
-----------------------------------------
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any material payment (including, without
limitation, any severance, unemployment compensation, golden parachute or bonus
payment) becoming due to any director, officer, agent or employee of Company or
any of its subsidiaries or any other third party, (ii) materially increase any
benefits otherwise payable by Company or any of its subsidiaries to their
respective employees or (iii) result in the acceleration of the time of payment
or vesting of any such benefits.
2.15 Employee Matters.
----------------
(a) 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, and are not engaged in any unfair labor practice, except where the
failure to be in compliance or the engagement in unfair labor practices has not
had and would not be reasonably expected to have a Company Material Adverse
Effect. Company and each of its subsidiaries have in all material respects
withheld all amounts required by law or by agreement to be withheld from the
wages, salaries, and other payments to their respective employees; and are not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing.
(b) To Company's knowledge, neither Company nor any of its
subsidiaries is liable for any payment to any trust or other fund or to any
governmental or administrative authority, 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
Company or any of its subsidiaries under any workers' compensation plan or
policy or for long term disability that are not covered by insurance. Neither
Company or any of its subsidiaries has any obligations under COBRA with respect
to any former employees or qualifying beneficiaries thereunder, except
obligations that would not have a Material Adverse Effect on Company. There are
no controversies pending or, to the knowledge of Company or any of its
subsidiaries, threatened, between Company or any of its subsidiaries and any of
their
21
respective employees, which controversies have or could reasonably be expected
to result in an action, suit, proceeding, claim, arbitration or investigation
against Company before any agency, court or tribunal, foreign or domestic except
for such action, suit, proceeding, claim, arbitration or investigation that
would not have a Material Adverse Effect on Company. Neither Company nor any of
its subsidiaries is a party to any collective bargaining agreement or other
labor union contract, nor does Company or any of its subsidiaries know of any
activities or proceedings of any labor union or organization of any such
employees.
(c) To Company's or any of its subsidiaries' knowledge, no
employees of Company or its subsidiaries are in violation of any term of any
employment contract, patent disclosure agreement, enforceable noncompetition
agreement, or any enforceable restrictive covenant to a former employer relating
to the right of any such employee to be employed by Company or any of its
subsidiaries because of the nature of the business conducted or presently
proposed to be conducted by Company or its subsidiaries or to the use of trade
secrets or proprietary information of others. No employees which are considered
key to the operations or the business of Company or any of its subsidiaries have
given notice to Company or its subsidiaries, nor is Company or any of its
subsidiaries otherwise aware that any such employee intends to terminate his or
her employment with Company or its subsidiaries.
2.16 Insurance. Company and each of its subsidiaries have made
---------
available to Parent all material policies of insurance. 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 Company and its subsidiaries are otherwise in compliance with the terms of
such policies and bonds. Neither Company nor any of its subsidiaries has
knowledge of any threatened termination of, or material premium increase with
respect to, any of such policies.
2.17 Compliance With Laws. Each of Company and its subsidiaries has
--------------------
complied with, is not in violation of, and has not received any 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, except for such violations or failures to comply as
could not be reasonably expected to have a Company Material Adverse Effect.
2.18 Brokers' and Finders' Fees. Except for Banc of America
--------------------------
Securities, 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, the Merger or any other transaction contemplated hereby. Company has
furnished or made available to Parent accurate and complete copies of all
agreements under which any such finders' fees or agents' commissions or
investment bankers' fees or any similar charges have been paid or may become
payable to, and all indemnification and other agreements related to the
engagement of Banc of America Securities.
2.19 Affiliates Agreements; Stockholder Voting Agreements; Irrevocable
-----------------------------------------------------------------
Proxies. Each Person and/or entity deemed to be an "affiliate" within the
-------
meaning of Rule 145
22
and as defined in Rule 501 promulgated under the Securities Act (an "Affiliate")
----------
of Company will have executed within fifteen (15) days of the Execution Date, an
Affiliates Agreement substantially in the form attached hereto as Exhibit B-1
-----------
("Company Affiliates Agreement"); and certain directors and officers of Company
----------------------------
have agreed in writing to vote for approval of the Merger and this Agreement
pursuant to a Stockholder Voting Agreement substantially in the form attached
hereto as Exhibit C ("Stockholder Voting Agreement"), and pursuant to
--------- ----------------------------
Irrevocable Proxies attached thereto as Attachment A ("Irrevocable Proxies").
-------------------
2.20 Vote Required. The affirmative vote of the holders of a majority
-------------
of the shares of Company Common Stock outstanding on the record date set for the
Company Stockholders Meeting is the only vote of the holders of any of Company's
Capital Stock necessary to approve this Agreement and the transactions
contemplated thereby and hereby.
2.21 Board Approval. The Board of Directors of Company has (i)
--------------
approved this Agreement and the Merger, (ii) determined that the Merger is in
the best interests of the stockholders of Company and is on terms that are fair
to such stockholders, and (iii) recommended that the stockholders of Company
approve this Agreement and the Merger.
2.22 Customers and Suppliers. Schedule 2.22 lists the top 10
----------------------- -------------
customers of Company in terms of gross revenues during the twelve (12) months
prior to the Execution Date; and no such customer and no supplier of Company or
any of its subsidiaries has canceled or otherwise terminated or made any written
threat to Company or any of its subsidiaries to cancel or otherwise terminate
its relationship with Company or any of its subsidiaries, or at any time on or
after the Company Balance Sheet Date has decreased materially its services or
supplies to Company or any of its subsidiaries in the case of any such supplier,
or its usage of the services or products of Company in the case of such
customer, and to Company's or any of its subsidiaries knowledge, no such
supplier or customer intends to cancel or otherwise terminate its relationship
with Company or any of its subsidiaries or to decrease materially its services
or supplies to Company or any of its subsidiaries or its usage of the services
or products of Company or any of its subsidiaries, as the case may be. Neither
Company or any of its subsidiaries has knowingly breached, so as to provide a
benefit to Company or any of it subsidiaries that was not intended by the
parties, any agreement with, or engaged in any fraudulent conduct with respect
to, any customer or supplier of Company or any of its subsidiaries.
2.23 Material Contracts. Except (i) as set forth in the Company SEC
------------------
Documents filed prior to the date of this Agreement; (ii) as set forth in
Schedule 2.10; (iii) as set forth in this Schedule 2.23 (the contracts in (i),
------------- -------------
(ii), and (iii) being collectively referred to herein as the "Material
--------
Contracts"); and (iv) for this Agreement, and other contracts and agreements
---------
which individually or in the aggregate are not material to Company's or any of
its subsidiaries' businesses, as of the date of this Agreement, Company is not a
party to or bound by:
(a) any distributor, sales, agency or manufacturer's
representative, consulting, joint-venture, or partnership contract or joint R&D
or technology sharing arrangements;
23
(b) any continuing contract for the purchase of materials,
supplies, equipment or services involving in the case of any such contact more
than $200,000 over the life of the contract;
(c) any trust indenture, mortgage, promissory note, loan
agreement or other contract for the borrowing of money, any currency exchange,
commodities or other hedging arrangement or any leasing transaction of the type
required to be capitalized in accordance with GAAP;
(d) any contract for capital expenditures in excess of $200,000
in the aggregate;
(e) any contract limiting the freedom of Company to engage in
any line of business, to acquire any product or asset from any other Person, to
sell any product or asset to, or to perform any service for, any Person, or to
compete with any other Person (as that term is defined in the Exchange Act);
(f) any confidentiality, secrecy or non-disclosure contract,
which individually or in the aggregate, materially affects or could be
reasonably anticipated to materially affect the business or operations of
Company;
(g) any contract pursuant to which Company is a lessor of real
property or any machinery, equipment, motor vehicles, office furniture, fixtures
or other personal property involving in the case of any such personal property
contact more than $200,000 over the life of the contract;
(h) any contract with any Person with whom Company does not deal
at arm's length;
(i) any contract which provides for the indemnification of any
officer, director, employee or agent; or
(j) any agreement of guarantee, support, indemnification,
assumption or endorsement of, or any similar commitment with respect to, the
obligations, liabilities (whether accrued, absolute, contingent or otherwise) or
indebtedness of any other Person.
2.24 No Breach of Material Contracts. All Material Contracts are in
-------------------------------
the written form previously provided or made available to Parent. Company has
performed all of the material obligations required to be performed by it as of
the date hereof and is entitled to all benefits under, and, to Company's
knowledge, is not alleged to be in material breach or default in respect of any
Material Contract. To Company's knowledge, each of the Material Contracts is in
full force and effect, unamended except as provided or made available to Parent,
and there exists no default or event of default or event, occurrence, condition
or act, with respect to Company or, to Company's knowledge, with respect to the
other contracting party, which, with the giving of notice, the lapse of the time
or the happening of any other event or conditions, would become a default or
event of default under any Material Contract or would give any
24
Person the right to exercise any remedy, or the right to any rebate, chargeback,
penalty or change in delivery schedule, except to the extent such defaults,
remedies, penalties or changes have not had and would not be reasonably expected
to have a Material Adverse Effect on Company.
2.25 Material Third Party Consents. Schedule 2.25 lists all contracts
----------------------------- -------------
that require a novation or consent to the Merger or change of control, as the
case may be, prior to the Effective Time so that such contracts may remain in
full force and effect after the Closing (the "Contracts Requiring Novation or
-------------------------------
Consent to Change of Control")which, if no novation occurs or if no consent to
----------------------------
the Merger or change of control is obtained, would have a Material Adverse
Effect on Parent's ability to operate the business in the same manner as the
business was operated by Company prior to the Effective Time.
2.26 Real Property.
-------------
(a) Neither Company nor any of its subsidiaries currently owns
or has ever owned any real property.
(b) To the extent not disclosed in the Company SEC Documents,
Schedule 2.26 sets forth a list of all leases, licenses or similar agreements to
-------------
which Company or any of its subsidiaries is a party, that are for the use or
occupancy of real estate owned by a third party ("Leases") (copies of which have
------
previously been furnished to Parent), in each case, setting forth: (i) the
lessor and lessee thereof and the commencement date, term and renewal rights
under each of the Leases, and (ii) the street address or legal description of
each property covered thereby (the "Leased Premises"). The Leases are in full
---------------
force and effect in all material respects, to the knowledge of Company, and have
not been amended except as disclosed in the Company SEC Documents or Schedule
--------
2.26 and, Company is not, and, to the knowledge of Company, no other party
----
thereto, is in default or breach under any such Lease and no event has occurred
by Company that, with the passage of time or the giving of notice or both, would
cause a breach of or default of Company under any of such Leases, except to the
extent such default would not have a Material Adverse Effect on Company. Either
Company or its subsidiaries have valid leasehold interests in each of the Leased
Premises, which leasehold interest is free and clear of any liens, covenants and
easements or title defects of any nature whatsoever other than Permitted Liens.
(c) With respect to the Leased Premises, (i) there are no
pending or, to the knowledge of Company, threatened condemnation proceedings,
suits or administrative actions relating to any such parcel or other matters
affecting adversely the current use, occupancy or value thereof, (ii) to the
Company's knowledge, all improvements, buildings and systems on any such parcel
are in good repair and safe for their current occupancy and use, (iii) to the
knowledge of Company, there are no contracts or agreements (whether oral or
written) granting to any party or parties the right of use or occupancy of any
such parcel, and there are no parties (other than Company) in possession of any
such parcel, (iv) to the knowledge of Company, there are no outstanding options
or rights of first refusal or similar rights to purchase any such parcel or any
portion thereof or interest therein, (v) to the knowledge of Company, all
facilities located on each such parcel are supplied with utilities and other
services necessary for their ownership, operation
25
or use, currently or as currently proposed by Company, all of which services are
adequate in accordance with all applicable laws, ordinances, rules and
regulations, and (vi) to the Company's knowledge, each such parcel abuts on and
has adequate direct vehicular access to a public road and there is no pending
or, to the knowledge of Company, threatened termination of such access.
2.27 Registration Statement; Proxy Statement/Proxy. The information
---------------------------------------------
relating to Company which is provided by Company (including any information
previously provided by Company in the Company SEC Documents) for inclusion in
the registration statement on Form S-4 (or such other successor form as may be
appropriate) pursuant to which the shares of Parent Common Stock to be issued in
the Merger will be registered with the SEC, including any amendments or
supplements thereto (the "Registration Statement") shall not, at the time the
----------------------
Registration Statement is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The information
relating to Company which is provided by Company (including any information
previously provided by Company in the Company SEC Documents) for inclusion in
the proxy statement/prospectus to be set to the stockholders of Company in
connection with the meeting of the Company stockholders (the "Company
-------
Stockholders Meeting"), as may be amended or supplemented (the "Proxy
-------------------- -----
Statement") shall not, on the date the Proxy Statement is first mailed to the
---------
stockholders of Company, at the time of the Company Stockholders Meeting and at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; or omit to state a material fact necessary to correct any
statement in an earlier communication with respect to the solicitation of
proxies for the Company Stockholders Meeting which has become false or
misleading. Notwithstanding the foregoing, Company makes no representation,
warranty or covenant with respect to any information supplied by Parent and
relating to Parent which is contained in the Registration Statement or the Proxy
Statement.
2.28 Tax Matters. To Company's knowledge neither Company nor any of
-----------
its Affiliates has taken or agreed to take any action, nor does Company have
knowledge of any fact or circumstance, that would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
2.29 Opinion of Financial Advisor. Company has been advised in
----------------------------
writing by its financial advisor, Banc of America Securities, that in such
advisor's opinion, as of the date hereof, the consideration to be received by
the stockholders of Company is fair from a financial point of view, to the
stockholders of Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
-------------------------------------------------------
In this Agreement, any reference to a "Parent Material Adverse Effect" any
------------------------------
change, event or effect that is materially adverse to the condition (financial
or otherwise), properties, assets
26
(including intangible assets), liabilities, business, operations or results of
operations of Parent and its subsidiaries, taken as a whole; provided, however,
that none of the following shall be deemed in themselves, either alone or in
combination, to constitute, and none of the following shall be taken into
account in determining whether there has been or will be, a Parent Material
Adverse Effect: (a) any change in the market price or trading volume of Parent's
stock after the date hereof; (b) any adverse change, effect, event, occurrence,
state of facts or development to the extent attributable to the announcement or
pendency of the Merger (including any cancellation of or delays in customer
orders, any reduction in sales, any disruption in supplier, distributor, partner
or similar relationships or any loss of employees); (c) any adverse change,
effect, event, occurrence, state of facts or development attributable to
conditions affecting the industries as a whole in which Parent participates, the
U.S. economy as a whole or the foreign economies as a whole in any locations
where Parent or any of its subsidiaries has material operations or sales; or (d)
any adverse change, effect, event, occurrence, state of facts or development
arising from or relating to compliance with the terms of, or the taking of any
action required by, this Agreement.
Except as disclosed in a document of even date herewith and delivered by
Parent to Company prior to the execution and delivery of this Agreement and
referring to the representations and warranties in this Agreement (the "Parent
------
Disclosure Schedule"), provided that any disclosure shall qualify the section
-------------------
number referred to in the Parent Disclosure Schedule as well as all other
sections in this Article III when it is reasonably apparent from a reading of
such disclosure that it also qualifies or applies to such other sections,
provided further that Parent shall make all reasonable efforts to specifically
cross reference in the Parent Disclosure Schedule all sections where a
particular disclosure qualifies or applies, Parent represents and warrants to
Company as follows:
27
3.1 Organization, Standing and Power. Parent and each of its
--------------------------------
subsidiaries, including Merger Sub, are corporations duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of organization. Each of Parent and its subsidiaries, including Merger Sub, have
the corporate power to own their respective properties and to carry on their
respective businesses as now being conducted and as proposed to be conducted and
are each duly qualified to do business and are in good standing in each
jurisdiction in which the failure to be so qualified and in good standing would
have a Parent Material Adverse Effect. Neither Parent nor any of its
subsidiaries, including Merger Sub, is in violation of any of the provisions of
its respective Articles of Incorporation or Bylaws or equivalent organizational
documents. Parent 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. Except as disclosed in the Parent SEC
Documents (as defined in Section 3.4 hereof), Parent 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, joint venture or other business association or entity,
excluding securities in any publicly traded company held for investment by
Parent or any of it subsidiaries in accordance with and pursuant to the Parent's
formal investment policy and comprising less than 5% of the outstanding stock of
such company.
3.2 Capital Structure.
-----------------
(a) The authorized capital stock of Parent consists of (i)
240,000,000 shares of Common Stock, no par value, of which there were
131,293,460 shares issued and outstanding as of the close of business on the day
two days prior to the Execution Date, and (ii) 10,000,000 shares of Preferred
Stock, no par value, of which there were no shares issued and outstanding as of
the close of business on the day two days prior to the Execution Date. 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, other than pursuant to the exercise of options outstanding as of
such date under the Parent 1992 Stock Option Plan (the "Parent Stock Option
-------------------
Plan"), and the Parent 1992 Employee Stock Purchase Plan (the "Parent ESPP").
---- -----------
The authorized capital stock of Merger Sub consists of 1,000 shares of common
stock, $0.001 par value, all of which are issued and outstanding and held by
Parent. The shares of Parent Common Stock to be issued in the Merger will be
duly authorized, validly issued, fully paid and nonassessable and registered
with the SEC pursuant to the Securities Act.
(b) All outstanding shares of Parent Capital Stock are duly
authorized, validly issued, fully paid and non-assessable and are free of any
liens or encumbrances, other than any liens or encumbrances created by or
imposed upon the holders thereof, and are not subject to preemptive rights or
rights of first refusal created by statute, the Articles of Incorporation or
Bylaws of Parent or any agreement to which Parent is a party or by which it is
bound. As of the close of business on September 30, 2000, Parent has reserved
(i) 33,345,000 shares of Common Stock for issuance to directors, employees and
consultants pursuant to the Parent 1992 Stock Option Plan, of which 12,621,201
shares have been issued pursuant to option exercises or direct stock purchases,
13,450,269 shares are subject to outstanding, unexercised options, and 7,273,530
shares are available for issuance thereunder (iii) 3,900,000 shares of
28
Common Stock under the Parent ESPP, of which 2,963,871 shares have been issued.
On the Execution Date, except as set forth in the Parent SEC Documents and
except for (i) the rights created pursuant to this Agreement, the Parent Stock
Option Plan, and the Parent ESPP and (ii) Parent's right to repurchase any
unvested shares under the Parent Stock Option Plan, there are no other options,
warrants, calls, rights, commitments or agreements of any character to which
Parent is a party or by which it is bound obligating Parent to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased
or redeemed, any shares of Parent Capital Stock or obligating Parent 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.
3.3 Authority.
---------
(a) Parent and Merger Sub each 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 each of Parent and
Merger Sub, as applicable.
(b) This Agreement has been duly executed and delivered by each
of Parent and Merger Sub, as applicable, and each constitutes the valid and
binding obligations of Parent and Merger Sub enforceable against each by Company
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally and by general
principles of equity. The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby and thereby 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 Articles of Incorporation or Bylaws of Parent or Merger
Sub, 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,
Merger Sub or their respective properties or assets, except where such conflict,
violation, default, termination, cancellation or acceleration with respect to
the foregoing provisions in subsection (ii) would not have had and would not be
reasonably expected to have a Parent Material Adverse Effect.
(c) Except as otherwise would not have a Parent Material Adverse
Effect, no consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required with respect to
Parent or Merger Sub 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 and thereby, except for (i) the filing
of the Certificate of Merger, together with the required officers' certificates,
as provided in Section 1.2, (ii) the filing of a Form 8-K with the SEC and the
NASD within fifteen (15) days after the Closing Date, (iii) the filing with the
SEC and the NASD of the Registration Statement, (iv) any filings as may be
required under applicable federal, state and local securities laws and
29
the securities laws of any foreign country, (v) such filings as may be required
under HSR, (vi) the filing with the NASDAQ Stock Market of a Notification Form
for Listing of Additional Shares with respect to the shares of Parent Common
Stock issuable upon conversion of the Company Common Stock in the Merger and
upon exercise of the options under the Company Stock Option Plans and assumed by
Parent, (vii) the filing of a registration statement on Form S-8 with the SEC,
or other applicable form covering the shares of Parent Common Stock issuable
pursuant to outstanding options under the Company Stock Option Plans and assumed
by Parent, (viii) the filing of a Form S-4 Registration Statement with the SEC
in accordance with the Securities Act; and (ix) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not prevent, materially alter or delay any of the transactions
contemplated by this Agreement.
30
3.4 SEC Documents; Financial Statements. Parent has made available to
-----------------------------------
Company 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 filing filed with the SEC by Parent since January 1, 1997
(collectively, the "Parent SEC Documents"). In addition, Parent has made
--------------------
available to Company all exhibits to the Parent SEC Documents filed prior to the
date hereof, and will promptly make available to Company all exhibits to any
additional Parent SEC Documents filed prior to the Effective Time. As of their
respective filing dates, the Parent SEC Documents complied in all material
respects with the requirements of the Exchange Act and the Securities Act. The
financial statements of Parent, including the notes thereto, included in the
Parent SEC Documents (the "Parent 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 GAAP applied on a
basis consistent 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-Qs, as permitted by Form
10-Q of the SEC). The Parent Financial Statements fairly present the
consolidated financial condition and operating results of Parent as of the dates
and for the periods indicated therein (subject, in the case of unaudited
statements, to normal, recurring year-end adjustments).
3.5 Tax Matters. To Parent's knowledge neither Parent nor any of its
-----------
Affiliates has taken or agreed to take any action, nor does Parent have
knowledge of any fact or circumstance, that would prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
3.6 Absence of Undisclosed Liabilities. Parent 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
balance sheet or in the notes to the Parent Financial Statements included in the
Parent Financial Statements in Parent's Quarterly Report on Form 10-Q for the
period ended on June 30, 2000 (the "Parent Balance Sheet Date"), (ii) those
-------------------------
incurred in the ordinary course of business since the Parent Balance Sheet Date
and consistent with past practice, (iii) those incurred in connection with the
execution of this Agreement, and (iv) those disclosed on Schedule 3.6.
------------
3.7 Litigation. Except as set forth in the Parent SEC Documents, as
----------
of the date of this Agreement, there is no material private or governmental
action, suit, proceeding, claim, arbitration, governmental investigation, or to
the knowledge of Parent private investigation, pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Parent or any of its
subsidiaries, threatened against Parent, any of its subsidiaries or any of their
respective properties or any of their respective officers or directors (in their
capacities as such). There is no judgment, decree or order against Parent or
any of its subsidiaries, or, to the knowledge of Parent, or any of its
subsidiaries, or any of their respective directors or officers (in their
capacities as such), that could prevent, enjoin, or materially alter or delay
any of the transactions contemplated by this Agreement, or that could reasonably
be expected to have a Parent Material Adverse Effect. Schedule 3.7 of the
------------
Parent Disclosure Schedule also lists all
31
material litigation that Parent has pending as of the date of this Agreement
against other parties which is not disclosed in the Parent SEC Documents.
3.8 Board and Shareholder Approval. The Board of Directors of Parent
------------------------------
has (i) approved this Agreement and the Merger, and (ii) determined that the
Merger is in the best interests of the shareholders of Parent and is on terms
that are fair to such shareholders. No action is necessary on the part of the
shareholders of Parent in connection with this Agreement or the Merger.
3.9 Registration Statement; Proxy Statement/Proxy. The information
---------------------------------------------
relating to Parent which is provided by Parent (including any information
previously provided by Parent in the Parent SEC Documents) for inclusion in the
Registration Statement shall not, at the time the Registration Statement is
declared effective by the SEC and at all times subsequent thereto (through and
including the Effective Date), contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The information relating to Parent which is
provided by Parent (including any information previously provided by Parent in
the Parent SEC Documents) for inclusion in the Proxy Statement shall not, on the
date the Proxy Statement is first mailed to the stockholders of Company, at the
time of the Company Stockholders Meeting and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; or omit
to state a material fact necessary to correct any statement in an earlier
communication with respect to the solicitation of proxies for the Company
Stockholders Meeting which has become false or misleading. Notwithstanding the
foregoing, Parent makes no representation, warranty or covenant with respect to
any information supplied by Company or relating to Company which is contained in
the Registration Statement or the Proxy Statement.
3.10 Opinion of Financial Advisor. Parent has been advised in writing
----------------------------
by its financial advisor, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated,
that in such advisor's opinion, as of the date hereof, the Exchange Ratio is
fair from a financial point of view, to Parent.
3.11 Investigation by Parent; Company's Liability. Parent has
--------------------------------------------
conducted its own independent investigation, review and analysis of the
business, operations, assets, liabilities, results of operations, financial
condition, software, technology and prospects of the Company, which
investigation, review and analysis was done by Parent and its Affiliates and, to
the extent Parent deemed appropriate, by Parent's representatives. Parent
acknowledges that it and its representatives have been provided adequate access
to the personnel, properties, premises and records of the Company and the
Company Subsidiaries as Parent has requested for such purpose. In entering into
this Agreement, Parent acknowledges that it has relied solely upon the
aforementioned investigation, review and analysis and not on any factual
representations or opinions of Company's or any of Company's representatives
(except the specific representations
32
and warranties of Company set forth in this Agreement and the Company Disclosure
Schedules). Parent has formed an independent judgment concerning the Company.
3.12 Absence of Certain Changes. Except as set forth in the Parent SEC
--------------------------
Documents prior to the date hereof or as expressly contemplated by this
Agreement, since the Parent Balance Sheet Date there has not occurred any
change, event or condition (whether or not covered by insurance or similar
indemnification agreement) that has resulted in, or would reasonably be expected
to result in, a Parent Material Adverse Effect.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
-----------------------------------
4.1 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, Company agrees (except to the extent expressly
contemplated by this Agreement, Section 4.2 hereof or as consented to in writing
by Parent), to carry on its business in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted. Subject to Section 4.2
hereof, Company further agrees to pay all debts and Taxes when due, subject (i)
to good faith disputes over such debts or Taxes and (ii) and the filing of
material Tax Returns (provided that Company shall inform Parent of its intention
to file such Tax Returns prior to filing), to pay or perform other obligations
when due, and to use all reasonable efforts consistent with past practice and
policies to preserve intact its present business organizations, to keep
available the services of its present officers and key employees and to preserve
its relationships with customers, suppliers, distributors, licensors, licensees
and others having business dealings with it, to the end that its goodwill and
ongoing businesses shall be unimpaired at the Effective Time, other than what
would not have a Material Adverse Effect on Company. Company agrees to promptly
notify Parent of any event or occurrence not in the ordinary course of its
business, and of any event which could reasonably be expected to have a Company
Material Adverse Effect.
4.2 Restriction on 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, except as set forth in the
Company Disclosure Schedule or as expressly contemplated by this Agreement,
Company shall not do, cause or permit any of the following, without the prior
written consent of Parent:
(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
-----------------------------------
dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of its capital stock; or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock
33
except from former employees, directors and consultants in accordance with
agreements providing for the repurchase of shares in connection with any
termination of service to it;
(c) Stock Option Plans. Accelerate, amend or change the
------------------
period of exercisability or vesting of options or other rights granted under its
stock plans or authorize cash payments in exchange for any options or other
rights granted under any of such plans;
(d) Material Contracts. Enter into any material contract or
------------------
commitment, or violate, amend or otherwise modify or waive any of the terms of
any of its material contracts other than in the ordinary course of business;
provided, further, that other than in the ordinary course of business, Company
shall not enter into any contract, commitment or agreement (i) which grants any
third party exclusive rights, (ii) which provides any third party with equity,
as compensation or otherwise, or (iii) with any third party which could
reasonably be deemed to be a competitor of Parent;
(e) Issuance of Securities. Except with respect to the
----------------------
transfer of Company securities contemplated by this Agreement, issue, deliver or
sell or authorize or propose the issuance, delivery or sale of, or purchase or
propose the purchase of, any shares of its 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 the issuance of shares of
Company Common Stock pursuant to (i) the exercise of Company Options issued and
outstanding on the date hereof, (ii) other rights therefor outstanding as of the
date of this Agreement; (iii) the issuance of no more than 200,000 additional
stock options in accordance with Parent guidelines for the issuance of the same
for such level of employee, a copy of which has been provided to Company by
Parent; and (iv) pursuant to the Company ESPP pursuant to Section 5.11(b)
hereof.
(f) Intellectual Property. Transfer to any Person or entity
---------------------
any of its Intellectual Property or any rights to its Intellectual Property
other than in the ordinary course of business consistent with past practice;
provided that Company will promptly disclose any such transfer to Parent;
(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) Dispositions. Sell, lease, license or otherwise dispose
------------
of or encumber any of its properties or assets which are material, individually
or in the aggregate, to its business, taken as a whole except for sales of
products in the ordinary course;
(i) Indebtedness. Incur any indebtedness for borrowed money
------------
under existing credit lines or otherwise, except as reasonably necessary for the
operation of its business in a manner, and in amounts, consistent with past
practices, or guarantee any such indebtedness or issue or sell any debt
securities or guarantee any debt securities of others;
(j) Leases. Enter into any material operating lease;
------
34
(k) Payment of Obligations. Pay, discharge or satisfy in an
----------------------
amount in excess of $100,000 in any one case or $500,000 in the aggregate, any
claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) arising other than in the ordinary course of business,
and other than the payment, discharge or satisfaction of liabilities reflected
or reserved against in the Company Financial Statements;
(l) Capital Expenditures. Make any capital expenditures,
--------------------
capital additions or capital improvements except in the ordinary course of
business and consistent with past practice, and not withstanding the above, make
any such expenditures, additions or improvements in excess of $250,000 in any
one case;
(m) Other Expenses. Except in the ordinary course of
--------------
business, commit to or incur any other expenses (excluding discharge of
indebtedness which is addresses in (k) above and capital expenditures which are
addressed in (l) above) in an amount in excess of $250,000 in any one case, and
except for payment of legal, accounting and banking fees in connection with this
Agreement and the transactions contemplated hereunder in the amounts set forth
in Section 6.3(e);
(n) Insurance. Materially reduce the amount of any
---------
insurance coverage provided by existing insurance policies;
(o) Termination or Waiver. Terminate or waive any right of
---------------------
any material or substantial value, except in the ordinary course of business;
(p) Employee Benefit Plans; New Hires; Pay Increases. Adopt
------------------------------------------------
or amend any employee benefit or stock purchase or option plan, except as
required under ERISA or except as necessary to maintain the qualified status of
such plan under the Code, or hire any new director level or officer level
employee, or increase the annual level of compensation of any employee, or grant
any unusual or extraordinary bonuses, benefits or other forms of direct or
indirect compensation to any employee, officer, director or consultant, except
in the ordinary course of business and in amounts consistent with past
practices;
(q) Severance Arrangements. Grant any severance or
----------------------
termination pay (i) to any director or officer or (ii) to any other employee,
except payments made pursuant to written agreements outstanding on the date
hereof;
(r) Lawsuits. Commence a lawsuit other than (i) for the
--------
routine collection of bills, (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, provided that it consults with Parent
prior to the filing of such a suit, or (iii) for a breach of this Agreement or
any Exhibits hereto;
(s) Acquisitions. Acquire or agree to acquire by merging or
------------
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or
35
otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to its business, taken as a whole;
(t) Taxes. Other than in the ordinary course of business,
-----
or as required by GAAP, 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;
(u) Revaluation. Revalue any of its assets, including
-----------
without limitation writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business;
(v) Pooling. Take any action which would reasonably be
-------
known after consultation with Company's financial and accounting advisors to
interfere with Parent's ability to account for the Merger as a "pooling of
interests"; or
(w) Other. Take or agree in writing or otherwise to take,
-----
any of the actions described in Sections 4.2(a) through (v) above, or any action
which would make any of its representations or warranties contained in this
Agreement untrue or incorrect in any material respect or prevent it from
performing or cause it not to perform its covenants hereunder.
4.3 No Solicitation.
---------------
(a) Company and its subsidiaries and the officers,
directors, employees or other agents of Company and its subsidiaries will not,
directly or indirectly, (i) take any action to solicit, initiate or
intentionally encourage any Takeover Proposal (defined below) or (ii) subject to
the terms of Section 4.3(b) below, take any action to solicit, intentionally
facilitate, intentionally encourage or engage in negotiations or discussions
with, or disclose any nonpublic information relating to Company or any of it
subsidiaries to, or afford access to the properties, books or records of Company
or any of its subsidiaries to, any Person that has advised Company in writing
that it intends to make, or that has made, a Takeover Proposal; provided,
--------
nothing herein shall prohibit Company's Board of Directors from complying with
Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard to a tender
or exchange offer.
(b) Notwithstanding Section 4.3(a) above, if an unsolicited
written Takeover Proposal, or an unsolicited written expression of interest that
can reasonably be expected to lead to a Takeover Proposal, shall be received by
the Board of Directors of Company, then (i) if none of Company, its
subsidiaries, and their respective officers, directors, employees or other
agents and representatives have violated any of the restrictions in this Section
4.3(a), and (ii) to the extent the Board of Directors of Company believes in
good faith (after consultation with its financial advisors) that such Takeover
Proposal would, if consummated, result in a transaction more favorable to
Company's stockholders than the transaction 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
-----------------
36
Company determines in good faith (after consultation with outside legal counsel)
that failure to take action with respect to such Superior Proposal would be
inconsistent with the fiduciary duties of the Board of Directors of Company to
Company stockholders under applicable law, Company and its officers, directors,
employees, investment bankers, financial advisors, attorneys, accountants and
other representatives retained by it may furnish in connection with such a
Superior Proposal information and take such other actions with respect to such
Superior Proposal as are consistent with the fiduciary obligations of Company's
Board of Directors, and such actions with respect to such Superior Proposal
shall not be considered a breach of Section 4.3(a), provided that in each such
event Company (A) notifies Parent in writing of such determination by the
Company Board of Directors, (B) provides Parent with a summary of the Superior
Proposal received from such third party so long as such disclosure does not
cause the breach of any non-disclosure or confidentiality agreements of Company
outstanding as of the Execution Date, and (C) informs Parent of all documents
containing or referring to non-public information of Company that are supplied
to such third party so long as such disclosure does not cause the breach of any
non-disclosure or confidentiality agreements of Company outstanding as of the
Execution Date. Notwithstanding the immediately preceding sentence, neither
Company nor its representatives may take any action with respect to a Superior
Proposal unless (x) the Board of Directors of Company has determined, with the
advice of Company's investment bankers, that such third party is actually
capable of making a Superior Proposal upon satisfactory completion of such third
party's review of the information supplied by Company, (y) the third party has
stated that it intends to make a Superior Proposal, and (z) Company provides
such non-public information to such third party pursuant to a non-disclosure or
confidentiality agreement at least as restrictive as the Confidentiality
Agreement (as defined in Section 5.4). Additionally Company shall not, and shall
not permit any of its officers, directors, employees or other representatives to
agree to or intentionally endorse any Takeover Proposal (including any Superior
Proposal) unless Parent or Company shall have terminated this Agreement and
Company shall have paid to Parent all amounts payable to Parent pursuant to
Section 7.3(b).
(c) Company will promptly notify Parent after receipt, but
in no event later than 24 hours from such receipt, of any Takeover Proposal or
any notice that any Person is considering making a Takeover Proposal or any
request for non-public information relating to Company or any of its
subsidiaries or for access to the properties, books or records of Company or any
of its subsidiaries by any Person that has advised Company that it may be
considering making, or that has made, a Takeover Proposal and will keep Parent
fully informed of the status of any such Takeover Proposal notice or request and
shall provide Parent with a true summary of such Takeover Proposal notice or
request.
(d) For purposes of this Agreement, "Takeover Proposal"
-----------------
means any offer or proposal for, or any indication of interest in (whether
written or oral), a merger or other business combination involving Company or
any of its subsidiaries or the acquisition of any significant equity interest
(30%) in, or a significant portion of the assets (30% or more on a consolidated
basis) of, Company or any of its subsidiaries, other than the transactions
contemplated by this Agreement.
37
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
5.1 Proxy Statement/Prospectus; Registration Statement. Promptly
--------------------------------------------------
after the execution of this Agreement, Company and Parent shall prepare, and
Parent shall file with the SEC a Registration Statement on Form S-4 (or such
other form or successor form as shall be appropriate), which complies in form
with applicable SEC requirements and shall use all reasonable efforts to cause
the Registration Statement to become effective as soon thereafter as
practicable; provided, however, that Parent shall have no obligation to agree to
account for the Merger as a "purchase" in order to cause the Registration
Statement to become effective. If, at any time prior to the Effective Time, any
event or information should be discovered by Company which should be set forth
in an amendment to the Registration Statement or a supplement to the Proxy
Statement, Company shall promptly inform Parent. Subject to the provisions of
Section 4.3, the Proxy Statement shall include the recommendation of the Board
of Directors of Company that the Company stockholders vote in favor of the
Merger and approve this Agreement; provided that such recommendation may not be
included or may be withdrawn if previously included if (i) none of Company, its
subsidiaries and their respective officers, directors, employees or other agents
and representatives violated any of the restrictions in Section 4.3(a) hereof,
(ii) Company's Board of Directors believes in good faith that a Superior
Proposal has been made, and (iii) following consultation with outside legal
counsel, Company's Board of Directors determines that the inclusion of such
recommendation or the failure to withdraw such recommendation would be
inconsistent with the fiduciary duties of the Board of Directors of Company to
the stockholders of Company under applicable laws.
5.2 Meeting of Stockholders.
-----------------------
Company shall promptly after the date hereof take all action necessary
in accordance with Delaware Law and its Certificate of Incorporation and Bylaws
to call, give notice of, convene and hold the Company Stockholders Meeting, as
promptly as practicable, and in any event within forty-five (45) days of the
Registration Statement being declared effective by the SEC. Company shall give
Parent no less than ten (10) business days advance notice of the date which
shall be set as the "record date" for the Company Stockholders eligible to vote
on this Agreement and the Merger. Company shall also 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 unless this Agreement is first terminated
by Company pursuant to Article VII hereof. Subject to Sections 4.3 and 5.1,
Company shall use commercially reasonable efforts to solicit from stockholders
of Company proxies in favor of the Merger and shall take all other action
necessary or advisable to secure the vote or consent of stockholders required by
the rules of Nasdaq or the laws of Delaware or other applicable law to effect
the Merger.
38
5.3 Access to Information; Disclosure Schedule Updates.
--------------------------------------------------
(a) Upon reasonable notice, 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 or the
earlier termination of this Agreement in accordance with its terms, provided
that such access does not cause disruption to the day-to-day operation of
Company and provided further that Parent contacts Company's Chief Financial
Officer prior to contacting any other employee of Company, to (i) all of
Company's properties, books, contracts, commitments and records, and (ii) all
other information concerning the business, properties and personnel of Company
as Parent may reasonably request. Company agrees to provide to Parent and its
accountants, counsel and other representatives copies of internal financial
statements promptly upon request.
(b) Subject to compliance with applicable law, from the
date hereof until the Effective Time or the earlier termination of this
Agreement in accordance with its terms, Company and Parent shall confer on a
regular and frequent basis to report operational matters of materiality and the
general status of ongoing operations of Company.
(c) No information or knowledge obtained in any
investigation after the Execution Date pursuant to this Section 5.3 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 Merger; provided,
however that Company shall promptly inform Parent of any such information or
knowledge obtained in its investigation which would reasonably be likely to have
a Company Material Adverse Effect. Additionally, during the period from the date
hereof and prior to the Effective Time or the earlier termination of this
Agreement in accordance with its terms, Company shall promptly notify Parent in
writing of:
(i) the discovery of any event, condition, fact
or circumstance which causes, caused, constitutes or constituted a breach of any
representation or warranty made by Company in this Agreement or any other
agreement contemplated hereby to the extent that such event, condition, fact or
circumstance would cause the condition in Section 6.3(a) of this Agreement not
to be satisfied;
(ii) any material breach of any covenant or
obligation by Company; and
(iii) any event, condition, fact or circumstance
that may make the timely satisfaction of any of the covenants or conditions set
forth in this Article V or Article VI impossible or unlikely.
(d) If any event, condition, fact or circumstances that is
required to be disclosed pursuant to Section 5.3(c) requires any material change
in Company's Disclosure Schedule, or if any such event, condition, fact or
circumstance would require such a change assuming Company's Disclosure Schedule
were dated as of the date of the occurrence, existence or discovery of such
event, condition, fact or circumstances, then Company shall promptly deliver to
Parent an update to its Disclosure Schedule specifying such change (a
"Disclosure
----------
39
Schedule Update"). Notwithstanding anything therein to the contrary, no such
---------------
update shall be deemed to supplement or amend Company's Disclosure Schedule for
the purpose of (A) determining the accuracy of any of the representations and
warranties made by such party in this Agreement, or (B) determining whether any
of the conditions set forth in Article VI has been satisfied.
(e) 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 Company's Tax
Returns and other records and workpapers relating to Taxes, provided that such
access does not cause disruption to the day-to-day operation of Company and
provided further that Parent contacts Company's Chief Financial Officer prior to
contacting any other employee of Company, and shall provide to Parent and its
representatives the following information promptly upon the request of Parent:
(i) the types of Tax Returns being filed by Company in each taxing jurisdiction,
(ii) the year of the commencement of the filing of each such type of Tax Return,
(iii) all closed years with respect to each such type of Tax Return filed in
each jurisdiction, (iv) all material Tax elections filed in each jurisdiction by
Company, (v) any deferred intercompany gain with respect to transactions to
which Company has been a party, and (vi) receipts for any Taxes paid to foreign
Tax authorities.
5.4 Confidentiality. The parties acknowledge that Parent and Company
---------------
have previously executed a (i) Confidentiality Agreement dated October 20, 2000
(the "Confidentiality Agreement"), a copy of which is attached hereto as
-------------------------
Exhibit D, which Confidentiality Agreement shall continue in full force and
---------
effect in accordance with its terms.
5.5 Public Disclosure. Company and Parent shall consult with each
-----------------
other before issuing any press releases or otherwise make any public statements
or make any other public (or non-confidential) disclosures (whether or not in
response to an inquiry) regarding the terms of this Agreement and the
transactions contemplated hereby, and neither shall issue a press release or
make any statements or disclosures without the prior written approval of the
other (which consent 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.
5.6 Consents; Cooperation.
---------------------
(a) Each of Parent and Company shall promptly apply for or
otherwise seek, and use 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 HSR. Company and Parent shall each use their
respective best efforts to obtain all necessary consents, waivers and approvals
under any of their respective 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 HSR or any other
federal or state antitrust or fair trade law.
40
(b) Each of Parent and Company shall use all 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 HSR, 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 Company shall cooperate and use all 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
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 neither party shall have any obligation to
litigate or contest any administrative or judicial action or proceeding or any
Order beyond the date of a ruling preliminarily enjoining the Merger issued by a
court of competent jurisdiction. Each of Parent and Company shall use all
commercially reasonable efforts to take such action as may be required to cause
the expiration of the notice periods under HSR or other Antitrust Laws with
respect to such transactions as promptly as possible after the execution of this
Agreement.
(c) Notwithstanding anything to the contrary in Section
5.6(a) or (b), (i) Parent shall not be required to divest any of its or its
subsidiaries' businesses, product lines or assets, or to take or agree to take
any other action or agree to any limitation where such divestiture or other
action could reasonably be expected to have a Material Adverse Effect on Parent
or of the Surviving Corporation after the Effective Time, and (ii) Company and
its subsidiaries shall not 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 where such divestiture or other action could
reasonably be expected to have a Material Adverse Effect on Company.
(d) Company shall use commercially reasonable efforts to
furnish Parent, on or prior to the Closing Date, with evidence satisfactory to
it of the consent or approval of those Persons whose consent or approval shall
be required in connection with the Merger under the contracts of Company set
forth, or required to be set forth, on Schedule 2.25.
-------------
5.7 Affiliates Agreements.
---------------------
(a) Schedule 5.7(a) sets forth those persons who may be
---------------
deemed Affiliates of Company. Company shall provide Parent with such information
and documents as Parent shall reasonably request for purposes of reviewing such
list. Company shall use its commercially reasonable efforts to deliver no later
than fifteen (15) days after the Execution Date from each of the Affiliates of
Company, a Company Affiliates Agreement in the form
41
attached hereto as Exhibit B-1. Parent and Merger Sub shall be entitled to place
-----------
appropriate legends on the certificates evidencing any Parent Common Stock to be
received by such Affiliates pursuant to the terms of this Agreement and to issue
appropriate stock transfer instructions to the transfer agent for Parent Common
Stock.
(b) Schedule 5.7(b) sets forth those persons who may be
---------------
deemed Affiliates of Parent. Parent shall provide Company such information and
documents as Company shall reasonably request for purposes of reviewing such
list. Parent shall use its commercially reasonable efforts to deliver no later
than fifteen (15) days after the Execution Date from each of the Affiliates of
Parent, a Parent Affiliates Agreement in the form attached hereto as Exhibit B-
---------
2.
-
5.8 Stockholder Voting Agreement. Company shall use its commercially
----------------------------
reasonable efforts, on behalf of Parent, and pursuant to the request of Parent,
to cause certain officers and directors of Company to execute and deliver to
Parent a Stockholder Voting Agreement substantially in the form attached hereto
as Exhibit C and an Irrevocable Proxy substantially in the form of Attachment A
---------
attached thereto concurrently with the execution of this Agreement.
5.9 FIRPTA. Company shall, on or prior to the Closing Date, provide
------
Parent with a properly executed FIRPTA Notification Letter, substantially in the
form attached hereto as Exhibit E, which states that shares of capital stock of
---------
Company do not constitute "United States real property interests" under Section
897(c) of the Code, for purposes of satisfying Parent's obligations under
Treasury Regulation Section 1.1445-2(c)(3). In addition, simultaneously with
delivery of such Notification Letter, Company shall have provided to Parent, as
agent for Company, a form of notice to the Internal Revenue Service in
accordance with the requirements of Treasury Regulation Section 1.897-2(h)(2)
and substantially in the form attached hereto as Exhibit F, along with written
---------
authorization for Parent to deliver such notice form to the Internal Revenue
Service on behalf of Company upon the Closing of the Merger.
5.10 Legal Requirements. Each of Parent and, subject to Sections 4.3
------------------
and 5.1 of this Agreement, Company, shall take all 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
and will promptly 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 will take all reasonable actions necessary to obtain (and will
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 or other Person, required to be obtained or made in
connection with the taking of any action contemplated by this Agreement.
5.11 Employee Benefit Plans.
----------------------
(a) Assumption of Company Options. At the Effective Time,
-----------------------------
the Company Stock Option Plans will be assumed by Parent and each outstanding
Company Option to purchase shares of Company Common Stock under the Company
Stock Option Plans, whether
42
vested or unvested, will be assumed by Parent and converted into an option to
purchase shares of Parent Common Stock (each a "Parent Option"). Schedule
------------- --------
5.11(a) hereto sets forth a true and complete list as of the date hereof of all
-------
holders of outstanding Company Options under each of the Company Stock Option
Plans, including the number of shares of Company 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, Company shall deliver to
Parent an updated Schedule 5.11(a) hereto current as of such date. Except as
----------------
provided below, each such Company Option so assumed by Parent under this
Agreement shall retain its respective vesting schedule under the applicable
Company Stock Option Plan and its respective stock option agreement and each
such Company Option shall continue to be subject to the terms and conditions set
forth in the applicable Company Stock Option Plan, except that (i) each 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
would be issuable upon exercise of such option immediately prior to the
Effective Time, assuming that all vesting conditions applicable to such option
were then satisfied, multiplied by the Exchange Ratio 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 Company Option will 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 Exchange Ratio,
rounded up to the nearest tenth of a cent. Consistent with the terms of the
Company Stock Option Plans and the documents governing the outstanding Company
Options under such plans, the Merger will not terminate any of the outstanding
Company Options under the Company Stock Option Plans or accelerate the
exercisability or vesting of such options or the shares of Parent Common Stock
which will be subject to those options upon the assumption of the Company
Options in connection with the Merger. It is the intention of the parties that
the Company Options assumed by Parent qualify, to the maximum extent
permissible, following the Effective Time, as incentive stock options, as
defined in Section 422 of the Code, to the extent, and only to the extent, the
Company Options so replaced qualified as incentive stock options prior to the
Effective Time. Parent shall use reasonable best efforts, within thirty (30)
days after the Form S-8 filed pursuant to Section 5.13 hereof is declared
effective, to issue to each Person who, immediately prior to the Effective Time,
was a holder of an outstanding Company Option, a copy of the effective Form S-8
and such other documents as are reasonably advisable, as evidence of the
foregoing assumption of such Company Options by Parent. The Company Board of
Directors shall, to the extent necessary, take appropriate action, prior to or
as of the Effective Time, to approve, for purposes of Section 16(b) of the
Exchange Act, the deemed disposition and cancellation of the Company Options in
the Merger. Provided that Company shall first provide to Parent the names of its
stockholders and the number of shares of Company Capital Stock or Company
Options which may be subject to Section 16(b) of the Exchange Act and any other
information reasonable requested by Parent and relating to the same, the Board
of Directors of Parent shall, prior to the Effective Time, take appropriate
action to approve, for purposes of Section 16(b) of the Exchange Act, the deemed
grant of options to purchase Parent Common Stock under the Company Options (as
assumed pursuant to this Section 5.11(a)). As of or prior to the Effective Time,
the disposition of shares of Company Common Stock by the Company executive
officers and Board members and the issuance of shares of Parent Common Stock to
43
such persons in the Merger shall also be included in the approval process of the
Boards of Directors of Company and Parent for purposes of Section 16(b) of the
Exchange Act.
(b) Company ESPP. The Company shall take all actions
------------
necessary to cause all outstanding purchase rights under the Company ESPP to be
exercised upon the earlier of (i) the next scheduled purchase date under the
Company ESPP, or (ii) 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 shares of Parent Common
Stock in the Merger. The Company shall take all actions necessary to terminate
the Company ESPP as of such exercise date, and no purchase rights shall be
subsequently granted or exercised under the Company ESPP. Employees of Company
and other Members of the Controlled Group who become employees of Parent or any
of its subsidiaries as of the Effective Time shall be permitted to participate
in the Parent ESPP commencing on the first enrollment date following the
Effective Time, subject to compliance with the eligibility provisions of such
plan (with employees receiving credit, for purposes of such eligibility
provisions, for service with the Company or any other Member of the Controlled
Group to the extent permitted by applicable law and applicable tax qualification
requirements).
(c) Termination of Employee Plans. If requested by Parent,
-----------------------------
Company shall, immediately prior to the Closing Date, terminate the Company
Plans and no further contributions shall be made to the Company Plans, provided
that, as conditions of such termination, (i) Company's employees who become
employees of Parent and/or the Surviving Corporation shall receive employee
benefits which in the aggregate are no less favorable than those provided from
time to time by Parent and its subsidiaries to their respective similarly
situated employees; and (ii) Company's employees shall be eligible to
participate in Parent's 401(k) plan immediately following the Closing Date,
subject to compliance with the eligibility provisions of such plan. Parent
and/or Surviving Corporation shall provide or cause to be provided that under
each employee benefit plan, policy, program or arrangement where service is
relevant to a determination of an employee's eligibility to participate,
vesting, or level or amount of benefits, employees of Company who become
employees of Parent and/or the Surviving Corporation shall be credited with
their period of service with Company prior to the Closing, to the extent
permitted by applicable law and applicable tax qualification requirements, and
subject to any generally applicable break in service or similar rules. Subject
to the approval of any insurance carrier and to the extent consistent with
applicable law and applicable tax qualification requirements, Parent and/or the
Surviving Corporation shall make available, or cause to be made available, to
those employees of Company who become employees of Parent and/or the Surviving
Corporation, medical, dental, disability and other welfare benefits plans and
programs, to the extent the same is offered by Parent and/or the Surviving
Corporation generally to their respective employees, without regard to any
preexisting condition limitation, actively-at-work requirement or similar
limitation, provided, and only to the extent, that any analogous restriction
applied to such employee under an analogous plan of Company had been satisfied
as of the Closing Date. In determining an employee's share of the cost of
coverage under any plan or program of Parent and/or the Surviving Corporation
for the year in which the Closing occurs, Parent and/or the Surviving
Corporation shall make commercially reasonable efforts to credit the employee
with any pre-Closing co-pays and deductibles made by or on behalf of such
employee
44
under each comparable plan maintained by Company prior to the Effective Time for
such year. Parent shall not be required to have any preexisting condition
limitation, actively-at-work requirement or similar limitation waived or to
credit any pre-Closing co-pays and deductibles made by or on behalf of such
employee unless Company (or its successor entity) or the applicable insurance
carrier makes available a HIPAA Certificate evidencing prior coverage under the
corresponding or analogous Company plan. Company shall provide to Parent (i)
executed resolutions by the Board of Directors of Company authorizing the
termination and (ii) an executed amendment to the Plans sufficient to assure
compliance with all applicable requirements of the Code and regulations
thereunder so that the tax-qualified status of the Plan will be maintained at
the time of termination.
5.12 Indemnification.
---------------
(a) For not less than (i) six (6) years, in the case of acts or
omissions under or pursuant to Section 174 of the Delaware Law and Section 8109
of Title 10 of the Delaware Code Annotated, and (ii) four (4) years, for all
other acts or omissions, after the Effective Time, Parent will, and will cause
the Surviving Corporation to, 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. Without limitation of the foregoing, in the event
any such Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter relating to this
Agreement or the transactions contemplated hereby occurring on or prior to the
Effective Time, Parent shall cause the Surviving Corporation to pay as incurred
such Indemnified Party's reasonable legal and other expenses (including the cost
of any investigation and preparation) incurred in connection therewith.
(b) For (i) six (6) years, in the case of acts or omissions
under or pursuant to Section 174 of the Delaware Law and Section 8109 of Title
10 of the Delaware Code Annotated, and (ii) four (4) years, for all other acts
or omissions after the Effective Time, Parent will, and will cause the Surviving
Corporation to, use its best efforts to 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 5.12(b), Parent shall not be
obligated to cause the Surviving Corporation to pay premiums in excess of 150%
of the amount per annum Company paid in its last full fiscal year, which amount
has been disclosed to Parent and if the Surviving Corporation is unable to
obtain the insurance required by this Section 5.12(b), it shall obtain as much
comparable insurance as possible for an annual premium equal to such maximum
amount.
45
(c) For a period of (i) six (6) years, in the case of acts or
omissions under or pursuant to Section 174 of the Delaware Law and Section 8109
of Title 10 of the Delaware Code Annotated, and (ii) four (4) years, for all
other acts or omissions, after the Effective Time, to the extent there is any
claim, action, suit, proceeding or investigation (whether commencing before or
after the Effective Time) against or involving any Indemnified Party that arises
out of or pertains to any action or omission (or alleged action or omission) in
his or her capacity as a director, officer, employee, or agent of Company which
act omission occurred prior to the Effective Time, Parent shall, and shall cause
the Surviving Corporation to, provide legal counsel and to defend such
Indemnified Party and to pay the reasonable fees and expenses of such counsel.
Parent shall, and shall cause the Surviving Corporation, to cooperate in the
defense of any such matter; provided, however, that neither the Surviving
Corporation nor Parent shall be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld, conditioned
or delayed); and provided, further, that, in the event that any claim or claims
for indemnification are asserted or made within such four-year or six-year
period, as applicable, all rights to indemnification in respect to any such
claim or claims shall continue until the final disposition of any and all such
claims.
(d) Parent shall pay all expenses, including reasonable
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 5.12 to the extent
that such Indemnified Party is determined to be entitled to indemnification
under this Section 5.12.
(e) The provisions of this Section 5.12 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and representatives.
5.13 Form S-8. Parent shall take all corporate action necessary to
--------
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon the exercise of the Company Options assumed in accordance with
Section 5.11(a). As soon as practicable and in no event more than twenty (20)
days after the Closing, Parent shall file a registration statement on Form S-8
(or any successor or other appropriate forms) with respect to the shares of
Parent Common Stock subject to such options or on another appropriate form of
registration statement for any such shares of Parent Common Stock which are not
registrable on Form S-8 and shall use its reasonable best efforts to maintain
the effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding. Company will cooperate and
assist Parent in the preparation of such registration statement(s).
5.14 NASDAQ Quotation. Parent and Company agree to continue the
----------------
quotation of Parent Common Stock and Company Common Stock, respectively, on the
Nasdaq National Market during the term of the Agreement so that, to the extent
necessary, appraisal rights will not be available to the stockholders of Company
under Section 262 of the Delaware Law.
5.15 Treatment as Reorganization. Neither Company nor Parent shall
---------------------------
take any action prior to or following the Closing that would cause the merger to
fail to qualify as a
46
"reorganization" within the meaning of Section 368(a) of the Code. Company and
Parent shall cooperate in obtaining the opinions referred to in Section 6.1(e)
hereof, including providing counsel with the representation letters also
described in Section 6.1(e).
5.16 Takeover Statutes. If any Takeover Statute shall become
-----------------
applicable to the transaction contemplated hereby, Company and the members of
the Board of Directors of Company shall grant such approvals and take such
actions as are necessary so that the Merger and the transactions contemplated
hereby may be commenced as promptly as practicable on the terms contemplated
hereby and otherwise act to eliminate or minimize the effects of such statute or
regulation in the transaction contemplated hereby, except, in each such case, to
the extent required in the exercise of the fiduciary duties of the Board of
Directors of Company under applicable law as advised by independent counsel.
5.17 Pooling Accounting. Parent and Company shall each use
------------------
reasonable efforts to cause the business combination to be effected by the
Merger to be accounted for as a pooling-of-interests. Each of Parent and Company
shall use its reasonable efforts to cause its "Affiliates" (as defined in
----------
Section 5.7) not to take any action that would adversely affect the ability of
Parent to account for the business combination to be effected by the Merger as a
pooling-of-interests.
5.18 Pooling Letters.
---------------
(a) Parent shall use all reasonable efforts to cause to be
delivered to Parent a letter of Ernst & Young LLP, Parent's independent
accountants, dated the Closing Date, to the effect that the Merger qualifies for
pooling-of-interests accounting treatment, if consummated in accordance with
this Agreement. Such letter shall be in a form reasonably satisfactory to Parent
and customary in scope and substance for letters delivered by independent public
accountants in connection with transactions of this type. Company shall provide
appropriate representations to Ernst & Young LLP as reasonably requested by
Ernst & Young LLP, customary in scope and substance for such letters.
(b) Company shall use all reasonable efforts to cause to be
delivered to Company a letter of Xxxxxx Xxxxxxxx LLP, Company's independent
accountants, dated the Closing Date, to the effect that Company is poolable in
the transactions contemplated in this Agreement, if consummated in accordance
with this Agreement. Such letter shall be in a form reasonably satisfactory to
Company and customary in scope and substance for letters delivered by
independent public accountants in connection with transactions of this type.
Parent shall provide appropriate representations to Xxxxxx Xxxxxxxx LLP as
reasonably requested by Xxxxxx Xxxxxxxx LLP, customary in scope and substance
for such letters.
47
5.19 Notices. Company shall give all notices and other information
-------
required to be given to the employees of Company, any collective bargaining unit
representing any group of employees of Company, if applicable, and any
applicable government authority under the WARN Act, the National Labor Relations
Act, the Internal Revenue Code, the Consolidated Omnibus Budget Reconciliation
Act, and other applicable law in connection with the transactions provided for
in this Agreement.
5.20 Listing of Additional Shares. Parent shall, prior to the
----------------------------
Effective Time, cause all shares of Parent Common Stock to be issued pursuant to
the terms of this Agreement to be approved for listing on the Nasdaq National
Market.
5.21 Further Assurances. Parent, Merger Sub and, subject to Sections
------------------
4.3 and 5.1 of this Agreement, Company, shall use commercially reasonable best
efforts to effectuate the transactions contemplated hereby and to fulfill and
cause to be fulfilled the conditions to closing under this Agreement. Each
party hereto, at the reasonable request of another party hereto, shall execute
and deliver such other instruments and do and perform such other acts and things
as may be necessary or desirable for effecting completely the consummation of
this Agreement and the transactions contemplated hereby.
5.22 Rights Agreement. If Company, after the date hereof, adopts or
----------------
implements any stockholder rights agreement or plan (the "Company Rights
--------------
Agreement"), Company shall take all necessary or advisable action to ensure that
---------
neither the execution and delivery of this Agreement nor the performance by the
respective parties hereto of their obligations hereunder will give rise to a
"stock acquisition date" or "distribution date" or constitute Parent or Merger
Sub an "acquiring person," or like terms as defined in any such Company Rights
Agreement. Company shall take any further action necessary prior to the
Effective Time to cause the dilutive provisions of any such Company Rights
Agreement to be inapplicable to the Merger, without any payment to holders of
rights issued under any such Company Rights Agreement.
ARTICLE VI
CONDITIONS TO THE MERGER
------------------------
No party may refuse to close if any condition remains unsatisfied where
such party's failure to fulfill its obligations under this Agreement shall have
been the cause of, or resulted in, the condition not being satisfied.
6.1 Conditions to Obligations of Each Party to Effect the Merger.
------------------------------------------------------------
The respective obligations of each party to this Agreement to consummate and
effect this Agreement and the transactions contemplated hereby shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by agreement of all the
parties hereto:
(a) Stockholder Approval. This Agreement and the Merger shall
--------------------
have been approved and adopted by the requisite vote of the Company
stockholders.
48
(b) Registration Statement. The SEC shall have declared
----------------------
the Registration Statement effective in accordance with the provisions of the
Securities Act, and shall be effective at the Effective Time, and no stop order
suspending effectiveness of the Registration Statement shall have been issued,
no action, suit, proceedings or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing.
(c) No Injunctions or Restraints; 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 authority or instrumentality, domestic or
foreign (which has jurisdiction over Company or Parent), seeking any of the
foregoing be pending; nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal. In the event an
injunction or other order shall have been issued, each party agrees to use its
reasonable efforts to have such injunction or other order lifted.
(d) Governmental Approval. Parent, Merger Sub and Company
---------------------
shall have timely obtained from each Governmental Entity all approvals, waivers
and consents, if any, necessary for consummation of or in connection with the
Merger and the several transactions contemplated hereby, including but not
limited to such approvals, waivers and consents as may be required under the
Securities Act, under state blue sky laws, and under HSR.
(e) Tax Opinion. Each of Parent and Company shall have
-----------
received written opinions of its respective legal counsel, in form and substance
reasonably satisfactory to Parent or Company, as the case may be, and dated on
or about the Closing Date to the effect that the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code and that each
of Parent, Merger Sub and Company is a "party to a reorganization" within the
meaning of Section 368(b) of the Code, and such opinions shall not have been
withdrawn; provided, however, that if Company's legal counsel does not render
such opinion, this condition shall nevertheless be deemed satisfied with respect
to Company if Parent's legal counsel renders such opinion to Parent. The parties
to this Agreement agree to make such reasonable representations as requested by
the legal counsel of Parent and/or Company for the purpose of rendering such
opinions and that such legal counsel are entitled to rely on such
representations, substantially in the form attached hereto as Exhibit G-1 and
-----------
Exhibit G-2.
-----------
6.2 Additional Conditions to Obligations of Company. The obligations
-----------------------------------------------
of Company to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, by Company:
(a) Representations, Warranties and Covenants. Except as
-----------------------------------------
disclosed in the Parent Disclosure Schedule dated the date of this Agreement,
(i) the representations and warranties of Parent in this Agreement shall be true
and correct in all material respects on and as of the Effective Time as though
such representations and warranties were made on and as of such
49
time or, in the case of representations and warranties of Parent which speak
specifically as of an earlier date, shall be true and correct as of such earlier
date, except in each case, (A) for changes contemplated by the Agreement, or (B)
where the failure to be true and correct has not had, and would not reasonably
be expected to result in, a Parent Material Adverse Effect and (ii) Parent shall
have performed and complied in all material respects with all covenants,
obligations and conditions of this Agreement required to be performed and
complied with by Parent as of the Effective Time.
(b) Certificate of Parent. Company shall have been
---------------------
provided with a certificate executed on behalf of Parent by an authorized
officer to the effect set forth in Section 6.2(a).
(c) Letter of Accountants. Company shall have received a
---------------------
letter from Xxxxxx Xxxxxxxx LLP, Company's independent accountants, dated the
Closing date, to the effect that the Merger qualifies for pooling-of-interests
accounting treatment if consummated in accordance with this Agreement.
6.3 Additional Conditions to the Obligations of Parent. The
--------------------------------------------------
obligations of Parent to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by Parent:
(a) Representations, Warranties and Covenants. Except as
-----------------------------------------
disclosed in the Company Disclosure Schedule dated the date of this Agreement,
(i) the representations and warranties of Company in this Agreement shall be
true and correct in all material respects on and as of the Effective Time as
though such representations and warranties were made on and as of such time and
or, in the case of representations and warranties of Company which speak
specifically as of an earlier date, shall be true and correct as of such earlier
date, except in each case, (A) for changes contemplated by the Agreement, or (B)
where the failure to be true and correct has not had, and would not reasonably
be expected to result in, a Company Material Adverse Effect and (ii) Company
shall have performed and complied in all material respects with all covenants,
obligations and conditions of this Agreement required to be performed and
complied with by it as of the Effective Time.
(b) Certificate of Company. Parent shall have been
----------------------
provided with a certificate executed on behalf of Company by its President to
the effect set forth in Section 6.3(a).
(c) Affiliates Agreements. Parent shall have received
---------------------
from the Affiliates of Company an executed Company Affiliates Agreement.
(d) Letter of Accountants. Parent shall have received a
---------------------
letter from Ernst & Young, LLP, Parent's independent accountants, dated the
Closing Date, to the effect that the Merger qualifies for pooling-of-interests
accounting treatment if consummated in accordance with this Agreement.
50
(e) Company Expenses. In connection with this Agreement
----------------
and the transactions contemplated hereunder, Company shall not have incurred any
expenses, costs or other fees in excess of $725,000 for all legal, $100,000 for
all accountant fees and $3,500,000 for Banc of America Securities.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
7.1 Termination.
-----------
(a) 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 Company, this Agreement may be terminated:
(i) by mutual written consent duly authorized by
each party's Board of Directors;
(ii) by either Parent or Company, if the Closing
shall not have occurred on or before the date which is six months after the date
hereof (provided, a later date may be agreed upon in writing by the parties
hereto, and provided further that the right to terminate this Agreement under
this Section 7.1(a)(ii) shall not be available to any party whose action or
failure to act has been the cause of the failure of the Merger to occur on or
before such date and such action or failure to act constitutes a breach of this
Agreement);
(iii) by Parent, if (A) Company shall materially
breach any representation, warranty, obligation or agreement hereunder (other
than a breach of Section 4.3(a) hereof which is specifically addressed in
subsection (v) below or a breach which has not had, and would not reasonably be
expected to result in, a Company Material Adverse Effect ) and such breach shall
not have been cured within twenty (20) business days of receipt by Company of
written notice of such breach (describing the details of such breach) provided
that the right to terminate this Agreement by Parent under this Section
7.1(a)(iii)(A) shall not be available to Parent where Parent is at that time in
breach of this Agreement, (B) the Board of Directors of Company shall have
withdrawn or modified its recommendation of this Agreement or the Merger in a
manner adverse to Parent or recommended, endorsed, accepted or agreed to a
Takeover Proposal or shall have resolved to do any of the foregoing, (C) the
Board of Directors of Company shall have rejected a Takeover Proposal, but
failed to give Parent a written reaffirmation of its recommendation of this
Agreement, the Merger and the other transactions contemplated hereby within five
(5) business days following the rejection of such Takeover Proposal (the
"Reaffirmation"), (D) a Trigger Event is commenced (other than by Parent or an
-------------
Affiliate of Parent) and the Board of Directors of Company (x) recommends that
the stockholders of Company tender their shares in such tender or exchange
offer; or (y) within 5 days after such tender or exchange offer, fails to
recommend against acceptance of such offer or takes no position with respect to
the acceptance of such Trigger Event and fails to deliver to Parent a
Reaffirmation; or (E) for any reason (other than as the result of the failure of
Parent to
51
satisfy the conditions specified in Sections 6.1 or 6.2(a)), Company fails to
call and hold the Company Stockholders Meeting by March 15, 2000;
(iv) by Company, if (A) Parent shall materially
breach any representation, warranty, obligation or agreement hereunder (other
than a breach which has not had, and would not reasonably be expected to result
in, a Parent Material Adverse Effect) and such breach shall not have been cured
within twenty (20) business days of receipt by Parent of written notice of such
breach (describing the details of such breach) provided that the right to
terminate this Agreement by Company under this Section 7.1(a)(iv)(A) shall not
be available to Company where Company is at that time in breach of this
Agreement, or (B) the Board of Directors of Company shall recommend, endorse,
accept or agree to a Superior Proposal or shall have resolved to recommend,
endorse, accept or agree to a Superior Proposal;
(v) by Parent if Company or any of its subsidiaries
or their respective officers, directors, employees or representatives have
materially breached or violated the restrictions of Section 4.3(a) hereof; or
(vi) by either Parent or Company if (A) 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, or (B) if any required approval of the stockholders of Company
shall not have been obtained by reason of the failure to obtain the required
vote upon a vote held at a duly held meeting of stockholders or at any
adjournment thereof.
(b) As used herein, a "Trigger Event" shall occur if any
-------------
Person acquires securities representing thirty percent (30%) or more, or
commences a tender or exchange offer following the successful consummation of
which the offeror and its affiliate would beneficially own securities
representing thirty percent (30%) or more, of the voting power of Company.
7.2 Effect of Termination. In the event of termination of this
---------------------
Agreement as provided in Section 7.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part, of Parent, Merger Sub
or Company or their respective officers, directors, stockholders or affiliates,
except to the extent that such termination results from the willful breach by a
party hereto of any of its representations, warranties or covenants set forth in
this Agreement; provided that, notwithstanding the above, the provisions of
Section 5.4 (Confidentiality), this Section 7.2 and Section 7.3 (Expenses and
Termination Fees) shall remain in full force and effect and survive any
termination of this Agreement and Parent's right to a remedy for Company's
breach of Section 4.3 shall survive any termination of this Agreement.
7.3 Expenses and Termination Fees.
-----------------------------
(a) Subject to subsections (b), (c) and (d) of this Section
7.3 and Section 6.3(o), whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including, without limitation, the fees and expenses of its
advisers, accountants and legal counsel) shall be paid by the party incurring
such expense.
52
(b) In the event that (i) Parent shall terminate this
Agreement pursuant to Section 7.1(a)(v), (ii) either Parent or Company shall
terminate this Agreement pursuant to Section 7.1(a)(vi)(B) following a failure
of the stockholders of Company to approve this Agreement and, prior to the time
of the meeting of Company's stockholders, there shall have been (A) a Trigger
Event with respect to Company or (B) a Takeover Proposal with respect to Company
which shall not have been (x) rejected by Company with delivery of a
Reaffirmation to Parent and (y) withdrawn by the third party, (iii) Parent shall
terminate this Agreement pursuant to Section 7.1(a)(iii)(B)(C) or (D), or (iv)
Company shall terminate this Agreement pursuant to Section 7.1(a)(iv)(B), then
Company shall promptly, but in no event later than fifteen business days after
such termination, pay to Parent 3% of the value of Parent Common Stock that
would have been issued in the Merger as of the date of termination of this
Agreement in cash (the "Termination Fee"); such Termination Fee to be determined
---------------
by the following formula: Termination Fee = ((A x B) x C) x 3%; where A equals
the sum of Company Capital Stock outstanding as of the date of the termination,
plus all shares of Company Capital Stock subject to Company Options outstanding
as of the date of the termination, plus Company Convertible Securities
outstanding as of the date of termination, if any; B equals the Exchange Ratio
and C equals the average of the closing prices of Parent Common Stock for the
twenty (20) days ending one day prior to the termination date; provided,
--------
however, that with respect to Section 7.3(b)(ii)(A) and Section 7.3(b)(iii)(A),
-------
a Trigger Event shall not be deemed to include the acquisition by any Person of
securities representing thirty percent (30%) or more of Company if such Person
has acquired such securities not with the purpose nor with the effect of
changing or influencing the control of Company, nor in connection with or as a
participant in any transaction having such purpose or effect, including without
limitation not in connection with such Person (i) making any public announcement
with respect to the voting of such shares at any meeting to consider any merger,
consolidation, sale of substantial assets or other business combination or
extraordinary transaction involving Company, (ii) making, or in any way
participating in, any "solicitation" of "proxies" (as such terms are defined or
used in Regulation 14A under the Exchange Act) to vote any voting securities of
Company (including, without limitation, any such solicitation subject to Rule
14a-11 under the Exchange Act) or seeking to advise or influence any Person with
respect to the voting of any voting securities of Company, (iii) forming,
joining or in any way participating in any "group" within the meaning of Section
13(d)(3) of the Exchange Act with respect to any voting securities of Company or
(iv) otherwise acting, alone or in concert with others, to seek control of
Company or to seek to control or influence the management or policies of
Company.
(c) In the event that Parent shall terminate this Agreement pursuant
to Section 7.1(a)(iii)(A), Company shall promptly reimburse Parent for all of
the actual, documented, reasonable out-of-pocket costs and expenses incurred by
Parent in connection with this Agreement and the transactions contemplated
hereby (including, without limitation, the fees and expenses of its outside
advisors, outside accountants and outside legal counsel).
(d) In the event that Company shall terminate this Agreement pursuant
to Section 7.1(a)(iv)(A), Parent shall promptly reimburse Company for all of the
actual, documented and reasonable out-of-pocket costs and expenses incurred by
Company in connection with this Agreement and the transactions contemplated
hereby (including without
53
limitation the fees and expenses of its outside advisors, outside accountants
and outside legal counsel).
(e) In the event that either Company's or Parent's accountants
determine that their respective client is not poolable, and such non-poolable
party shall terminate this Agreement or otherwise determine not to close the
transactions contemplated thereby, such non-poolable party shall promptly
reimburse the other party for all of the actual, documented and reasonable out-
of-pocket costs and expenses incurred by such party in connection with this
Agreement and the transactions contemplated hereby (including without limitation
the fees and expenses of its outside advisors, outside accountants and outside
legal counsel).
54
7.4 Amendment. 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; provided that an
amendment made subsequent to adoption of the Agreement by the stockholders of
Company shall not (i) alter or change the amount or kind of consideration to be
received on conversion of the Company Capital Stock, (ii) alter or change any
term of the Articles of Incorporation of the Surviving Corporation to be
effected by the Merger, or (iii) alter or change any of the terms and conditions
of the Agreement, if such alteration or change would materially adversely affect
the holders of Company Capital Stock.
7.5 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 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 the other
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 granting such waiver or extension.
ARTICLE VIII
GENERAL PROVISIONS
------------------
8.1 Non-Survival at Effective Time. The representations, warranties
------------------------------
and agreements set forth in this Agreement shall terminate at the Effective
Time, except that the agreements set forth in Article I, Section 5.4
(Confidentiality), Section 5.11 (Employee Benefit Plans), Section 5.12
(Indemnification), Section 5.13 (Form S-8), Section 5.21 (Best Efforts and
Further Assurances), Section 7.3 (Expenses and Termination Fees), Section 7.4
(Amendment), and this Article VIII shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent, to:
Neptune, Inc.
0000 X. Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
55
with a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) if to Company, to:
Globe Corporation
0000 Xxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx, President
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
Two Embarcadero Place, 0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxx, Esq.
Xxxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
56
8.3 Interpretation; Certain Definitions. When a reference is made
-----------------------------------
in this Agreement to Exhibits, such reference shall be to an Exhibit to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. 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 the Execution Date.
The term "Person" shall mean any corporation, partnership, individual, trust,
------
unincorporated association or other entity or Group (within the meaning of
Section 13(d)(3) of the Exchange Act). 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.
8.4 Counterparts; Facsimile Delivery. This Agreement may be executed
--------------------------------
in one or more counterparts and delivered by facsimile, 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.
8.5 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 and the Parent 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, except for the Confidentiality Agreement, which shall continue in full
force and effect, and shall survive any termination of this Agreement or the
Closing, in accordance with its terms, (b) are not intended to confer upon any
other Person any rights or remedies hereunder, except as set forth in Sections
1.6(a), (b) and (d)-(f), 1.7, 1.9, 1.10, 5.11, 5.12 and 5.13. and (c) shall not
be assigned by operation of law or otherwise except as otherwise specifically
provided.
8.6 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.
8.7 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.
57
8.8 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of Delaware without reference to such
state's principles of conflicts of law. Each of the parties hereto irrevocably
consents to the jurisdiction of any court located within 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. THE PARTIES HERETO
IRREVOCABLY WAIVE THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY ACTIONS,
SUITS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE MERGER OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
8.9 Rules of Construction. The parties hereto agree that they have
---------------------
been represented by counsel during the negotiation, 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.
8.10 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of law or otherwise), without
the prior written consent of the other party, and any attempt to make any such
assignment without such consent shall be null and void. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
8.11 Attorneys' Fees. In any action at law or suit in equity to
---------------
enforce this Agreement or the rights of any of the parties hereunder, the
prevailing party in such action or suit shall be entitled to receive a sum for
its attorneys' fees and all other costs and expenses incurred in such action or
suit.
[Signatures Follow On A Separate Page]
58
IN WITNESS WHEREOF, Company, Parent and Merger Sub have each caused
this Agreement to be executed and delivered by their respective officers
thereunto duly authorized, all as of the date first written above.
"Company"
GASONICS INTERNATIONAL CORPORATION
By:__________________________________
Name:________________________________
Title:_______________________________
"Parent"
NOVELLUS SYSTEMS, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
"Merger Sub"
NEPTUNE ACQUISITION-SUB, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF REORGANIZATION]
