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<PAGE> 1
AGREEMENT AND PLAN OF MERGER
AMONG
CHIPS AND TECHNOLOGIES, INC.,
INTEL CORPORATION
AND
INTEL ENTERPRISE CORPORATION
DATED AS OF JULY 27, 1997
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TABLE OF CONTENTS
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ARTICLE I
THE OFFER
1.1. The Offer........................................................................ 1
1.2 Company Actions.................................................................. 2
1.3. Boards of Directors and Committees; Section 14(f)................................ 4
ARTICLE II
THE MERGER; CLOSING; EFFECTIVE TIME
2.1. The Merger....................................................................... 4
2.2. Closing.......................................................................... 5
2.3. Effective Time................................................................... 5
2.4. Options.......................................................................... 5
ARTICLE III
CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION; OFFICERS AND DIRECTORS OF THE
SURVIVING CORPORATION
3.1. Certificate of Incorporation..................................................... 5
3.2. By-Laws.......................................................................... 5
3.3. Directors........................................................................ 5
3.4. Officers......................................................................... 6
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK;
EXCHANGE OF CERTIFICATES FOR MERGER CONSIDERATION
4.1. Effect on Capital Stock.......................................................... 6
(a) Merger Consideration......................................................... 6
(b) Cancellation of Excluded Shares.............................................. 6
(c) Merger Sub................................................................... 6
4.2. Exchange of Certificates for Payment............................................. 6
(a) Exchange Agent............................................................... 6
(b) Exchange Procedures.......................................................... 6
(c) Transfers.................................................................... 7
(d) Termination of Merger Fund................................................... 7
(e) Return of Consideration...................................................... 7
(f) Lost, Stolen or Destroyed Certificates....................................... 7
4.3. Dissenters' Shares............................................................... 7
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company.................................... 7
(a) Organization, Good Standing, Corporate Power and Qualification; Subsidiaries
and Other Interests.............................................................. 7
(b) Capital Structure............................................................ 8
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(c) Corporate Authority; Approval and Fairness................................... 9
(d) Governmental Filings; No Violations.......................................... 9
(e) Company Reports; Financial Statements........................................ 9
(f) Absence of Certain Changes................................................... 10
(g) Litigation and Liabilities................................................... 11
(h) Employee Benefits............................................................ 11
(i) Compliance with Laws......................................................... 12
(j) Takeover Statutes............................................................ 13
(k) Environmental Matters........................................................ 13
(l) Intellectual Property........................................................ 13
(m) Taxes........................................................................ 14
(n) Labor Matters................................................................ 15
(o) Insurance.................................................................... 15
(p) Rights Agreement............................................................. 15
(q) Brokers and Finders.......................................................... 15
(r) Certain Business Practices................................................... 15
(s) Product Warranties........................................................... 15
(t) Suppliers and Customers...................................................... 15
(u) Backlog Information.......................................................... 15
5.2. Representations and Warranties of Parent and Merger Sub.......................... 16
(a) Organization, Good Standing and Qualification................................ 16
(b) Ownership of Merger Sub...................................................... 16
(c) Corporate Authority.......................................................... 16
(d) Governmental Filings; No Violations.......................................... 16
(e) Brokers and Finders.......................................................... 17
(f) Financing.................................................................... 17
ARTICLE VI
COVENANTS
6.1. Interim Operations............................................................... 17
6.2. Third Party Acquisitions......................................................... 18
6.3. Filings; Other Actions; Notification............................................. 20
6.4. Information Supplied............................................................. 21
6.5. Stockholders Meeting............................................................. 21
6.6. Access........................................................................... 21
6.7. Publicity........................................................................ 21
6.8. Status of Company Employees; Company Stock Options; Employee Benefits............ 22
6.9. Expenses......................................................................... 22
6.10. Indemnification; Directors' and Officers' Insurance.............................. 22
6.11. Other Actions by the Company and Parent.......................................... 24
(a) Rights Agreement............................................................. 24
(b) Takeover Statutes............................................................ 24
6.12. Parent Stock Option; Exercise; Adjustments....................................... 24
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ARTICLE VII
CONDITIONS
7.1. Conditions to Each Party's Obligation to Effect Merger........................... 25
(a) Stockholder Approval......................................................... 25
(b) Regulatory Consents.......................................................... 25
(c) Litigation................................................................... 25
7.2. Conditions to Obligations of Parent and Merger Sub............................... 25
(a) Representations and Warranties............................................... 25
(b) Performance of Obligations of the Company.................................... 25
7.3. Conditions to Obligations of the Company......................................... 25
(a) Representations and Warranties............................................... 25
(b) Performance of Obligations of Parent and Merger Sub.......................... 26
ARTICLE VIII
TERMINATION
8.1. Termination Mutual Consent....................................................... 26
8.2. Termination by Either Parent or the Company...................................... 26
8.3. Termination by the Company....................................................... 26
8.4. Termination by Parent and Merger Sub............................................. 26
8.5. Effect of Termination and Abandonment............................................ 27
8.6. Procedure for Termination........................................................ 27
ARTICLE IX
MISCELLANEOUS
9.1. Survival......................................................................... 28
9.2. Certain Definitions.............................................................. 28
9.3. No Personal Liability............................................................ 29
9.4. Modification or Amendment........................................................ 29
9.5. Waiver of Conditions............................................................. 29
9.6. Counterparts..................................................................... 29
9.7. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.................................... 29
9.8. Notices.......................................................................... 30
9.9. Entire Agreement................................................................. 31
9.10. No Third Party Beneficiaries..................................................... 31
9.11. Obligations of the Company and Surviving Corporation............................. 31
9.12. Severability..................................................................... 31
9.13. Interpretation................................................................... 31
9.14. Assignment....................................................................... 31
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SCHEDULES
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SCHEDULE DESCRIPTION
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Schedule 5.1(a) Company Subsidiaries and Other Interests
Schedule 5.1(d) Consents
Schedule 5.1(f) Certain Changes
Schedule 5.1(g) Litigation and Liabilities
Schedule 5.1(h) Outstanding Company Options and Other Benefit Plan Matters
Schedule 5.1(k) Environmental Matters
Schedule 5.1(l)(ii) Outstanding Orders and Judgments on Intellectual Property Rights
Schedule 5.1(l)(iii) Intellectual Property Material Contracts
Schedule 5.1(m) Certain Tax Matters
Schedule 5.1(s) Product Warranties
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated
as of July 27, 1997, among CHIPS AND TECHNOLOGIES, INC., a Delaware corporation
(the "Company"), INTEL CORPORATION, a Delaware corporation ("Parent"), and INTEL
ENTERPRISE CORPORATION, a Delaware corporation and a direct, wholly-owned
subsidiary of Parent ("Merger Sub"; the Company and Merger Sub sometimes being
hereinafter together referred to as the "Constituent Corporations").
RECITALS
WHEREAS, the respective Boards of Directors of each of Parent, Merger Sub
and the Company have approved the merger of Merger Sub with and into the Company
(the "Merger") and approved the Merger upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, in furtherance thereof, it is proposed that Parent shall, within
five (5) Business Days after the public announcement hereof, commence a tender
offer (the "Offer") to acquire all of the outstanding shares of common stock,
par value $.01 per share, of the Company (the "Shares"), together with the
associated Rights (as defined in Section 4.1(a)), at a price of $17.50 per
Share, net to the seller in cash, less any required withholding taxes (such
amount, or any greater amount per share paid pursuant to the Offer, being
hereinafter referred to as the "Offer Price"), in accordance with the terms and
subject to the conditions provided herein; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER
1.1. The Offer.
(a) Provided that this Agreement shall not have been terminated and
subject to the terms hereof, as promptly as practicable, but in no event
later than five (5) Business Days after the public announcement of the
execution hereof by the parties, Parent shall commence (within the meaning
of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), the Offer for any and all of the Shares, at the Offer
Price. The obligation of Parent to accept for payment and to pay for any
Shares tendered shall be subject only to (i) the condition that at least a
majority of Shares on a fully-diluted basis (including for purposes of such
calculation all Shares issuable upon exercise of all vested and unvested
stock options) be validly tendered (the "Minimum Condition"), and (ii) the
other conditions set forth in Annex A. Parent expressly reserves the right
to increase the Offer Price or to make any other changes in the terms and
conditions of the Offer (provided that, unless previously approved by the
Company in writing, no change may be made which (i) decreases the Offer
Price, (ii) changes the form of consideration to be paid in the Offer,
(iii) reduces the maximum number of Shares to be purchased in the Offer,
(iv) imposes conditions to the Offer in addition to those set forth in
Annex A, (v) amends the conditions set forth in Annex A to broaden the
scope of such conditions, (vi) amends any other term of the Offer in a
manner adverse to the holders of the Shares, (vii) extends the Offer except
as provided in Section 1.1(b)), or (viii) amends the Minimum Condition. It
is agreed that the conditions set forth in Annex A are for the sole benefit
of Parent and may be waived by Parent, in whole or in part at any time and
from time to time, in its sole discretion other than the Minimum Condition,
as to which prior written Company approval is required. The failure by
Parent at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an
ongoing right
<PAGE> 7
which may be asserted at any time and from time to time. The Company agrees
that no Shares held by the Company or any of its Subsidiaries (as defined
in Section 9.2) will be tendered in the Offer.
(b) Subject to the terms and conditions thereof, the Offer shall
expire at midnight, New York City time, on the date that is twenty (20)
Business Days after the date the Offer is commenced; provided, however,
that without the consent of the Company's Board of Directors, Parent may
(i) from time to time extend the Offer, if at the scheduled expiration date
of the Offer any of the conditions to the Offer shall not have been
satisfied or waived, until such time as such conditions are satisfied or
waived; (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Offer; or
(iii) extend the Offer for any reason on one or more occasions for an
aggregate period of not more than twenty (20) Business Days beyond the
latest expiration date that would otherwise be permitted under clause (i)
or (ii) of this sentence if on such expiration date there shall not have
been tendered at least 90% of the outstanding Shares. Parent agrees that if
all of the conditions to the Offer set forth on Annex A are not satisfied
on any scheduled expiration date of the Offer then, provided that all such
conditions are reasonably capable of being satisfied prior to October 31,
1997, Parent shall extend the Offer from time to time until such conditions
are satisfied or waived, provided that Parent shall not be required to
extend the Offer beyond October 31, 1997. Subject to the terms and
conditions of the Offer and this Agreement, Parent shall accept for
payment, and pay for, all Shares validly tendered and not withdrawn
pursuant to the Offer that Parent becomes obligated to accept for payment
and pay for pursuant to the Offer, as promptly as practicable after the
expiration of the Offer.
(c) As soon as practicable on the date the Offer is commenced, Parent
shall file with the SEC a Tender Offer Statement on Schedule 14D-1
(together with all amendments and supplements thereto, and including all
exhibits thereto, the "Schedule 14D-1") with respect to the Offer. The
Schedule 14D-1 shall contain as an exhibit or incorporate by reference the
Offer to Purchase (or portions thereof) and forms of the related letter of
transmittal and summary advertisement. Parent and Merger Sub agree that the
Schedule 14D-1, the Offer to Purchase and all amendments or supplements
thereto (which together constitute the "Offer Documents") shall comply in
all material respects with the Exchange Act and the rules and regulations
thereunder and other applicable Laws (as defined in Section 5.1(i)). Parent
and Merger Sub further agree that the Offer Documents, on the date first
published, sent or given to the Company's stockholders, shall not 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, except that no representation or warranty is made by Parent or
Merger Sub with respect to information supplied by the Company or any of
its stockholders specifically for inclusion or incorporation by reference
in the Offer Documents. The Company agrees that the information provided by
the Company for inclusion or incorporation by reference in the Offer
Documents shall not 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. Each of Parent, Merger Sub and the
Company agrees promptly to correct any information provided by it for use
in the Offer Documents if and to the extent that such information shall
have become false or misleading in any material respect, and Parent and
Merger Sub further agree to take all steps necessary to cause the Schedule
14D-1 as so corrected to be filed with the SEC and the other Offer
Documents as so corrected to be disseminated to the Company's stockholders,
in each case as and to the extent required by applicable federal securities
laws. The Company and its counsel shall be given reasonable opportunity to
review and comment on the Offer Documents prior to the filing thereof with
the SEC. Parent agrees to provide the Company and its counsel in writing
with any comments Parent or its counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after receipt of such
comments.
1.2. Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents that its Board of Directors, at a meeting duly called and held,
has, subject to the terms and conditions set forth herein, (i) after
evaluating the Merger in accordance with all of the provisions of Article
Ninth of the Company's
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certificate of incorporation, determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, taken
together, are at a price and on terms which are adequate and are otherwise
in the best interests of the Company and its stockholders (other than
Parent and its Affiliates), (ii) approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, in
all respects and such approval constitutes approval of the Offer, this
Agreement and the Merger for purposes of (x) Section 203 of the Delaware
General Corporation Law (the "DGCL"), (y) similar provisions of any other
similar state statutes that might be deemed applicable to the transactions
contemplated hereby and (z) the Rights Agreement (as defined in Section
5.1(b)), (iii) resolved to recommend that the stockholders of the Company
accept the Offer, tender their Shares thereunder to Parent and approve and
adopt this Agreement and the Merger, and (iv) in accordance with the
applicable provisions of the Assumed Stock Option Plan (as defined in
Section 2.4), approved the assumption of the Assumed Stock Option Plan by
Parent as contemplated by Section 6.8(c) and the conversion of the options
under the Assumed Stock Option Plan outstanding at the Effective Time of
the Merger. The Company consents to the inclusion of such recommendation
and approval in the Offer Documents. The Company also represents that its
Board of Directors has reviewed the opinion of Hambrecht & Quist LLC,
financial advisor to the Board of Directors (the "Financial Advisor"),
that, as of July 27, 1997, the consideration to be received pursuant to
this Agreement is fair to the stockholders of the Company (other than
Parent and its Affiliates) from a financial point of view (the "Fairness
Opinion"). The Company has been authorized by the Financial Advisor to
permit, subject to the prior review and consent by the Financial Advisor
(such consent not to be unreasonably withheld), the inclusion of the
fairness opinion (or a reference thereto) in the Offer Documents, the
Schedule 14D-9 and the Proxy Statement.
(b) The Company shall file with the SEC, concurrently with the filing
of the Schedule 14D-1, a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto, and including
all exhibits thereto, the "Schedule 14D-9") containing the recommendations
described in Section 1.2(a) and shall mail the Schedule 14D-9 to the
stockholders of the Company promptly after the commencement of the Offer.
The Company agrees that the Schedule 14D-9 shall comply in all material
respects with the Exchange Act and the rules and regulations thereunder and
other applicable Laws. The Company further agrees that Schedule 14D-9, on
the date first published, sent or given to the Company's stockholders,
shall not 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, except that no representation or warranty is
made by the Company with respect to information supplied by the Parent or
Merger Sub specifically for inclusion or incorporation by reference in
Schedule 14D-9. Each of the Company, Parent and Merger Sub agrees promptly
to correct any information provided by it for use in the Schedule 14D-9 or
the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and be disseminated to the Company's
stockholders, in each case as and to the extent required by applicable
federal securities laws. Parent and its counsel shall be given reasonable
opportunity to review and comment on the Schedule 14D-9 prior to the filing
thereof with the SEC.
(c) In connection with the Offer, the Company shall, or shall cause
its transfer agent to, promptly furnish Parent with such information,
including updated lists of the stockholders of the Company, mailing labels
and updated lists of security positions, and such assistance as Parent or
its agents may reasonably request in communicating the Offer to the record
and beneficial holders of Shares. Subject to the requirements of applicable
law, and except for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate the Merger,
Parent and Sub and their agents shall hold in confidence the information
contained in any such labels, listings and files, will use such information
only in connection with the Offer and the Merger and, if this Agreement
shall be terminated, will deliver, and will use their reasonable efforts to
cause their agents to deliver, to the Company all copies and any extracts
or summaries from such information then in their possession or control.
3
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(d) Solely in connection with the tender and purchase of Shares
pursuant to the Offer and the consummation of the Merger, the Company
hereby waives any and all rights of first refusal it may have with respect
to Shares owned by, or issuable to, any Person, other than rights to
repurchase unvested shares, if any, that may be held by Persons following
exercise of employee stock options.
1.3. Boards of Directors and Committees; Section 14(f).
(a) Promptly upon the purchase by Parent of Shares pursuant to the
Offer and from time to time thereafter, if the Minimum Condition has been
met, and subject to the second to last sentence of this Section 1.3(a),
Parent shall be entitled to designate up to such number of directors,
rounded up to the next whole number, on the Board of Directors of the
Company as will give Parent representation on such Board equal to the
product of the number of directors on such Board (giving effect to any
increase in the number of directors pursuant to this Section 1.3) and the
percentage that such number of Shares so purchased bears to the total
number of outstanding Shares on a fully-diluted basis, and the Company
shall use its best efforts to, upon request by Parent, promptly, at the
Company's election, either increase the size of its Board of Directors
(subject to the provisions of Article Sixth of the Company's certificate of
incorporation) or secure the resignation of such number of directors as is
necessary to enable Parent's designees to be elected to such Board and to
cause Parent's designees to be so elected. At such times, and subject to
the second to last sentence of this Section 1.3(a), the Company will use
its best efforts to cause persons designated by Parent to constitute the
same percentage as is on the Company's Board of Directors of (i) each
committee of such Board (other than any committee of such Board established
to take action under this Agreement), (ii) each Board of Directors of each
Subsidiary of the Company and (iii) each committee of each such Board.
Notwithstanding the foregoing, the Company shall use its best efforts to
ensure that three of the members of its Board of Directors as of the date
hereof ("Continuing Directors") shall remain members of such Board until
the Effective Time (as defined in Section 2.3). In the event a Continuing
Director resigns from the Company's Board of Directors, Parent, Merger Sub
and the Company shall permit the remaining Continuing Director or Directors
to appoint the resigning director's successor who shall be deemed to be a
Continuing Director.
(b) The Company's obligation to appoint designees to its Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all action
required pursuant to such Section and Rule in order to fulfill its
obligations under this Section 1.3 and shall include in the Schedule 14D-9
such information with respect to the Company and its officers and directors
as is required under such Section and Rule in order to fulfill its
obligations under this Section 1.3. Parent will supply to the Company in
writing and be solely responsible for any information with respect to
itself and its nominees, officers, directors and Affiliates required by
such Section and Rule.
(c) Following the election or appointment of Parent's designees
pursuant to this Section 1.3 and prior to the Effective Time, if there
shall be any Continuing Directors, any amendment of this Agreement, any
termination of this Agreement by the Company, any extension by the Company
of the time for the performance of any of the obligations or other acts of
Parent or any waiver of any of the Company's rights hereunder, will require
the concurrence of a majority of such Continuing Directors.
ARTICLE II
THE MERGER; CLOSING; EFFECTIVE TIME
2.1. The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, at the Effective Time (as defined in Section 2.3) Merger Sub
shall be merged with and into the Company and the separate corporate existence
of Merger Sub shall thereupon cease. The Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Delaware, and the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Article III. At the election of Parent, to
the extent that such action would not
4
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cause a failure of a condition to the Offer of the Merger, the Merger may be
structured so that the Company shall be merged with and into Merger Sub with the
result that Merger Sub shall become the "Surviving Corporation." The Merger
shall have the effects specified in the DGCL. Parent, as the sole stockholder of
Merger Sub, hereby approves the Merger and this Agreement.
2.2. Closing. The closing of the Merger (the "Closing") shall take place
(i) at the offices of Gibson, Dunn & Crutcher LLP, One Montgomery Street, San
Francisco, California at 9:00 am., Pacific time, on the first Business Day after
the day on which the last to be fulfilled or waived of the conditions set forth
in Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions) shall be satisfied or waived in accordance with this Agreement or
(ii) at such other place and time and/or on such other date as the Company and
Parent may agree in writing (the "Closing Date").
2.3. Effective Time. As soon as practicable following the Closing, the
Company and Parent will cause a Certificate of Merger (the "Delaware Certificate
of Merger") to be executed, acknowledged and filed with the Secretary of State
of Delaware as provided in Section 251 of the DGCL. The Merger shall become
effective at the time when the Delaware Certificate of Merger has been duly
filed with the Secretary of State of Delaware (the "Effective Time").
2.4. Options. At the Effective Time, options under the Company's Amended
and Restated 1994 Stock Option Plan (the "Assumed Stock Option Plan") to
purchase Shares (each, a "Company Option"), which are then outstanding and
unexercised, shall cease to represent a right to acquire Shares and shall be
converted automatically into options to purchase shares of common stock, par
value $.001 per share, of Parent ("Parent Common Stock"), and Parent shall
assume each such Company Option subject to the terms of the Assumed Stock Option
Plan, in each case as heretofore amended or restated, as the case may be, and
the agreements evidencing grants thereunder; provided, however, that from and
after the Effective Time, (i) the number of shares of Parent Common Stock
purchasable upon exercise of such Company Option shall be equal to the number of
Shares that were purchasable under such Company Option immediately prior to the
Effective Time multiplied by the Exchange Ratio (as hereinafter defined), and
rounding to the nearest whole share, and (ii) the per share exercise price under
each such Company Option shall be adjusted by dividing the per share exercise
price of each such Company Option by the Exchange Ratio, and rounding down to
the nearest cent. The terms of each Company Option shall, in accordance with its
terms, be subject to further adjustment as appropriate to reflect any stock
split, stock dividend, recapitalization or other similar transaction with
respect to Parent Common Stock on or subsequent to the Effective Date.
Notwithstanding the foregoing, each Company Option which is intended to be an
"incentive stock option": (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended, (the "Code")) shall be adjusted in accordance with the
requirements of Section 424 of the Code. Accordingly, with respect to any
incentive stock options, fractional shares shall be rounded down to the nearest
whole number of shares and the per share exercise price shall be rounded down to
the nearest cent. The Exchange Ratio is 0.197656.
ARTICLE III
CERTIFICATE OF INCORPORATION AND
BY-LAWS OF THE SURVIVING CORPORATION; OFFICERS AND
DIRECTORS OF THE SURVIVING CORPORATION
3.1. Certificate of Incorporation. The certificate of incorporation of
the Company as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation (the "Charter"), until
duly amended as provided therein or by applicable Law, except that Article
Fourth of the Charter shall be amended to read in its entirety as follows: "The
aggregate number of shares that the Corporation shall have the authority to
issue is 1,000 shares of Common Stock, par value $.01 per share."
3.2. By-Laws. The by-laws of Merger Sub in effect at the Effective Time
shall be the by-laws of the Surviving Corporation (the "By-Laws"), until
thereafter amended as provided therein or by applicable Law.
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3.3. Directors. The directors of Merger Sub at the Effective Time shall,
from and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and By-Laws.
3.4. Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and By-Laws.
ARTICLE IV
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES FOR MERGER CONSIDERATION
4.1. Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any Capital Stock (as
defined in Section 9.2) of the Company:
(a) Merger Consideration. Each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent,
Merger Sub or any other direct or indirect Subsidiary of Parent or Shares
that are owned by the Company or any direct or indirect Subsidiary of the
Company (collectively, the "Excluded Shares")) shall be converted into, and
become exchangeable for the Offer Price, without interest (the "Merger
Consideration"). Unless the context otherwise clearly requires, each
reference in this Agreement to the Shares shall include the associated
"Rights" as defined in and issued pursuant to the Rights Agreement (the
"Rights"). At the Effective Time, all Shares shall no longer be outstanding
and shall be canceled and retired and shall cease to exist, and each
certificate (a "Certificate") formerly representing any of such Shares
(other than Excluded Shares) shall thereinafter represent only the right to
receive the Merger Consideration.
(b) Cancellation of Excluded Shares. Each Excluded Share issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, cease to
be outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of Common Stock,
par value $.01 per share, of Merger Sub issued and outstanding immediately
prior to the Effective Time shall be converted into one share of Common
Stock of the Surviving Corporation.
4.2. Exchange of Certificates for Payment.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit,
or shall cause to be deposited, with an exchange agent selected by Parent
(the "Exchange Agent"), for the benefit of the holders of Shares, cash in
U.S. dollars in an amount equal to the Merger Consideration multiplied by
the aggregate outstanding Shares (other than Excluded Shares) to be paid
pursuant to Section 4.1(a) in exchange for outstanding Shares upon due
surrender of the Certificates (or affidavits of loss in lieu thereof)
pursuant to the provisions of this Article IV (such aggregate cash amount
when paid to the Exchange Agent being hereinafter referred to as the
"Merger Fund").
(b) Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause the Exchange Agent to mail to each holder
of record of Shares (other than holders of Excluded Shares) (i) a letter of
transmittal (which shall, among other matters, specify that delivery of the
Certificates shall be effected, and risk of loss and title to the
Certificates shall pass, only upon actual receipt of the Certificates (or
affidavits of loss in lieu thereof) by the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration due and payable to such holder. Upon
surrender of a Certificate for cancellation to the Exchange Agent together
with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a check in
the amount (after giving effect to any required tax withholdings) of the
Merger Consideration due and payable in respect of such holder's Shares and
the Certificate so surrendered shall forthwith be canceled. No interest
will be paid or accrued on any amount payable upon
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due surrender of the Certificates. All Merger Consideration paid upon
surrender for exchange of Shares in accordance with the terms of this
Agreement shall be deemed to have been paid in full satisfaction of all
rights pertaining to such Shares. In the event of a transfer of ownership
of Shares that is not registered in the transfer records of the Company, a
check for the amount of cash to be paid upon due surrender of the
Certificate may be delivered to such a transferee if the Certificate
formerly representing such Shares is presented to the Exchange Agent,
accompanied by all documents required by the Exchange Agent to evidence and
effect such transfer and to evidence that any applicable stock transfer
taxes have been paid.
(c) Transfers. After the Effective Time, there shall be no transfers
on the stock transfer books of the Company of the Shares that were
outstanding immediately prior to the Effective Time.
(d) Termination of Merger Fund. Any portion of the Merger Fund
(including the proceeds of any investments thereof) that remains unclaimed
by the stockholders of the Company for 180 days after the Effective Time
shall be paid to Parent. Any stockholders of the Company who have not
theretofore complied with this Article IV shall thereafter look only to
Parent for payment of their Merger Consideration payable pursuant to
Section 4.1 upon due surrender of their Certificates (or affidavits of loss
in lieu thereof), in each case, without any interest thereon.
Notwithstanding the foregoing, neither Parent, the Surviving Corporation,
the Exchange Agent nor any other Person shall be liable to any former
holder of Shares for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws. Any
amounts remaining unclaimed by holders of Shares on the two (2) year
anniversary of the Effective Time (or such earlier date immediately prior
to such time as such amounts would otherwise escheat to or become property
of any Governmental Entity (as defined in Section 5.1(d)) shall, to the
extent permitted by applicable Law, become the property of Parent, free and
clear of any claims or interest of any Person previously entitled thereto.
(e) Return of Consideration. Any portion of the Merger Fund
representing Merger Consideration payable in respect of Dissenters' Shares
(as defined in Section 4.3) for which appraisal rights have been perfected
shall be returned to Parent, upon demand.
(f) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the Person claiming such Certificate to be
lost, stolen or destroyed and, if required by Parent, the posting by such
Person of a bond in an amount determined by Parent as indemnity against any
claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration payable pursuant to Section 4.1 upon
due surrender of the Certificate representing such Shares pursuant to this
Agreement.
4.3. Dissenters' Shares. Notwithstanding Section 4.1, Shares outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has demanded
appraisal for such Shares in accordance with the DGCL ("Dissenters' Shares")
shall not be converted into a right to receive the Merger Consideration, unless
such holder fails to perfect or withdraws or otherwise loses such holder's right
to appraisal. If after the Effective Time such holder fails to perfect or
withdraws or loses such holder's right to appraisal, such Dissenters' Shares
shall be treated as if they had been converted as of the Effective Time into a
right to receive the Merger Consideration. The Company shall give Parent prompt
notice of any demands received by the Company for appraisal of Dissenters'
Shares, and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1. Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent and Merger Sub as follows:
(a) Organization, Good Standing, Corporate Power and Qualification;
Subsidiaries and Other Interests.
(i) Each of the Company and its Subsidiaries (x) is a corporation
duly organized, validly existing and in good standing under the laws of
its respective jurisdiction of organization, (y) has all requisite
corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently
conducted and (z) is qualified to do business and is in good standing as
a foreign corporation in each jurisdiction where the ownership or
operation of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good
standing, individually or in the aggregate, has not had and is not
reasonably likely to have a Company Material Adverse Effect (as defined
in Section 9.2). The Company has made available to Parent a complete and
correct copy of the Company's and its Subsidiaries' certificates of
incorporation and by-laws (or comparable governing documents), each as
amended to the date hereof. The Company's and its Subsidiaries'
certificates of incorporation and by-laws (or comparable governing
documents) made available are in full force and effect.
(ii) Schedule 5.1(a) contains a correct and complete list of each
of the Company's Subsidiaries, the jurisdiction where each of such
Subsidiaries is organized and the percentage of outstanding Capital
Stock of such Subsidiaries that is directly or indirectly owned by the
Company. The Company or another Subsidiary of the Company owns its
shares of the Capital Stock of each Subsidiary of the Company free and
clear of all Liens except Permitted Liens (as defined in Section 9.2).
Schedule 5.1(a) sets forth a true and complete list of each equity
investment in an amount of $2,000,000 or more or which represents a 5%
or greater ownership interest in the subject of such investment made by
the Company or any of its Subsidiaries in any other Person other than
the Company's Subsidiaries ("Other Interests"). The Other Interests are
owned by the Company, by one or more of the Company's Subsidiaries or by
the Company and one or more of its Subsidiaries, in each case free and
clear of all Liens, except for Permitted Liens and Liens that may be
created by any partnership or joint venture agreements for Other
Interests.
(b) Capital Structure. The authorized Capital Stock of the Company
consists of (i) one hundred million (100,000,000) Shares, of which
22,003,195 were outstanding as of the close of business on July 27, 1997,
and (ii) five million (5,000,000) shares of Preferred Stock, par value $.01
per share (the "Preferred Shares"), none of which is outstanding. All of
the outstanding Shares have been duly authorized and are validly issued,
fully paid and nonassessable. The Company has no Preferred Shares reserved
for issuance. Schedule 5.1(h) contains a correct and complete list as of
July 27, 1997 of each outstanding purchase right or option (each a "Company
Option") to purchase Shares, including all Company Options issued under the
Company's Amended and Restated Employee Stock Purchase Plan, the Company's
Amended and Restated 1994 Stock Option Plan and the Company's First Amended
1988 Nonqualified Stock Option Plan for Outside Directors, in each case as
amended to the date hereof (collectively, the "Stock Option Plans"),
including the holder, date of grant, exercise price and number of Shares
subject thereto. The Stock Option Plans are the only plans under which any
Company Options are outstanding. As of July 27, 1997, other than (1) the
3,983,598 Shares reserved for issuance upon exercise of outstanding Company
Options and (2) Shares reserved for issuance pursuant to the Rights
Agreement, dated as of August 23, 1989, between the Company and Bank of
America, NT & SA, as Rights Agent (the "Rights Agreement"), there are no
Shares reserved for issuance or any commitments for the Company to issue
Shares. Each of the outstanding shares of Capital Stock or other securities
of each of the Company's Subsidiaries directly or indirectly owned by the
Company is duly authorized, validly issued, fully paid and nonassessable
and owned by the Company or by a direct or indirect Subsidiary of the
Company, free and clear of any limitation or restriction (including any
restriction on the
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<PAGE> 14
right to vote or sell the same except as may be provided as a matter of
Law). Except for Company Options, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements or
commitments to issue or sell any shares of Capital Stock or other
securities of the Company or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving
any Person a right to subscribe for or acquire, any shares of Capital Stock
or other securities of the Company or any of its Subsidiaries, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding. The Company does not have outstanding any bonds, debentures,
notes or other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote)
with the stockholders of the Company on any matter ("Voting Debt"). If
Parent takes the actions provided for in Section 6.8(c) hereof, after the
Effective Time, the Surviving Corporation will have no obligation to issue,
transfer or sell any shares of Capital Stock or other securities of the
Surviving Corporation pursuant to the Stock Option Plans. The Shares
constitute the only class of securities of the Company or any of its
Subsidiaries registered or required to be registered under the Exchange
Act.
(c) Corporate Authority; Approval and Fairness.
(i) The Company has all requisite corporate power and authority and
has taken all corporate action necessary in order to execute, deliver
and perform its obligations under this Agreement and to consummate,
subject (if required by law) only to approval of this Agreement by the
holders of a majority of the outstanding Shares (the "Company Requisite
Vote"), the Merger. Assuming due execution and delivery by Parent and
Merger Sub, this Agreement is a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy
laws or creditors' rights generally or by general principles of equity.
(ii) The Board of Directors of the Company has unanimously approved
this Agreement and the Merger and the other transactions contemplated
hereby including, without limitation, the Offer and the assumption
referred to in Section 6.8(c), has received and reviewed the Fairness
Opinion and duly taken all other actions described in Sections 1.2(a),
5.1(j) and 5.1(p).
(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to Section
1.2, (B) with the Delaware Secretary of State, (C) under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act") and the Exchange Act, (D) to comply with state securities or
"blue sky" laws and (E) with the National Association of Securities
Dealers (the "NASD"), no notices, reports or other filings are required
to be made nor are any consents, registrations, approvals, permits or
authorizations (collectively, "Government Consents") required to be
obtained by the Company from any court or other governmental or
regulatory authority, agency, commission, body or other governmental
entity (a "Governmental Entity"), in connection with the execution and
delivery of this Agreement by the Company and the consummation by the
Company of the Merger and the other transactions contemplated hereby,
except those that the failure to make or obtain are not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse
Effect or prevent, materially delay or materially impair the ability of
the Company to consummate the transactions contemplated by this
Agreement.
(ii) The execution, delivery and performance of this Agreement by
the Company does not, and the consummation by the Company of the Merger
and the other transactions contemplated hereby will not, constitute or
result in (A) a breach or violation of or a default under, the
certificate of incorporation or by-laws of the Company or the comparable
governing instruments of any of its Subsidiaries, (B) a breach or
violation of, or a default under, the acceleration of any obligations or
the creation of any Lien on the assets of the Company or any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant
to, any agreement, lease, contract, note, mortgage, indenture or other
obligation (a "Contract") binding upon the Company or any of its
Subsidiaries or any order, writ, injunction, decree of any court or any
Law or governmental or non-governmental permit or
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<PAGE> 15
license to which the Company or any of its Subsidiaries is subject or
(C) any change in the rights or obligations of any party under any
Contract, except, in the case of clause (B) or (C) above, for any
breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to have a
Company Material Adverse Effect or prevent, materially delay or
materially impair the ability of the Company to consummate the
transactions contemplated by this Agreement. Except as set forth on
Schedule 5.1(d), there are no Contracts of the Company or its
Subsidiaries which are material to the Company and its Subsidiaries,
taken as a whole, pursuant to which consents or waivers are or may be
required prior to consummation of the Offer or the Merger and the other
transactions contemplated by this Agreement.
(e) Company Reports; Financial Statements. The Company has made
available to Parent each registration statement, report, proxy statement or
information statement filed with the SEC by it since June 30, 1996 (the
"Audit Date"), including the Company's Annual Report on Form 10-K for the
year ended June 30, 1996 (the "Company 10-K") in the form (including
exhibits, annexes and any amendments thereto) filed with the SEC
(collectively, including any such reports filed subsequent to the date
hereof, the "Company Reports"). As of their respective dates, the Company
Reports complied, and any Company Reports filed with the SEC after the date
hereof will comply, as to form in all material respects with the applicable
requirements of the Exchange Act and the Securities Act of 1933, as amended
(the "Securities Act"), and the Company Reports did not, and any Company
Reports filed with the SEC after the date hereof will not, at the time of
their filing, contain any untrue statement of a material fact or omit 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. Each of the consolidated balance sheets included
in or incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presents, or will fairly present, the
consolidated financial position of the Company and its Subsidiaries as of
its date and each of the consolidated statements of income and of changes
in financial position included in or incorporated by reference into the
Company Reports (including any related notes and schedules) fairly
presents, or will fairly present, the results of operations, retained
earnings and changes in financial position, as the case may be, of the
Company and its Subsidiaries for the periods set forth therein (subject, in
the case of unaudited statements, to notes and normal year-end audit
adjustments that will not be material in amount or effect), in each case in
accordance with United States generally accepted accounting principles
("GAAP") consistently applied during the periods involved, except as may be
noted therein. The Company has heretofore made available or promptly will
make available to Parent a complete and correct copy of all amendments or
modifications which are required to be filed with the SEC but have not yet
been filed with the SEC to the Company Reports, agreements, documents or
other instruments which previously had been filed by the Company with the
SEC pursuant to the Exchange Act. For purposes of this Agreement, "Balance
Sheet" means the consolidated balance sheet of the Company as of June 30,
1996 set forth in the Company 10-K. Except as set forth in Company Reports
filed with the SEC prior to the date hereof or as incurred in the ordinary
course of business since the date of the most recent financial statements
included in the Company Reports, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which would be required under
GAAP to be set forth on a consolidated balance sheet of the Company and its
subsidiaries taken as a whole and which individually or in the aggregate
would have a Company Material Adverse Effect.
(f) Absence of Certain Changes. Except as disclosed in Schedule 5.1(f)
or in the Company Reports filed prior to the date hereof, since the Audit
Date, the Company and its Subsidiaries have conducted their respective
businesses in all material respects only in, and have not engaged in any
material transaction other than according to, the ordinary and usual course
of such businesses consistent with past practices, and there has not been
any (i) change in the financial condition, properties, business or results
of operations of the Company and its Subsidiaries, except for those changes
that, individually or in the aggregate, have not had and are not reasonably
likely to have a Company Material Adverse Effect; (ii) material damage,
destruction or other casualty loss with respect to any material asset or
property owned, leased or otherwise used by the Company or any of its
Subsidiaries, not covered by insurance;
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(iii) declaration, setting aside or payment of any dividend or other
distribution in respect of the Capital Stock of the Company or any of its
Subsidiaries (other than wholly-owned Subsidiaries) or any repurchase,
redemption or other acquisition by the Company or any of its Subsidiaries
of any outstanding shares of Capital Stock or other securities of, or other
ownership interests in, the Company or any of its Subsidiaries; (iv)
amendment of any material term of any outstanding security of the Company
or any of its Subsidiaries; (v) incurrence, assumption or guarantee by the
Company or any of its Subsidiaries of any indebtedness for borrowed money
other than in the ordinary course of business and in amounts and on terms
consistent with past practices; (vi) creation or assumption by the Company
or any of its Subsidiaries of any Lien (other than Permitted Liens) on any
material asset other than in the ordinary course of business consistent
with past practices; (vii) making of any loan, advance or capital
contributions by the Company or any of its Subsidiaries to, or investment
in, any Person other than (x) loans or advances to employees in connection
with business-related travel (y) loans made to employees consistent with
past practices which are not in the aggregate in excess of $250,000, and
(z) loans, advances or capital contributions to or investments in
wholly-owned Subsidiaries, and in each case made in the ordinary course of
business consistent with past practices; (viii) transaction or commitment
made, or any contract or agreement entered into, by the Company or any of
its Subsidiaries relating to its assets or business (including the
acquisition or disposition of any assets) or any relinquishment by the
Company or any of its Subsidiaries of any Contract or other right, in
either case, material to the Company and its Subsidiaries, taken as a
whole, other than transactions and commitments in the ordinary course of
business consistent with past practices and those contemplated by this
Agreement; (ix) labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any of its Subsidiaries, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees; or (x) change by the Company or any of its
Subsidiaries in accounting principles, practices or methods. Since the
Audit Date, except as disclosed in the Company Reports filed prior to the
date hereof or increases in the ordinary course of business consistent with
past practices, there has not been any increase in the compensation payable
or that could become payable by the Company or any of its Subsidiaries to
(a) officers of the Company or any of its Subsidiaries or (b) any employee
of the Company or any of its Subsidiaries whose annual cash compensation is
$150,000 or more, or any amendment of any of the Compensation and Benefit
Plans (as defined in Section 5.1(h)).
(g) Litigation and Liabilities. Except as disclosed in Schedule
5.1(g) or in the Company Reports filed prior to the date hereof, and except
for matters which, individually or in the aggregate, have not had and are
not reasonably likely to have a Company Material Adverse Effect or prevent,
delay or impair the ability of the Company to consummate the transactions
contemplated by this Agreement, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries or (ii) obligations or liabilities,
whether or not accrued, contingent or otherwise and whether or not required
to be disclosed, including those relating to matters involving any
Environmental Law (as defined in Section 5.1(k)) or any other facts or
circumstances of which the Company has knowledge that are reasonably likely
to result in any claims against, or material obligations or liabilities of,
the Company or any of its Subsidiaries.
(h) Employee Benefits.
(i) For purposes of this Agreement, "Compensation and Benefit
Plans" means, collectively, each bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock option, employment,
termination, severance, compensation, medical, health, or other plan,
agreement, policy or arrangement, whether written or oral, that covers
employees or directors of the Company or any of its Subsidiaries, or
pursuant to which former employees or directors of the Company or any of
its Subsidiaries are entitled to current or future benefits. The Company
has made available to Parent copies of all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes referred to
herein as "Pension Plans"),
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"employee welfare benefit plans" (as defined in Section 3(1) of ERISA)
and all other Compensation and Benefit Plans maintained, or contributed
to, by the Company or of its subsidiaries or any person or entity that,
together with the Company and its subsidiaries, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Internal Revenue
Code of 1986, as amended (the "Code") (the Company and each such other
person or entity, a "Commonly Controlled Entity") for the benefit of any
current employees, officers or directors of the Company or any of its
subsidiaries. The Company has also made available to Parent true,
complete and correct copies of (1) the most recent annual report on Form
5500 filed with the Internal Revenue Service with respect to each
Compensation and Benefit Plan (if any such report was required), (2) the
most recent summary plan description for each Compensation and Benefit
Plan for which such summary plan description is required and (3) each
trust agreement and group annuity contract related to any Compensation
and Benefit Plan. Except as would not have a material adverse effect on
the Company, each Compensation and Benefit Plan has been administered in
accordance with its terms. Except as would not have a Company Material
Adverse Effect, each of its subsidiaries and all the Compensation and
Benefit Plans are all in compliance with applicable provisions of ERISA
and the Code.
(ii) Except as would not have a Company Material Adverse Effect,
all Pension Plans have been the subject of determination letters from
the Internal Revenue Service to the effect that such Pension Plans are
qualified and exempt from Federal income taxes under Sections 401(a) and
501(a), respectively, of the Code, and no such determination letter has
been revoked nor has any event occurred since the date of its most
recent determination letter or application therefor that would adversely
affect its qualification or materially increase its costs.
(iii) Neither the Company, nor any of its Subsidiaries, nor any
Commonly Controlled Entity has maintained, contributed or been obligated
to contribute to any Benefit Plan that is subject to Title IV of ERISA.
(iv) Schedule 5.1(h) lists all outstanding Stock Options as of July
27, 1997, showing for each such option: (1) the number of shares
issuable, (2) the number of vested shares, (3) the date of expiration
and (4) the exercise price.
(v) All contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof have been timely
made.
(vi) Except as provided by this Agreement or in Schedule 5.1(h), no
employee of the Company or any of its Subsidiaries will be entitled to
any additional compensation or benefits or any acceleration of the time
of payment or vesting of any compensation or benefits under any Benefit
Plan as a result of the transactions contemplated by this Agreement.
(vii) All Compensation and Benefit Plans covering current or former
non-U.S. employees of the Company or any of its Subsidiaries comply in
all material respects with applicable local Laws. The Company and its
Subsidiaries have no unfunded liabilities with respect to any Pension
Plan that covers such non-U.S. employees.
(viii) Each Compensation and Benefit Plan complies in all material
respects with all applicable requirements of (i) the Age Discrimination
in Employment Act of 1967, as amended, and the regulations thereunder
and (ii) Title VII of the Civil Rights Act of 1964, as amended, and the
regulations thereunder and all other applicable laws. All amendments and
actions required to bring each of the Employee Benefit Plans into
conformity with all of the applicable provisions of ERISA and other
applicable laws have been made or taken except to the extent that such
amendments or actions are not required by law to be made or taken until
a date after the Closing Date and are disclosed on Schedule 5.1(h).
(ix) Each group medical plan sponsored by the Company materially
complies with the health care continuation provisions of COBRA and (ii)
the Medicare Secondary Payor Provisions of Section 1826 (b) of the
Social Security Act, and the regulations promulgated thereunder.
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(i) Compliance with Laws. Except as set forth in the Company Reports
filed prior to the date hereof, the businesses of each of the Company and
its Subsidiaries have not been, and are not being, conducted in violation
of any law, ordinance, regulation, judgment, order, injunction, decree,
arbitration award, license or permit of any Governmental Entity
(collectively, "Laws"), except for violations or possible violations that,
individually or in the aggregate, have not had and are not reasonably
likely to have a Company Material Adverse Effect or prevent, materially
delay or materially impair the ability of the Company to consummate the
transactions contemplated by this Agreement. Except as set forth in the
Company Reports filed prior to the date hereof, no investigation or review
by any Governmental Entity with respect to the Company or any of its
Subsidiaries is pending or, to the knowledge of the Company, threatened,
nor has any Governmental Entity indicated an intention to conduct the same,
except for those the outcome of which are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect or
prevent, materially delay or materially impair the ability of the Company
to consummate the transactions contemplated by this Agreement.
(j) Takeover Statutes. No "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation (each a
"Takeover Statute") is applicable to the Company, the Shares, the Offer,
the Merger or any of the other transactions contemplated by this Agreement.
The Board of Directors of the Company has approved the Offer, the Merger
and this Agreement, and such approval is sufficient to render inapplicable
to the Offer, the Merger, this Agreement, and the transactions contemplated
by this Agreement the provisions of Section 203 of DGCL to the extent, if
any, such Section is applicable to the Offer, the Merger, this Agreement
and the transactions contemplated by this Agreement.
(k) Environmental Matters.
(i) The term "Environmental Laws" means any Federal, state, local
or foreign statute, treaty, ordinance, rule, regulation, policy, permit,
consent, approval, license, judgment, order, decree or injunction
relating to: (A) Releases (as defined in 42 U.S.C. sec. 9601(22) and
California Health and Safety Code sec. 25501(r)) or threatened Releases
of Hazardous Material (as hereinafter defined) into the environment, (B)
the generation, treatment, storage, presence disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Material, (C) the
health or safety of employees in the workplace environment, (D) natural
resources, or (E) the environment, and includes all "Environmental Laws"
as they are defined in any indemnification provision in any contract,
lease, or agreement to which Company is a party. The term "Hazardous
Material" means (1) hazardous substances (as defined in 42 U.S.C. sec.
9601(14)) and California Health and Safety Code sec. 25501(o), including
"hazardous waste" as defined in California Health and Safety Code sec.
25501(p), (2) petroleum, including crude oil and any fractions thereof,
(3) natural gas, synthetic gas and any mixtures thereof, (4) asbestos
and/or asbestos containing materials, (5) PCBs or materials containing
PCBs and (6) any material regulated as a medical waste or infectious
waste but excludes commonly available office and janitorial supplies,
(7) lead containing paint, (8) radioactive materials, and (9) "Hazardous
Substance" or "Hazardous Material" as those terms are defined in any
indemnification provision in any contract, lease, or agreement to which
the Company is a party.
(ii) During the period of ownership or operation by the Company and
its Subsidiaries of any of their current or previously owned or leased
properties, there have been no Releases of Hazardous Material by the
Company or any of its Subsidiaries in, on, under or affecting such
properties or any surrounding site, and neither the Company nor any of
its Subsidiaries has disposed of any Hazardous Material in a manner that
has led, or could reasonably be anticipated to lead to a Release, except
in each case for those which individually or in the aggregate would not
have a Company Material Adverse Effect, and except as disclosed in the
Company Reports. Except as set forth on Schedule 5.1(k), to the
Company's knowledge there have been no Releases of Hazardous Material by
the Company or any of its Subsidiaries in, on, under or affecting such
properties or any surrounding site at times outside of such periods of
ownership, operation, or lease or by any other party except in each case
for those which individually on in the aggregate would not have a
Company Material Adverse Effect. The Company and its Subsidiaries have
not received any written notice of, or entered into
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any order, settlement or decree relating to: (A) any violation of any
Environmental Laws or the institution or pendency of any suit, action,
claim, proceeding or investigation by any Governmental Entity or any
third party in connection with any alleged violation of Environmental
Laws, (B) the response to or remediation of Hazardous Material at or
arising from any of the Company's properties or any Subsidiary's
properties. To the Company's knowledge there have been no violations of
any Environmental Laws which violations individually or in the aggregate
would have a Company Material Adverse Effect.
(l) Intellectual Property.
(i) The Company and its subsidiaries own, or are validly licensed
or otherwise have the right to use all (i) foreign and United States
federal and state patents, trademarks, trade names, service marks and
copyright registrations, (ii) foreign and United States federal and
state patent, trademark, trade name, service mark and copyright
applications for registration, (iii) common law claims to trademarks,
service marks and trade names, (iv) claims of copyright which exist
although no registrations have been issued with respect thereto, (v)
fictitious business name filings with any state or local Governmental
Entity and (vi) inventions, concepts, designs, improvements, original
works of authorship, computer programs, know-how, research and
development, techniques, modifications to existing copyrightable works
of authorship, data and other proprietary and intellectual property
rights (whether or not patentable or subject to copyright, mask work or
trade secret protection), in each case which are material to the conduct
of the business of the Company and its Subsidiaries (collectively, the
"Intellectual Property Rights"). There are no Liens other than Permitted
Liens on the Intellectual Property Rights. There are no outstanding and,
to the Company's knowledge, no threatened disputes or disagreements with
respect to any Contract in respect of the Intellectual Property Rights.
(ii) Neither the Company nor any of its Subsidiaries is, nor has it
during the three (3) years preceding the date of this Agreement been, a
party to any litigation or arbitral or other proceeding, nor, to the
knowledge of the Company, is any such proceeding threatened as to which
there is a reasonable possibility of a determination adverse to the
Company or one of its Subsidiaries, that involved a claim of
infringement by the Company or one of its Subsidiaries or any other
Person (including any Governmental Entity) of any Intellectual Property
Right. No Intellectual Property Right is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting the use
thereof by the Company or any of its Subsidiaries or, in the case of any
Intellectual Property Right owned by the Company or its Subsidiaries
licensed to others, restricting the sale, transfer, assignment or
licensing thereof by the Company or any of its Subsidiaries to any other
Person. Except as set forth on Schedule 5.1(ii), the Company has no
knowledge that would cause it to believe that its or any Subsidiary's
use of any Intellectual Property Right conflicts with, infringes upon or
violates any patent, patent license, trademark, tradename, copyright,
service mark, brand mark or brand name, or any trade secret of any
Person.
(iii) Schedule 5.1(l) (iii) sets forth a complete list of (a) any
material contracts related to the Intellectual Property Rights and (b)
all documents which license or otherwise convey any of the Intellectual
Property Rights owned by the Company or any of its Subsidiaries to a
third party.
(iv) All employees and independent contractors of the Company or
any of its Subsidiaries involved with the development of graphics and
video controllers for portable computers, desktop PC motherboard
products and other products and computer software in connection
therewith (collectively, "Products") for the Company or any of its
Subsidiaries have executed written agreements with the Company or
applicable Subsidiary that assign to the Company or such Subsidiary all
rights to any Intellectual Property Rights and that otherwise
appropriately protect the Intellectual Property Assets.
(m) Taxes. Except as set forth on Schedule 5.1(m), (i) the Company and
its Subsidiaries have timely filed or will timely file all returns and
reports required to be filed by them with any taxing authority with respect
to Taxes for any period ending on or before the date hereof, taking into
account any
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<PAGE> 20
extension of time to file granted to or obtained on behalf of the Company
or any of its Subsidiaries; (ii) all Taxes shown to be payable on such
returns or reports that are due prior to the date hereof have been timely
paid; (iii) as of the date hereof, no deficiency for any amount of Tax has
been asserted or assessed or, to the Company's knowledge, has been
threatened or is likely to be assessed by a taxing authority against the
Company or any of its Subsidiaries other than deficiencies as to which
adequate reserves have been provided for in the Company's consolidated
financial statements; and (iv) the Company has provided in accordance with
GAAP adequate reserves in its consolidated financial statements for any
Taxes that have not been paid, whether or not shown as being due on any
returns. For purposes of this Agreement, "Taxes" means any and all taxes,
fees, levies, duties, tariffs, imposts and other charges of any kind
(together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any
Governmental Entity or other taxing authority, including taxes or other
charges on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, Capital Stock, payroll,
employment, social security, workers' compensation, unemployment
compensation, or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added or gains taxes;
license, registration and documentation fees; and customers' duties,
tariffs and similar charges. Neither the Company nor any of its
Subsidiaries is subject to any Tax sharing agreement. No payments to be
made to any of the employees of the Company or any of its Subsidiaries
will, as a direct or indirect result of the Offer or the consummation of
the Merger, be subject to the deduction limitations of Section 280G of the
Code.
(n) Labor Matters. Neither the Company nor any of its Subsidiaries is
a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is the Company or any of its Subsidiaries the subject of
any proceeding asserting that the Company or any of its Subsidiaries has
committed an unfair labor practice or is seeking to compel it to bargain
with any labor union or labor organization, nor is there pending or, to the
knowledge of the Company, threatened, any labor strike, dispute, walkout,
work stoppage, slow-down or lockout involving the Company or any of its
Subsidiaries.
(o) Insurance. The Company maintains insurance policies (the
"Insurance Policies") against all risks of a character and in such amounts
as are usually insured against by similarly situated companies in the same
or similar businesses. Each Insurance Policy is in full force and effect
and is valid, outstanding and enforceable, and all premiums due thereon
have been paid in full. None of the Insurance Policies will terminate or
lapse (or be affected in any other materially adverse manner) by reason of
the transactions contemplated by this Agreement. The Company and its
Subsidiaries have complied in all material respects with the provisions of
each Insurance Policy under which it is the insured party. No insurer under
any Insurance Policy has canceled or generally disclaimed liability under
any such policy or, to the Company's knowledge, indicated any intent to do
so or not to renew any such policy. All material claims under the Insurance
Policies have been filed in a timely fashion.
(p) Rights Agreement. The Company has taken all necessary action to
ensure that neither the entering into of this Agreement, the making of the
Offer nor the consummation of the Offer or the Merger will cause the Rights
to become exercisable, cause Parent or Merger Sub to become an "Acquiring
Person" (as defined in the Rights Agreement), or cause there to occur a
"Distribution Date" or a "Section 11(a)(ii) Event" (each as defined in the
Rights Agreement).
(q) Brokers and Finders. Neither the Company nor any of its
Subsidiaries, officers, directors, or employees or other Affiliates has
employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finders' fees in connection with the Offer, the Merger
or the other transactions contemplated by this Agreement, except that the
Company has employed the Financial Advisor, the arrangements with which
have been disclosed to Parent prior to the date hereof.
(r) Certain Business Practices. Neither the Company, any of its
Subsidiaries nor any directors, officers, agents or employees of the
Company or any of its Subsidiaries has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or
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<PAGE> 21
domestic political parties or campaigns or violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended; or (iii) made any other
payment prohibited by applicable Law.
(s) Product Warranties. Schedule 5.1(s) sets forth complete and
accurate copies of the written, and descriptions of all oral, warranties
and guaranties by the Company or any of its Subsidiaries currently in
effect with respect to the Products. There have not been any material
deviations from such warranties and guaranties, and none of the Company's
or any of its Subsidiaries' salesmen, employees, distributors and agents is
authorized to undertake obligations to any customer or to other third
parties in excess of such warranties or guaranties.
(t) Suppliers and Customers. The documents and information supplied
by the Company to Parent, Merger Sub or any of their representatives in
connection with this Agreement with respect to relationships and volumes of
business done with significant suppliers and customers was accurate in all
material respects.
(u) Backlog Information. None of the documents or information
delivered to Parent, Merger Sub or any of their respective counsel,
accountants and other agents and representatives in connection with backlog
and billing contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein not misleading.
5.2. Representations and Warranties of Parent and Merger Sub. Parent and
Merger Sub each hereby represents and warrants to the Company as follows:
(a) Organization, Good Standing and Qualification. Each of Parent and
Merger Sub (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, (ii) has all
requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted
and (iii) is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except
where the failure to be so qualified or in such good standing, when taken
together with all other such failures, has not had and is not reasonably
likely to have a Parent Material Adverse Effect (as defined in Section
9.2). Parent has made available to the Company a complete and correct copy
of Parent's certificate or incorporation and by-laws, as amended to the
date hereof. Parent's certificate of incorporation and by-laws so delivered
are in full force and effect.
(b) Ownership of Merger Sub. All of the issued and outstanding
Capital Stock of Merger Sub is, and at the Effective Time will be, owned by
Parent, and there are no (i) other outstanding shares of Capital Stock or
other voting securities of Merger Sub, (ii) securities of Merger Sub
convertible into or exchangeable for shares of Capital Stock or other
voting securities of Merger Sub or (iii) options or other rights to acquire
from Merger Sub, and no obligations of Merger Sub to issue, any Capital
Stock, other voting securities or securities convertible into or
exchangeable for Capital Stock or other voting securities of Merger Sub.
Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated hereby, has engaged in no other business
activities and has conducted its operations only as contemplated hereby.
(c) Corporate Authority. Each of Parent and Merger Sub has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under
this Agreement and to consummate the Offer and the Merger. Assuming due
execution and delivery by the Company, this Agreement is a valid and
binding agreement of Parent and Merger Sub, enforceable against each of
them in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy laws or creditors' rights generally or by
general principles of equity.
(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to Section
1.2, (B) under the HSR Act and the Exchange Act, (C) to comply with
state securities or "blue sky" laws, and (D) required to be made with
the NASD, no notices, reports or other filings are required to be made
by Parent or Merger Sub with, nor are any Government Consents required
to be obtained by Parent or Merger
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<PAGE> 22
Sub from, any Governmental Entity, in connection with the execution and
delivery of this Agreement by Parent and Merger Sub, the Offer and the
consummation by Parent and Merger Sub of the Merger and the other
transactions contemplated hereby, except those that the failure to make
or obtain are not, individually or in the aggregate, reasonably likely
to have a Parent Material Adverse Effect or prevent, materially delay or
materially impair the ability of the Parent or Merger Sub to consummate
the transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by
Parent and Merger Sub do not, and the consummation by Parent and Merger
Sub of the Merger and the other transactions contemplated hereby will
not, constitute or result in (A) a breach or violation of, or a default
under, the certificate or by-laws of Parent or Merger Sub, (B) a breach
or violation of, or a default under, the acceleration of or the creation
of a Lien, on the assets of Parent or any of its Subsidiaries (with or
without notice, lapse of time or both) pursuant to, any Contract binding
upon Parent or any of its Subsidiaries or any Law to which Parent or any
of its Subsidiaries is subject or (C) any change in the rights or
obligations of any party under any such Contract, except, in the case of
clause (B) or (C) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate,
is not reasonably likely to have a Parent Material Adverse Effect or
prevent, materially delay or materially impair the ability of the Parent
or Merger Sub to consummate the transactions contemplated by this
Agreement.
(e) Brokers and Finders. Neither Parent nor Merger Sub, nor any of
their respective officers, directors, employees or other Affiliates, has
employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finders' fees in connection with the Offer, the Merger
or the other transactions contemplated by this Agreement.
(f) Financing. At the expiration of the Offer and at the Effective
Time, Parent and Merger Sub will have available all the funds necessary for
the acquisition of all Shares pursuant to the Offer and to perform their
respective obligations under this Agreement, including without limitation
payment in full for all Shares validly tendered or outstanding as of the
Effective Time.
ARTICLE VI
COVENANTS
6.1. Interim Operations. The Company covenants and agrees as to itself
and its Subsidiaries that, after the date hereof and prior to the Effective Time
(unless Parent shall otherwise approve in writing, which approval shall not be
unreasonably withheld, and except as otherwise expressly contemplated by this
Agreement):
(a) the business of it and its Subsidiaries shall be conducted in the
ordinary and usual course consistent with past practices and, to the extent
consistent therewith, it and its Subsidiaries shall use commercially
reasonable efforts to preserve its business organization intact and
maintain its existing relations and goodwill with customers, suppliers,
distributors, creditors, lessors, employees and business associates;
(b) it shall not, (i) issue, sell otherwise dispose of or subject to
Lien (other than Permitted Liens) any of its Subsidiaries' Capital Stock
owned by it; (ii) amend its charter, by-laws or, except for any amendment
which will not hinder, delay or make more costly to Parent the Offer or the
Merger; the Rights Agreement; (iii) split, combine or reclassify its
outstanding shares of Capital Stock; (iv) declare, set aside or pay any
dividend payable in cash, stock or property in respect of any Capital Stock
other than the issuance of Rights in connection with the issuance of
Capital Stock upon the exercise of Company Options; (v) repurchase, redeem
or otherwise acquire or permit any of its Subsidiaries to purchase or
otherwise acquire, any shares of its Capital Stock; or any securities
convertible into or exchangeable or exercisable for any shares of its
Capital Stock; or (vi) adopt a plan of complete or partial liquidation or
dissolution, merger or otherwise restructure or recapitalize or consolidate
with any Person other than Merger Sub or another wholly-owned Subsidiary of
Parent;
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(c) neither it nor any of its Subsidiaries shall (i) authorize for
issuance or issue, sell or otherwise dispose of or subject to any Lien
(other than Permitted Liens) any shares of, or securities convertible into
or exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its Capital
Stock of any class or any Voting Debt (other than Shares issuable pursuant
to Company Options outstanding on the date hereof, the grant of Company
Options to newly hired employees in accordance with a benefit matrix
previously provided to Parent and after notification of Parent and
automatic grants of director stock options as mandated by the Company's
First Amended 1988 Nonqualified Stock Option Plan for Outside Directors);
(ii) other than in the ordinary and usual course of business consistent
with past practices, transfer, lease, license, guarantee, sell or otherwise
dispose of or subject to any Lien (other than Permitted Liens) any other
property or assets or incur or modify any material indebtedness or other
liability (except for additional borrowings in the ordinary course under
lines of credit in existence on the date hereof); (iii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person except
in the ordinary course of business consistent with past practices and
except for obligations of Subsidiaries of the Company incurred in the
ordinary course of business; (iv) make any loans to any other Person (other
than to Subsidiaries of the Company or, customary loans or advances to
employees in connection with business-related travel in the ordinary course
of business consistent with past practices); or (v) make any commitments
for, make or authorize any capital expenditures other than in amounts less
than $150,000 individually and $3,000,000 in the aggregate or, by any
means, make any acquisition of, or investment in, assets or stock of any
other Person;
(d) except as may be required to comply with applicable law or by
existing contractual commitments, neither it nor any of its Subsidiaries
shall (i) enter into any new agreements or commitments for any severance or
termination pay to, or enter into any employment or severance agreement
with, any of its directors, officers or employees or consultants except for
(a) specific arrangements with ten of the Company's employees and one of
its directors which have been previously disclosed to Parent and (b)
reasonable severance payments made to employees in the ordinary course of
business and consistent with past practices, or (ii) terminate, establish,
adopt, enter into, make any new grants or awards under, amend or otherwise
modify, any Compensation and Benefit Plan or increase or accelerate the
salary, wage, bonus or other compensation of any employees or directors
(except for increases occurring in the ordinary and usual course of
business, which shall include normal periodic performance reviews and
related compensation and benefit increases, but not any general
across-the-board increases) or consultants or pay or agree to pay any
pension, retirement allowance or other employee benefit not required by any
existing Compensation and Benefit Plan;
(e) neither it nor any of its Subsidiaries shall, except as may be
required as a result of a change in law or in GAAP, change any of the
accounting principles or practices used by it;
(f) neither it nor any of its Subsidiaries shall revalue in any
respect any of its material assets, including writing down the value of
inventory or writing-off notes or accounts receivable, other than in the
ordinary course of business consistent with past practices;
(g) neither it nor any of its Subsidiaries shall settle or compromise
any material claims or litigation or terminate or materially amend or
modify any of its material Contracts or waive, release or assign any
material rights or claims;
(h) neither it nor any of its Subsidiaries shall make any Tax election
or permit any insurance policy naming it as a beneficiary or loss-payable
payee to be canceled or terminated;
(i) neither it nor any of its Subsidiaries shall take any action or
omit to take any action that would cause any of its representations and
warranties herein to become untrue in any material respect; and
(j) neither it nor any of its Subsidiaries will authorize or enter
into any agreement to do any of the foregoing.
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6.2. Third Party Acquisitions.
(a) The Company agrees that neither it nor any of its Subsidiaries nor
any of its or its Subsidiaries' employees or directors shall, and it shall
direct and use its best efforts to cause its and its Subsidiaries' agents
and representatives (including the Financial Advisor or any other
investment banker and any attorney or accountant retained by it or any of
its Subsidiaries (collectively, "Company Advisors")) not to, directly or
indirectly, initiate, solicit, encourage or otherwise facilitate any
inquiries in respect of, or the making of any proposal for, a Third Party
Acquisition (as defined in Section 6.2(b)). The Company further agrees that
neither it nor any of its Subsidiaries nor any of its or its Subsidiaries'
employees or directors shall, and it shall direct and use its best efforts
to cause all Company Advisors not to, directly or indirectly, engage in any
negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any Third Party (as defined in Section
6.2(b)) relating to the proposal of a Third Party Acquisition, or otherwise
facilitate any effort or attempt to make or implement a Third Party
Acquisition; provided, however, that if at any time prior to the acceptance
for payment of Shares pursuant to the Offer, the Board of Directors of the
Company determines in good faith, after consultation with outside counsel,
that it is necessary to do so in order to comply with its fiduciary duties
to the Company's stockholders under applicable law, the Company may, in
response to an inquiry, proposal or offer for a Third Party Acquisition
which was not solicited subsequent to the date hereof, (x) furnish only
such information with respect to the Company to any such person pursuant to
a customary confidentiality agreement as was delivered to Parent prior to
the execution of this Agreement and (y) participate in the discussions and
negotiations regarding such inquiry, proposal or offer; and further
provided, that nothing contained in this Agreement shall prevent the
Company or its Board of Directors from complying with Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to any proposed Third Party
Acquisition. The Company shall immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any Third Parties
conducted heretofore with respect to any of the foregoing. The Company
shall take the necessary steps to promptly inform all Company Advisors of
the obligations undertaken in this Section 6.2(a). The Company agrees to
notify Parent promptly if (i) any inquiries relating to or proposals for a
Third Party Acquisition are received by the Company, any of its
Subsidiaries or any of the Company Advisors, (ii) any confidential or other
non-public information about the Company or any of its Subsidiaries is
requested from the Company, any of its Subsidiaries or any of the Company
Advisors, or (iii) any negotiations or discussions in connection with a
possible Third Party Acquisition are sought to be initiated or continued
with the Company, any of its Subsidiaries or any of the Company Advisors
indicating, in connection with such notice, the principal terms and
conditions of any proposals or offers, and thereafter shall keep Parent
informed in writing, on a reasonably current basis, on the status and terms
of any such proposals or offers and the status of any such negotiations or
discussions. The Company also agrees promptly to request each Person that
has heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company or any of its Subsidiaries, if any,
to return all confidential information heretofore furnished to such Person
by or on half of the Company or any of its Subsidiaries.
(b) Except as permitted by this Section 6.2(b), the Board of Directors
of the Company shall not withdraw its recommendation of the Offer or the
Merger and other transactions contemplated hereby or approve or recommend,
or cause the Company to enter into any agreement with respect to, any Third
Party Acquisition. Notwithstanding the preceding sentence, if the Board of
Directors of the Company determines in its good faith judgment, after
consultation with legal counsel, that it is necessary to do so in order to
comply with its fiduciary duties, the Board of Directors may withdraw its
recommendation of the Offer or the Merger and the other transactions
contemplated hereby, or approve or recommend or cause the Company to enter
into an agreement with respect to a Superior Proposal (as defined below),
but in each case only (i) after providing written notice to Parent (a
"Notice of Superior Proposal") advising Parent that the Board of Directors
has received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the Person making such
Superior Proposal and (ii) if Parent does not, within five (5) Business
Days (or within two (2) Business Days with respect to any amendment to any
Superior Proposal which was noticed at least five (5) Business Days prior
to such amendment) after Parent's receipt of the Notice of Superior
Proposal, make an offer which the Board of
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<PAGE> 25
Directors of the Company determines in its good faith judgment (based on
the advice of the Financial Advisor or another financial adviser of
nationally recognized reputation) to be as favorable to the Company's
stockholders as such Superior Proposal; provided, however, that the Company
shall not be entitled to enter into any agreement with respect to a
Superior Proposal unless this Agreement is concurrently terminated by its
terms pursuant to Section 8.3(b). For purposes of this Agreement, "Third
Party Acquisition" means the occurrence of any of the following events: (i)
the acquisition of the Company by merger or otherwise by any Person (which
includes a "person" as such term is defined in Section 13(d)(3) of the
Exchange Act) other than Parent, Merger Sub or any Affiliate thereof (a
"Third Party"); (ii) the acquisition by a Third Party of 20% or more of the
total assets of the Company and its Subsidiaries, taken as a whole (other
than the purchase of the Company's products in the ordinary course of
business); (iii) the acquisition by a Third Party of 20% or more of the
outstanding Shares; (iv) the adoption by the Company of a plan of partial
or complete liquidation or the declaration or payment of an extraordinary
dividend; (v) the repurchase by the Company or any of its Subsidiaries of
20% or more of the outstanding Shares; or (vi) the acquisition by the
Company or any of its Subsidiaries by merger, purchase of stock or assets,
joint venture or otherwise of a direct or indirect ownership interest or
investment in any business whose annual revenues, net income or assets is
equal to or greater than 20% of the annual revenues, net income or assets
of the Company and its Subsidiaries, taken as a whole. For purposes of this
Agreement, a "Superior Proposal" means any bona fide proposal to acquire
directly or indirectly for consideration consisting of cash and/or
securities more than 50% of the Shares then outstanding or all or
substantially all the assets of the Company and its Subsidiaries, taken as
a whole, and otherwise on terms which the Board of Directors of the Company
by a majority vote determines in its good faith judgment (based on
consultation with the Financial Advisor or another financial adviser of
nationally recognized reputation) to be reasonably capable of being
completed (taking into account all legal, financial, regulatory and other
aspects of the proposal and the Person making the proposal, including the
availability of financing therefor) and more favorable to the Company's
stockholders than the Merger.
6.3. Filings; Other Actions; Notification.
(a) If a vote of the Company's stockholders is required by law, the
Company shall promptly, following the acceptance for payment of Shares by
Parent, pursuant to the Offer, prepare and file with the SEC the Proxy
Statement, which shall include the recommendation of the Board of Directors
of the Company that stockholders of the Company vote in favor of the
approval and adoption of this Agreement and the written opinion of the
Financial Advisor that the cash consideration to be received by the
stockholders of the Company pursuant to the Merger is fair to such
stockholders from a financial point of view. The Company shall use all
reasonable efforts to have the Proxy Statement cleared by the SEC as
promptly as practicable after such filing, and promptly thereafter mail the
Proxy Statement to the stockholders of the Company. The Company shall also
use its best efforts to obtain all necessary state securities law or "blue
sky" permits and approvals required in connection with the Merger and to
consummate the other transactions contemplated by this Agreement and will
pay all expenses incident thereto.
(b) Upon and subject to the terms and conditions set forth in this
Agreement, the Company and Parent shall cooperate with each other and use
(and shall cause their respective Subsidiaries to use) all reasonable
efforts to take or cause to be taken all actions, and do or cause to be
done all things, necessary, proper or advisable under this Agreement and
applicable Laws to consummate and make effective the Offer, the Merger and
the other transactions contemplated by this Agreement as soon as
practicable, including preparing and filing as promptly as practicable all
documentation to effect all necessary applications, notices, petitions,
filings and other documents and to obtain as promptly as practicable all
permits, consents, approvals and authorizations necessary or advisable to
be obtained from any third party and/or any Governmental Entity in order to
consummate the Offer, the Merger or any of the other transactions
contemplated by this Agreement; provided, however, that nothing in this
Section 6.3 shall require, or be construed to require, Parent to proffer
to, or agree to, sell or hold separate and agree to sell, before or after
the Effective Time, any material assets, businesses or any interest in any
material assets or
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businesses of Parent, the Company or any of their respective Affiliates (or
to consent to any sale, or agreement to sell, by the Company of any of its
material assets or businesses) or to agree to any material change in or
restriction on the operations of any such assets or businesses; provided
further, that nothing in this Section 6.3 shall require, or be construed to
require, a proffer or agreement that would, in the good faith judgment of
Parent, be likely to have a significant adverse effect on the benefits to
Parent of the transactions contemplated by this Agreement. Subject to
applicable Laws relating to the exchange of information, Parent and the
Company shall have the right to review in advance, and to the extent
practicable each will consult the other on, all the information relating to
Parent or the Company, as the case may be, and any of their respective
Subsidiaries, that appears in any filing made with, or written materials
submitted to, any third party and/or any Governmental Entity in connection
with the Offer, the Merger and the other transactions contemplated by this
Agreement, including the Proxy Statement. In exercising the foregoing
right, the Company and Parent shall act reasonably and as promptly as
practicable.
(c) Each of the Company and Parent shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Proxy Statement or
any other statement, filing, notice or application made by or on behalf of
Parent, the Company or any of their respective Subsidiaries to any
Governmental Entity or other Person (including the NASD) in connection with
the Offer, the Merger and the other transactions contemplated by this
Agreement.
(d) Each of the Company and Parent shall keep the other apprised of
the status of matters relating to completion of the transactions
contemplated hereby, including promptly furnishing the other with copies of
notices or other communications received by Parent or the Company, as the
case may be, or any of their respective Subsidiaries, from any third party
and/or any Governmental Entity with respect to the Offer, the Merger and
the other transactions contemplated by this Agreement. Each of the Company
and Parent shall give prompt notice to the other of any change that is
reasonably likely to have a Company Material Adverse Effect or a Parent
Material Adverse Effect, respectively.
6.4. Information Supplied. Each of Parent and the Company agrees, as to
information provided by itself and its Subsidiaries, that none of the
information included or incorporated by reference in the proxy statement
delivered by the Company to its stockholders in connection with the Merger and
any amendment or supplement thereto (the "Proxy Statement") will, at the time
the Proxy Statement is cleared by the SEC, at the date of mailing to
stockholders of the Company, and at the time of the Stockholders Meeting (as
defined in Section 6.5),contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
6.5. Stockholders Meeting.
(a) If a vote of the Company's stockholders is required by law, the
Company will, following the acceptance for payment of Shares by Parent
pursuant to the Offer, take, in accordance with applicable Law and its
certificate of incorporation and by-laws, all action necessary to convene a
meeting of holders of Shares (the "Stockholders Meeting") as promptly as
practicable after the Proxy Statement is cleared by the SEC to consider and
vote upon the approval of this Agreement. The Proxy Statement shall,
include a statement that the Board approved this Agreement and recommended
that Stockholders vote in favor of this Merger, and the Company shall use
all reasonable and customary efforts to solicit such approval.
Notwithstanding the foregoing, if Parent, Merger Sub and/or any other
Subsidiary of Parent shall acquire at least 90% of the outstanding Shares,
the parties shall take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after the expiration of
the Offer without a Stockholders Meeting in accordance with Section 253 of
the DGCL.
(b) Parent agrees to cause all Shares purchased pursuant to the Offer
and all other Shares owned by Parent or any Subsidiary of Parent to be
voted in favor of the Merger.
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6.6. Access. Upon reasonable notice, and except as may otherwise be
required by applicable law or relevant contractual provisions contained in such
agreements, the Company shall (and shall cause its Subsidiaries to) (i) afford
Parent's officers, employees, counsel, accountants and other authorized
representatives (collectively, "Representatives") access, during normal business
hours throughout the period prior to the Effective Time, to its properties,
books, contracts and records and, during such period, (ii) furnish promptly to
Parent all information concerning its business, properties and personnel as may
reasonably be requested; provided, however, that no investigation pursuant to
this Section 6.6 shall affect or be deemed to modify any representation or
warranty made by the Company. All requests for information made pursuant to this
Section 6.6 shall be directed to an executive officer of the Company or such
Person as may be designated by its officers. Notwithstanding the foregoing, the
parties shall comply with, and shall cause their respective Representatives to
comply with, all their respective obligations under the Confidentiality
Agreement, dated July 22, 1997, between the Company and Parent.
6.7. Publicity. The initial press release concerning the Merger has been
approved by Parent and the Company and thereafter the Company and its
Subsidiaries, on the one hand, and Parent and Merger Sub, on the other hand,
shall consult with each other prior to issuing any press releases or otherwise
making public announcements with respect to the Merger and the other
transactions contemplated by this Agreement and prior to making any filings with
any Governmental Entity or other Person (including the NASD) with respect
hereto, except as may be required by law or by obligations pursuant to any
listing agreement with the National Market.
6.8. Status of Company Employees; Company Stock Options; Employee
Benefits.
(a) Except as contemplated by this Agreement, Parent agrees that, for
a period of twelve (12) months following the Effective Time, the Surviving
Corporation shall maintain employee benefits plans and arrangements
(directly or in conjunction with Parent) which, in the aggregate, will
provide a level of benefits to Continuing Employees of the Surviving
Corporation and its Subsidiaries similar to those provided under the
Compensation and Benefit Plans as in effect immediately prior to the
Effective Time (other than discretionary benefits); provided, however, that
Parent may cause modifications to be made to such employee benefit plans
and arrangements to the extent necessary to comply with applicable Law or
to reflect widespread adjustments in benefits (or costs thereof) provided
to employees under compensation and benefit plans of Parent and its
Subsidiaries, and no specific Compensation and Benefit Plans need be
provided. Parent shall use Continuing Employee's hire date with Company as
the basis for determining eligibility and vesting of Parent's defined
benefit and Supplemental Employee Retirement Medical Account (SERMA) plans.
Parent shall use Effective Time as the basis for determining eligibility
under the Parent's sabbatical plan and for determining benefit accruals
under Parent's defined benefit and SERMA plans. For purposes of determining
eligibility and vesting with respect to all other benefits maintained by
Parent, Parent shall use Continuing Employee's hire date with the Company.
Nothing in this Section 6.8(a) shall be construed or applied to restrict
the ability of the Surviving Corporation and its Subsidiaries to establish
such types and levels of compensation and benefits as they determine to be
appropriate.
(b) From and after the date hereof, the Company agrees that, except
with respect to grants in connecti