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ANNEX B
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
(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
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(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
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
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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
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 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,
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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 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)),
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(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.
(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
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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 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
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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.
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
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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 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.
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(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.
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.
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(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 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
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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 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
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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; (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.
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(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"), "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
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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.
(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
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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 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 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
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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 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
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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 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,
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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;
(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
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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.
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
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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 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
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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 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.
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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.
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
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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 connection with offers of employment outstanding
on July 22, 1997, it will not grant additional stock options under the
Assumed Stock Option Plan and its Board of Directors will take all actions
necessary to provide that all options outstanding under the Assumed Stock
Option Plan can be assumed by Parent.
(c) The Board of Directors of Parent will adopt a resolution assuming
on behalf of Parent the obligations and rights of the Company under all
options outstanding under the Assumed Stock Option Plan.
6.9. Expenses. The Surviving Corporation shall pay all charges and
expenses, including those of the Exchange Agent, in connection with the
transactions contemplated in Article IV. Except as otherwise provided in
Sections 8.5, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the Merger and the other
transactions contemplated by this Agreement shall be paid by the party incurring
such expense.
6.10. Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, the Surviving Corporation shall
indemnify, defend and hold harmless each person who is now, or has been at
any time prior to the date of this Agreement or who becomes prior to the
Effective Time a director or officer of the Company or any of its
Subsidiaries (when acting in such capacity) (the "Indemnified Parties"),
against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, demands, liabilities, damages or
liabilities (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal or
administrative arising out of matters existing or occurring prior to or
after the Effective Time, whether asserted or claimed prior to, at or after
the Effective Time, which is based in whole or in part on, or arising in
whole or in part out of the fact that such person is or was a director or
officer of the Company or any of its Subsidiaries including, without
limitation, all losses, claims, damages, costs, expenses, liabilities,
judgments or settlement amounts based in whole or in part on, or arising in
whole or in part out of, or pertaining to this Agreement or the
transactions contemplated hereby to the fullest extent that the Company
would have been permitted under the DGCL and its certificate of
incorporation, by-laws and other agreements in effect on the date hereof to
indemnify such individual.
(b) Any Indemnified Party wishing to claim indemnification under
subsection (a) of this Section 6.10, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify Parent and
the Surviving Corporation thereof (but the failure so to notify the
Surviving Corporation shall not relieve it from any liability which it may
have under this Section 6.10 except to the extent such failure materially
prejudices such party). In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) the Surviving Corporation shall have the right to assume the
defense thereof and the Surviving Corporation shall not be liable to any
such Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Party in connection with
the defense thereof, (ii) the Indemnified Party will cooperate in all
respects as requested by the Surviving Corporation in the defense of any
such matter and (iii) the Surviving Corporation shall not be liable for any
settlement effected without its prior written consent which consent shall
not be unreasonably withheld; provided, however, that the Surviving
Corporation shall not have any obligation hereunder to any Indemnified
Party if and when a court shall ultimately determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by Law.
(c) Parent and the Surviving Corporation shall maintain the Company's
and its Subsidiaries' existing officers' and directors' liability insurance
("D&O Insurance") for a period of six (6) years after the Effective Time so
long as the annual premium therefor is not in excess of 150% of the last
annual premium paid prior to the date hereof (the "Current Premium");
provided, however, that if the existing
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D&O Insurance expires, is terminated or canceled during such six-year
period, the Surviving Corporation will use its commercially reasonable
efforts to obtain as much D&O Insurance as can be obtained for the
remainder of such period for a premium not in excess (on an annualized
basis) of 150% of the Current Premium; provided further, that, in lieu of
maintaining such existing D&O Insurance as provided above, Parent may cause
coverage to be provided under any policy maintained for the benefit of
Parent or any of its Subsidiaries, so long as the terms are no less
advantageous to the intended beneficiaries thereof than the existing D&O
Insurance. In lieu of the purchase of such insurance by Parent or the
Surviving Corporation, the Company may purchase a six-year extended
reporting period endorsement ("reporting tail coverage") under its existing
directors' and liability insurance coverage, provided that the total cost
of the reporting tail coverage shall not exceed $350,000, and provided that
such reporting tail coverage shall extend the director and officer
liability coverage in force as of the date hereof for a period of six (6)
years from the Effective Time for any claims based upon, arising out of,
directly or indirectly resulting from, in consequence of, or in any way
involving wrongful acts or omissions occurring on or prior to the Effective
Time, including without limitation all claims based upon, arising out of,
directly or indirectly resulting from, in consequence of, or in any way
involving the Offer, the Merger and any and all related transactions or
related events.
(d) The provisions of this Section 6.10 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties
and their respective heirs and estates. Nothing in this Section 6.10 shall
limit in any way any other rights to indemnification that any current or
former director or officer of the Company may have by contract or
otherwise.
(e) From and after the Effective Time, the Surviving Corporation shall
fulfill, assume and honor in all respects the obligations of the Company
pursuant to the Company's Certificate of Incorporation, Bylaws and any
indemnification agreement between the Company and any of the Company's
directors and officers existing and in force as of the Effective Time. The
Company agrees that the indemnification obligations set forth in the
Company's Certificate of Incorporation and Bylaws, in each case as of the
date of this Agreement, shall survive the Merger (and, as of or prior to
the Effective Time, Parent shall cause the Bylaws of Sub to reflect such
previsions) and shall not be amended, repealed or otherwise modified for a
period of six (6) years after the Effective Time in any manner that would
adversely affect the rights thereunder of the Indemnified Parties.
(f) If the Surviving Corporation or any of its successors or assigns
(i) shall consolidate with or merge into any other Person and shall not be
the continuing or surviving corporation or Person of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties
and assets to any Person, then and in each such case, proper provisions
shall be made so that the successors and assigns of the Surviving
Corporation shall assume all of the obligations set forth in this Section
6.10.
6.11. Other Actions by the Company and Parent.
(a) Rights Agreement. Prior to the Effective Time, the Board of
Directors of the Company shall take all necessary action to ensure that the
representation and warranty in Section 5.1(p) is true and correct.
(b) Takeover Statutes. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, each of Parent and the Company and their respective Boards of
Directors shall grant such approvals and take such lawful actions as are
necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement or by the Merger
and otherwise act to eliminate or minimize the effects of such statute, and
any regulations promulgated thereunder, on such transactions.
6.12. Parent Stock Option; Exercise; Adjustments.
(a) Subject to the terms and conditions set forth herein, the Company
hereby grants to Parent an irrevocable option (the "Parent Option") to
purchase that number of authorized and unissued shares of Common Stock
equal to 19.99% of the outstanding Shares immediately prior to the exercise
of the Parent Option (the "Option Shares") at a purchase price of $17.50
per Option Share (the "Option Price"). Subject to the conditions set forth
in Subsection (c) below, the Parent Option may be exercised by Parent, in
whole or in part, at any time or from time to time after the date on which
Parent has accepted for payment the Shares tendered pursuant to the Offer
and prior to the termination of this Agreement pursuant to Article VIII. If
Parent wishes to exercise the Parent Option, Parent shall send a written
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notice to the Company (the "Exercise Notice") specifying a date (not
earlier than the next Business Day following the date such notice is given)
for the closing of such purchase and containing a representation by Parent
that upon the issuance and delivery of the Option Shares, there will be no
further conditions precedent that need to be satisfied for Parent and
Merger Sub to effect the Merger, and that Parent and Merger Sub will take
all actions required on their respective parts to effect the Merger.
(b) In the event of any change in the number of issued and outstanding
Shares by reason of any stock dividend, stock split, split-up,
recapitalization, merger or other change in the corporate or capital
structure of the Company, the number of Option Shares and the Option Price
shall be appropriately adjusted to restore Parent to its rights hereunder.
(c) The Company's obligation to issue and deliver the Option Shares
upon exercise of the Parent Option is subject only to the following
conditions:
(i) No preliminary or permanent injunction or other order issued by
any federal or state court of competent jurisdiction in the United
States prohibiting the delivery of the Option Shares shall be in effect;
(ii) Any applicable waiting periods under the HSR Act, or other
applicable United States or foreign Laws shall have expired or been
terminated; and
(iii) The number of Option Shares plus the number of Shares
accepted for payment by Parent pursuant to the Offer will, upon issuance
of the Option Shares, constitute at least ninety percent (90%) of the
Company's issued and outstanding shares of Common Stock.
(d) Any closing hereunder shall take place on the date specified by
Parent in its Exercise Notice delivered pursuant to subsection (a) above at
9:00 a.m., California time, or the first day thereafter on which all of the
conditions in subsection (c) above are met, at the offices of Parent's
counsel, or at such other time and place as the parties may agree (the
"Option Closing Date"). On the Option Closing Date, the Company will
deliver to Parent a certificate or certificates representing the Option
Shares in the denominations designated by Parent in its Exercise Notice and
Parent will purchase such Option Shares from the Company at a price per
Option Share equal to the Option Price. Any payment made by Parent to the
Company pursuant to this subsection (d) shall be made by certified,
cashier's or bank check or by wire transfer of immediately available funds
to an account designated by the Company. The certificates representing the
Option Shares may bear an appropriate legend relating to the fact that such
Option Shares have not been registered under the Securities Act.
ARTICLE VII
CONDITIONS
7.1. Conditions to Each Party's Obligation to Effect Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Closing of each of the following
conditions:
(a) Stockholder Approval. If required by applicable law this
Agreement shall have been duly approved by holders of the number of Shares
constituting at least the Company Requisite Vote.
(b) Regulatory Consents. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated and, other than filing the Delaware Certificate of Merger, all
filings with any Governmental Entity required to be made prior to the
Effective Time by the Company or Parent or any of their respective
Subsidiaries, with, and all Government Consents required to be obtained
prior to the Effective Time by the Company or Parent or any of their
respective Subsidiaries in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
by the Company, Parent and Merger Sub shall have been made or obtained (as
the case may be), except where the failure to so make or obtain will not
result in either a Company Material Adverse Effect or a Parent Material
Adverse Effect.
(c) Litigation. No court or other Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the transactions
contemplated by this Agreement
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(collectively, an "Order"), and no Governmental Entity shall have
instituted any proceeding or formally threatened to institute any
proceeding seeking any such Order and such proceeding or threat remains
unresolved.
7.2. Conditions to Obligations of Parent and Merger Sub. The obligations
of Parent and Merger Sub to effect the Merger are also subject to the
satisfaction or waiver by Parent prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the
Closing Date it being understood that representations and warranties shall
be deemed to be true and correct unless the respects in which the
representations and warranties (without giving effect to any "materiality"
limitations or references to "material adverse effect" set forth therein)
are untrue or incorrect in the aggregate is likely to have a Company
Material Adverse Effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date.
7.3. Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement
and (except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of the
Closing Date it being understood that representations and warranties shall
be deemed to be true and correct unless the respects in which the
representations and warranties (without giving effect to any "materiality"
limitations or references to "material adverse effect" set forth therein)
are untrue or incorrect in the aggregate is likely to have a Parent
Material Adverse Effect.
(b) Performance of Obligations of Parent and Merger Sub. Each of
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior
to the Closing Date.
ARTICLE VIII
TERMINATION
8.1. Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after its approval by the Company Requisite Vote, by mutual written
consent of the Company (through the Continuing Directors or their designated
successors), Parent and Merger Sub.
8.2. Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by either Parent or the Company if any Order permanently restraining,
enjoining or otherwise prohibiting the Merger shall be entered (whether before
or after the approval by the stockholders of the Company) and such Order is or
shall have become nonappealable.
8.3. Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after its approval by the Company Requisite Vote, by the Company if:
(a) after October 31, 1997, Parent shall have failed to pay for Shares
pursuant to the Offer; provided, however, that the right to terminate this
Agreement pursuant to this subsection (a) shall not be available to the
Company if it has breached in any material respects its obligations under
this Agreement that in any manner shall have proximately contributed to the
failure referenced in this clause (a);
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(b) prior to Parent's purchase of Shares pursuant to the Offer, (i)
the Company enters into a binding written agreement concerning a Superior
Proposal after fully complying with the procedures set forth in Section 6.2
and (ii) the Company concurrently with such termination pays to Parent in
immediately available funds all expense reimbursements due Parent pursuant
to Section 8.5(a) and the first installment of the Termination Fee pursuant
to Section 8.5(b); or
(c) there has been a material breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement contained in this Agreement
that is not curable or, if curable, is not cured prior to the earlier of
(i) twenty (20) days after written notice of such breach is given by the
Company to Parent and (ii) two (2) Business Days before the date on which
the Offer expires.
8.4. Termination by Parent and Merger Sub. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after its approval by the Company Requisite Vote, by
Parent and Merger Sub if:
(a) the Merger shall not have been consummated by January 15, 1998;
provided, however, that the right to terminate this Agreement pursuant to
this subsection (a) shall not be available to Parent and Merger Sub if
either of them has breached in any material respect its obligations under
this Agreement in any manner that shall have proximately contributed to the
occurrence of the failure referred to in this subsection;
(b) the Board of Directors of the Company shall have withdrawn or
adversely modified its approval or recommendation of this Agreement;
(c) there has been a material breach by the Company of any
representation, warranty, covenant or agreement contained in this Agreement
that is not curable or, if curable, is not cured within twenty (20) days
after written notice of such breach is given by Parent to the Company and
which is likely to have a Company Material Adverse Effect; or
(d) Parent shall have terminated the Offer in accordance with the
provisions of Annex A; provided, however, that the right to terminate this
Agreement pursuant to this subsection (d) shall not be available to Parent
and Merger Sub if either of them has breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the termination of the Offer.
8.5. Effect of Termination and Abandonment.
(a) If this Agreement is terminated and the Merger abandoned pursuant
to this Article VIII, this Agreement (other than as set forth in Section
9.1) shall become void and of no further effect with no liability of any
party hereto (or any of its directors, officers, employees, agents,
stockholders, legal, accounting and financial advisors or other
representatives); provided, however, that, except as otherwise provided
herein, no such termination shall relieve any party hereto of any liability
or damages resulting from any breach of this Agreement; provided further,
that the Company shall reimburse Parent in the amount of $2,000,000 as
reimbursement for all of its costs and expenses in connection with this
Agreement, the Offer and the Merger unless: (i) the Agreement has been
terminated by the parties pursuant to Section 8.1 or by either party
pursuant to Section 8.2; (ii) the Company has terminated this Agreement
pursuant to Sections 8.3(a) or 8.3(c); or (iii) the Parent has terminated
this Agreement pursuant to Section 8.4(a) or Section 8.4(d) and, further,
the Company has not breached in any material respect its obligations under
this Agreement in any manner which proximately contributed to the failure
to close the Merger or Parent's termination of the Offer, respectively.
(b)(i) In lieu of any liability or obligation to pay damages (other
than the obligation to reimburse Parent for expenses pursuant to Section
8.5(a)), if (A) there shall be a proposal by a Third Party for a Third
Party Acquisition existing at the time of termination of the Agreement by
Parent and Merger Sub, and (B) Parent and Merger Sub shall have terminated
this Agreement pursuant to Section 8.4(b) or (c) or (d) and, with respect
to a termination pursuant to Section 8.4(d), the Company has breached in
any material respect its obligations under this Agreement in any manner
which proximately contributed to Parent and Merger Sub's termination of the
Offer, the Company shall pay to Parent (i) within two (2) business days
after such termination $5,000,000 and (ii) an additional $8,000,000 upon
consummation, if any, of any Third Party Acquisition with a Person who had
proposed a Third Party Acquisition prior to the time of the termination of
this Agreement by the Parent and Merger Sub.
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(ii) In lieu of any liability or obligation to pay damages (other
than the obligation to reimburse Parent for expenses pursuant to Section
8.5(a)), (A) if there shall not have been a material breach of any
representation, warranty, covenant or agreement on the part of Parent or
Merger Sub and (B) the Company shall have terminated this Agreement
pursuant to Section 8.3(b), the Company shall pay to Parent (i)
concurrently with such termination $5,000,000 and (ii) an additional
$8,000,000 upon consummation, if any, of either the Superior Proposal
giving right to terminate this Agreement under Section 8.3 (b) or any
Third Party Acquisition with a Person who had proposed a Third party
Acquisition prior to the termination of this Agreement under section
8.3(b). (Such amounts payable pursuant to Section 8.5(b)(i) or this
Section 8.5(b)(ii) are referred to in the aggregate in this Agreement as
the "Termination Fee".)
(c) The Company acknowledges that the agreements contained in Section
8.5 are an integral part of the transactions contemplated by this Agreement
and that, without these agreements, Parent and Merger Sub would not enter
into this Agreement; accordingly, if the Company fails promptly to pay the
amounts required pursuant to Section 8.5 and, in order to obtain such
payment Parent or Merger Sub commences a suit which results in a final
nonappealable judgment against the Company for such amounts, the Company
shall pay to Parent or Merger Sub (i) its costs and expenses (including
attorneys' fees) in connection with such suit and (ii) if (and only if)
this Agreement has been terminated pursuant to Section 8.3(b) or 8.4(c),
interest on the amount at the rate announced by Bank of America, NT & SA as
its "reference rate" in effect on the date such payment was required to be
made.
8.6. Procedure for Termination. A termination of this Agreement pursuant
to this Article VIII shall, in order to be effective, require in the case of
Parent, Merger Sub or the Company, action by its Board of Directors.
ARTICLE IX
MISCELLANEOUS
9.1. Survival. This Article IX and the agreements of the Company, Parent
and Merger Sub contained in Sections 6.8 (Benefits), 6.9 (Expenses) and 6.10
(Indemnification; Directors' and Officers' Insurance) shall survive the
consummation of the Merger. This Article IX and the agreements of the Company,
Parent and Merger Sub contained in Section 6.9 (Expenses) and Section 8.5
(Effect of Termination and Abandonment) shall survive the termination of this
Agreement. All other representations, warranties, agreements and covenants in
this Agreement and in any certificate or schedule delivered pursuant hereto
shall not survive the consummation of the Merger or the termination of this
Agreement.
9.2. Certain Definitions. For the purposes of this Agreement each of the
following terms shall have the meanings set forth below:
(a) "Affiliate" means a Person that, directly or indirectly, through
one or more intermediaries controls, is controlled by or is under common
control with the first-mentioned Person.
(b) "Business Day" means any day other than a day on which banks in
the State of California are authorized to close or the NASDAQ National
Market is closed.
(c) "Capital Stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof.
(d) "Company Material Adverse Effect" means a material adverse effect
on the financial condition, properties, business or results of operations
of the Company and its Subsidiaries, taken as a whole it being understood
that none of the following shall be deemed by itself or by themselves,
either alone or in combination, to constitute a Company Material Adverse
Effect: (a) a change in the market price or trading volume of the Company
Common Stock, (b) a failure by the Company to meet internal earnings or
revenue projections or the revenue or earnings predictions of equity
analysts as reflected in the First Call consensus estimate, or any other
revenue or earnings predictions or expectations, for any period ending (or
for which earnings are released) on or after the date of this Agreement and
prior to the Effective Date, (c) conditions affecting the semi-conductor
industry as a whole or the U.S. economy as a whole, (d) any disruption of
customer or supplier relationships arising primarily out of or resulting
primarily from actions contemplated by the parties in connection with, or
which is primarily attributable
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to, the announcement of this Agreement and the transactions contemplated
hereby, to the extent so attributable.
(e) "Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, encumbrance, hypothecation, title defect
or adverse claim of any kind in respect of such asset.
(f) "Parent Material Adverse Effect" means a material adverse effect
on the ability of Parent or Merger Sub to conduct the Offer or consummate
the Merger or any of the other material transactions contemplated by this
Agreement
(g) "Permitted Liens" means (i) Liens for Taxes or other governmental
assessments, charges or claims the payment of which is not yet due; (ii)
statutory liens of landlords and liens of carriers, warehousemen,
mechanics, materialmen and other similar Persons and other liens imposed by
applicable Law incurred in the ordinary course of business for sums not yet
delinquent or immaterial in amount and being contested in good faith; (iii)
liens specifically identified as such in the Balance Sheet or the notes
thereto; (iv) liens constituting or securing executory obligations under
any lease that constitutes an "operating lease" under GAAP; and (v) any
other Lien arising in the ordinary course of business, the imposition of
which would not constitute a Company Material Adverse Effect; provided,
however, that, with respect to each of the foregoing clauses (i) through
(iv), to the extent that any such lien arose prior to the Audit Date and
relates to, or secures the payment of, a liability that is required to be
accrued on the Balance Sheet under GAAP, such lien shall not be a Permitted
lien unless accruals for such liability have been established therefor on
the Balance Sheet in conformity with GAAP. Notwithstanding the foregoing,
no lien arising under the Code or ERISA with respect to the operation,
termination, restoration or funding of any Compensation and Benefit Plan
sponsored by, maintained by or contributed to by the Company or any of its
ERISA Affiliates or arising in connection with any excise tax or penalty
tax with respect to such Compensation and Benefit Plan shall be a Permitted
lien.
(h) "Person" means an individual, corporation (including
not-for-profit), partnership, limited liability company, association,
trust, unincorporated organization, joint venture, estate, Governmental
Entity or other legal entity.
(i) "Subsidiary" or "Subsidiaries" of the Company, Parent, the
Surviving Corporation or any other Person means any corporation,
partnership, limited liability company, association, trust, unincorporated
association or other legal entity of which the Company, Parent, the
Surviving Corporation or any such other Person, as the case may be, either
alone or through or together with any other Subsidiary, owns, directly or
indirectly, 50% or more of the Capital Stock, the holders of which are
generally entitled to vote for the election of the Board of Directors or
other governing body of such corporation or other legal entity.
9.3. No Personal Liability. This Agreement shall not create or be deemed
to create any personal liability or obligation on the part of any direct or
indirect stockholder of the Company, Merger Sub or Parent, or any of their
respective officers, directors, employees, agents or representatives.
9.4. Modification or Amendment. Subject to the provisions of applicable
Law, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
9.5. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable Law. The failure of any party hereto to exercise any right, power or
remedy provided under this Agreement or otherwise available in respect hereof at
law or in equity, or to insist upon strict compliance by any other party hereto
with its obligations hereunder, and any custom or practice of the parties at
variance with the terms hereof, shall not constitute a waiver by such party of
its rights to exercise any such or other right, power or remedy or to demand
such compliance.
9.6. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.7. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCOR-
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DANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT
OF LAW PRINCIPLES THEREOF. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of Delaware and the Federal courts
of the United States of America located in the State of Delaware solely in
respect of the interpretation and enforcement of the provisions of this
Agreement and of the documents referred to in this Agreement, and in
respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such document may not be
enforced in or by such courts, and the parties hereto irrevocably agree
that all claims with respect to such action or proceeding shall be heard
and determined in such a Delaware State or Federal court. The parties
hereby consent to and grant any such court jurisdiction over the person of
such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.8 or in such other manner as
may be permitted by applicable Law, shall be valid and sufficient service
thereof.
(b) The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of
the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms
and provisions of this Agreement in any Federal court located in the State
of Delaware or in Delaware state court, this being in addition to any other
remedy to which they are entitled at law or in equity.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE INITIAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.7.
9.8. Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be deemed given if in writing
and delivered personally or sent by registered or certified mail (return receipt
requested) or overnight courier (providing proof of delivery), postage prepaid,
or by facsimile (which is confirmed):
If to Parent or Merger Sub:
Intel Corporation.
2200 Mission College Blvd.
Santa Clara, CA 95052-8119
Attention: General Counsel
Fax: (408) 765-7636
with a copy to:
Richard A. Strong, Esq.
Gibson, Dunn & Crutcher LLP
333 So. Grand Avenue
Los Angeles, CA 90071
Fax: (213) 229-6205
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If to the Company:
Chips and Technologies, Inc.
2950 Zanker Road
San Jose, CA 95134
Attention: Jeffery Anne Tatum
Fax: (408) 894-2088
with a copy to:
Bradley J. Rock, Esq.
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, CA 94301
Fax: (415) 327-3699
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.9. Entire Agreement. This Agreement (including any schedules, exhibits
or annexes hereto) and the Confidentiality Agreement hereto constitute the
entire agreement, and supersede all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof.
9.10. No Third Party Beneficiaries. Except as provided in Section 6.10
(Indemnification; Directors' and Officers' Insurance), this Agreement is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
9.11. Obligations of the Company and Surviving Corporation. Whenever this
Agreement requires a Subsidiary of the Company to take any action, such
requirement shall be deemed to include and undertaking on the part of the
Company to cause such Subsidiary to take such action and, after the Effective
Time, on the part of the Surviving Corporation to cause such Subsidiary to take
such action.
9.12. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision hereof shall
not affect the validity or enforceability of any of the other provisions hereof.
If any provision of this Agreement, or the application thereof to any Person or
any circumstance, is illegal, invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
9.13. Interpretation. The table of contents and Article, Section and
subsection headings herein are for convenience of reference only, do not
constitute a part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof. Where a reference in this
Agreement is made to a Section, Schedule, Annex or Exhibit, such reference shall
be to a Section of, or Schedule, Annex or Exhibit to, this Agreement, unless
otherwise indicated. Whenever the words "include," "includes" or "including" are
used in this Agreement, they shall be deemed to be followed by the words
"without limitation." All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. The definitions contained in
this Agreement are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders of
such term. Any agreement, instrument or statute defined or referred to herein or
in any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns and, in
the case of an individual, to his or her heirs and estate, as applicable.
9.14. Assignment. This Agreement shall not be assignable by operation of
Law or otherwise and any attempted assignment of this Agreement in violation of
this sentence shall be void; provided, however, that
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Parent may designate, by written notice to the Company, another wholly-owned,
direct subsidiary to be a Constituent Corporation in lieu of Merger Sub, in the
event of which, all references herein to Merger Sub shall be deemed references
to such other Subsidiary except that all representations and warranties made
herein with respect to Merger Sub as of the date of this Agreement shall be
deemed representations and warranties made with respect to such other Subsidiary
as of the date of such designation.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
duly authorized officers of the parties hereto as of the date hereof.
CHIPS AND TECHNOLOGIES, INC.
By:
Name:
Title:
INTEL CORPORATION
By:
Name:
Title:
INTEL ENTERPRISE CORPORATION
By:
Name:
Title:
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ANNEX A
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer or this Agreement, and
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) relating to Parent's obligation to pay for or return tendered shares
after termination of the Offer, Parent shall not be required to accept for
payment or pay for any Shares tendered pursuant to the Offer, shall delay the
acceptance for payment of any Shares and if required by Section 1.1(b) of this
Agreement, shall extend the Offer by one or more extensions until October 31,
1997, and may terminate the Offer at any time after October 31, 1997 if (i) less
than a majority of the outstanding Shares on a fully-diluted basis (including
for purposes of such calculation all Shares issuable upon exercise of all vested
and unvested options) has been tendered pursuant to the Offer by the expiration
of the Offer and not withdrawn; (ii) any applicable waiting period under the HSR
Act has not expired or terminated; (iii) all necessary Government Consents shall
not have been obtained on terms and conditions reasonably satisfactory to
Parent; or (iv) at any time after the date of this Agreement, and before
acceptance for payment of any Shares, any of the following events shall occur
and be continuing on or after October 31, 1997:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued or deemed applicable to the Offer or the Merger by any
domestic or foreign court or other Governmental Entity which directly or
indirectly (i) prohibits, or imposes any material limitations on, Parent's
ownership or operation (or that of any of its Subsidiaries or other
Affiliates) of all or a material portion of their or the Company's
businesses or assets, or compels Parent or any of its Subsidiaries or other
Affiliates to dispose of or hold separate any material portion of the
business or assets of the Company or Parent and its respective
Subsidiaries, in each case taken as a whole, (ii) prohibits, or makes
illegal, the acceptance for payment, payment for or purchase of Shares or
the consummation of the Offer, the Merger or the other transactions
contemplated by this Agreement, (iii) results in the delay in or restricts
the ability of Parent, or renders Parent unable, to accept for payment, pay
for or purchase some or all of the Shares, (iv) imposes material
limitations on the ability of Parent effectively to exercise full rights of
ownership of the Shares, including the right to vote the Shares purchased
by it on all matters properly presented to the Company's stockholders, or
(v) otherwise has a Company Material Adverse Effect;
(b) (i) the representations and warranties of the Company set forth in
this Agreement shall not be true and correct in any material respect as of
the date of this Agreement and as of consummation of the Offer as though
made on or as of such date (except for representations and warranties made
as of a specified date) but only if the respects in which the
representations and warranties made by the Company (without giving effect
to any "materiality" limitations or references to "material adverse effect"
set forth therein) are inaccurate would in the aggregate have a Company
Material Adverse Effect, (ii) the Company shall have failed to comply with
its covenants and agreements contained in this Agreement in all material
respects, or (iii) there shall have occurred any events or changes which
have had or which are likely to have a Company Material Adverse Effect;
(c) it shall have been publicly disclosed or Parent shall have
otherwise learned that (i) any Person or "group" (as defined in Section
13(d)(3) of the Exchange Act) shall have acquired or entered into a
definitive agreement or agreement in principle to acquire beneficial
ownership of more than 20% of the Shares or any other class of Capital
Stock of the Company, through the acquisition of stock, the formation of a
group or otherwise, or shall have been granted any option, right or
warrant, conditional or otherwise, to acquire beneficial ownership of more
than 20% of the Shares and (ii) such Person or group shall not have
tendered such Shares pursuant to the Offer;
(d) the Board of Directors of the Company shall have withdrawn, or
modified or changed in a manner adverse to Parent (including by amendment
of the Schedule 14D-9), its recommendation of the Offer, this Agreement or
the Merger, or recommended another proposal or offer, or the Board of
Directors of the Company, shall have resolved to do any of the foregoing;
or
(e) this Agreement shall have terminated in accordance with its terms;
which in the good faith judgment of Parent, in any such case, and regardless of
the circumstances (including any action or inaction by Parent) giving rise to
such condition makes it inadvisable to proceed with the Offer or the acceptance
for payment of or payment for the Shares.
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The foregoing conditions, other than condition (i) above 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 the sole discretion of Parent. 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 which may
be asserted at any time and from time to time.
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