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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
PARADIGM TECHNOLOGY, INC.,
a Delaware corporation;
PARADIGM ENTERPRISES, INC.
a Delaware corporation; and
IXYS CORPORATION
a Delaware corporation
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Dated as of March 6, 1998
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TABLE OF CONTENTS
PAGE
SECTION 1. DESCRIPTION OF TRANSACTION........................................................1
1.1 Merger of Merger Sub into the Company.............................................1
1.2 Effect of the Merger..............................................................1
1.3 Closing; Effective Time...........................................................1
1.4 Certificate of Incorporation and Bylaws; Directors and Officers...................2
1.5 Conversion of Shares..............................................................2
1.6 Closing of the Company's Transfer Books...........................................6
1.7 Exchange of Certificates..........................................................6
1.8 Appraisal Rights..................................................................8
1.9 Tax Consequences..................................................................8
1.10 Accounting Consequences...........................................................8
1.11 Further Action....................................................................8
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................................8
2.1 Due Organization; Subsidiaries; Etc...............................................8
2.2 Certificate of Incorporation and Bylaws...........................................9
2.3 Capitalization, Etc...............................................................9
2.4 Financial Statements.............................................................10
2.5 Absence of Changes...............................................................11
2.6 Title to Assets..................................................................12
2.7 Receivables; Inventory...........................................................12
2.8 Buildings, Equipment; Leasehold..................................................13
2.9 Proprietary Assets...............................................................13
2.10 Contracts........................................................................15
2.11 Liabilities......................................................................17
2.12 Compliance with Legal Requirements...............................................17
2.13 Certain Business Practices.......................................................17
2.14 Governmental Authorizations......................................................17
2.15 Tax Matters......................................................................18
2.16 Employee and Labor Matters; Benefit Plans........................................19
2.17 Environmental Matters............................................................21
i.
TABLE OF CONTENTS
(CONTINUED)
PAGE
2.18 Insurance........................................................................23
2.19 Transactions With Affiliates.....................................................23
2.20 Legal Proceedings; Orders........................................................23
2.21 Authority; Inapplicability of Anti-takeover Statutes; Binding Nature of
Agreement........................................................................23
2.22 Section 203 of the DGCL Not Applicable...........................................24
2.23 No Existing Discussions..........................................................24
2.24 Vote Required....................................................................24
2.25 Non-Contravention; Consents......................................................24
2.26 Financial Advisor................................................................25
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..........................26
3.1 Due Organization; Subsidiaries; Etc..............................................26
3.2 Certificate of Incorporation and Bylaws..........................................26
3.3 Capitalization, Etc..............................................................26
3.4 SEC Filings; Financial Statements................................................28
3.5 Absence of Changes...............................................................28
3.6 Title to Assets..................................................................30
3.7 Receivables; Inventory...........................................................31
3.8 Buildings, Equipment; Leasehold..................................................31
3.9 Proprietary Assets...............................................................32
3.10 Contracts........................................................................33
3.11 Liabilities......................................................................35
3.12 Compliance with Legal Requirements...............................................35
3.13 Certain Business Practices.......................................................35
3.14 Governmental Authorizations......................................................35
3.15 Tax Matters......................................................................36
3.16 Employee and Labor Matters; Benefit Plans........................................37
3.17 Environmental Matters............................................................39
3.18 Insurance........................................................................40
3.19 Transactions with Affiliates.....................................................40
ii.
TABLE OF CONTENTS
(CONTINUED)
PAGE
3.20 Legal Proceedings; Orders........................................................40
3.21 Authority; Binding Nature of Agreement...........................................41
3.22 Section 203 of the DGCL Not Applicable...........................................41
3.23 No Existing Discussions..........................................................41
3.24 Vote Required....................................................................41
3.25 Non-Contravention; Consents......................................................41
3.26 Fairness Opinion.................................................................42
3.27 Financial Advisor................................................................43
SECTION 4. CERTAIN COVENANTS OF THE COMPANY.................................................43
4.1 Access and Investigation.........................................................43
4.2 Operation of the Company's Business..............................................43
4.3 No Solicitation..................................................................44
4.4 Disclosure.......................................................................45
SECTION 5. CERTAIN COVENANTS OF PARENT......................................................45
5.1 Access and Investigation.........................................................45
5.2 Operation of Parent's Business...................................................46
5.3 No Solicitation..................................................................49
5.4 Parent Capitalization; Name Change...............................................49
5.5 Disclosures......................................................................50
SECTION 6. ADDITIONAL COVENANTS OF THE PARTIES..............................................50
6.1 Registration Statement; Joint Proxy Statement/Prospectus.........................50
6.2 Company Stockholders' Meeting....................................................51
6.3 Parent Stockholders' Meeting.....................................................52
6.4 Regulatory Approvals.............................................................53
6.5 Indemnification of Officers and Directors........................................53
6.6 Additional Agreements............................................................55
6.7 Disclosure.......................................................................55
6.8 Affiliate Agreements.............................................................56
6.9 Tax Matters......................................................................56
6.10 Corporate Governance.............................................................56
iii.
TABLE OF CONTENTS
(CONTINUED)
PAGE
6.11 Resignations.....................................................................56
6.12 Registration Rights Agreement....................................................57
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB.....................57
7.1 Accuracy of Representations......................................................57
7.2 Performance of Covenants.........................................................57
7.3 Effectiveness of Registration Statement..........................................57
7.4 Parent Stockholder Approval......................................................57
7.5 Company Stockholder Approval.....................................................57
7.6 Agreements and Documents.........................................................57
7.7 No Material Adverse Change.......................................................58
7.8 HSR Act..........................................................................58
7.9 Additional Shares................................................................58
7.10 No Restraints....................................................................58
7.11 Consents.........................................................................58
SECTION 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY...............................58
8.1 Accuracy of Representations......................................................58
8.2 Performance of Covenants.........................................................58
8.3 Effectiveness of Registration Statement..........................................58
8.4 Parent Stockholder Approval......................................................59
8.5 Company Stockholder Approval.....................................................59
8.6 Parent Capitalization............................................................59
8.7 Consents.........................................................................59
8.8 Agreements and Documents.........................................................59
8.9 No Material Adverse Change.......................................................60
8.10 Market for Parent Common Stock...................................................60
8.11 HSR Act..........................................................................60
8.12 Additional Shares................................................................60
8.13 Appraisal Rights.................................................................60
8.14 Blue Sky Law.....................................................................60
8.15 No Restraints....................................................................60
iv.
TABLE OF CONTENTS
(CONTINUED)
PAGE
8.16 No Governmental Litigation.......................................................60
8.17 No Other Litigation..............................................................60
8.18 Taxes............................................................................60
SECTION 9. TERMINATION......................................................................60
9.1 Termination......................................................................60
9.2 Effect of Termination............................................................60
9.3 Expenses; Termination Fees.......................................................60
SECTION 10. MISCELLANEOUS PROVISIONS.........................................................60
10.1 Amendment........................................................................60
10.2 Waiver...........................................................................60
10.3 No Survival of Representations and Warranties....................................60
10.4 Entire Agreement; Counterparts; Applicable Law...................................60
10.5 Disclosure Schedule..............................................................60
10.6 Attorneys' Fees..................................................................60
10.7 Assignability....................................................................60
10.8 Notices..........................................................................60
10.9 Cooperation......................................................................60
10.10 Construction.....................................................................60
v.
EXHIBITS
Exhibit A - Certain Definitions
Exhibit B - Form of Certificate of Incorporation of Surviving Corporation
Exhibit C - Directors of Surviving Corporation
Exhibit D - Company Form of Affiliate Agreement
Exhibit E - Form of Parent Tax Representation Letter
Exhibit F - Form of Company Tax Representation Letter
Exhibit G - Registration and Stockholder Rights Agreement
Exhibit H - Directors of Parent
Exhibit I - Form of legal opinion of Cooley Godward LLP
Exhibit J - Form of legal opinion of Pillsbury Madison & Sutro LLP
vi.
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7.
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this "Agreement")
is made and entered into as of March __, 1998 by and among: PARADIGM TECHNOLOGY,
INC., a Delaware corporation ("Parent"); PARADIGM ENTERPRISES, INC., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"); and IXYS
CORPORATION, a Delaware corporation (the "Company"). Certain capitalized terms
used in this Agreement but not defined herein are defined in Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger of
Merger Sub with and into the Company in accordance with this Agreement and the
Delaware General Corporation Law (the "Merger"). Upon consummation of the
Merger, Merger Sub will cease to exist, and the Company will become a wholly
owned subsidiary of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For financial reporting purposes, it is intended that the
Merger be accounted for as a "purchase."
C. The respective boards of directors of Parent, Merger Sub and the
Company have approved this Agreement and the Merger.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
Section 1. Description of Transaction
1.1 Merger of Merger Sub into the Company. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time (as
defined in Section 1.3), Merger Sub shall be merged with and into the Company,
and the separate existence of Merger Sub shall cease. The Company will continue
as the surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the Delaware General
Corporation Law (the "DGCL").
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Cooley Godward LLP, Five Palo Alto Square, 3000 El Camino Real, Palo Alto,
California, at 10:00 a.m. on a date to be agreed upon by Parent and the Company
(the "Closing Date"), which (subject to the satisfaction or waiver of the
conditions set forth in Sections 7 and 8) shall be no later than the fifth
business day
1.
after satisfaction of the latest to occur of the conditions set
forth in Sections 7.4, 7.5, 7.7, 8.4, 8.5 and 8.12. Contemporaneously with or as
promptly as practicable after the Closing, the parties shall cause a properly
executed certificate of merger conforming to the requirements of the DGCL (the
"Certificate of Merger") to be filed with the Secretary of State of the State of
Delaware. The Merger shall take effect at the time the Certificate of Merger is
filed with the Secretary of State of the State of Delaware (the "Effective
Time").
1.4 Certificate of Incorporation and Bylaws; Directors and
Officers. Unless otherwise determined by the Company prior to the Effective
Time:
(a) the Certificate of Incorporation of the Surviving Corporation shall
be amended and restated as of the Effective Time to conform to Exhibit B;
(b) the Bylaws of the Surviving Corporation shall be amended and
restated as of the Effective Time to conform to the Bylaws of the Company; and
(c) the directors and officers of the Surviving Corporation immediately
after the Effective Time shall be the respective individuals set forth on
Exhibit C.
1.5 Conversion of Shares.
(a) Subject to Sections 1.5(d) and 1.8, at the Effective Time, by virtue
of the Merger and without any further action on the part of Parent, Merger Sub,
the Company or any stockholder of the Company:
(i) any shares of Company Capital Stock then held by the Company or
any subsidiary of the Company (or held in the Company's treasury) shall be
canceled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor;
(ii) any shares of Company Capital Stock then held by Parent or
Merger Sub, or any other subsidiary of Parent, shall be canceled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor;
(iii) except as provided in clauses "(i)" and "(ii)" above and
subject to Sections 1.5(b)(iv), 1.5(d), and 1.8 each share of Company Common
Stock then outstanding shall be converted into the right to receive a fraction
of a share of Parent Common Stock equal to the Exchange Ratio;
(iv) except as provided in clauses "(i)" and "(ii)" above and
subject to Sections 1.5(b)(iv), 1.5(d), and 1.8 each share of Company Preferred
Stock then outstanding shall be converted into the right to receive a fraction
of a share of Parent Common Stock equal to the Exchange Ratio; and
(v) each share of the common stock, par value $0.001 per share, of
Merger Sub then outstanding shall be converted into one share of common stock of
the Surviving Corporation.
(b) The "Exchange Ratio" shall be the greater of (A) the Percentage
Formula Ratio or (B) the Valuation Formula Ratio. The Exchange Ratio shall be
expressed to six digits to the right of the decimal place.
(i) As used herein, the "Percentage Formula Ratio" shall be
determined according to the following formula:
A = 19 x B
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C
, where "A" is the Percentage Formula Ratio, expressed to six digits to the
right of the decimal place, "B" is the fully diluted capitalization of Parent,
immediately prior to the Effective Time and having given effect to the Reverse
Stock Split, expressed as the sum of (x) the number of shares of Parent Common
Stock outstanding, (y) the number of shares of Parent Common Stock into which
the outstanding Parent Preferred Stock converts pursuant to the Parent Preferred
Stock Conversion and (z) the aggregate number of shares of Parent Common Stock
for which outstanding warrants, options or other rights to acquire Parent Common
Stock are exercisable and "C" is the fully diluted capitalization of the Company
immediately prior to the Effective Time, expressed as the sum of (A) the number
of shares of Company Common Stock outstanding, (B) the number of shares of
Company Common Stock issuable upon conversion of the outstanding shares of
Company Preferred Stock and (C) the aggregate number of shares of Company Common
Stock for which outstanding warrants, options or other rights to acquire Company
Common Stock are exercisable (such fully diluted capitalization being referred
to herein as the "Company Fully Diluted Capitalization").
(ii) As used herein, the "Valuation Formula Ratio" shall be
determined according to the following formula:
D = $150,000,000
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(E x C)
, where "D" is the Valuation Formula Ratio, expressed to six digits to the right
of the decimal place, "E" is the average of the closing sale prices of Parent
Common Stock for the ten trading days ending (and including) the trading day two
business days prior to the date of the Parent Stockholders' Meeting,
appropriately adjusted to reflect the completion of the Reverse Stock Split, and
"C" is the Company Fully Diluted Capitalization.
(iii) If, between the date of this Agreement and the Effective
Time, the outstanding shares of Company Capital Stock or Parent Common Stock are
changed into a different number or class of shares by reason of any stock split,
stock dividend, reverse stock split, reclassification, recapitalization or other
similar, then the Exchange Ratio shall be appropriately adjusted. The Exchange
Ratio already contemplates the Reverse Stock Split, and to the extent the
Reverse Stock Split is implemented, no further adjustments to the Exchange Ratio
are required.
(c) If any shares of Company Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any applicable restricted stock
purchase agreement or other agreement
3.
with the Company or under which the Company has any rights, then the shares of
Parent Common Stock issued in exchange for such shares of Company Common Stock
will also be unvested and subject to the same repurchase option, risk of
forfeiture or other condition, and the certificates representing such shares of
Parent Common Stock may accordingly be marked with appropriate legends. The
Company shall take all action that may be necessary to ensure that, from and
after the Effective Time, Parent is entitled to exercise any such repurchase
option or other right set forth in any such restricted stock purchase agreement
or other agreement.
(d) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no certificates or scrip for any such fractional
shares shall be issued. Any holder of Company Capital Stock who would otherwise
be entitled to receive a fraction of a share of Parent Common Stock (after
aggregating all fractional shares of Parent Common Stock issuable to such
holder) shall, in lieu of such fraction of a share and, upon surrender of such
holder's Company Stock Certificate(s) (as defined in Section 1.6), be paid in
cash the dollar amount (rounded to the nearest whole cent), without interest,
determined by multiplying such fraction by the closing price of a share of
Parent Common Stock as reported by the Nasdaq National Market on the date the
Merger becomes effective.
(e) At the Effective Time, all rights with respect to Company Common
Stock under each Company Option then outstanding under the Company Plans (as
defined in Section 2.3(b)) shall be converted into and become rights with
respect to Parent Common Stock, and Parent shall assume each such Company Option
in accordance with the terms (as in effect as of the date of this Agreement) of
the Company Plan under which it was issued and the stock option agreement by
which it is evidenced. From and after the Effective Time, (i) each Company
Option assumed by Parent may be exercised solely for shares of Parent Common
Stock, (ii) the number of shares of Parent Common Stock subject to each such
Company Option shall be equal to the number of shares of Company Common Stock
subject to such Company Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounding down to the nearest whole share (with
cash, less the applicable exercise price, being payable for any fraction of a
share), (iii) the per share exercise price under each such Company Option shall
be adjusted by dividing the per share exercise price under such Company Option
by the Exchange Ratio and rounding up to the nearest hundredth of a cent and
(iv) any restriction on the exercise of any such Company Option shall continue
in full force and effect and the term, exercisability, vesting schedule and
other provisions of such Company Option shall otherwise remain unchanged;
PROVIDED, HOWEVER, that each Company Option assumed by Parent in accordance with
this Section 1.5(e) shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, stock dividend, reverse
stock split, reclassification, recapitalization or other similar transaction
subsequent to the Effective Time. Parent shall file with the SEC, no later than
30 days after the date on which the Form S-4 Registration Statement becomes
effective (and in any event prior to the Merger), a registration statement on
Form S-8 relating to the shares of Parent Common Stock issuable with respect to
the Company Options and the Company Plans assumed by Parent in accordance with
this Section 1.5(e).
(f) At the Effective Time, all rights with respect to Company Warrants
then outstanding shall be converted into and become rights with respect to
Parent Common Stock, and Parent shall assume each such Company Warrant in
accordance with the terms (as in effect as of
4.
the date of this Agreement) of the Warrant by which it is evidenced. From and
after the Effective Time, (i) each Company Warrant assumed by Parent may be
exercised solely for shares of Parent Common Stock, (ii) the number of shares of
Parent Common Stock subject to each such Company Warrant shall be equal to the
number of shares of Company Common Stock subject to such Company Warrant
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounding down to the nearest whole share (with cash, less the applicable
exercise price, being payable for any fraction of a share), and (iii) the per
share exercise price under each such Company Warrant shall be adjusted by
dividing the per share exercise price under such Company Warrant by the Exchange
Ratio and rounding up to the nearest hundredth of a cent; PROVIDED, HOWEVER,
that each Company Warrant assumed by Parent in accordance with this Section
1.5(f) shall, in accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, stock dividend, reverse stock split,
reclassification, recapitalization or other similar transaction subsequent to
the Effective Time.
1.6 Closing of the Company's Transfer Books. At the Effective
Time: (a) all shares of Company Capital outstanding immediately prior to the
Effective Time shall automatically be canceled and retired and shall cease to
exist, and all holders of certificates representing shares of Company Capital
Stock that were outstanding immediately prior to the Effective Time shall cease
to have any rights as stockholders of the Company; and (b) the stock transfer
books of the Company shall be closed with respect to all shares of Company
Capital Stock outstanding immediately prior to the Effective Time. No further
transfer of any such shares of Company Capital Stock shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any shares of Company Capital Stock (a
"Company Stock Certificate") is presented to the Exchange Agent (as defined in
Section 1.7) or to the Surviving Corporation or Parent, such Company Stock
Certificate shall be canceled and shall be exchanged as provided in Section 1.7.
1.7 Exchange of Certificates.
(a) On or prior to the Closing Date, ChaseMellon Shareholder Services,
LLC shall act as exchange agent in the Merger (the "Exchange Agent"). Promptly
after the Effective Time, Parent shall deposit with the Exchange Agent (i) blank
certificates representing the shares of Parent Common Stock issuable pursuant to
this Section 1 and (ii) cash sufficient to make payments in lieu of fractional
shares in accordance with Section 1.5(d). The shares of Parent Common Stock and
cash amounts so deposited with the Exchange Agent, together with any dividends
or distributions received by the Exchange Agent with respect to such shares, are
referred to collectively as the "Exchange Fund."
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent will mail to the holders of Company Stock Certificates (i) a
letter of transmittal in customary form and containing such provisions as Parent
may reasonably specify (including a provision confirming that delivery of
Company Stock Certificates shall be effected, and risk of loss and title to
Company Stock Certificates shall pass, only upon delivery of such Company Stock
Certificates to the Exchange Agent) and (ii) instructions for use in effecting
the surrender of Company Stock Certificates in exchange for certificates
representing Parent Common Stock. Upon surrender of a Company Stock Certificate
to the Exchange Agent for exchange, together with a duly executed letter of
transmittal and such other documents as may be reasonably
5.
required by the Exchange Agent or Parent, (1) the holder of such Company Stock
Certificate shall be entitled to receive in exchange therefor a certificate
representing the number of whole shares of Parent Common Stock that such holder
has the right to receive pursuant to the provisions of Section 1.5 (and cash in
lieu of any fractional share of Parent Common Stock in accordance with Section
1.5(d)), and (2) the Company Stock Certificate so surrendered shall be canceled.
Until surrendered as contemplated by this Section 1.7, each Company Stock
Certificate shall be deemed, from and after the Effective Time, to represent
only the right to receive shares of Parent Common Stock (and cash in lieu of any
fractional share of Parent Common Stock) as contemplated by this Section 1. If
any Company Stock Certificate shall have been lost, stolen or destroyed, Parent
may, in its discretion and as a condition precedent to the issuance of any
certificate representing Parent Common Stock, require the owner of such lost,
stolen or destroyed Company Stock Certificate to provide an appropriate
affidavit (but in no event a surety bond) as indemnity against any claim that
may be made against the Exchange Agent, Parent or the Surviving Corporation with
respect to such Company Stock Certificate.
(c) No dividends or other distributions declared or made with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Company Stock Certificate with respect to the
shares of Parent Common Stock represented thereby until such holder surrenders
such Company Stock Certificate in accordance with this Section 1.7 (at which
time such holder shall be entitled, subject to the effect of applicable escheat
or similar laws, to receive all such dividends and distributions, without
interest).
(d) Any portion of the Exchange Fund that remains undistributed to
holders of Company Stock Certificates as of the date 180 days after the date on
which the Merger becomes effective shall be delivered to Parent upon demand, and
any holders of Company Stock Certificates who have not theretofore surrendered
their Company Stock Certificates in accordance with this Section 1.7 shall
thereafter look only to Parent for satisfaction of their claims for Parent
Common Stock, cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock.
(e) Each of the Exchange Agent, Parent and the Surviving Corporation
shall be entitled to deduct and withhold from any consideration payable or
otherwise deliverable pursuant to this Agreement to any holder or former holder
of Company Capital Stock such amounts as may be required to be deducted or
withheld therefrom under the Code or any provision of state, local or foreign
tax law or under any other applicable Legal Requirement. To the extent such
amounts are so deducted or withheld, such amounts shall be treated for all
purposes under this Agreement as having been paid to the Person to whom such
amounts would otherwise have been paid.
(f) Neither Parent nor the Surviving Corporation shall be liable to any
holder or former holder of Company Capital Stock or to any other Person with
respect to any shares of Parent Common Stock (or dividends or distributions with
respect thereto), or for any cash amounts, delivered to any public official
pursuant to any applicable abandoned property law, escheat law or similar Legal
Requirement.
6.
1.8 Appraisal Rights. Notwithstanding anything to the contrary
contained in this Agreement, any shares of Company Capital Stock for which, as
of the Effective Time, "appraisal rights" within the meaning of Section 262 of
the DGCL shall have been perfected, shall not be converted into or represent the
right to receive Parent Common Stock in accordance with Section 1.5 (or cash in
lieu of fractional shares in accordance with Section 1.5(d)), and the holder or
holders of such shares shall be entitled only to such rights as may be granted
to such holder or holders in Section 262 of the DGCL; PROVIDED, HOWEVER, if any
holders of such shares shall lose its appraisal rights, then, as of the later of
the Effective Time or the loss of such rights, such shares shall automatically
be converted into and shall represent only the right to receive (upon the
surrender of the certificate or certificates representing such shares) Parent
Common Stock in accordance with Section 1.5 (and cash in lieu of fractional
shares in accordance with Section 1.5(d)).
1.9 Tax Consequences. For federal income tax purposes, the Merger
is intended to constitute a reorganization within the meaning of Section 368 of
the Code. The parties to this Agreement hereby adopt this Agreement as a "plan
of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Treasury Regulations.
1.10 Accounting Consequences. For financial reporting purposes,
the Merger is intended to be accounted for as a "purchase."
1.11 Further Action. If, at any time after the Effective Time,
any further action is determined by Parent to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full right, title and possession of and to all rights and property of Merger Sub
and the Company, the officers and directors of the Surviving Corporation and
Parent shall be fully authorized (in the name of Merger Sub, in the name of the
Company and otherwise) to take such action.
Section 2. Representations and Warranties of the Company
Except as disclosed in the Company Disclosure Schedule, the Company
represents and warrants to Parent and Merger Sub as follows:
2.1 Due Organization; Subsidiaries; Etc.
(a) The Company does not own more than 50% of the shares of the voting
capital stock, or more than 50% of the equity interest of any nature in any
Entity except for the corporations identified in Part 2.1(a)(i) of the Acquired
Corporation Disclosure Schedule (such corporations being collectively referred
to, with the Company, as the "Acquired Corporations"); and none of the Acquired
Corporations owns any capital stock of, or any equity interest of any nature in,
any other Entity, other than the Acquired Corporations. None of the Acquired
Corporations has agreed, and none of the Acquired Corporations is obligated or
bound to any contract under which it may become obligated, to make any future
investment in or capital contribution to any other Entity. None of the Acquired
Corporations has, at any time, been a general partner of any general
partnership, limited partnership or other Entity.
(b) Each of the Acquired Corporations is a corporation or other legal
entity duly organized, validly existing and in good standing (with respect to
jurisdictions which
7.
recognize such concept) under the laws of the jurisdiction of its organization
and has all necessary power and authority: (i) to conduct its business in the
manner in which its business is currently being conducted; (ii) to own and use
its assets in the manner in which its assets are currently owned and used; and
(iii) to perform its obligations under all Contracts by which it is bound.
(c) Each of the Acquired Corporations is qualified to do business as a
foreign corporation, and is in good standing, (with respect to jurisdictions
which recognize such concept) under the laws of all jurisdictions where the
nature of its business requires such qualification and where the failure to be
so qualified would have a Material Adverse Effect on the Acquired Corporations.
2.2 Certificate of Incorporation and Bylaws. The Company has
delivered to Parent accurate and complete copies of the certificate of
incorporation, bylaws and other charter and organizational documents, including
all amendments thereto, of the Company.
2.3 Capitalization, Etc.
(a) The entire authorized capital stock of the Company consists of: (i)
250,000,000 shares of common stock, $0.001 par value per share; and (ii)
116,000,000 shares of preferred stock, $0.001 par value per share, of which
41,200,000 shares have been designated as Series A Preferred Stock and
74,382,633 shares have been designated as Series B Preferred Stock. There are,
as of the date of this Agreement: (i) 72,557,485 shares of Company Common Stock
issued and outstanding; (ii) 37,026,730 shares of Series A Preferred Stock
issued and outstanding and; (iii) 74,382,633 shares of Series B Preferred Stock
issued and outstanding. All of the outstanding shares of Company Capital Stock
have been duly authorized and validly issued, and are fully paid and
nonassessable. As of the date of this Agreement, there are no shares of Company
Capital Stock held by any of the other Acquired Corporations. As of the date of
this Agreement, and except as set forth in Part 2.3(a) of the Acquired
Corporation Disclosure Schedule: (i) none of the outstanding shares of Company
Capital Stock is entitled or subject to any preemptive right, right of
participation, right of maintenance or any similar right; (ii) none of the
outstanding shares of Company Capital Stock is subject to any right of first
refusal in favor of the Company; and (iii) there is no Acquired Corporation
Contract relating to the voting or registration of, or restricting any Person
from purchasing, selling, pledging or otherwise disposing of (or granting any
option or similar right with respect to), any shares of Company Capital Stock.
None of the Acquired Corporations is under any obligation or bound by any
contract pursuant to which it may become obligated to repurchase, redeem or
otherwise acquire any outstanding shares of Company Capital Stock.
8.
(b) As of the date of this Agreement, 5,527,850 shares of Company Common
Stock are reserved for future issuance pursuant to stock options granted and
outstanding under the Company's common stock option plans (the "Company Plans"),
(stock options granted by the Company pursuant to the Company Plans are referred
to in this Agreement as "Company Options") and 2,663 shares of Company Common
Stock are reserved and available for future issuance pursuant to future grants
of stock options. Part 2.3(b) of the Acquired Corporation Disclosure Schedule
sets forth the following information with respect to each Company Option
outstanding as of the date of this Agreement: (i) the name of the optionee; (ii)
the number of shares of Company Common Stock subject to such Company Option;
(iii) the exercise price of such Company Option; (iv) the date on which such
Company Option was granted; (v) the applicable vesting schedule and the extent
to which such Company Option is vested and exercisable as of the date of this
Agreement; and (vi) the date on which such Company Option expires. The Company
has delivered to Parent an accurate and complete copy of the Company Plans.
(c) As of the date of this Agreement, 19,265,176 shares of Company
Common Stock are reserved for future issuance pursuant to outstanding warrants
to purchase Company Common Stock (the "Company Warrants"). The Company has
delivered to Parent an accurate and complete copy of the forms of all such
warrants.
(d) Except as set forth in Part 2.3(a), Part 2.3(b) and Part 2.3(c) of
the Acquired Corporation Disclosure Schedule, as of the date of this Agreement
there is no: (i) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) granted by the Company to acquire any
shares of Company Capital Stock or other securities of the Company; (ii)
outstanding security, instrument or obligation that is or may become convertible
into or exchangeable for any shares of Company Capital Stock or other securities
of the Company; (iii) stockholder rights plan (or similar plan commonly referred
to as a "poison pill") or Contract under which the Company is or may become
obligated to sell or otherwise issue any shares of (iv) Company Capital Stock or
any other securities; or condition or circumstance that may give rise to or
provide a basis for the assertion of a claim by any Person to the effect that
such Person is entitled to acquire or receive any shares of Company Capital
Stock or other securities of the Company.
(e) All outstanding shares of Company Capital Stock, all outstanding
Company Options, all outstanding warrants to purchase Company Common Stock and
all outstanding shares of capital stock of each subsidiary of the Company have
been issued and granted in compliance with (i) all applicable securities laws
and other applicable Legal Requirements and (ii) all requirements set forth in
applicable Contracts.
2.4 Financial Statements.
(a) The Company has delivered to Parent the following financial
statements and notes (collectively, the "Company Financial Statements"):
(i) The audited balance sheets of the Company as of March 31, 1997
and 1996 and the related audited consolidated income statements, consolidated
statements of stockholders' equity and consolidated statements of cash flows of
the Company and its
9.
subsidiaries for the years then ended, together with the notes thereto and the
unqualified report and opinion of Coopers & Lybrand LLP relating thereto; and
(ii) the unaudited consolidated balance sheet of the Company as of
December 31, 1997 (the "Company Unaudited Interim Balance Sheet"), and the
related consolidated unaudited income statement of the Company and its
subsidiaries for the nine months then ended.
(b) The Company Financial Statements are accurate and complete in all
material respects and present fairly the consolidated financial position of the
Company and its subsidiaries as of the respective dates thereof and the results
of consolidated operations and (in the case of the financial statements referred
to in Section 2.4(a)(i)) consolidated cash flows of the Company and its
subsidiaries for the periods covered thereby. The Company Financial Statements
have been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods covered (except
that the financial statements referred to in Section 2.4(a)(ii) do not contain
footnotes and are subject to normal and recurring year-end audit adjustments,
which will not, individually or in the aggregate, be material in magnitude).
2.5 Absence of Changes.
(a) Since December 31, 1997;
(i) there has not been any material loss, damage or destruction to,
or any material interruption in the use of, any of the assets of any of the
Acquired Corporations (whether or not covered by insurance).
(ii) none of the Acquired Corporations has (A) declared, accrued,
set aside or paid any dividend or made any other distribution in respect of any
shares of capital stock or (B) repurchased, redeemed or otherwise reacquired any
shares of capital stock or other securities;
(iii) none of the Acquired Corporations has issued, granted or
authorized the issuance of (A) any capital stock or other security (except for
Company Common Stock issued upon the exercise of outstanding Company Options),
(B) any option, warrant or right to acquire any capital stock or any other
security (except for Company Options described in Part 2.3(b) of the Acquired
Corporation Disclosure Schedule) or (C) any instrument convertible into or
exchangeable for any capital stock or other security;
(iv) the Company has not amended or waived any of its rights under,
or permitted the acceleration of vesting under, (i) any provision of any of the
Company Plans, (ii) any provision of any agreement evidencing any outstanding
Company Option, or (iii) any restricted stock purchase agreement;
(v) there has been no amendment to the certificate of
incorporation, bylaws or other charter or organizational documents of any of the
Acquired Corporations;
10.
(vi) other than in relation to Parent, none of the Acquired
Corporations has (A) received any Acquisition Proposal or (B) solicited,
initiated, encouraged or induced, or provided any nonpublic information to or
entered into any discussions with, any Person for the purpose of soliciting,
initiating, encouraging or inducing, the making or submission of any Acquisition
Proposal;
(vii) none of the Acquired Corporations has changed any of its
methods of accounting or accounting practices in any respect; and
(viii) none of the Acquired Corporations has agreed or committed to
take any of the actions referred to in clauses "(ii)" through "(vii)" above.
(b) Since March 31, 1997, except as is reflected in the Company
Unaudited Interim Balance Sheet, there has not been any material adverse change
in the business, condition, assets, capitalization, liabilities, operations,
financial performance or prospects of the Acquired Corporations taken as a
whole, and no event has occurred that could reasonably be expected to have a
Material Adverse Effect on any of the Acquired Corporations.
2.6 Title to Assets.
(a) Part 2.6 of the Acquired Corporation Disclosure Schedule contains a
complete and accurate list of all real property, leaseholds, or other interests
in real property owned by the Acquired Corporations (all such property owned by
the Acquired Corporations being referred to herein as the "Acquired Corporation
Owned Real Property" and all such real property leased by the Acquired
Corporations being referred to herein as the "Acquired Corporation Leased Real
Property"). The Acquired Corporations hold the leasehold interests of the
Acquired Corporation Leased Real Property under the real property leases
described in Part 2.6 of the Acquired Corporation Disclosure Schedule.
(b) Each of the Acquired Corporations owns, and has good, valid and
marketable title to, all assets purported to be owned by it, including: (i) all
assets reflected on the Company Unaudited Interim Balance Sheet; (ii) all other
assets reflected in the books and records of each of the Acquired Corporations
as being owned by such Acquired Corporation; and (iii) the real property
identified in Part 2.6 of the Acquired Corporation Disclosure Schedule. All of
said assets are owned by the Acquired Corporations free and clear of any
Encumbrances, except for (1) any lien for current taxes not yet due and payable,
(2) minor liens that have arisen in the ordinary course of business and that do
not (in any case or in the aggregate) materially detract from the value of the
assets subject thereto or materially impair the operations of any of the
Acquired Corporations and (3) liens described in Part 2.6 of the Acquired
Corporation Disclosure Schedule. All buildings, plants and structures owned or
leased by the Acquired Corporations lie wholly within the boundaries of the real
property owned or leased by the Acquired Corporations and do not encroach upon
the property of, or otherwise conflict with the property rights of, any other
Person.
2.7 Receivables; Inventory.
(a) All existing accounts receivable of the Acquired Corporations
(including those accounts receivable reflected on the Company Unaudited Interim
Balance Sheet that have
11.
not yet been collected and those accounts receivable that have arisen since
December 31, 1997 and have not yet been collected) (i) represent valid
obligations of customers of the Acquired Corporations arising from bona fide
transactions entered into in the ordinary course of business and (ii), to the
best of the Company's knowledge, except as set forth in Part 2.7(a) of the
Acquired Corporation Disclosure Schedule, will be collected in full, without any
counterclaim or set off (net of an allowance for doubtful accounts not to exceed
$500,000 in the aggregate).
(b) Part 2.7(b) of the Acquired Corporation Disclosure Schedule contains
an accurate and complete list as of the date of this Agreement of all loans and
advances made by any of the Acquired Corporations to any employee, director,
consultant or independent contractor of any of the Acquired Corporations, other
than routine travel advances made to employees in the ordinary course of
business.
(c) All inventory of the Acquired Corporations, whether or not reflected
in the Company Unaudited Interim Balance Sheet, consists of a quality and
quantity usable and salable in the ordinary course of business, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Company Unaudited
Interim Balance Sheet. All inventories not written off have been priced at the
lower of cost or net realizable value on a first in, first out basis. The
quantities of each item of inventory (whether raw materials, work-in-process or
finished goods) are not excessive, but are reasonable in the present
circumstances of the Acquired Corporations.
2.8 Buildings, Equipment; Leasehold. The buildings, plants,
structures and all material items of equipment and other tangible assets owned
by or leased to the Acquired Corporations are adequate for the uses to which
they are being put, are in good condition and repair (ordinary wear and tear
excepted), are adequate for the conduct of the respective businesses of the
Acquired Corporations in the manner in which such businesses are currently being
conducted, and are in compliance with all applicable Legal Requirements.
2.9 Proprietary Assets.
(a) Part 2.9(a)(i) of the Acquired Corporation Disclosure Schedule sets
forth, with respect to each Proprietary Asset owned by the Acquired Corporations
and registered with any Governmental Body or for which an application has been
filed with any Governmental Body, (i) a brief description of such Proprietary
Asset and (ii) the names of the jurisdictions covered by the applicable
registration or application. Part 2.9(a)(ii) of the Acquired Corporation
Disclosure Schedule identifies and provides a brief description of any ongoing
royalty or payment obligations in excess of $10,000 with respect to, each
Proprietary Asset that is licensed or otherwise made available to any of the
Acquired Corporations by any Person (except for any Proprietary Asset that is
licensed to any of the Acquired Corporations under any third party software
license generally available to the public at a price per central processing unit
less than $5,000), and identifies the Contract under which such Proprietary
Asset is being licensed or otherwise made available to such Acquired
Corporation. To the Company's knowledge, the Acquired Corporations have good,
valid and marketable title to all of the Proprietary Assets identified in Part
2.9(a)(i) of the Acquired Corporation Disclosure Schedule and to all other
Proprietary Assets that an Acquired Corporation purports to own, free and clear
of all Encumbrances, except for (i) any lien for current taxes not yet due and
payable and (ii) minor
12.
liens that have arisen in the ordinary course of business and that do not
(individually or in the aggregate) materially detract from the value of the
assets subject thereto or materially impair the operations of any of the
Acquired Corporations. The Acquired Corporations have a valid right to use,
license and otherwise exploit all Proprietary Assets identified in Part
2.9(a)(ii) of the Acquired Corporation Disclosure Schedule. Except as set forth
in Part 2.9(a)(iii) of the Acquired Corporation Disclosure Schedule, none of the
Acquired Corporations has developed jointly with any other Person any
Proprietary Asset that is material to the business of the Acquired Corporations
with respect to which such other Person has any rights. Except as set forth in
Part 2.9(a)(iv) of the Acquired Corporation Disclosure Schedule, there is no
Acquired Corporation Contract pursuant to which any Person has any right
(whether or not currently exercisable) to use, license or otherwise exploit any
Proprietary Asset.
(b) Each of the Acquired Corporations has taken reasonable measures and
precautions to protect and maintain the confidentiality, secrecy and value of
all material Acquired Corporation Proprietary Assets (except Acquired
Corporation Proprietary Assets whose value would be unimpaired by disclosure).
Without limiting the generality of the foregoing, except as set forth in Part
2.9(b) of the Acquired Corporation Disclosure Schedule, (i) all current
employees of the Acquired Corporations who are or were involved in, or who have
contributed to, the creation or development of any material Acquired Corporation
Proprietary Asset have executed and delivered to the Company an agreement that
is substantially identical to the form of Confidential Information and Invention
Assignment Agreement previously delivered by the Company to Parent and (ii) all
current consultants and independent contractors to the Acquired Corporations who
are or were involved in, or who have contributed to, the creation or development
of any Acquired Corporation Proprietary Asset have executed and delivered to the
Company an agreement (containing no exceptions to or exclusions from the scope
of its coverage) that is substantially identical to the form of Consultant
Confidential Information and Invention Assignment Agreement previously delivered
by the Company to Parent. No current or former employee, officer, director,
stockholder, consultant or independent contractor has any right, claim or
interest in or with respect to any Acquired Corporation Proprietary Asset. None
of the Acquired Corporations has disclosed or delivered to any Person, or
permitted the disclosure or delivery to any escrow agent or other Person, of the
source code, or any portion or aspect of the source code, or any proprietary
information or algorithm contained in any source code, of any Acquired
Corporation Proprietary Asset.
(c) To the best knowledge of the Company: (i) all patents, trademarks,
service marks and copyrights held by each of the Acquired Corporations are
valid, enforceable and subsisting; (ii) none of the Acquired Corporation
Proprietary Assets and no Proprietary Asset that is currently being developed by
any of the Acquired Corporations (either by itself or with any other Person)
infringes, misappropriates or conflicts with any Proprietary Asset owned or used
by any other Person; (iii) none of the products that are or have been designed,
created, developed, assembled, manufactured or sold by any of the Acquired
Corporations is infringing, misappropriating or making any unlawful or
unauthorized use of any Proprietary Asset owned or used by any other Person, and
none of such products has at any time infringed, misappropriated or made any
unlawful or unauthorized use of, and none of the Acquired Corporations has
received any notice or other communication (in writing or otherwise) of any
actual, alleged, possible or potential infringement, misappropriation or
unlawful or unauthorized use of, any Proprietary Asset owned or used by any
other Person; and (iv) no other Person is infringing,
13.
misappropriating or making any unlawful or unauthorized use of, and no
Proprietary Asset owned or used by any other Person infringes or conflicts with,
any material Acquired Corporation Proprietary Asset.
(d) The Acquired Corporation Proprietary Assets constitute all of the
Proprietary Assets necessary to enable each of the Acquired Corporations to
conduct their business in the manner in which such business has been and is
being conducted. None of the Acquired Corporations has (i) licensed any of the
material Acquired Corporation Proprietary Assets to any Person on an exclusive
basis or (ii) entered into any covenant not to compete or Contract limiting its
ability to exploit fully any material Acquired Corporation Proprietary Assets or
to transact business in any market or geographical area or with any Person.
2.10 Contracts.
(a) Part 2.10 of the Acquired Corporation Disclosure Schedule identifies
each Acquired Corporation Contract that constitutes an "Acquired Corporation
Material Contract" as of the date of this Agreement. For purposes of this
Agreement, each of the following shall be deemed to constitute an "Acquired
Corporation Material Contract":
(i) any Contract relating to the employment of, or the performance
of services by, any employee or consultant with annual compensation in excess of
$150,000, and any Contract pursuant to which any of the Acquired Corporations
is, or may become, obligated to make any severance, termination or similar
payment, bonus or relocation payment or any other payment (other than payments
in respect of salary) in excess of $150,000, to any current or former employee
or director of any of the Acquired Corporations;
(ii) each lease, rental or occupancy agreement, installment and
conditional sales agreement, and other Contract affecting the ownership of,
leasing of, title to, use of, or any leasehold or other interest in, any real or
personal property (except for any personal property lease, installment sales
agreement or conditional sales agreement providing for aggregate payments by or
to the Acquired Corporations of less than $25,000 and except for sales
acknowledgments and purchase orders in the ordinary course of business);
(iii) any Contract relating to the acquisition, transfer,
development, sharing or license of any Proprietary Asset (except for (A) any
Contract pursuant to which any Proprietary Asset is licensed to any Acquired
Corporation under any third party software license generally available to the
public at a price per central processing unit of less than $5,000, (B) any
license implied in the sale by the Company of a tangible product or (C) any
Contract between Acquired Corporations);
(iv) any Contract which provides for indemnification of any
officer, director, employee or agent of any Acquired Corporation;
(v) any Contract imposing any restriction on the right or ability
of any Acquired Corporation (A) to compete with any other Person, (B) to acquire
any product or other asset or any services from any other Person, to sell any
product or other asset to or perform any services for any other Person or to
transact business or deal in any other manner with any other Person, or (C) to
develop or distribute any technology;
14.
(vi) any Contract (A) relating to the acquisition, issuance,
voting, registration, sale or transfer of any securities, (B) providing any
Person with any preemptive right, right of participation, right of maintenance
or any similar right with respect to any securities, or (C) providing the
Company with any right of first refusal with respect to, or right to repurchase
or redeem, any securities;
(vii) any Contract requiring that any Acquired Corporation give any
notice or provide any information to any Person prior to accepting an
Acquisition Proposal;
(viii) any Contract that has a term of more than 90 days and that
may not be terminated without penalty within 90 days after the delivery of a
termination notice by an Acquired Corporation (other than for the sale of
products by an Acquired Corporation entered into in the ordinary course of
business);
(ix) any Contract pursuant to which any of the Acquired
Corporations is or may become obligated to make payments aggregating in excess
of $100,000 or pursuant to which any of the Acquired Corporations is or may be
entitled to receive in excess of $100,000 (other than for the sale of products
or the purchase of components or materials by an Acquired Corporation entered
into in the ordinary course of business);
(x) any Contract (not otherwise identified in clauses "(i)" through
"(ix)" of this sentence) that has or could reasonably be expected to have a
material effect on the business, condition, assets, liabilities, capitalization,
operations, financial performance or prospects of any of the Acquired
Corporations or on any of the transactions contemplated by this Agreement (other
than for the sale of products or the purchase of components or materials by an
Acquired Corporation entered into in the ordinary course of business); and
(xi) any other Contract, if a breach of such Contract could
reasonably be expected to have a Material Adverse Effect on any of the Acquired
Corporations.
There is no Acquired Corporation Contract to which any Governmental Body is a
party or under which any Governmental Body has any rights or obligations, or
directly or indirectly benefiting any Governmental Body (including any
subcontract or other Contract between any Acquired Corporation and any
contractor or subcontractor to any Governmental Body).
(b) Each Acquired Corporation Contract that is an Acquired Corporation
Material Contract is valid and in full force and effect, and is enforceable by
the respective Acquired Corporation in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
(c) Except as set forth in Part 2.10 of the Acquired Corporation
Disclosure Schedule: (i) none of the Acquired Corporations has violated or
breached, or committed any default under, any Acquired Corporation Contract and,
to the best of each of the knowledge of the Acquired Corporations, no other
Person has violated or breached, or committed any default under, any Acquired
Corporation Contract; (ii) to the best of the knowledge of the Acquired
Corporations, no event has occurred, and no circumstance or condition exists,
that (with or without notice or lapse of time or both) will, or could reasonably
be expected to, (A) result in a
15.
violation or breach of any of the provisions of any Acquired Corporation
Contract, (B) give any Person the right to declare a default or exercise any
remedy under any Acquired Corporation Contract, (C) give any Person the right to
a rebate, chargeback, penalty or change in delivery schedule under any Acquired
Corporation Contract, (D) give any Person the right to accelerate the maturity
or performance of any Acquired Corporation Contract, or (E) give any Person the
right to cancel, terminate or modify any Acquired Corporation Contract; and
(iii) since September 30, 1997, none of the Acquired Corporations has received
any notice or other communication regarding any actual or possible violation or
breach of, or default under, any Acquired Corporation Contract.
(d) No Person is renegotiating, or has a right pursuant to the terms of
any Acquired Corporation Material Contract to renegotiate, any amount paid or
payable to the Acquired Corporation under any Acquired Corporation Material
Contract or any other material term or provision of any Acquired Corporation
Material Contract.
2.11 Liabilities. None of the Acquired Corporations has any
accrued, contingent or other liabilities of any nature, either matured or
unmatured (whether or not required to be reflected in financial statements in
accordance with GAAP, and whether due or to become due), except for: (a)
liabilities identified as such in the "liabilities" column of the Company
Unaudited Interim Balance Sheet; (b) normal and recurring liabilities that have
been incurred by any of the Acquired Corporations since December 31, 1997 in the
ordinary course of business and consistent with past practices; and (c)
liabilities described in Part 2.11 of the Acquired Corporation Disclosure
Schedule.
2.12 Compliance with Legal Requirements. Each of the Acquired
Corporations is, and has at all times since December 31, 1994 been, in
compliance with all applicable Legal Requirements, except where the failure to
comply with such Legal Requirements has not had, either individually or in the
aggregate, and could not reasonably be expected to have, a Material Adverse
Effect on the Acquired Corporations. Since December 31, 1994, none of the
Acquired Corporations has received any notice or other communication from any
Governmental Body regarding any actual or possible violation of, or failure to
comply with, any Legal Requirement.
2.13 Certain Business Practices. None of the Acquired Corporations or
any director, officer, agent or employee of any of the Acquired Corporations has
(i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating 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 unlawful
payment.
2.14 Governmental Authorizations. The Company holds all
Governmental Authorizations necessary to enable it to conduct its business in
the manner in which such business is currently being conducted. All such
Governmental Authorizations are valid and in full force and effect. The Company
is, and at all times since December 31, 1994 has been, in substantial compliance
with the terms and requirements of such Governmental Authorizations. Since
December 31, 1994, none of the Acquired Corporations has received any notice or
other communication from any Governmental Body regarding (a) any actual or
possible violation of or
16.
failure to comply with any term or requirement of any material Governmental
Authorization, or (b) any actual or possible revocation, withdrawal, suspension,
cancellation, termination or modification of any material Governmental
Authorization. Part 2.14 of the Acquired Corporation Disclosure Schedule
contains an accurate and complete list of all presently effective United States
Government Authorizations relating to the real or personal property of the
Company, and the Company is in compliance with such Governmental Authorizations.
2.15 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of the Acquired
Corporations with any Governmental Body with respect to any taxable period
ending on or before the Closing Date (the "Acquired Corporation Returns") (i)
have been or will be filed on or before the applicable due date (including any
extensions of such due date), and (ii) have been, or will be when filed,
prepared in all material respects in compliance with all applicable Legal
Requirements. All amounts shown on the Acquired Corporation Returns to be due on
or before the Closing Date have been or will be paid on or before the Closing
Date.
(b) The Company Unaudited Interim Balance Sheet fully accrues all actual
and contingent liabilities for Taxes with respect to all periods through the
date thereof in accordance with GAAP. The Acquired Corporations will establish,
in the ordinary course of business and consistent with past practices, reserves
adequate for the payment of all Taxes for the period from December 31, 1997
through the Closing Date.
(c) No Acquired Corporation Return has ever been examined or audited by
any Governmental Body. No extension or waiver of the limitation period
applicable to any of the Acquired Corporation Returns has been granted (by any
of the Acquired Corporations or any other Person), and no such extension or
waiver has been requested from any of the Acquired Corporations.
(d) No claim or Legal Proceeding is pending or, to the best knowledge of
the Acquired Corporations, has been threatened against or with respect to any of
the Acquired Corporations in respect of any material Tax. There are no
unsatisfied liabilities for material Taxes (including liabilities for interest,
additions to tax and penalties thereon and related expenses) with respect to any
notice of deficiency or similar document received by any of the Acquired
Corporations with respect to any material Tax (other than liabilities for Taxes
asserted under any such notice of deficiency or similar document which are being
contested in good faith by such Acquired Corporation and with respect to which
adequate reserves for payment have been established). There are no liens for
material Taxes upon any of the assets of any of the Acquired Corporations except
liens for current Taxes not yet due and payable. None of the Acquired
Corporations has entered into or become bound by any agreement or consent
pursuant to Section 341(f) of the Code. None of the Acquired Corporations has
been, or will be, required to include any adjustment in taxable income for any
tax period (or portion thereof) pursuant to Section 481 or 263A of the Code or
any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.
17.
(e) There is no agreement, plan, arrangement or other Contract covering
any employee or independent contractor or former employee or independent
contractor of any of the Acquired Corporations that, considered individually or
considered collectively with any other such Contracts, will, or could reasonably
be expected to, give rise directly or indirectly to the payment of any amount
that would not be deductible pursuant to Section 280G or Section 162 of the
Code. None of the Acquired Corporations is, or has ever been, a party to or
bound by any tax indemnity agreement, tax sharing agreement, tax allocation
agreement or similar Contract.
2.16 Employee and Labor Matters; Benefit Plans.
(a) Part 2.16(a) of the Acquired Corporation Disclosure Schedule
identifies each salary, bonus, vacation, deferred compensation, incentive
compensation, stock purchase, stock option, severance pay, termination pay,
death or disability benefits, hospitalization, medical, life or other insurance,
flexible benefits, supplemental unemployment benefits, profit-sharing, pension
or retirement plan, program or agreement and each other employee benefit plan or
arrangement maintained within the United States (collectively, the "Acquired
Corporation Plans") sponsored, maintained, contributed to or required to be
contributed to by any of the Acquired Corporations or any ERISA Affiliate (as
defined in Section 2.16(d) below) for the benefit of any current or former
employee in the United States of any of the Acquired Corporations or any ERISA
Affiliate.
(b) Except as set forth in Part 2.16(a) of the Acquired Corporation
Disclosure Schedule, neither the Acquired Corporations nor any ERISA Affiliate
maintain, sponsor or contribute to, or have at any time in the past maintained,
sponsored or contributed to, any employee pension benefit plan (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), whether or not excluded from coverage under specific Titles or
Subtitles of ERISA) that is maintained within the United States for the benefit
of employees or former employees of the Acquired Corporations or any ERISA
Affiliate (an "Acquired Corporation Pension Plan"). None of the Acquired
Corporation Pension Plans identified in the Acquired Corporation Disclosure
Schedule is a multiemployer plan (within the meaning of Section 3(37) of ERISA)
or is subject to Section 412 of the Code, Part 3 of Subtitle B of Title I of
ERISA or Title IV of ERISA.
(c) Except as set forth in Part 2.16(a) of the Acquired Corporation
Disclosure Schedule, neither the Acquired Corporations nor any ERISA Affiliate
maintain, sponsor or contribute to any: employee welfare benefit plan (as
defined in Section 3(1) of ERISA, whether or not excluded from coverage under
specific Titles or Subtitles of ERISA) that is maintained within the United
States for the benefit of any employees or former employees of any of the
Acquired Corporations or any ERISA Affiliate (an "Acquired Corporation Welfare
Plan"). None of the Acquired Corporation Plans identified in the Acquired
Corporation Disclosure Schedule is a multiemployer plan (within the meaning of
Section 3(37) of ERISA).
(d) None of the Acquired Corporations has or has ever been required to
be treated as a single employer with any other Person under Section 4001(b)(1)
of ERISA or Section 414(b), (c), (m) or (o) of the Code (an "ERISA Affiliate").
None of the Acquired Corporations has ever been a member of an "affiliated
service group" within the meaning of Section 414(m) of the Code with any other
Person within the United States. Neither the
18.
Acquired Corporations nor any ERISA Affiliate has ever made a complete or
partial withdrawal from a multiemployer plan, as such term is defined in Section
3(37) of ERISA, that is maintained within the United States, resulting in
"withdrawal liability," as such term is defined in Section 4201 of ERISA
(without regard to subsequent reduction or waiver of such liability under either
Section 4207 or 4208 of ERISA).
(e) Neither the Acquired Corporations nor any ERISA Affiliate has any
plan or commitment to create any additional Acquired Corporation Welfare Plans
or Acquired Corporation Pension Plans, or to modify or change any existing
Acquired Corporation Welfare Plan or Acquired Corporation Pension Plan (other
than to comply with applicable law) in a manner that would affect any employee
of any of the Acquired Corporations or any ERISA Affiliate.
(f) No Acquired Corporation Plan provides death, medical or health
benefits (whether or not insured) with respect to any current or former employee
of any of the Acquired Corporations or any ERISA Affiliate after any such
employee's termination of service (other than benefit coverage mandated by
applicable law, including coverage provided pursuant to COBRA (as defined in
Section 2.16(g) below)).
(g) With respect to any Acquired Corporation Plan constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code or Section
607(1) of ERISA, the provisions of Section 4980B of the Code and Sections 601
through 609 of ERISA ("COBRA") have been complied with in all material respects.
(h) Each of the Acquired Corporation Plans has been operated and
administered in all material respects in accordance with applicable Legal
Requirements, including but not limited to ERISA and the Code.
(i) Each of the Acquired Corporation Plans intended to be qualified
under Section 401(a) of the Code has received a favorable determination as to
its qualification from the Internal Revenue Service, and nothing has occurred
that would adversely affect such qualification.
(j) Except as set forth in Part 2.16(j) of the Acquired Corporation
Disclosure Schedule, neither the execution, delivery or performance of this
Agreement, nor the consummation of the Merger or any of the other transactions
contemplated by this Agreement, will result in any payment in the United States
(including any bonus, golden parachute or severance payment) to any current or
former employee or director of any of the Acquired Corporations (whether or not
under any Plan), or materially increase the benefits payable under any Plan, or
result in any acceleration of the time of payment or vesting of any such
benefits.
(k) Part 2.16(k) of the Acquired Corporation Disclosure Schedule
contains a list of all salaried employees located in the United States of each
of the Acquired Corporations or any ERISA Affiliate as of the date of this
Agreement whose salaries are in excess of $150,000 per year, and correctly
reflects, in all material respects, their salaries, any other compensation
payable to them (including compensation payable pursuant to bonus, deferred
compensation or commission arrangements), their dates of employment and their
positions. Neither any of the
19.
Acquired Corporations nor any ERISA Affiliate is a party to any collective
bargaining agreement or other Contract with a labor union involving any of their
employees located in the United States. There has not been, is not now pending,
and no Person has threatened to commence any slowdown, work stoppage, labor or
dispute or any similar activity or dispute in the United States affecting any of
the Acquired Corporations or any ERISA Affiliates or their employees since
December 31, 1997. All of the employees in the United States of each of the
Acquired Corporations and any ERISA Affiliates are "at will" employees.
(l) Part 2.16(l) of the Acquired Corporation Disclosure Schedule
identifies each employee in the United States of each of the Acquired
Corporations or any ERISA Affiliate who is not fully available to perform work
because of disability or other leave and sets forth the basis of such leave and
the anticipated date of return to full service.
(m) Each of the Acquired Corporations and any ERISA Affiliate in the
United States is in compliance in all material respects with all applicable
Legal Requirements and Contracts relating to employment, employment practices,
wages, bonuses and terms and conditions of employment, including employee
compensation matters.
(n) Each of the Acquired Corporations has good labor relations, and none
of the Acquired Corporations has any knowledge of any facts indicating that (i)
the consummation of the Merger or any of the other transactions contemplated by
this Agreement will have a material adverse effect on the labor relations of any
of the Acquired Corporations, or that (ii) any of the key employees of the
Company intends to terminate his or her employment with such Acquired
Corporation.
(o) The employee benefit plans and arrangements that are currently
maintained by the Acquired Corporations in Germany are in material compliance
with applicable German laws.
2.17 Environmental Matters.
(a) Each of the Acquired Corporations is, and at all times has been, in
compliance in all material respects with all applicable Environmental Laws,
which compliance includes (i) the possession by each of the Acquired
Corporations of all permits and other Governmental Authorizations required under
applicable Environmental Laws, and (ii) compliance with the terms and conditions
thereof (and the violation of which would have a Material Adverse Effect).
(b) None of the Acquired Corporations has received any notice or other
communication (in writing or otherwise), whether from a Governmental Body,
citizens group, employee or otherwise, that alleges that an Acquired Corporation
is not in compliance with any Environmental Law or is or may be required to
undertake or bear any Environmental Liabilities. To the best knowledge of each
of the Acquired Corporations, there are no circumstances that may prevent or
interfere with the compliance by any of the Acquired Corporations with any
Environmental Law or that may require any of the Acquired Corporations to
undertake or bear any Environmental Liabilities in the future (other than
routine Environmental Liabilities incurred in the ordinary course of business
consistent with past practices) with respect to any Property,
20.
any other property or otherwise. To the best knowledge of each of the Acquired
Corporations, no current or prior owner of any Acquired Corporation Property has
received any notice or other communication (in writing or otherwise), whether
from a Government Body, citizens group, employee or otherwise, that alleges that
such current or prior owner or such Acquired Corporation has not been or is not
in compliance with any Environmental Law or is or may be required to undertake
or bear any Environmental Liabilities.
(c) (i) To the best knowledge of each of the Acquired Corporations all
Acquired Corporation Property and all surface water, groundwater and soil
associated with such Acquired Corporation Property and (ii) to the knowledge of
the Company without independent investigation, all Property to which the Company
has sent any Material of Environmental Concern are free of any material
environmental contamination by any Material of Environmental Concern in any
concentration that may require any costs of investigation, response, removal or
remedial action.
(d) The Company has delivered to Parent true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by any of the Acquired Corporations pertaining to Materials of
Environmental Concern in, on, or under any Acquired Corporation Property, or
concerning compliance by any of the Acquired Corporations, or any other Person
for whose conduct it is or may be held responsible, with Environmental Laws.
(e) For purposes of this Agreement: (i) "Environmental Law" means any
federal, state, local or foreign Legal Requirement relating to pollution or
protection of human health or the environment (including ambient air, surface
water, ground water, land surface or subsurface strata), including any law or
regulation relating to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern; (ii) "Materials of Environmental
Concern" include chemicals, pollutants, contaminants, wastes, toxic substances,
asbestos, petroleum and petroleum products and any other substance that is now
or hereafter regulated by any Environmental Law or that is otherwise a danger to
health, reproduction or the environment; (iii) "Environmental Liabilities"
include any cost, damages, expense, liability, obligation, fine, penalty,
judgment, award, loss or other responsibility arising from or under
Environmental Law, including financial responsibility under Environmental Law
for investigation, removal, containment, remediation, response or other cleanup
costs or corrective action; and (iv) "Acquired Corporation Property" shall
include any property, parcel or facility now or heretofore owned, leased, used
or controlled by any of the Acquired Corporations or geologically or
hydrologically adjoining any such property, parcel or facility.
2.18 Insurance. The Company has delivered to Parent a copy of
each material insurance policy and each material self insurance program relating
to the business, assets or operations of each of the Acquired Corporations in
the United States. Each such insurance policy is in full force and effect. Since
December 31, 1994, none of the Acquired Corporations has received any notice or
other communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or rejection
of any material claim under any insurance policy, or (c) material adjustment in
the amount of the premiums
21.
payable with respect to any insurance policy. Except as set forth in Part 2.18
of the Acquired Corporation Disclosure Schedule, there is no pending claim
(including any workers' compensation claim) under or based upon any insurance
policy applicable to any of the business, assets or operations of any of the
Acquired Corporations.
2.19 Transactions With Affiliates. Except as set forth in Part
2.19 of the Acquired Corporation Disclosure Schedule, since December 31, 1994,
no event has occurred that would be required to be reported by the Company
pursuant to Item 404 of Regulation S-K promulgated by the SEC, were the Company
required to report to its stockholders in accordance with such Item. Part 2.19
of the Acquired Corporation Disclosure Schedule identifies each person who is an
"affiliate" (as that term is used in Rule 145 under the Securities Act) of the
Company as of the date of this Agreement.
2.20 Legal Proceedings; Orders.
(a) Except as set forth in Part 2.20 of the Acquired Corporation
Disclosure Schedule, there is no pending Legal Proceeding and (to the best
knowledge of each of the Acquired Corporations) no Person has threatened to
commence any Legal Proceeding: (i) that involves any of the Acquired
Corporations or any of the assets owned or used by any of the Acquired
Corporations; or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, the Merger
or any of the other transactions contemplated by this Agreement. To the best
knowledge of each of the Acquired Corporations, no event has occurred, and no
claim, dispute or other condition or circumstance exists, that will, or that
could reasonably be expected to, give rise to or serve as a basis for the
commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.20 of the Acquired Corporation
Disclosure Schedule, there is no material order, writ, injunction, judgment or
decree to which any of the Acquired Corporations, or any of the assets owned or
used by any of the Acquired Corporations, is subject. To the best knowledge of
each of the Acquired Corporations, no officer or key employee of any of the
Acquired Corporations is subject to any order, writ, injunction, judgment or
decree that prohibits such officer or other employee from engaging in or
continuing any conduct, activity or practice relating to the business of any of
the Acquired Corporations.
2.21 Authority; Inapplicability of Anti-takeover Statutes; Binding
Nature of Agreement. The Company has the absolute and unrestricted right,
power and authority to enter into and to perform its obligations under this
Agreement. The Board of Directors of the Company (at a meeting duly called and
held) has (a) unanimously determined that the Merger is advisable and fair and
in the best interests of the Company and its stockholders, (b) unanimously
authorized and approved the execution, delivery and performance of this
Agreement by the Company and has unanimously approved the Merger, (c)
unanimously recommended the adoption of this Agreement by the holders of Company
Common Stock and directed that this Agreement be submitted for consideration by
the Company's stockholders at the Company Stockholders' Meeting (as defined in
Section 6.2(a)), and (d) adopted a resolution having the effect of causing the
Company not to be subject to any state takeover law or similar Legal Requirement
that might otherwise apply to the Merger or any of the other transactions
contemplated by this Agreement. This Agreement constitutes the legal, valid and
binding
22.
obligation of the Company, enforceable against the Company in accordance
with its terms, subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
2.22 Section 203 of the DGCL Not Applicable. As of the date
hereof and at all times on or prior to the Effective Time, Section 203 of the
DGCL is, and will be, inapplicable to the execution, delivery and performance of
this Agreement and to the consummation of the Merger and the other transactions
contemplated by this Agreement.
2.23 No Existing Discussions. None of the Acquired Corporations,
nor any Representative of any of the Acquired Corporations, is engaged, directly
or indirectly, in any discussions or negotiations with any other Person relating
to any Acquisition Proposal.
2.24 Vote Required. The affirmative vote of the holders of (a) a
majority of the shares of Company Common Stock and Company Preferred Stock,
voting as a single class, outstanding on the record date for the Company
Stockholder's Meeting and (b) a majority of the shares of Company Preferred
Stock outstanding on the record date for the Company Stockholders' Meeting to
adopt this Agreement (the "Company Required Vote") is the only vote of the
holders of any class or series of the Company's capital stock necessary to
consummate the transactions contemplated by this Agreement.
2.25 Non-Contravention; Consents. Neither (1) the execution,
delivery or performance of this Agreement or any of the other agreements
referred to in this Agreement, nor (2) the consummation of the Merger or any of
the other transactions contemplated by this Agreement, will directly or
indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of the
provisions of the certificate of incorporation, bylaws or other charter or
organizational documents of any of the Acquired Corporations, or (ii) any
resolution adopted by the stockholders, the board of directors, or similar
governing body, or any committee of the board of directors, or similar governing
body, of any of the Acquired Corporations;
(b) contravene, conflict with or result in a violation of, or give any
Governmental Body or other Person the right to challenge the Merger or any of
the other transactions contemplated by this Agreement or to exercise any remedy
or obtain any relief under, any Legal Requirement or any order, writ,
injunction, judgment or decree to which any of the Acquired Corporations, or any
of the assets owned or used by any of the Acquired Corporations, is subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by any of the Acquired Corporations or that otherwise relates to
the business of any of the Acquired Corporations or to any of the assets owned
or used by any of the Acquired Corporations;
(d) contravene, conflict with or result in a violation or breach of, or
result in a default under, any provision of any Acquired Corporation Contract
that is or would constitute an
23.
Acquired Corporation Material Contract, or give any Person the right to (i)
declare a default or exercise any remedy under any such Acquired Corporation
Contract, (ii) a rebate, chargeback, penalty or change in delivery schedule
under any such Acquired Corporation Contract, (iii) accelerate the maturity or
performance of any such Acquired Corporation Contract, or (iv) cancel, terminate
or modify any term of any such Acquired Corporation Contract;
(e) result in the imposition or creation of any Encumbrance upon or with
respect to any asset owned or used by any of the Acquired Corporations (except
for minor liens that will not, in any individual case or in the aggregate,
materially detract from the value of the assets subject thereto or materially
impair the operations of any of the Acquired Corporations); or
(f) result in, or increase the likelihood of, the disclosure, delivery
or transfer of any material asset of any of the Acquired Corporations to any
Person.
Except as may be required by the DGCL and the HSR Act, none of the
Acquired Corporations was, is nor will be required to make any filing with or
give any notice to, or to obtain any Consent from, any Person in connection with
(x) the execution, delivery or performance of this Agreement or any of the other
agreements referred to in this Agreement, or (y) the consummation of the Merger
or any of the other transactions contemplated by this Agreement.
2.26 Financial Advisor. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or any of the other transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
Section 3. Representations and Warranties of Parent and Merger Sub
Except as disclosed in the Parent Disclosure Schedule, Parent and Merger
Sub represent and warrant to the Company as follows:
3.1 Due Organization; Subsidiaries; Etc.
(a) Neither Parent nor Merger Sub own any shares of capital stock of, or
equity interest of any nature in, any Entity except for the corporations
identified in Part 3.1(a)(i) of the Parent Disclosure Schedule; and neither
Parent, Merger Sub nor any of the other corporations identified in Part
3.1(a)(i) of the Parent Disclosure Schedule owns any capital stock of, or any
equity interest of any nature in, any other Entity, other than those identified
in Part 3.1(a)(ii) of the Parent Disclosure Schedule. Neither Parent nor Merger
Sub has agreed, nor is obligated or bound to any contract under which it may
become obligated, to make any future investment in or capital contribution to
any Entity. Neither Parent nor Merger Sub has, at any time, been a general
partner of any general partnership, limited partnership or other Entity.
(b) Parent and Merger Sub are corporations duly organized, validly
existing and in good standing under the laws of the jurisdiction of their
incorporation and each has all necessary power and authority: (i) to conduct its
business in the manner in which its business is currently being conducted; (ii)
to own and use its assets in the manner in which its assets are currently owned
and used; and (iii) to perform its obligations under all Contracts by which it
is
24.
bound. Merger Sub was incorporated for purposes of consummating the Merger
and has never conducted any business or other activities, except in connection
with this Agreement.
(c) Each of Parent and Merger Sub are qualified to do business as a
foreign corporation, and is in good standing, under the laws of all
jurisdictions where the nature of its business requires such qualification and
where the failure to be so qualified would have a Material Adverse Effect on
Parent or Merger Sub.
3.2 Certificate of Incorporation and Bylaws. Parent has delivered
to the Company accurate and complete copies of the certificate of incorporation,
bylaws and other charter and organizational documents, including all amendments
thereto, of Parent and Merger Sub.
3.3 Capitalization, Etc.
(a) The authorized capital stock of Parent consists of: (i) 25,000,000
shares of common stock, $.01 par value per share ("Parent Common Stock"), of
which 14,881,039 shares have been issued and are outstanding as of the date of
this Agreement; and (ii) 5,000,000 shares of Preferred Stock, $.01 par value per
share, of which 30 shares of Series A Preferred Stock, $.01 par value, 68 shares
of Series B Preferred Stock, $.01 par value, and 85 shares of Series C Preferred
Stock, $.01 par value are outstanding as the date of this Agreement ("Parent
Preferred Stock"). All of the outstanding shares of Parent Common Stock have
been duly authorized and validly issued, and are fully paid and nonassessable.
Parent does not hold any of its shares of capital stock in its treasury. Except
as set forth in Part 3.3(a) of the Parent Disclosure Schedule: (i) none of the
outstanding shares of Parent Common Stock or Parent Preferred Stock is entitled
or subject to any preemptive right, right of participation, right of maintenance
or any similar right; (ii) none of the outstanding shares of Parent Common Stock
or Parent Preferred Stock is subject to any right of first refusal in favor of
Parent; and (iii) there is no Contract relating to the voting or registration
of, or restricting any Person from purchasing, selling, pledging or otherwise
disposing of (or granting any option or similar right with respect to), any
shares of Parent Common Stock or Parent Preferred Stock. Parent is not under any
obligation or bound by any contract pursuant to which it may be obligated to
repurchase, redeem or otherwise acquire any outstanding shares of Parent Common
Stock. The authorized capital of Merger Sub consists of 1,000 shares of Common
Stock, par value $.01 per share, 100 of which are issued and outstanding and are
held, beneficially and of record, by Parent.
(b) As of the date of this Agreement: (i) 1,039,764 shares of Parent
Common Stock are reserved for future issuance pursuant to stock options granted
and outstanding under Parent's 1994 Stock Option Plan, as amended (the "Parent
Options") and 458,236 shares of Parent Common Stock are reserved and available
for future issuance pursuant to future grants of stock options; and (ii) 141,653
shares of Parent Common Stock are reserved for future issuance pursuant to
Parent's 1995 Employee Stock Purchase Plan (the "1995 Purchase Plan"). Part
3.3(b)(i) of the Parent Disclosure Schedule sets forth the following information
with respect to each Parent Option outstanding as of the date of this Agreement:
(i) the particular plan pursuant to which such Parent Option was granted; (ii)
the name of the optionee; (iii) the number of shares of Parent Common Stock
subject to such Parent Option; (iv) the exercise price of such Parent Option;
(v) the date on which such Parent Option was granted; (vi) the applicable
vesting schedules and the extent to which such Parent Option is vested and
exercisable as of the date of
25.
this Agreement; and (vii) the date on which such Parent Option expires. Parent
has delivered to the Company accurate and complete copies of all stock option
plans pursuant to which Parent has granted outstanding stock options, and the
forms of all stock option agreements evidencing such options. Part 3.3(b)(ii) of
the Parent Disclosure Schedule sets forth the following information with respect
to the outstanding warrants to purchase Parent Common Stock: (1) the number of
shares of Parent Common Stock subject to such warrants; (2) the exercise price
of such warrants; and (3) the date on which such warrants expire. Parent has
delivered to the Company an accurate and complete copy of the forms of all such
warrants.
(c) Except as set forth in Part 3.3(a), or Part 3.3(b)(i) or Part
3.3(b)(ii) of Parent Disclosure Schedule, there is no: (i) outstanding
subscription, option, call, warrant or right (whether or not currently
exercisable) granted by Parent to acquire any shares of the capital stock or
other securities of Parent; (ii) outstanding security, instrument or obligation
that is or may become convertible into or exchangeable for any shares of the
capital stock or other securities of Parent; (iii) stockholder rights plan (or
similar plan commonly referred to as a "poison pill") or Contract under which
Parent is or may become obligated to sell or otherwise issue any shares of its
capital stock or any other securities; or (iv) condition or circumstance that
may give rise to or provide a basis for the assertion of a claim by any Person
to the effect that such Person is entitled to acquire or receive any shares of
capital stock or other securities of Parent.
(d) All outstanding shares of Parent Common Stock, all outstanding
Parent Options and all outstanding warrants to purchase Parent Common Stock have
been issued and granted in compliance with (i) all applicable securities laws
and other applicable Legal Requirements, and (ii) all requirements set forth in
applicable Contracts.
3.4 SEC Filings; Financial Statements.
(a) Parent has delivered to the Company accurate and complete copies of
all registration statements, proxy statements, reports, schedules, forms and
other documents filed by Parent with the SEC since December 31, 1994 (the
"Parent SEC Documents"). All statements, reports, schedules forms and other
documents required to have been filed by Parent with the SEC have been so filed.
As of the time it was filed with the SEC (or, if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing):
(i) each of the Parent SEC Documents complied in all material respects with the
applicable requirements of the Securities Act or the Exchange Act (as the case
may be); and (ii) none of the Parent SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The financial statements (including any related notes) contained in
the Parent SEC Documents: (i) complied as to form in all material respects with
the published rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC, and except that the unaudited financial statements may not contain
footnotes and are subject to normal and recurring year-end adjustments which
will not, individually or in the aggregate, be material in amount); and (iii)
fairly present the financial position of Parent as of
26.
the respective dates thereof and the results of operations and cash flows of
Parent for the periods covered thereby.
(c) Parent has delivered to the Company the audited balance sheet of
Parent as of December 31, 1997 (the "Parent Audited Balance Sheet") and the
related audited consolidated income statement, consolidated statement of
stockholders' equity and consolidated statement of cash flows of Parent and its
subsidiaries for the years then ended, together with the notes thereto and the
unqualified report and opinion of Price Waterhouse LLP relating thereto
(collectively, the "Parent Financial Statements.") The Parent Financial
Statements are accurate and complete in all material respects and present fairly
the consolidated financial position of Parent and its subsidiaries as of the
respective dates thereof and the results of consolidated operations and
consolidated cash flows of Parent and its subsidiaries for the periods covered
thereby. The Parent Financial Statements have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered.
3.5 Absence of Changes. Since December 31, 1997;
(a) there has not been any material adverse change in the business,
condition, assets, capitalization, liabilities, operations, financial
performance or prospects of Parent, and no event has occurred that could
reasonably be expected to have a Material Adverse Effect on Parent; and
(b) there has not been any material loss, damage or destruction to, or
any material interruption in the use of, any of the assets of Parent (whether or
not covered by insurance).
(c) Parent has not (i) declared, accrued, set aside or paid any dividend
or made any other distribution in respect of any shares of capital stock, or
(ii) repurchased, redeemed or otherwise reacquired any shares of capital stock
or other securities;
(d) Except for the sale and issuance, prior to the Effective Time, of
convertible Preferred Stock of Parent that is convertible, in the aggregate,
into not more than 2,000,000 shares of Parent Common Stock ("the "Preferred
Sale"), Parent has not issued, granted or authorized the issuance of (i) any
capital stock or other security (except for Parent Common Stock issued upon the
exercise of outstanding Parent Options or pursuant to the 1995 Purchase Plan),
(ii) any option, warrant or right to acquire any capital stock or any other
security (except for Parent Options described in Part 3.3(b)(i) of the Parent
Disclosure Schedule), or (iii) any instrument convertible into or exchangeable
for any capital stock or other security;
(e) Parent has not amended or waived any of its rights under, or
permitted the acceleration of vesting under, (i) any provision of any of
Parent's stock option plans, (ii) any provision of any agreement evidencing any
outstanding Parent Option, or (iii) any restricted stock purchase agreement;
(f) except as contemplated by this Agreement and except in connection
with a Preferred Sale, there has been no amendment to the certificate of
incorporation, bylaws or other charter or organizational documents of Parent,
and Parent has not effected or been a party to any
27.
merger, consolidation, share exchange, business combination, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction or received any Acquisition Proposal;
(g) other than in relation to the Company, Parent has not (i) received
any Acquisition Proposal, or (ii) solicited, initiated, encouraged or induced,
or provided any nonpublic information to or entered into any discussions with
any Person for the purpose of soliciting, initiating, encouraging or inducing,
the making or submission of any Acquisition Proposal;
(h) Parent has not formed any subsidiary or acquired any equity interest
or other interest in any other Entity, other than Merger Sub;
(i) Parent has not made any capital expenditures which, when added to
all other capital expenditures made by or on behalf of Parent since December 31,
1997, exceed $50,000 in the aggregate;
(j) except in the ordinary course of business and consistent with past
practices, Parent has not (i) entered into or permitted any of the assets owned
or used by it to become bound by any Parent Material Contract (as defined in
Section 2.10), or (ii) amended or terminated, or waived any material right or
remedy under, any Parent Material Contract;
(k) Parent has not (i) acquired, leased or licensed any material right
or other material asset from any other Person, (ii) sold or otherwise disposed
of, or leased or licensed, any material right or other material asset to any
other Person, or (iii) waived or relinquished any right, except for rights or
other assets acquired, leased, licensed or disposed of in the ordinary course of
business and consistent with past practices;
(l) Parent has not written off as uncollectable, or established any
extraordinary reserve with respect to, any account receivable or other
indebtedness;
(m) Parent has not made any pledge of any of its assets or otherwise
permitted any of its assets to become subject to any Encumbrance, except for
pledges of immaterial assets made in the ordinary course of business and
consistent with past practices;
(n) Parent has not (i) lent money to any Person, or (ii) incurred or
guaranteed any indebtedness for borrowed money;
(o) Parent has not (i) established or adopted any Parent Welfare Plan
(as defined in Section 3.16(c)) or Parent Pension Plan (as defined in Section
3.16(b)), (ii) caused or permitted any Parent Welfare Plan or Parent Pension
Plan to be amended in any material respect, or (iii) paid any bonus or made any
profit-sharing or similar payment (other than as committed pursuant to plan or
agreement prior to June 30, 1997) to, or materially increased the amount of the
wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees;
(p) Parent has not changed any of its methods of accounting or
accounting practices in any respect;
28.
(q) Parent has not made any material Tax election;
(r) Parent has not commenced or settled any Legal Proceeding;
(s) Parent has not entered into any material transaction or taken any
other material action that has had, or could reasonably be expected to have, a
Material Adverse Effect on Parent;
(t) Parent has not entered into any material transaction or taken any
other material action outside of the ordinary course of business or inconsistent
with past practices; and
(u) Parent has not agreed or committed to take any of the actions
referred to in clauses "(a)" through "(t)" above.
3.6 Title to Assets.
(a) Part 3.6 of the Parent Disclosure Schedule contains a complete and
accurate list of all real property, leaseholds, or other interests in real
property owned by Parent (all such property owned by Parent being referred to
herein as the "Parent Owned Real Property" and all such real property leased by
Parent being referred to herein as the "Parent Leased Real Property"). Parent
holds the leasehold interests of the Parent Leased Real Property under the real
property leases described in Part 3.6 of the Parent Disclosure Schedule.
(b) Parent owns, and has good, valid and marketable title to, all assets
purported to be owned by it, including: (i) all assets reflected on the Parent
Audited Balance Sheet; (ii) all other assets reflected in the books and records
of Parent as being owned by Parent; and (iii) the real property identified on
Part 3.6 of the Parent Disclosure Schedule. All of said assets are owned by
Parent free and clear of any Encumbrances, except for (1) any lien for current
taxes not yet due and payable, (2) minor liens that have arisen in the ordinary
course of business and that do not (in any case or in the aggregate) materially
detract from the value of the assets subject thereto or materially impair the
operations of Parent and (3) liens described in Part 3.6 of the Parent
Disclosure Schedule. All buildings, plants, and structures owned or leased by
Parent lie wholly within the boundaries of the real property owned or leased by
Parent and do not encroach upon the property of, or otherwise conflict with the
property rights of, any other Person.
3.7 Receivables; Inventory.
(a) All existing accounts receivable of Parent (including those accounts
receivable reflected on the Parent Audited Balance Sheet that have not yet been
collected and those accounts receivable that have arisen since December 31, 1997
and have not yet been collected) (i) represent valid obligations of customers of
Parent arising from bona fide transactions entered into in the ordinary course
of business, (ii) to the best of Parent's knowledge, except as set forth in Part
3.7(a) of the Parent Disclosure Schedule, will be collected in full, without any
counterclaim or set off (net of an allowance for doubtful accounts not to exceed
$65,000 in the aggregate).
29.
(b) Part 3.7(b) of the Parent Disclosure Schedule contains an accurate
and complete list as of the date of this Agreement of all loans and advances
made by Parent to any employee, director, consultant or independent contractor
of Parent, other than routine travel advances made to employees in the ordinary
course of business.
(c) All inventory of Parent, whether or not reflected in the Parent
Audited Balance Sheet, consists of a quality and quantity usable and salable in
the ordinary course of business, except for obsolete items and items of
below-standard quality, all of which have been written off or written down to
net realizable value in the Parent Audited Balance Sheet. All inventories not
written off have been priced at the lower of cost or market on a first in, first
out basis. The quantities of each item of inventory (whether raw materials,
work-in-process, or finished goods) are not excessive, but are reasonable in the
present circumstances of Parent.
3.8 Buildings, Equipment; Leasehold. The buildings, plants, structures
and all material items of equipment and other tangible assets owned by or leased
to Parent are adequate for the uses to which they are being put, are in good
condition and repair (ordinary wear and tear excepted), are adequate for the
conduct of the business of Parent in the manner in which such business is
currently being conducted, and are in compliance with all applicable Legal
Requirements.
3.9 Proprietary Assets.
(a) Part 3.9(a)(i) of the Parent Disclosure Schedule sets forth, with
respect to each Proprietary Asset owned by Parent and registered with any
Governmental Body or for which an application has been filed with any
Governmental Body, (i) a brief description of such Proprietary Asset, and (ii)
the names of the jurisdictions covered by the applicable registration or
application. Part 3.9(a)(ii) of the Parent Disclosure Schedule identifies and
provides a brief description of, any ongoing royalty or payment obligations in
excess of $10,000 with respect to, each Proprietary Asset that is licensed or
otherwise made available to Parent by any Person (except for any Proprietary
Asset that is licensed to Parent under any third party software license
generally available to the public at a price per central processing unit of not
less than $5,000), and identifies the Contract under which such Proprietary
Asset is being licensed or otherwise made available to Parent. To the knowledge
of Parent, Parent has good, valid and marketable title to all of the Proprietary
Assets identified in Part 3.9(a)(i) of the Parent Disclosure Schedule and to all
other Proprietary Assets that Parent purports to own, free and clear of all
Encumbrances, except for (i) any lien for current taxes not yet due and payable,
and (ii) minor liens that have arisen in the ordinary course of business and
that do not (individually or in the aggregate) materially detract from the value
of the assets subject thereto or materially impair the operations of Parent. To
the knowledge of Parent, Parent has a valid right to use, license and otherwise
exploit all Proprietary Assets identified in Part 3.9(a)(ii) of the Parent
Disclosure Schedule. Except as set forth in Part 3.9(a)(iii) of the Parent
Disclosure Schedule, Parent has not developed jointly with any other Person any
Proprietary Asset that is material to the business of Parent with respect to
which such other Person has any rights. Except as set forth in Part 3.9(a)(iv)
of the Parent Disclosure Schedule, to Parent's knowledge there is no Parent
Contract pursuant to which any Person has any right (whether or not currently
exercisable) to use, license or otherwise exploit any Parent Proprietary Asset.
30.
(b) Parent has taken reasonable measures and precautions to protect and
maintain the confidentiality, secrecy and value of all material Parent
Proprietary Assets (except Parent Proprietary Assets whose value would be
unimpaired by disclosure). Without limiting the generality of the foregoing,
except as set forth in Part 3.9(b) of the Parent Disclosure Schedule, (i) all
current employees of Parent who are or were involved in, or who have contributed
to, the creation or development of any Parent Proprietary Asset have executed
and delivered to Parent an agreement that is substantially identical to the form
of Confidential Information and Invention Assignment Agreement previously
delivered by Parent to the Company, and (ii) all current consultants and
independent contractors to Parent who are or were involved in, or who have
contributed to, the creation or development of any material Parent Proprietary
Asset have executed and delivered to Parent an agreement (containing no
exceptions to or exclusions from the scope of its coverage) that is
substantially identical to the form of Consultant Confidential Information and
Invention Assignment Agreement previously delivered by Parent to the Company. No
current or former employee, officer, director, stockholder, consultant or
independent contractor has any right, claim or interest in or with respect to
any Parent Proprietary Asset. Parent has not disclosed or delivered to any
Person, or permitted the disclosure or delivery to any escrow agent or other
Person, of the source code, or any portion or aspect of the source code, or any
proprietary information or algorithm contained in any source code, of any Parent
Proprietary Asset.
(c) To the best knowledge of Parent: (i) all patents, trademarks,
service marks and copyrights held by Parent are valid, enforceable and
subsisting; (ii) none of the Parent Proprietary Assets and no Proprietary Asset
that is currently being developed by Parent (either by itself or with any other
Person) infringes, misappropriates or conflicts with any Proprietary Asset owned
or used by any other Person; (iii) none of the products that are or have been
designed, created, developed, assembled, manufactured or sold by Parent is
infringing, misappropriating or making any unlawful or unauthorized use of any
Proprietary Asset owned or used by any other Person, and none of such products
has at any time infringed, misappropriated or made any unlawful or unauthorized
use of, and Parent has not received any notice or other communication (in
writing or otherwise) of any actual, alleged, possible or potential
infringement, misappropriation or unlawful or unauthorized use of, any
Proprietary Asset owned or used by any other Person; (iv) no other Person is
infringing, misappropriating or making any unlawful or unauthorized use of, and
no Proprietary Asset owned or used by any other Person infringes or conflicts
with, any material Parent Proprietary Asset.
(d) The Parent Proprietary Assets constitute all the Proprietary Assets
necessary to enable Parent to conduct its business in the manner in which such
business has been and is being conducted. Parent has not (i) licensed any of the
material Parent Proprietary Assets to any Person on an exclusive basis, or (ii)
entered into any covenant not to compete or Contract limiting its ability to
exploit fully any material Parent Proprietary Assets or to transact business in
any market or geographical area or with any Person.
3.10 Contracts.
(a) Part 3.10 of the Parent Disclosure Schedule identifies each Parent
Contract that constitutes a "Parent Material Contract" as of the date of this
Agreement. For purposes of
31.
this Agreement, each of the following shall be deemed to constitute a "Parent
Material Contract":
(i) any Contract relating to the employment of, or the performance
of services by, any employee or consultant, and any Contract pursuant to which
Parent is, or may become, obligated to make any severance, termination or
similar payment, bonus or relocation payment or any other payment to any current
or former employee or director of Parent;
(ii) each lease, rental or occupancy agreement, installment and
conditional sale agreement, and other Contract affecting the ownership of,
leasing of, title to, use of, or any leasehold or other interest in, any real or
personal property (except for any personal property lease, installment sale
agreement or conditional sales agreements providing for aggregate payments by or
to Parent of less than $25,000 and except for sales acknowledgements and
purchase orders in the ordinary course of business);
(iii) any Contract relating to the acquisition, transfer,
development, sharing or license of any Proprietary Asset (except for (A) any
Contract pursuant to which any Proprietary Asset is licensed to Parent under any
third party software license generally available to the public at a price per
central processing unit of less than $5,000, or (B) any license implied in the
sale by Parent of a tangible product);
(iv) any Contract which provides for indemnification of any
officer, director, employee or agent of Parent;
(v) any Contract imposing any restriction on the right or ability
of Parent (A) to compete with any other Person, (B) to acquire any product or
other asset or any services from any other Person, to sell any product or other
asset to or perform any services for any other Person or to transact business or
deal in any other manner with any other Person, or (C) to develop or distribute
any technology;
(vi) any Contract (A) relating to the acquisition, issuance,
voting, registration, sale or transfer of any securities, (B) providing any
Person with any preemptive right, right of participation, right of maintenance
or any similar right with respect to any securities, or (C) providing Parent
with any right of first refusal with respect to, or right to repurchase or
redeem, any securities;
(vii) any Contract requiring that Parent give any notice or provide
any information to any Person prior to accepting any Acquisition Proposal;
(viii) any Contract that has a term of more than 90 days and that
may not be terminated without penalty within 90 days after the delivery of a
termination notice by Parent (other than for the sale of products or the
purchase of components or materials by Parent entered into in the ordinary
course of business);
(ix) any Contract pursuant to which Parent is or may become
obligated to make payments aggregating in excess of $25,000 or pursuant to which
Parent is or may be entitled to receive in excess of $25,000 (other than for the
sale of products or the purchase of components or materials by Parent entered
into in the ordinary course of business);
32.
(x) any Contract (not otherwise identified in clauses "(i)" through
"(ix)" of this sentence) that has or could reasonably be expected to have a
material effect on the business, condition, assets, liabilities, capitalization,
operations, financial performance or prospects of Parent or on any of the
transactions contemplated by this Agreement (other than for the sale of products
by Parent entered into in the ordinary course of business); and
(xi) any other Contract, if a breach of such Contract could
reasonably be expected to have a Material Adverse Effect on Parent.
There is no Parent Contract to which any Governmental Body is a party or
under which any Governmental Body has any rights or obligations, or directly or
indirectly benefiting any Governmental Body (including any subcontract or other
Contract between Parent and any contractor or subcontractor to any Governmental
Body).
(b) Each Parent Contract that is a Parent Material Contract is valid and
in full force and effect, and is enforceable by Parent in accordance with its
terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
(c) Except as set forth in Part 3.10 of the Parent Disclosure Schedule:
(i) Parent has not violated or breached, or committed any default under, any
Parent Contract, and, to the best of the knowledge of Parent, no other Person
has violated or breached, or committed any default under, any Parent Contract;
(ii) to the best of the knowledge of Parent, no event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
will, or could reasonably be expected to, (A) result in a violation or breach of
any of the provisions of any Parent Contract, (B) give any Person the right to
declare a default or exercise any remedy under any Parent Contract, (C) give any
Person the right to a rebate, chargeback, penalty or change in delivery schedule
under any Parent Contract, (D) give any Person the right to accelerate the
maturity or performance of any Parent Contract, or (E) give any Person the right
to cancel, terminate or modify any Parent Contract; and (iii) since September
30, 1997, Parent has not received any notice or other communication regarding
any actual or possible violation or breach of, or default under, any Parent
Contract.
(d) No Person is renegotiating, or has a right pursuant to the terms of
any Parent Material Contract to renegotiate, any amount paid or payable to
Parent under any Material Contract or any other material term or provision of
any Material Contract.
3.11 Liabilities. Parent has no accrued, contingent or other
liabilities of any nature, either matured or unmatured (whether or not required
to be reflected in financial statements in accordance with GAAP, and whether due
or to become due), except for: (a) liabilities identified as such in the
"liabilities" column of the Parent Audited Balance Sheet; (b) normal and
recurring liabilities that have been incurred by Parent since December 31, 1997
in the ordinary course of business and consistent with past practices; and (c)
liabilities described in Part 3.11 of the Parent Disclosure Schedule.
3.12 Compliance with Legal Requirements. Parent is, and has at
all times since December 31, 1994 been, in compliance with all applicable Legal
Requirements, except where
33.
the failure to comply with such Legal Requirements has not had, either
individually or in the aggregate, and could not reasonably be expected to have,
a Material Adverse Effect on Parent. Since December 31, 1994, Parent has not
received any notice or other communication from any Governmental Body regarding
any actual or possible violation of, or failure to comply with, any Legal
Requirement.
3.13 Certain Business Practices. Neither Parent nor any director,
officer, agent or employee of Parent has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating 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 unlawful payment.
3.14 Governmental Authorizations. Parent holds all Governmental
Authorizations necessary to enable Parent to conduct its business in the manner
in which such business is currently being conducted. All such Governmental
Authorizations are valid and in full force and effect. Parent is, and at all
times since September 30, 1994 has been, in substantial compliance with the
terms and requirements of such Governmental Authorizations. Since September 30,
1994, Parent has not received any notice or other communication from any
Governmental Body regarding (a) any actual or possible violation of or failure
to comply with any term or requirement of any material Governmental
Authorization, or (b) any actual or possible revocation, withdrawal, suspension,
cancellation, termination or modification of any material Governmental
Authorization. Part 3.14 of the Parent Disclosure Schedule contains an accurate
and complete list of all presently effective United States Government
Authorizations relating to the real or personal property of Parent, and Parent
is in compliance with all such Governmental Authorizations.
3.15 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of Parent with
any Governmental Body with respect to any taxable period ending on or before the
Closing Date (the "Parent Returns") (i) have been or will be filed on or before
the applicable due date (including any extensions of such due date), and (ii)
have been, or will be when filed, prepared in all material respects in
compliance with all applicable Legal Requirements. All amounts shown on the
Parent Returns to be due on or before the Closing Date have been or will be paid
on or before the Closing Date.
(b) The Parent Audited Balance Sheet fully accrues all actual and
contingent liabilities for Taxes with respect to all periods through the date
thereof in accordance with GAAP. Parent will establish, in the ordinary course
of business and consistent with its past practices, reserves adequate for the
payment of all Taxes for the period from December 31, 1997 through the Closing
Date.
(c) No Parent Return has ever been examined or audited by any
Governmental Body. No extension or waiver of the limitation period applicable to
any Parent Returns has been granted (by Parent or any other Person), and no such
extension or waiver has been requested from Parent.
34.
(d) No claim or Legal Proceeding is pending or, to the best knowledge of
Parent, has been threatened against or with respect to Parent in respect of any
material Tax. There are no unsatisfied liabilities for material Taxes (including
liabilities for interest, additions to tax and penalties thereon and related
expenses) with respect to any notice of deficiency or similar document received
by Parent with respect to any material Tax (other than liabilities for Taxes
asserted under any such notice of deficiency or similar document which are being
contested in good faith by Parent and with respect to which adequate reserves
for payment have been established). There are no liens for material Taxes upon
any of the assets of the Company except liens for current Taxes not yet due and
payable. Parent has not entered into or become bound by any agreement or consent
pursuant to Section 341(f) of the Code. Parent has not been, nor will be,
required to include any adjustment in taxable income for any tax period (or
portion thereof) pursuant to Section 481 or 263A of the Code or any comparable
provision under state or foreign Tax laws as a result of transactions or events
occurring, or accounting methods employed, prior to the Closing.
(e) There is no agreement, plan, arrangement or other Contract covering
any employee or independent contractor or former employee or independent
contractor of Parent that, considered individually or considered collectively
with any other such Contracts, will, or could reasonably be expected to, give
rise directly or indirectly to the payment of any amount that would not be
deductible pursuant to Section 280G or Section 162 of the Code. Parent is not,
nor has ever been, a party to or bound by any tax indemnity agreement, tax
sharing agreement, tax allocation agreement or similar Contract.
3.16 Employee and Labor Matters; Benefit Plans.
(a) Part 3.16(a) of the Parent Disclosure Schedule identifies each
salary, bonus, vacation, deferred compensation, incentive compensation, stock
purchase, stock option, severance pay, termination pay, death or disability
benefits, hospitalization, medical, life or other insurance, flexible benefits,
supplemental unemployment benefits, profit-sharing, pension or retirement plan,
program or agreement and each other employee benefit plan or arrangement
maintained within the United States (collectively, the "Parent Plans")
sponsored, maintained, contributed to or required to be contributed to by Parent
or any ERISA Affiliate for the benefit of any current or former employee of
Parent or any ERISA Affiliate.
(b) Except as set forth in Part 3.16(a) of the Parent Disclosure
Schedule, neither Parent nor any ERISA Affiliate maintains, sponsors or
contributes to, or has at any time in the past maintained, sponsored or
contributed to, any employee pension benefit plan (as defined in Section 3(2) of
ERISA, whether or not excluded from coverage under specific Titles or Subtitles
of ERISA) that is maintained within the United States for the benefit of
employees or former employees of Parent or any ERISA Affiliate (a "Parent
Pension Plan"). None of the Parent Pension Plans identified in the Parent
Disclosure Schedule is a multiemployer plan (within the meaning of Section 3(37)
of ERISA) or is subject to Section 412 of the Code, Part 3 of Subtitle B of
Title I of ERISA or Title IV of ERISA.
(c) Except as set forth in Part 3.16(a) of the Parent Disclosure
Schedule, neither Parent nor any ERISA Affiliate maintains, sponsors or
contributes to any: employee welfare benefit plan (as defined in Section 3(1) of
ERISA, whether or not excluded from
35.
coverage under specific Titles or Subtitles of ERISA) that is maintained within
the United States for the benefit of any employees or former employees of Parent
or any ERISA Affiliate (a "Parent Welfare Plan"). None of the Parent Welfare
Plans identified in the Parent Disclosure Schedule is a multiemployer plan
(within the meaning of Section 3(37) of ERISA).
(d) With respect to each Parent Plan, Parent has delivered to the
Company: (i) an accurate and complete copy of such Parent Plan (including all
amendments thereto); (ii) an accurate and complete copy of the annual report, if
required under ERISA, with respect to such Parent Plan for the last two years;
(iii) an accurate and complete copy of the most recent summary plan description,
together with each summary of material modifications, if required under ERISA,
with respect to such Parent Plan, (iv) if such Parent Plan is funded through a
trust or any third party funding vehicle, an accurate and complete copy of the
trust or other funding agreement (including all amendments thereto) and accurate
and complete copies the most recent financial statements thereof; (v) accurate
and complete copies of all Contracts relating to such Parent Plan, including
service provider agreements, insurance contracts, minimum premium contracts,
stop-loss agreements, investment management agreements, subscription and
participation agreements and recordkeeping agreements; and (vi) an accurate and
complete copy of the most recent determination letter received from the Internal
Revenue Service with respect to such Parent Plan (if such Parent Plan is
intended to be qualified under Section 401(a) of the Code).
(e) Parent is not and has never been required to be treated as a single
employer with any ERISA Affiliate. Parent has never been a member of an
"affiliated service group" within the meaning of Section 414(m) of the Code with
any other Person within the United States. Neither Parent nor any ERISA
Affiliate has ever made a complete or partial withdrawal from a multiemployer
plan, as such term is defined in Section 3(37) of ERISA, that is maintained
within the United States, resulting in "withdrawal liability," as such term is
defined in Section 4201 of ERISA (without regard to subsequent reduction or
waiver of such liability under either Section 4207 or 4208 of ERISA).
(f) Neither Parent nor any ERISA Affiliate has any plan or commitment to
create any additional Parent Welfare Plans or Parent Pension Plans, or to modify
or change any existing Parent Welfare Plan or Parent Pension Plan (other than to
comply with applicable law) in a manner that would affect any employee of Parent
or any ERISA Affiliate.
(g) Except as set forth in Part 3.16(k) of the Parent Disclosure
Schedule, no Parent Plan provides death, medical or health benefits (whether or
not insured) with respect to any current or former employee of Parent or any
ERISA Affiliate after any such employee's termination of service (other than
benefit coverage mandated by applicable law, including coverage provided
pursuant to COBRA).
(h) With respect to any Parent Plan constituting a group health plan
within the meaning of Section 4980B(g)(2) of the Code or Section 607(1) of
ERISA, the provisions of COBRA have been complied with in all material respects.
36.
(i) Each of the Parent Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
but not limited to ERISA and the Code.
(j) Each of the Parent Plans intended to be qualified under Section
401(a) of the Code has received a favorable determination as to its
qualification from the Internal Revenue Service, and nothing has occurred that
would adversely affect such qualification.
(k) Except as set forth in Part 3.16(k) of the Parent Disclosure
Schedule, neither the execution, delivery or performance of this Agreement, nor
the consummation of the Merger or any of the other transactions contemplated by
this Agreement, will result in any payment (including any bonus, golden
parachute or severance payment) to any current or former employee or director of
Parent (whether or not under any Parent Plan), or materially increase the
benefits payable under any Parent Plan, or result in any acceleration of the
time of payment or vesting of any such benefits.
(l) Part 3.16(l) of the Parent Disclosure Schedule contains a list of
all salaried employees of Parent located in the United States or any ERISA
Affiliate as of the date of this Agreement whose salaries are in excess of
$150,000 per year, and correctly reflects, in all material respects, their
salaries, any other compensation payable to them (including compensation payable
pursuant to bonus, deferred compensation or commission arrangements), their
dates of employment and their positions. Neither Parent nor any ERISA Affiliate
is a party to any collective bargaining agreement or other Contract with a labor
union involving any of its employees located in the United States. There has not
been, is not now pending, and no Person has threatened to commence any slowdown,
work stoppage, labor or dispute or union organizing activity or any similar
activity or dispute in the United States affecting Parent or any ERISA
Affiliates or their employees. All of the employees of Parent and any ERISA
Affiliates are "at will" employees.
(m) Part 3.16(m) of the Parent Disclosure Schedule identifies each
employee of Parent or any ERISA Affiliate who is not fully available to perform
work because of disability or other leave and sets forth the basis of such leave
and the anticipated date of return to full service.
(n) Parent and each ERISA Affiliate are in compliance in all material
respects with all applicable Legal Requirements and Contracts relating to
employment, employment practices, wages, bonuses and terms and conditions of
employment, including employee compensation matters.
(o) Parent has good labor relations, and Parent has no knowledge of any
facts indicating that (i) the consummation of the Merger or any of the other
transactions contemplated by this Agreement will have a material adverse effect
on the labor relations of Parent, or that (ii) any of the key employees of
Parent intends to terminate his or her employment with Parent.
3.17 Environmental Matters.
(a) Except as set forth in Part 3.17(a) of the Parent Disclosure
Schedule, Parent is, and at all times has been, in compliance in all material
respects with all applicable
37.
Environmental Laws, which compliance includes (i) the possession by Parent of
all permits and other Governmental Authorizations required under applicable
Environmental Laws, and (ii) compliance with the terms and conditions thereof
(and the violation of which would have a Material Adverse Effect).
(b) Except as set forth in Part 3.17(b) of the Parent Disclosure
Schedule, Parent has not received any notice or other communication (in writing
or otherwise), whether from a Governmental Body, citizens group, employee or
otherwise, that alleges that Parent is not in compliance with any Environmental
Law or is or may be required to undertake or bear any Environmental Liabilities.
To the best knowledge of Parent, there are no circumstances that may prevent or
interfere with the compliance by Parent with any Environmental Law or that may
require Parent to undertake or bear any Environmental Liabilities in the future
(other than routine Environmental Liabilities incurred in the ordinary course of
business consistent with past practices) with respect to any Parent Property,
any other property or otherwise. To the best knowledge of Parent, no current or
prior owner of any Parent Property has received any notice or other
communication (in writing or otherwise), whether from a Government Body,
citizens group, employee or otherwise, that alleges that such current or prior
owner or Parent has not been or is not in compliance with any Environmental Law
or is or may be required to undertake or bear any Environmental Liabilities.
(c) (i) To the best knowledge of Parent all Parent Property and all
surface water, groundwater and soil associated with such Parent Property and
(ii) to the knowledge of Parent without independent investigation, all Property
to which Parent has sent any Material of Environmental Concern are free of any
material environmental contamination by any Material of Environmental Concern in
any concentration that may require any costs of investigation, response, removal
or remedial action.
(d) Parent has delivered to the Company true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by Parent pertaining to Materials of Environmental Concern in, on, or
under any Parent Property, or concerning compliance by Parent, or any other
Person for whose conduct it is or may be held responsible, with Environmental
Laws.
(e) For purposes of this Section 3.17, "Parent Property" shall include
any property, parcel or facility now or heretofore owned, leased, used or
controlled by Parent or geologically or hydrologically adjoining any such
property, parcel or facility.
3.18 Insurance. Parent has delivered to the Company a copy of each
material insurance policy and each material self insurance program relating to
the business, assets or operations of Parent in the United States. Each such
insurance policy is in full force and effect. Since December 31, 1994, Parent
has not received any notice or other communication regarding any actual or
possible (a) cancellation or invalidation of any insurance policy, (b) refusal
of any coverage or rejection of any material claim under any insurance policy,
or (c) material adjustment in the amount of the premiums payable with respect to
any insurance policy. Except as set forth in Part 3.18 of the Parent Disclosure
Schedule, there is no pending claim (including any workers' compensation claim)
under or based upon any insurance policy applicable to the business, assets or
operations of Parent.
38.
3.19 Transactions with Affiliates. Except as set forth in the Parent SEC
Reports, since the date of Parent's last proxy statement filed with the SEC, no
event has occurred that would be required to be reported by Parent pursuant to
Item 404 of Regulation S-K promulgated by the SEC. Part 3.19 of the Parent
Disclosure Schedule identifies each person who is an "affiliate" (as that term
is used in Rule 145 under the Securities Act) of Parent as of the date of this
Agreement.
3.20 Legal Proceedings; Orders.
(a) Except as set forth in Part 3.20 of the Parent Disclosure Schedule,
there is no pending Legal Proceeding, and (to the best knowledge of Parent) no
Person has threatened to commence any Legal Proceeding: (i) that involves Parent
or any of the assets owned or used by Parent; or (ii) that challenges, or that
may have the effect of preventing, delaying, making illegal or otherwise
interfering with, the Merger or any of the other transactions contemplated by
this Agreement. To the best knowledge of Parent, no event has occurred, and no
claim, dispute or other condition or circumstance exists, that will, or that
could reasonably be expected to, give rise to or serve as a basis for the
commencement of any such Legal Proceeding.
(b) There is no material order, writ, injunction, judgment or decree to
which Parent, or any of the assets owned or used by Parent, is subject. To the
best knowledge of Parent, no officer or key employee of Parent is subject to any
order, writ, injunction, judgment or decree that prohibits such officer or other
employee from engaging in or continuing any conduct, activity or practice
relating to the business of Parent.
3.21 Authority; Binding Nature of Agreement. Parent and Merger
Sub have the absolute and unrestricted right, power and authority to enter into
and to perform their obligations under this Agreement. The Board of Directors of
Parent (at a meeting duly called and held) has (a) unanimously determined that
the Merger is advisable and fair and in the best interests of the Company and
its stockholders, (b) unanimously authorized and approved the execution,
delivery and performance of this Agreement by Parent and has unanimously
approved the Merger and the creation and issue of a sufficient amount of
authorized Parent Common Stock, and (c) unanimously recommended the adoption of
this Agreement by the holders of Parent Common Stock and directed that this
Agreement be submitted for consideration by Parent's stockholders at the Parent
Stockholders' Meeting (as defined in Section 6.3(a)). This Agreement constitutes
the legal, valid and binding obligation of Parent and Merger Sub, enforceable
against them in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
3.22 Section 203 of the DGCL Not Applicable. As of the date
hereof and at all times on or prior to the Effective Time, Section 203 of the
DGCL is, and will be, inapplicable to the execution, delivery and performance of
this Agreement and to the consummation of the Merger and the other transactions
contemplated by this Agreement.
3.23 No Existing Discussions. Neither Parent, nor any
Representative of Parent, is engaged, directly or indirectly, in any discussions
or negotiations with any other Person relating to any Acquisition Proposal.
39.
3.24 Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of capital stock of Parent to adopt the
Agreement, the Parent Preferred Stock Conversion, the Reverse Stock Split, the
Increased Authorization and the Name Change at the duly convened Parent
Stockholders' Meeting (the "Parent Required Vote") is the only vote of the
holders of any class or series of Parent's capital stock necessary to consummate
the transactions contemplated by this Agreement.
3.25 Non-Contravention; Consents. Neither (1) the execution,
delivery or performance of this Agreement or any of the other agreements
referred to in this Agreement, nor (2) the consummation of the Merger or any of
the other transactions contemplated by this Agreement, will directly or
indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of the
provisions of the certificate of incorporation, bylaws or other charter or
organizational documents of Parent or Merger Sub, or (ii) any resolution adopted
by the stockholders, the board of directors or any committee of the board of
directors of Parent or Merger Sub;
(b) contravene, conflict with or result in a violation of, or give any
Governmental Body or other Person the right to challenge the Merger or any of
the other transactions contemplated by this Agreement or to exercise any remedy
or obtain any relief under, any Legal Requirement or any order, writ,
injunction, judgment or decree to which Parent or Merger Sub, or any of the
assets owned or used by Parent or Merger Sub, is subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by Parent or Merger Sub or that otherwise relates to the business
of Parent or Merger Sub or to any of the assets owned or used by Parent or
Merger Sub;
(d) contravene, conflict with or result in a violation or breach of, or
result in a default under, any provision of any Parent Contract that is or would
constitute a Material Contract, or give any Person the right to (i) declare a
default or exercise any remedy under any such Parent Contract, (ii) a rebate,
chargeback, penalty or change in delivery schedule under any such Parent
Contract, (iii) accelerate the maturity or performance of any such Parent
Contract, or (iv) cancel, terminate or modify any term of such Parent Contract;
(e) result in the imposition or creation of any Encumbrance upon or with
respect to any asset owned or used by Parent (except for minor liens that will
not, in any case or in the aggregate, materially detract from the value of the
assets subject thereto or materially impair the operations of Parent); or
(f) result in, or increase the likelihood of, the disclosure, delivery
or transfer of any material asset of Parent to any Person.
Except as may be required by the Securities Act, the Exchange Act, the DGCL, the
HSR Act and the rules of the National Association of Securities Dealers, Inc.
(the "NASD Rules") (as they relate to the Form S-4 Registration Statement and
the Joint Proxy Statement/Prospectus), neither Parent nor Merger Sub was, is nor
will be required to make any filing with or give any notice to,
40.
or to obtain any Consent from, any Person in connection with (x) the execution,
delivery or performance of this Agreement or any of the other agreements
referred to in this Agreement, or (y) the consummation of the Merger or any of
the other transactions contemplated by this Agreement.
3.26 Fairness Opinion. Parent's Board of Directors has received
the written opinion of Alliant Partners, financial advisor to Parent, dated the
date of this Agreement, to the effect that the Merger is fair to the
stockholders of Parent from a financial point of view. Parent has furnished an
accurate and complete copy of said written opinion to the Company.
3.27 Financial Advisor. Except for Alliant Partners, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger or any of the other transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent. The total of all fees, commissions and other amounts that have been paid
by Parent to Alliant Partners in connection with the Merger and all fees,
commissions and other amounts that may become payable to Alliant Partners by
Parent in connection with the Merger if the Merger is consummated will not
exceed $325,000. Parent has furnished to the Company accurate and complete
copies of all agreements under which any such fees, commissions or other amounts
have been paid or may become payable and all indemnification and other
agreements related to the engagement of Alliant Partners.
Section 4. Certain Covenants of the Company
4.1 Access and Investigation. During the period from the date of
this Agreement through the Effective Time (the "Pre-Closing Period"), the
Company shall: (a) provide Parent and Parent's Representatives with reasonable
access to the Company, the Company's Representatives, personnel and assets and
to all existing books, records, Tax Returns, work papers and other documents and
information relating to the Company; and (b) provide Parent and Parent's
Representatives, as Parent may reasonably request, with such copies of the
existing books, records, Tax Returns, work papers and other documents and
information relating to the Company, and with such additional financial,
operating and other data and information regarding the Company.
4.2 Operation of the Company's Business.
(a) During the Pre-Closing Period, the Company shall not (without the
prior written consent of Parent):
(i) declare, accrue, set aside or pay any dividend or make any
other distribution in respect of any shares of capital stock, or repurchase,
redeem or otherwise reacquire any shares of capital stock or other securities
except as the Company deems appropriate to consummate the Merger;
(ii) amend or permit the adoption of any amendment to its
certificate of incorporation or bylaws or other charter or organizational
documents, except as the Company deems appropriate to consummate the Merger; or
41.
(iii) change any of its methods of accounting or accounting
practices in any respect.
(b) During the Pre-Closing Period, the Company shall promptly notify
Parent in writing of: (i) the discovery by the Company of any event, condition,
fact or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes a material inaccuracy in any
representation or warranty made by the Company in this Agreement; (ii) any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute a material inaccuracy
in any representation or warranty made by the Company in this Agreement if (A)
such representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or (B)
such event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement; (iii) any material breach of any
covenant or obligation of the Company; and (iv) any event, condition, fact or
circumstance that would make the timely satisfaction of any of the conditions
set forth in Sections 7 or 8 impossible or unlikely or that has had or could
reasonably be expected to have a Material Adverse Effect on the Company. No
notification given to Parent pursuant to this Section 4.2(b) shall limit or
otherwise affect any of the representations, warranties, covenants or
obligations of Parent contained in this Agreement.
4.3 No Solicitation.
(a) The Company shall not directly or indirectly, and shall not
authorize or permit any Representative of the Company directly or indirectly to,
(i) solicit, initiate, encourage or induce the making, submission or
announcement of any Acquisition Proposal or take any action that could
reasonably be expected to lead to an Acquisition Proposal, (ii) furnish any
information regarding the Company to any Person in connection with or in
response to an Acquisition Proposal, (iii) engage in discussions or negotiations
with any Person with respect to any Acquisition Proposal, (iv) approve, endorse
or recommend any Acquisition Proposal or (v) enter into any letter of intent or
similar document or any Contract contemplating or otherwise relating to any
Acquisition Transaction; PROVIDED, HOWEVER, that, prior to the approval of this
Agreement by the Company Required Vote, this Section 4.3(a) shall not prohibit
the Company from furnishing nonpublic information regarding the Company to, or
entering into discussions with, any Person in response to a Superior Offer that
is submitted by such Person (and not withdrawn) if (1) neither the Company nor
any Representative of the Company shall have violated any of the restrictions
set forth in this Section 4.3(a), (2) the Board of Directors of the Company
concludes in good faith, based upon the advice of its outside legal counsel,
that failure to do so would create a substantial risk of liability for breach of
its fiduciary obligations to the Company's stockholders under applicable law,
(3) prior to furnishing any such nonpublic information to, or entering into
discussions with, such Person, the Company gives Parent written notice of the
identity of such Person and of the Company's intention to furnish nonpublic
information to, or enter into discussions with, such Person, and the Company
receives from such Person an executed confidentiality agreement containing
customary limitations on the use and disclosure of all nonpublic written and
oral information furnished to such Person by or on behalf of the Company, and
(4) prior to furnishing any such nonpublic information to such Person, the
Company furnishes such nonpublic information to Parent (to the extent such
nonpublic information has not been previously furnished by the Company to
Parent). Without limiting the
42.
generality of the foregoing, the Company acknowledges and agrees that any
violation of any of the restrictions set forth in the preceding sentence by any
Representative of the Company, whether or not such Representative is purporting
to act on behalf of the Company, shall be deemed to constitute a breach of this
Section 4.3 by the Company.
(b) The Company shall promptly advise Parent orally and in writing of
any Acquisition Proposal (including the identity of the Person making or
submitting such Acquisition Proposal and the terms thereof) that is made or
submitted by any Person during the Pre-Closing Period. The Company shall keep
Parent fully informed with respect to the status of any such Acquisition
Proposal and any modification or proposed modification thereto.
(c) The Company shall immediately cease and cause to be terminated any
existing discussions with any Person that relate to any Acquisition Proposal.
(d) Notwithstanding anything in this Agreement to the contrary, the
Company shall not be bound, obligated or otherwise restricted under this Section
4.3 or otherwise under this Agreement with respect to any potential, proposed or
actual merger, consolidation, share exchange, business combination, issuance of
securities, acquisition of securities, tender offer, exchange offer or similar
transaction that does not involve a change in the ownership of the equity
securities of the Company sufficient to result in the stockholders of the
Company as of the date hereof not holding a majority of the voting power of the
outstanding securities of the Company.
4.4 Disclosure. None of the information supplied or to be
supplied by or on behalf of the Company for inclusion or incorporation by
reference in the Form S-4 Registration Statement to be filed with the SEC by
Parent in connection with the issuance of Parent Common Stock in the Merger
will, at the time the Form S-4 Registration Statement is filed with the SEC or
at the time it becomes effective under the Securities Act, 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 the
light of the circumstances under which they are made, not misleading. None of
the information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in the Joint Proxy Statement/Prospectus
will, at the time the Joint Proxy Statement/Prospectus is mailed to the
stockholders of Parent and the Company or at the time of the Parent
Stockholders' Meeting or the Company Stockholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading.
Section 5. Certain Covenants of Parent
5.1 Access and Investigation. During the Pre-Closing Period,
Parent shall: (a) provide the Company and the Company's Representatives with
reasonable access to Parent, Parent's Representatives, personnel and assets and
to all existing books, records, Tax Returns, work papers and other documents and
information relating to Parent; and (b) provide the Company and the Company's
Representatives with such copies of the existing books, records, Tax Returns,
work papers and other documents and information relating to Parent, and with
such additional financial, operating and other data and information regarding
Parent, as the Company
43.
may reasonably request. Without limiting the generality of the foregoing, during
the Pre-Closing Period, Parent shall promptly provide the Company with copies
of:
(i) all material operating and financial reports prepared by Parent
for its senior management, including (A) copies of the unaudited monthly balance
sheets of Parent and the related unaudited monthly income statements of
operations, statements of stockholders' equity and statements of cash flows and
(B) copies of any sales forecasts, marketing plans, development plans, discount
reports, write-off reports, hiring reports and capital expenditure reports
prepared for Parent's senior management;
(ii) any written materials or communications sent by or on behalf
of Parent to its stockholders;
(iii) any material notice, document or other communication sent by
or on behalf of Parent to any party to any Parent Contract or sent to Parent by
any party to any Parent Contract (other than any communication that relates
solely to commercial transactions between Parent and the other party to any such
Parent Contract and that is of the type sent in the ordinary course of business
and consistent with past practices);
(iv) any notice, report or other document filed with or sent to any
Governmental Body in connection with the Merger or any of the other transactions
contemplated by this Agreement; and
(v) any material notice, report or other document received by
Parent from any Governmental Body.
5.2 Operation of Parent's Business.
(a) During the Pre-Closing Period: (i) Parent shall conduct its business
and operations (A) in the ordinary course and in accordance with past practices
and (B) in compliance with all applicable Legal Requirements and the
requirements of all Parent Contracts that constitute Parent Material Contracts;
(ii) Parent shall use all reasonable efforts to preserve intact its current
business organization, keeps available the services of its current officers and
employees and maintains its relations and goodwill with all suppliers,
customers, landlords, creditors, licensors, licensees, employees and other
Persons having business relationships with Parent; (iii) Parent shall keep in
full force all insurance policies referred to in Section 3.18; (iv) Parent shall
provide all notices, assurances and support required by any Parent Contract
relating to any Proprietary Asset in order to ensure that no condition under
such Parent Contract occurs which could result in, or could increase the
likelihood of, any transfer, disclosure or release by Parent of any Proprietary
Asset; and (v) Parent shall (to the extent requested by the Company) cause its
officers to report regularly to the Company concerning the status of Parent's
business.
(b) During the Pre-Closing Period, Parent shall not (without the prior
written consent of the Company):
(i) declare, accrue, set aside or pay any dividend or make any
other distribution in respect of any shares of capital stock, or repurchase,
redeem or otherwise reacquire any shares of capital stock or other securities;
44.
(ii) except in connection with a Preferred Sale, sell, issue, grant
or authorize the issuance or grant of (A) any capital stock or other security,
(B) any option, call, warrant or right to acquire any capital stock or other
security, or (C) any instrument convertible into or exchangeable for any capital
stock or other security (except that Parent may issue Parent Common Stock upon
the valid exercise of Parent Options outstanding as of the date of this
Agreement and except that Parent may reprice outstanding stock options or grant
stock awards in exchange for cancellation of existing stock options, if any
awards so granted correspond in number of shares to the stock options so
cancelled and if the aggregate number of shares so repriced or granted, when
combined with the number of shares subject to options that are not repriced or
cancelled, does not exceed 1,039,764);
(iii) except for the full vesting of Parent stock options that may
occur on the Effective Date as a result of the Merger or any repricing of stock
options, amend or waive any of its rights under, or accelerate the vesting
under, any provision of Parent's stock option plans, any provision of any
agreement evidencing any outstanding stock option or any restricted stock
purchase agreement, or otherwise modify any of the terms of any outstanding
option, warrant or other security or any related Contract;
(iv) other than as contemplated by this Agreement and except in
connection with a Preferred Sale, amend or permit the adoption of any amendment
to its certificate of incorporation or bylaws or other charter or organizational
documents, or effect or become a party to any merger, consolidation, share
exchange, business combination, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction;
(v) form any subsidiary or acquire any equity interest or other
interest in any other Entity;
(vi) make any capital expenditure (except that Parent may make
capital expenditures that, when added to all other capital expenditures made on
behalf of Parent during the Pre-Closing Period, do not exceed $50,000 in the
aggregate);
(vii) enter into or become bound by, or permit any of the assets
owned or used by it to become bound by, any Parent Contract that constitutes or
would constitute a Parent Material Contract other than in the ordinary course of
business, or amend or terminate, or waive or exercise any material right or
remedy (including any right to repurchase shares of Parent Common Stock) under,
any Parent Contract that constitutes a Parent Material Contract;
(viii) acquire, lease or license any right or other asset from any
other Person or sell or otherwise dispose of, or lease or license, any right or
other asset to any other Person (except in each case for assets acquired,
leased, licensed or disposed of by Parent in the ordinary course of business and
consistent with past practices), or waive or relinquish any material right;
(ix) write off as uncollectable, or establish any extraordinary
reserve with respect to, any accounts receivable or other indebtedness, other
than in the ordinary course of business;
45.
(x) make any pledge of any of its assets or otherwise permit any of
its assets to become subject to any encumbrance, except for pledges of
immaterial assets made in the ordinary course of business and consistent with
past practices;
(xi) except pursuant to lines of credit and subject to credit
limits in effect prior to the date of this Agreement and except for up to an
additional $1,000,000 in indebtedness for borrowed money which may be incurred
by Parent, lend money to any Person or incur or guarantee any indebtedness;
(xii) except for severance and fully vested deferred compensation
that is payable upon termination of employment from Parent without cause on or
after the Effective Date, establish, adopt or amend any employee benefit plan,
pay any bonus or make any profit-sharing or similar payment to, or increase the
amount of the wages, salary, commissions, fringe benefits or other compensation
or remuneration payable to, any of its directors, officers or employees;
(xiii) hire any new employee or engage any consultant or
independent contractor;
(xiv) change any of its methods of accounting or accounting
practices in any respect;
(xv) make any Tax election;
(xvi) commence or settle any Legal Proceeding, except to enforce
its rights under this Agreement;
(xvii) enter into any material transaction or take any other
material action outside the ordinary course of business or inconsistent with
past practices;
(xviii) enter into any material transaction or take any other
material action that could reasonably be expected to have a Material Adverse
Effect on Parent; or
(xix) agree or commit to take any of the actions described in
clauses "(i)" through "(xviii)" of this Section 5.2(b).
(c) During the Pre-Closing Period, Parent shall promptly notify the
Company in writing of: (i) the discovery by Parent of any event, condition, fact
or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes a material inaccuracy in any
representation or warranty made by Parent in this Agreement; (ii) any event,
condition, fact or circumstance that occurs, arises or exists after the date of
this Agreement and that would cause or constitute a material inaccuracy in any
representation or warranty made by Parent in this Agreement if (A) such
representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or (B)
such event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement; (iii) any material breach of any
covenant or obligation of Parent; and (iv) any event, condition, fact or
circumstance that would make the timely satisfaction of any of the conditions
set forth in Sections 7 or 8 impossible or unlikely or that has had or could
reasonably
46.
be expected to have a Material Adverse Effect on Parent. No notification given
to the Company pursuant to this Section 5.2(c) shall limit or otherwise affect
any of the representations, warranties, covenants or obligations of Parent
contained in this Agreement.
5.3 No Solicitation.
(a) Parent shall not directly or indirectly, and shall not authorize or
permit any Representative of Parent directly or indirectly to, (i) solicit,
initiate, encourage or induce the making, submission or announcement of any
Acquisition Proposal or take any action that could reasonably be expected to
lead to an Acquisition Proposal, (ii) furnish any information regarding Parent
to any Person in connection with or in response to an Acquisition Proposal,
(iii) engage in discussions or negotiations with any Person with respect to any
Acquisition Proposal, (iv) approve, endorse or recommend any Acquisition
Proposal or (v) enter into any letter of intent or similar document or any
Contract contemplating or otherwise relating to any Acquisition Transaction;
PROVIDED, HOWEVER, that, prior to the approval of this Agreement by the Parent
Required Vote, this Section 5.3(a) shall not prohibit Parent from furnishing
nonpublic information regarding Parent to, or entering into discussions with,
any Person in response to a Superior Offer that is submitted by such Person (and
not withdrawn) if (1) neither Parent nor any Representative of Parent shall have
violated any of the restrictions set forth in this Section 5.3(a), (2) the Board
of Directors of Parent concludes in good faith, based upon the advice of its
outside legal counsel, that failure to do so would create a substantial risk of
liability for breach of its fiduciary obligations to Parent's stockholders under
applicable law, (3) prior to furnishing any such nonpublic information to, or
entering into discussions with, such Person, Parent gives the Company written
notice of the identity of such Person and of Parent's intention to furnish
nonpublic information to, or enter into discussions with, such Person, and
Parent receives from such Person an executed confidentiality agreement
containing customary limitations on the use and disclosure of all nonpublic
written and oral information furnished to such Person by or on behalf of Parent,
and (4) prior to furnishing any such nonpublic information to such Person,
Parent furnishes such nonpublic information to the Company (to the extent such
nonpublic information has not been previously furnished by Parent to the
Company). Without limiting the generality of the foregoing, Parent acknowledges
and agrees that any violation of any of the restrictions set forth in the
preceding sentence by any Representative of Parent, whether or not such
Representative is purporting to act on behalf of Parent, shall be deemed to
constitute a breach of this Section 5.3 by Parent.
(b) Parent shall promptly advise the Company orally and in writing of
any Acquisition Proposal (including the identity of the Person making or
submitting such Acquisition Proposal and the terms thereof) that is made or
submitted by any Person during the Pre-Closing Period. Parent shall keep the
Company fully informed with respect to the status of any such Acquisition
Proposal and any modification or proposed modification thereto.
(c) Parent shall immediately cease and cause to be terminated any
existing discussions with any Person that relate to any Acquisition Proposal.
5.4 Parent Capitalization; Name Change. Prior to the Closing,
Parent shall (a) cause all of its outstanding preferred stock to be converted
into Parent Common Stock in accordance with the provisions of Parent's
Certificate of Incorporation (the "Parent Preferred
47.
Stock Conversion"), (b) cause the Parent Common Stock to be combined on a twenty
(20) for one (1) basis (the "Reverse Stock Split Ratio"), such that, in one or
more steps, each twenty (20) outstanding shares of Parent Common Stock shall be
combined into one (1) share of Parent Common Stock (the "Reverse Stock Split")
(c) increase the number of authorized shares of Parent Common Stock to
40,000,000 (the "Increased Authorization") and (d) take all requisite corporate
action necessary (including board and stockholder approval) to approve the
change of Parent's name to a name designated by the Company prior to the filing
of the Form S-4 Registration Statement (the "Name Change").
5.5 Disclosures. None of the information supplied or to be
supplied by or on behalf of Parent for inclusion or incorporation by reference
in the Form S-4 Registration Statement will, at the time the Form S-4
Registration Statement is filed with the SEC or at the time it becomes effective
under the Securities Act, 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 the light of the circumstances under
which they are made, not misleading. None of the information supplied or to be
supplied by or on behalf of Parent for inclusion or incorporation by reference
in the Joint Proxy Statement/Prospectus will, at the time the Joint Proxy
Statement/Prospectus is mailed to the stockholders of Parent and the Company or
at the time of the Parent Stockholders' Meeting or the Company Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. The Joint Proxy Statement/Prospectus will comply as to form in
all material respects with the provisions of the Exchange Act and the Securities
Act and the rules and regulations promulgated by the SEC thereunder.
Section 6. Additional Covenants of the Parties
6.1 Registration Statement; Joint Proxy Statement/Prospectus.
(a) As promptly as practicable after the date of this Agreement, Parent
and the Company shall prepare and cause to be filed with the SEC the Form S-4
Registration Statement and the Joint Proxy Statement/Prospectus. Each of Parent
and the Company shall use all reasonable efforts to cause the Form S-4
Registration Statement (including the Joint Proxy Statement/Prospectus) to
comply with the rules and regulations promulgated by the SEC, to respond
promptly to any comments of the SEC or its staff and to have the Form S-4
Registration Statement declared effective under the Securities Act as promptly
as practicable after it is filed with the SEC. Each of Parent and the Company
shall use all reasonable efforts to cause the Joint Proxy Statement/Prospectus
to be mailed to the parties' stockholders, as promptly as practicable after the
Form S-4 Registration Statement is declared effective under the Securities Act.
The Company shall promptly furnish to Parent all information concerning the
Company and the Company's stockholders that may be required or reasonably
requested in connection with any action contemplated by this Section 6.1. If any
event relating to the Company occurs, or if the Company becomes aware of any
information that should be disclosed in an amendment or supplement to the Form
S-4 Registration Statement or the Joint Proxy Statement/Prospectus, then the
Company shall promptly inform Parent thereof and shall cooperate with Parent in
filing such amendment or supplement with the SEC and, if appropriate, in mailing
such amendment or supplement to the stockholders of the Company.
48.
(b) Prior to the Effective Time, Parent shall use reasonable efforts to
obtain all regulatory approvals needed to ensure that the Parent Common Stock to
be issued in the Merger will be registered or qualified under the securities law
of every jurisdiction of the United States in which any registered holder of
Company Common Stock has an address of record on the record date for determining
the stockholders entitled to notice of and to vote at the Company Stockholders'
Meeting.
6.2 Company Stockholders' Meeting.
(a) The Company shall take all action necessary under all applicable
Legal Requirements to call, give notice of, convene and hold a meeting of the
holders of Company Common Stock to consider, act upon and vote upon the adoption
of this Agreement (the "Company Stockholders' Meeting"). The Company
Stockholders' Meeting will be held as promptly as practicable and in any event
within 45 days after the Form S-4 Registration Statement is declared effective
by the SEC. The Company shall ensure that the Company Stockholders' Meeting is
called, noticed, convened, held and conducted, and that all proxies solicited in
connection with the Company Stockholders' Meeting are solicited, in compliance
with all applicable Legal Requirements. The Company's obligation to call, give
notice of, convene and hold the Company Stockholders' Meeting in accordance with
this Section 6.2(a) shall not be limited or otherwise affected by the
commencement, disclosure, announcement or submission of any Superior Offer or
other Acquisition Proposal, or by any withdrawal, amendment or modification of
the recommendation of the Board of Directors of the Company with respect to the
Merger.
(b) Subject to Section 6.2(c): (i) the Board of Directors of the Company
shall unanimously recommend that the Company's stockholders vote in favor of the
adoption of this Agreement at the Company Stockholders' Meeting; (ii) the Joint
Proxy Statement/Prospectus shall include a statement to the effect that the
Board of Directors of the Company has unanimously recommended that the Company's
stockholders vote in favor of the adoption of this Agreement at the Company
Stockholders' Meeting; and (iii) neither the Board of Directors of the Company
nor any committee thereof shall withdraw, amend or modify, or propose or resolve
to withdraw, amend or modify, in a manner adverse to Parent, the unanimous
recommendations of the Board of Directors of the Company that the Company's
stockholders vote in favor of the adoption of this Agreement. For purposes of
this Agreement, said recommendations of the Board of Directors shall be deemed
to have been modified in a manner adverse to Parent if said recommendations
shall no longer be unanimous.
(c) Nothing in Section 6.2(b) shall prevent the Board of Directors of
the Company from withdrawing, amending or modifying its unanimous
recommendations in favor of the adoption of this Agreement at any time prior to
the adoption of this Agreement by the Company Required Vote if (i) a Superior
Offer is made to the Company and is not withdrawn, and (ii) the Board of
Directors of the Company concludes in good faith, in light of such offer, based
upon the advice of its outside counsel, that the failure to withdraw, amend or
modify such recommendation would create a substantial risk of liability for
breach of its fiduciary obligations to the Company's stockholders under
applicable law. Nothing contained in this Section 6.2 shall limit the Company's
obligation to call, give notice of, convene and hold the Company
49.
Stockholders' Meeting (regardless of whether the unanimous recommendation of
the Board of Directors of the Company shall have been withdrawn, amended or
modified).
6.3 Parent Stockholders' Meeting.
(a) Parent shall take all action necessary under all applicable Legal
Requirements to call, give notice of, convene and hold a meeting of the holders
of Parent Common Stock to consider, act upon and vote upon (i) the adoption of
this Agreement, (ii) the Parent Preferred Stock Conversion, (iii) the Reverse
Stock Split, (iv) the Increased Authorization and (v) the Name Change (the
"Parent Stockholders' Meeting"). The Parent Stockholders' Meeting will be held
as promptly as practicable and in any event within 45 days after the Form S-4
Registration Statement is declared effective by the SEC. Parent shall ensure
that the Parent Stockholders' Meeting is called, noticed, convened, held and
conducted, and that all proxies solicited in connection with the Parent
Stockholders' Meeting are solicited, in compliance with all applicable Legal
Requirements. Parent's obligation to call, give notice of, convene and hold the
Parent Stockholders' Meeting in accordance with this Section 6.3(a) shall not be
limited or otherwise affected by the commencement, disclosure, announcement or
submission of any Superior Offer or other Acquisition Proposal, or by any
withdrawal, amendment or modification of the recommendation of the Board of
Directors of Parent with respect to the Merger.
(b) Subject to Section 6.3(c): (i) the Board of Directors of Parent
shall unanimously recommend that Parent's stockholders vote in favor of (A) the
adoption of this Agreement, (B) the Parent Preferred Stock Conversion, (C) the
Reverse Stock Split (D) the Increased Authorization, and (E) the Name Change at
the Parent Stockholders' Meeting; (ii) the Joint Proxy Statement/Prospectus
shall include a statement to the effect that the Board of Directors of Parent
has unanimously recommended that Parent's stockholders vote in favor of (A) the
adoption of this Agreement, (B) the Parent Preferred Stock Conversion, (C) the
Reverse Stock Split, (D) the Increased Authorization and (E) the Name Change at
the Parent Stockholders' Meeting; and (iii) neither the Board of Directors of
Parent nor any committee thereof shall withdraw, amend or modify, or propose or
resolve to withdraw, amend or modify, in a manner adverse to the Company, the
unanimous recommendation of the Board of Directors of Parent that Parent's
stockholders vote in favor of (A) the adoption of this Agreement, (B) the Parent
Preferred Stock Conversion, (C) the Reverse Stock Split, (D) the Increased
Authorization and (E) the Name Change. For purposes of this Agreement, said
recommendation of the Board of Directors shall be deemed to have been modified
in a manner adverse to the Company if said recommendation shall no longer be
unanimous.
(c) Nothing in Section 6.3(b) shall prevent the Board of Directors of
Parent from withdrawing, amending or modifying its unanimous recommendation in
favor of the adoption of this Agreement and amending the Form S-4 Registration
Statement (provided that Parent shall use its best efforts not to delay the
Parent Stockholders' Meeting if it amends the Form S-4 Registration Statement)
at any time prior to the adoption of this Agreement by the Parent Required Vote
if (i) a Superior Offer is made to Parent and is not withdrawn, (ii) neither
Parent nor any of its Representatives shall have violated any of the
restrictions set forth in Section 5.3, and (iii) the Board of Directors of
Parent concludes in good faith, in light of such offer, based upon the advice of
its outside counsel, that failure to withdraw, amend or modify such
recommendation would create a substantial risk of liability for breach of its
fiduciary
50.
obligations to Parent's stockholders under applicable law. Nothing
contained in this Section 6.3 shall limit Parent's obligation to call, give
notice of, convene and hold the Parent Stockholders' Meeting (regardless of
whether the unanimous recommendation of the Board of Directors of Parent shall
have been withdrawn, amended or modified).
6.4 Regulatory Approvals. The Company and Parent shall use all
reasonable efforts to file, as soon as practicable after the date of this
Agreement, all notices, reports and other documents required to be filed with
any Governmental Body with respect to the Merger and the other transactions
contemplated by this Agreement, and to submit promptly any additional
information requested by any such Governmental Body. Without limiting the
generality of the foregoing, Parent shall, and the Company shall use reasonable
efforts to cause Asea Brown Boveri AG ("ABB") to, prepare and file the
notifications required under the HSR Act in connection with the Merger. The
Company and Parent shall respond as promptly as practicable to (a) any inquiries
or requests received from the Federal Trade Commission or the Department of
Justice for additional information or documentation and (b) any inquiries or
requests received from any state attorney general or other Governmental Body in
connection with antitrust or related matters. The Company and Parent shall (1)
give each other prompt notice of the commencement of any Legal Proceeding by or
before any Governmental Body with respect to the Merger or any of the other
transactions contemplated by this Agreement, (2) keep the other party informed
as to the status of any such Legal Proceeding, and (3) promptly inform the other
party of any communication to or from the Federal Trade Commission, the
Department of Justice or any other Governmental Body regarding the Merger. To
the extent within their control, the Company and Parent will consult and
cooperate with one another, and will consider in good faith the views of one
another, in connection with any analysis, appearance, presentation, memorandum,
brief, argument, opinion or proposal made or submitted in connection with any
Legal Proceeding under or relating to the HSR Act or any other federal or state
antitrust or fair trade law. In addition, except as may be prohibited by any
Governmental Body or by any Legal Requirement, to the extent permitted by ABB,
in connection with any Legal Proceeding under or relating to the HSR Act or any
other federal or state antitrust or fair trade law or any other similar Legal
Proceeding, each of the Company and Parent agrees to permit authorized
Representatives of the other party to be present at each meeting or conference
relating to any such Legal Proceeding and to have access to and be consulted in
connection with any document, opinion or proposal made or submitted to any
Governmental Body in connection with any such Legal Proceeding.
6.5 Indemnification of Officers and Directors.
(a) From and after the Effective Time, Parent will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of the Company
pursuant to (i) each indemnification agreement currently in effect between
Parent and each person who is or was a director or officer of Parent at or prior
to the Effective Time and (ii) any indemnification provision under the Company's
Certificate of Incorporation or By-Laws and any indemnification provision under
Parent's Certificate of Incorporation or By-Laws, all as is in effect on the
date hereof (the persons to be indemnified pursuant to the agreements or
provisions referred to in this Section 6.5(a) shall be referred to as,
collectively, the "Indemnified Parties"). The Certificate of Incorporation and
By-Laws of the Surviving Corporation shall contain the provisions with respect
to indemnification and exculpation from liability set forth in the Company's
Certificate
51.
of Incorporation and By-Laws on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years after the Effective Time in any manner that would adversely affect the
rights thereunder of any Indemnified Party.
(b) Without limiting the provisions of Section 6.5(a), during the period
ending six years after the Effective Time, Parent will indemnify and hold
harmless each Indemnified Party against and from any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, to the extent such claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, to the extent such claim, action, suit, proceeding or
investigation arises out of or pertains to (1) any action or omission or alleged
action or omission in his or her capacity as a director or officer of the
Company, Parent or any of their subsidiaries (regardless of whether such action
or omission, or alleged action or omission, occurred prior to, on or after the
Closing Date) or (2) any of the transactions contemplated by this Agreement, in
each case to the full extent a corporation is permitted under the DGCL to
indemnify its own directors and officers, as the case may be; provided, however,
that if, at any time prior to the sixth anniversary of the Effective Time, any
Indemnified Party delivers to Parent a written notice asserting a claim for
indemnification under this Section 6.5(b), then the claim asserted in such
notice shall survive the sixth anniversary of the Effective Time until such time
as such claim is fully and finally resolved. In the event of any such claim,
action, suit, proceeding or investigation, (i) Parent will have the right to
control the defense thereof after the Effective Time (it being understood that,
by electing to control the defense thereof, Parent will be deemed to have waived
any right to object to the indemnified Parties' entitlements to indemnification
hereunder with respect thereto), (ii) any counsel retained by the Indemnified
Parties with respect to the defense thereof for any period after the Effective
Time must be reasonably satisfactory to Parent, and (iii) after the Effective
Time, Parent will pay the reasonable fees and expenses of such counsel, promptly
after statements therefor are received (provided that in the event that any
Indemnified Party is not entitled to indemnification hereunder, any amounts
advanced on his or her behalf shall be remitted to the Surviving Corporation);
provided, however, that neither Parent nor the Surviving Corporation nor any
Indemnified Party, will be liable for any settlement effected without its
express written consent. The Indemnified Parties as a group may retain only one
law firm (in addition to local counsel) to represent them with respect to any
single action unless counsel for any Indemnified Party determines in good faith
that, under applicable standards of professional conduct, a conflict exists or
is reasonably likely to arise on any material issue between the positions of any
two or more Indemnified Parties. Notwithstanding anything to the contrary
contained in this Section 6.5(b) or elsewhere in this Agreement, Parent agrees
that it will not settle or compromise or consent to the entry of any judgment or
otherwise seek termination with respect to any claim, action, suit, proceeding
or investigation for which indemnification may be sought under this Agreement
unless such settlement, compromise, consent or termination includes an
unconditional release of all Indemnified Parties from all liability arising out
of such claim, action, suit, proceeding or investigation. Without limiting the
foregoing, in any case in which approval of or a determination by the Surviving
Corporation is required to effectuate any indemnification, the Indemnified
Parties will conclusively be deemed to have met the applicable standards for
indemnification with respect to any actions or omissions of such Indemnified
Parties as an officer or director of the Company or Parent on or prior to the
Effective Time relating to any of the transactions contemplated by this
Agreement.
52.
(c) Parent and the Surviving Corporation jointly and severally agree to
pay all expenses, including attorneys' fees, that may be incurred by the
Indemnified Parties in enforcing the indemnity and other obligations provided
for in this Section 6.5.
(d) Parent shall maintain in effect for a period of three years after
the Effective Time the policy of officers' and directors' liability insurance
maintained by Parent on the date of this Agreement, with coverage in amount and
scope at least as favorable as the Parent's existing directors' and officers'
liability insurance coverage, provided that such policy shall not be required to
be maintained if equivalent coverage is provided to such Persons under another
policy of officers' and directors' liability insurance; and provided further
that in no event shall Parent be required to expend in any one year an amount in
excess of 150% of the annual premium currently paid by Parent for such
insurance; and provided further, that if the annual premiums of such insurance
coverage exceed such amount, Parent shall be obligated to obtain a policy with
the greatest coverage available for a cost not exceeding such amount.
(e) This Section 6.5 shall survive the consummation of the Merger and
the Effective Time, is intended to benefit and may be enforced by the Company,
Parent, the Surviving Corporation and the Indemnified Parties, and shall be
binding on all successors and assigns of Parent and the Surviving Corporation.
6.6 Additional Agreements.
(a) Subject to Section 6.6(b), Parent and the Company shall use all
reasonable efforts to take, or cause to be taken, all actions necessary to
consummate the Merger and make effective the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, but subject to
Section 6.6(b), each party to this Agreement (i) shall make all filings (if any)
and give all notices (if any) required to be made and given by such party in
connection with the Merger and the other transactions contemplated by this
Agreement, (ii) shall use all reasonable efforts to obtain each Consent (if any)
required to be obtained (pursuant to any applicable Legal Requirement or
Contract, or otherwise) by such party in connection with the Merger or any of
the other transactions contemplated by this Agreement, and (iii) shall use all
reasonable efforts to lift any restraint, injunction or other legal bar to the
Merger. Each party shall promptly deliver to the other party a copy of each such
filing made, each such notice given and each such Consent obtained by such party
during the Pre-Closing Period.
(b) Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor the Company shall have any obligation under this
Agreement (i) to dispose of any assets; (ii) to discontinue offering any
product; (iii) to license or otherwise make available to any Person any
technology, software or other Proprietary Asset; (iv) to hold separate any
assets or operations (either before or after the Closing Date); or (v) to make
any commitment (to any Governmental Body or otherwise) regarding its future
operations.
6.7 Disclosure. Parent and the Company shall consult with each
other before issuing any press release or otherwise making any public statement
with respect to the Merger or any of the other transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, neither party
shall, nor shall permit any of its Representatives to, make any disclosure
regarding the Merger or any of the other transactions contemplated by this
Agreement
53.
unless (a) the other party shall have approved such disclosure or (b)
the party making such disclosure shall have been advised in writing by its
outside legal counsel that such disclosure is required by applicable law.
6.8 Affiliate Agreements. The Company shall use all reasonable
efforts to cause each Person identified in Part 2.19 of the Acquired Corporation
Disclosure Schedule and each other Person who is or becomes an "affiliate" (as
that term is used in Rule 145 under the Securities Act) of the Company to
execute and deliver to Parent, prior to the date of the mailing of the Joint
Proxy Statement/Prospectus to the Company's stockholders, an Affiliate Agreement
in the form of Exhibit D.
6.9 Tax Matters.
(a) At or prior to the filing of the Form S-4 Registration Statement,
Parent and Merger Sub and the Company shall execute and deliver to Cooley
Godward LLP and to Pillsbury Madison & Sutro LLP tax representation letters in
the forms attached hereto as Exhibits E and F, respectively.
(b) Parent, Merger Sub and the Company shall each confirm to Cooley
Godward LLP and to Pillsbury Madison & Sutro LLP the accuracy and completeness
as of the Effective Time of the tax representation letters delivered pursuant to
Section 6.9(a).
(c) Parent and the Company shall use all reasonable efforts prior to the
Effective Time to cause the Merger to qualify as a tax free reorganization under
Section 368(a) of the Code.
(d) Following delivery of the tax representation letters pursuant to
Section 6.9(a), each of Parent and the Company shall use its reasonable efforts
to cause Pillsbury Madison & Sutro LLP and Cooley Godward LLP, respectively, to
deliver promptly to it a legal opinion satisfying the requirements of Item 601
of Regulation S-K promulgated under the Securities Act. In rendering such
opinions, each of such counsel shall be entitled to rely on the tax
representation letters delivered pursuant to Section 6.9(a).
6.10 Corporate Governance.
(a) Parent shall obtain and deliver to the Company at the Closing the
resignation of each officer and director of Parent, other than the resignation
of James Kochman as a director of Parent.
(b) Parent shall take all necessary action to reconstitute the Board of
Directors of Parent to consist as of the Effective Time of the individuals
identified in Exhibit H.
6.11 Resignations. The parties agree that any written resignation
that is entered into by an employee of Parent, and which is delivered by such
employee at the request of the Company, shall be considered for all purposes a
termination of such employee without cause. A resignation by an individual as a
director or officer of Parent shall not, in and of itself, constitute a
resignation as an employee as described in this Section 6.11.
54.
6.12 Registration Rights Agreement. Parent shall execute and
enter into a Registration and Stockholder Rights Agreement, in the form of
Exhibit G, with ABB and its affiliates.
Section 7. Conditions Precedent to Obligations of Parent and Merger Sub
The obligations of Parent and Merger Sub to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions:
7.1 Accuracy of Representations. The representations and warranties of
each of the Acquired Corporations contained in this Agreement shall have been
accurate in all material respects as of the date of this Agreement and shall be
accurate in all material respects as of the Closing Date as if made on and as of
the Closing Date (it being understood that, for purposes of determining the
accuracy of such representations and warranties, any update of or modification
to the Acquired Corporation Disclosure Schedule made or purported to have been
made after the date of this Agreement shall be disregarded).
7.2 Performance of Covenants. Each covenant or obligation that
the Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
7.3 Effectiveness of Registration Statement. The Form S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued by the SEC with respect
to the Form S-4 Registration Statement.
7.4 Parent Stockholder Approval. This Agreement, the Parent
Preferred Stock Conversion, Reverse Stock Split, the Increased Authorization and
the Name Change shall have been duly adopted by the Parent Required Vote.
7.5 Company Stockholder Approval. This Agreement shall have been
duly adopted by the Company Required Vote.
7.6 Agreements and Documents. Parent and the Company shall have
received the following agreements and documents, each of which shall be in full
force and effect:
(a) a legal opinion of Cooley Godward LLP, dated as of the Closing Date,
in the form of Exhibit I; and
(b) a certificate executed on behalf of the Company by its Chief
Executive Officer confirming that the conditions set forth in Sections 7.1, 7.2,
7.5 and 7.7 have been duly satisfied.
7.7 No Material Adverse Change. There shall have been no material
adverse change in the business, condition, capitalization, assets, liabilities,
operations or financial performance of the Company since the date of this
Agreement.
55.
7.8 HSR Act. The waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated.
7.9 Additional Shares. The shares of Parent Common Stock to be
issued in the Merger shall have been approved for trading (subject to notice of
issuance) on the Nasdaq Small Cap Market.
7.10 No Restraints. No temporary restraining order, preliminary
or permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
7.11 Consents. All material Consents required to be obtained by
the Company in connection with the Merger and the other transactions
contemplated by this Agreement (including the Consents identified in Part 7.11
of the Acquired Corporation Schedule) shall have been obtained and shall be in
full force and effect.
Section 8. Conditions Precedent to Obligations of the Company
The obligation of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
8.1 Accuracy of Representations. The representations and
warranties of Parent and Merger Sub contained in this Agreement shall have been
accurate in all material respects as of the date of this Agreement and shall be
accurate in all material respects as of the Closing Date as if made on and as of
the Closing Date (it being understood that, for purposes of determining the
accuracy of such representations and warranties, any update of or modification
to the Parent Disclosure Schedule made or purported to have been made after the
date of this Agreement shall be disregarded).
8.2 Performance of Covenants. Each covenant or obligation that
Parent or Merger Sub is required to comply with or to perform at or prior to the
Closing shall have been complied with and performed in all material respects.
8.3 Effectiveness of Registration Statement. The Form S-4
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act, and no stop order shall have been issued by
the SEC with respect to the Form S-4 Registration Statement.
8.4 Parent Stockholder Approval. This Agreement, the Preferred
Stock Conversion, the Reverse Stock Split, the Increased Authorization and the
Name Change shall have been duly adopted by the Parent Required Vote.
8.5 Company Stockholder Approval. This Agreement shall have been
duly adopted and approved by the Company Required Vote.
56.
8.6 Parent Capitalization. The Parent Preferred Stock Conversion,
the Reverse Stock Split and the Increased Authorization shall have been duly
effected.
8.7 Consents. All material Consents required to be obtained in
connection with the Merger and the other transactions contemplated by this
Agreement (including the Consents identified in Part 8.7 of the Parent
Disclosure Schedule) shall have been obtained and shall be in full force and
effect.
8.8 Agreements and Documents. The Company shall have received the
following agreements and documents, each of which shall be in full force and
effect:
(a) Affiliate Agreements in the form of Exhibit D, executed by each
Person who could reasonably be deemed to be an "affiliate" of the Company (as
that term is used in Rule 145 under the Securities Act);
(b) a legal opinion of Pillsbury Madison & Sutro LLP dated as of the
Closing Date, in the form of Exhibit J;
(c) a legal opinion of Cooley Godward LLP dated as of the Closing Date
and addressed to the Company, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code (it being
understood that, in rendering such opinion, Cooley Godward LLP may rely upon the
tax representation letters referred to in Section 6.9); PROVIDED, HOWEVER, that
if Cooley Godward LLP does not render such opinion or withdraws or modifies such
opinion, this condition shall nonetheless be deemed to be satisfied if counsel
to Parent renders such opinion to the Company. In rendering such opinion, such
firm may rely on the tax representation letters referred to in Section 6.9;
(d) a certificate executed on behalf of Parent by its Chief Executive
Officer confirming that the conditions set forth in Sections 8.1, 8.2, 8.4, 8.6,
8.7 (insofar as it relates to the Consents identified in Part 8.7 of the Parent
Disclosure Schedule), 8.9, 8.10 and 8.18 have been duly satisfied;
(e) the written resignations of all officers and directors of Parent
(except for the resignation of James Kochman as a director of Parent), effective
as of the Effective Time;
(f) evidence of Parent's compliance with Section 6.10(b); and
(g) a Registration and Stockholder Rights Agreement in the form of
Exhibit G, executed by Parent and ABB.
8.9 No Material Adverse Change. There shall have been no material
adverse change in the business, condition, capitalization, assets, liabilities,
operations or financial performance of Parent since the date of this Agreement.
8.10 Market for Parent Common Stock. Parent Common Stock shall be
traded on the Nasdaq SmallCap Market and the Company shall be reasonably
satisfied that Parent has complied with NASD Manual Rule 4330 (f).
57.
8.11 HSR Act. The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated.
8.12 Additional Shares. The shares of Parent Common Stock to be
issued in the Merger shall have been approved for trading (subject to notice of
issuance) in the Nasdaq SmallCap Market.
8.13 Appraisal Rights. Not more than one percent (1%) of the
outstanding shares of Company Common Stock and not more than one percent (1%) of
the outstanding shares of Company Preferred Stock shall have appraisal rights
available under Section 262 of the DGCL.
8.14 Blue Sky Law. Parent shall have received all permits and
other authorizations required under applicable state securities laws for the
issuance of shares of Parent Common Stock pursuant to the Merger.
8.15 No Restraints. No temporary restraining order, preliminary
or permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
8.16 No Governmental Litigation. There shall not be pending or
threatened any Legal Proceeding in which a Governmental Body is or is threatened
to become a party or is otherwise involved: (a) challenging or seeking to
restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement; (b) relating to the Merger and
seeking to obtain from Parent, the Company or any of its subsidiaries any
damages that may be material to the combined company after the Effective Time;
(c) seeking to prohibit or limit in any material respect Parent's ability to
vote, receive dividends with respect to or otherwise exercise ownership rights
with respect to the stock of the Surviving Corporation; or (d) which would
materially and adversely affect the right of Parent, the Surviving Corporation
or any subsidiary of Parent to own the assets or operate the business of Parent
or of the Company.
8.17 No Other Litigation. There shall not be pending any Legal
Proceeding in which there is a reasonable possibility of an outcome that would
have a Material Adverse Effect on the Company or on Parent: (a) challenging or
seeking to restrain or prohibit the consummation of the Merger or any of the
other transactions contemplated by this Agreement; (b) relating to the Merger
and seeking to obtain from Parent, the Company or any of its subsidiaries any
damages that may be material to the combined company after the Effective Time;
(c) seeking to prohibit or limit in any material respect Parent's ability to
vote, receive dividends with respect to or otherwise exercise ownership rights
with respect to the stock of the Surviving Corporation; or (d) which would
materially and adversely affect the right of Parent, the Surviving Corporation
or any subsidiary of Parent to own the assets or operate the business of Parent
or of the Company.
8.18 Taxes. All Parent Returns due to be filed on or before the
Closing Date (a) shall have been filed and (b) shall have been prepared in all
material respects in compliance with all applicable Legal Requirements.
58.
Section 9. Termination
9.1 Termination. This Agreement may be terminated prior to the
Effective Time (whether before or after adoption of this Agreement by the
stockholders of Parent or the Company):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have been
consummated by June 30, 1998 (unless the failure to consummate the Merger is
attributable to a failure on the part of the party seeking to terminate this
Agreement to perform any material obligation required to be performed by such
party at or prior to the Effective Time);
(c) by either Parent or the Company if a court of competent jurisdiction
or other Governmental Body shall have issued a final and nonappealable order,
decree or ruling, or shall have taken any other action, having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger;
(d) by either Parent or the Company if (i) the Company Stockholders'
Meeting shall have been held and (ii) this Agreement shall not have been adopted
at such meeting by the Company Required Vote;
(e) by either Parent or the Company if (i) the Parent Stockholders'
Meeting shall have been held and (ii) this Agreement, the Reverse Stock Split,
the Parent Preferred Stock Conversion, the Increased Authorization or the Name
Change shall not have been adopted at such meeting by the Parent Required Vote;
(f) by the Company (at any time prior to the adoption of this Agreement
by the Parent Required Vote) if a Triggering Event shall have occurred;
(g) by Parent if any of the Company's representations and warranties
contained in this Agreement shall be or shall have become materially inaccurate,
or if any of the Company's covenants contained in this Agreement shall have been
breached in any material respect; PROVIDED, HOWEVER, that if an inaccuracy in
the Company's representations and warranties or a breach of a covenant by the
Company is curable by the Company and the Company is continuing to exercise all
reasonable efforts to cure such inaccuracy or breach, then Parent may not
terminate this Agreement under this Section 9.1(g) on account of such inaccuracy
or breach; or
(h) by the Company if any of Parent's representations and warranties
contained in this Agreement shall be or shall have become materially inaccurate,
or if any of Parent's covenants contained in this Agreement shall have been
breached in any material respect; PROVIDED, HOWEVER, that if an inaccuracy in
Parent's representations and warranties or a breach of a covenant by Parent is
curable by Parent and Parent is continuing to exercise all reasonable efforts to
cure such inaccuracy or breach, then the Company may not terminate this
Agreement under this Section 9.1(h) on account of such inaccuracy or breach.
59.
9.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 9.1, this Agreement shall be of no further
force or effect; PROVIDED, HOWEVER, that (a) this Section 9.2, Section 9.3 and
Section 10 shall survive the termination of this Agreement and shall remain in
full force and effect, and (b) the termination of this Agreement shall not
relieve any party from any liability for any breach of any representation,
warranty or covenant contained in this Agreement.
9.3 Expenses; Termination Fees.
(a) Except as set forth in this Section 9.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses, whether or
not the Merger is consummated;
(b) (i) If this Agreement is terminated by Parent or the Company
pursuant to Section 9.1(e), or if this Agreement is terminated by the Company
pursuant to Section 9.1(f), and (ii) if prior to the date six months after the
date of such termination, (A) Parent enters into any agreement involving an
Acquisition Transaction, (B) a tender offer, an exchange offer, or a share
exchange is commenced that would constitute an Acquisition Transaction if
completed or (C) an Acquisition Transaction is otherwise consummated (each, the
"Alternate Transaction") then, upon consummation of such Alternate Transaction,
Parent shall pay to the Company, in cash, a nonrefundable fee in the amount of
$500,000.
(c) The fee referred to in Section 9.3(b) shall be paid by Parent within
two (2) business days after becoming payable pursuant to Section 9.3(b).
(d) If this Agreement is terminated by Parent or the Company pursuant to
Section 9.1(d), then the Company shall pay to Parent within two (2) business
days of the date of the termination a nonrefundable fee in the amount of
$500,000 to cover Parent's expenses in connection with the proposed transaction.
Section 10. Miscellaneous Provisions
10.1 Amendment. This Agreement may be amended with the approval
of the respective Boards of Directors of the Company and Parent at any time
before or after adoption of this Agreement by the stockholders of the Company or
the stockholders of Parent; PROVIDED, HOWEVER, that after any such adoption of
this Agreement by Parent's stockholders or the Company's stockholders, no
amendment shall be made which (a) by law requires further approval of the
stockholders of the Company without the further approval of such stockholders or
(b) requires further approval of the stockholders of Parent without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
10.2 Waiver.
(a) No failure on the part of any party to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any party
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or
60.
remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
(b) No party shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
party; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
10.3 No Survival of Representations and Warranties. None of the
representations and warranties contained in this Agreement or in any certificate
delivered pursuant to this Agreement shall survive the Merger.
10.4 Entire Agreement; Counterparts; Applicable Law. This
Agreement and the other agreements referred to herein constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among or between any of the parties with respect to the subject matter
hereof and thereof. This Agreement may be executed in several counterparts, each
of which shall be deemed an original and all of which shall constitute one and
the same instrument, and shall be governed in all respects by the laws of the
State of Delaware as applied to contracts entered into and to be performed
entirely within Delaware.
10.5 Disclosure Schedule. The Acquired Corporation Disclosure
Schedule shall be arranged in separate parts corresponding to the numbered and
lettered sections contained in Section 2, and the information disclosed in any
numbered or lettered part shall be deemed to relate to and to qualify only the
particular representation or warranty set forth in the corresponding numbered or
lettered section in Section 2, and shall not be deemed to relate to or to
qualify any other representation or warranty. The Parent Disclosure Schedule
shall be arranged in separate parts corresponding to the numbered and lettered
sections contained in Section 3, and the information disclosed in any numbered
or lettered part shall be deemed to relate to and to qualify only the particular
representation or warranty set forth in the corresponding numbered or lettered
section in Section 3, and shall not be deemed to relate to or to qualify any
other representation or warranty.
10.6 Attorneys' Fees. In any action at law or suit in equity to
enforce this Agreement or the rights of any of the parties hereunder, the
prevailing party in such action or suit shall be entitled to receive a
reasonable sum for its attorneys' fees and all other reasonable costs and
expenses incurred in such action or suit.
10.7 Assignability. This Agreement shall be binding upon, and
shall be enforceable by and inure solely to the benefit of, the parties hereto
and their respective successors and assigns; PROVIDED, HOWEVER, that neither
this Agreement nor the Company's rights hereunder may be assigned by the Company
without the prior written consent of Parent, and any attempted assignment of
this Agreement or any of such rights by the Company without such consent shall
be void and of no effect. Except as set forth in Section 6.5 with respect to the
current directors and officers of the Company and Parent, nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
61.
10.8 Notices. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in writing
and shall be deemed properly delivered, given and received when delivered (by
hand, by registered mail, by courier or express delivery service or by
facsimile) to the address or facsimile telephone number set forth beneath the
name of such party below (or to such other address or facsimile telephone number
as such party shall have specified in a written notice given to the other
parties hereto):
IF TO PARENT:
Paradigm Technology, Inc.
694 Tasman Drive
Milpitas, CA 95035
Attn: Michael Gulett
Phone: (408) 954-0500
Fax: (408) 954-1046
WITH A COPY TO:
Pillsbury Madison & Sutro LLP
2550 Hanover Street
Palo Alto, CA 94304-1115
Attn: Allison M. Leopold Tilley
Phone: (650) 233-4518
Fax: (650) 233-4545
IF TO MERGER SUB:
same information as Parent
IF TO THE COMPANY:
IXYS Corporation
3540 Bassett Street
Santa Clara, CA 95054-2704
Attn: Dr. Nathan Zommer
Phone: (408 982-0700
Fax: (408) 496-6104
WITH A COPY TO:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Attn: James R. Jones
62.
Phone: (650) 843-5063
Fax: (650) 857-0663
10.9 Cooperation. The Company agrees to cooperate fully with
Parent and to execute and deliver such further documents, certificates,
agreements and instruments and to take such other actions as may be reasonably
requested by Parent to evidence or reflect the transactions contemplated by this
Agreement and to carry out the intent and purposes of this Agreement.
10.10 Construction.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include masculine
and feminine genders.
(b) The parties hereto agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
63.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
PARADIGM TECHNOLOGY, INC.
By: /s/ Michael Gulett
--------------------------------
Name: Michael Gulett
------------------------------
Title: President, CEO
-----------------------------
PARADIGM ENTERPRISES, INC.
By: /s/ Michael Gulett
--------------------------------
Name: Michael Gulett
------------------------------
Title: President, CEO
-----------------------------
IXYS CORPORATION
By: /s/ Nathan Zommer
--------------------------------
Name: Nathan Zommer
------------------------------
Title: President, CEO
-----------------------------
64.
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUIRED CORPORATION CONTRACT. "Acquired Corporation Contract" shall
mean any Contract: (a) to which any Acquired Corporation is a party; (b) by
which any Acquired Corporation or any asset of any Acquired Corporation is or
may become bound or under which any Acquired Corporation has, or may become
subject to, any obligation; or (c) under which any Acquired Corporation has or
may acquire any right or interest.
ACQUIRED CORPORATION DISCLOSURE SCHEDULE. "Acquired Corporation
Disclosure Schedule" shall mean the disclosure schedule that has been prepared
by the Company in accordance with the requirements of Section 10.5 and that has
been delivered by the Company to Parent on the date of this Agreement and signed
by the President of the Company.
ACQUIRED CORPORATION PROPRIETARY ASSET. "Acquired Corporation
Proprietary Asset" shall mean any Proprietary Asset owned by or licensed to any
Acquired Corporation or otherwise used by any Acquired Corporation.
ACQUISITION PROPOSAL. "Acquisition Proposal" shall mean any offer,
proposal or inquiry (other than offers, proposals or inquiries exchanged between
Parent and the Company) contemplating or otherwise relating to any Acquisition
Transaction.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction or series of related transactions (other than a Preferred Sale)
involving:
(A) any merger, consolidation, share exchange, business
combination, issuance of securities, acquisition of securities,
tender offer, exchange offer or other similar transaction (i) in
which the Subject Corporation is a constituent corporation, (ii)
in which a Person or "group" (as defined in the Exchange Act and
the rules promulgated thereunder) of Persons directly or
indirectly acquires the Subject Corporation or more than 50% of
the Subject Corporation's business or directly or indirectly
acquires beneficial or record ownership of securities
representing more than 20% of the outstanding securities of any
class of voting securities of the Subject Corporation or (iii) in
which the Subject Corporation issues securities representing more
than 20% of the outstanding securities of any class of voting
securities of the Subject Corporation;
(B) any sale, lease, exchange, transfer, license,
acquisition or disposition of more than 50% of the assets of the
Subject Corporation; or
(C) any liquidation or dissolution of the Subject
Corporation.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached, as it may be amended from
time to time.
A-1
ABB. "ABB" shall have the meaning assigned to it in Section 6.4 of the
Agreement.
COMPANY CAPITAL STOCK. "Company Capital Stock" shall mean the Company
Common Stock and Company Preferred Stock, collectively.
COMPANY OPTION. "Company Option" shall have the meaning ascribed to it
in Section 2.3(b) of the Agreement.
COMPANY COMMON STOCK. "Company Common Stock" shall mean the Common
Stock, $0.001 par value per share, of the Company.
COMPANY PLANS. "Company Plans" shall have the meaning ascribed to it in
Section 2.3(b) of the Agreement.
COMPANY PREFERRED STOCK. "Company Preferred Stock" shall mean the Series
A Preferred Stock, $0.001 par value per share, of the Company and the Series B
Preferred Stock, $0.001 par value per share, of the Company, collectively.
COMPANY WARRANT. "Company Warrant" shall have the meaning ascribed to it
in Section 2.3(c) of the Agreement.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, option, warranty,
purchase order, license, sublicense, insurance policy, benefit plan or legally
binding commitment or undertaking of any nature.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
FORM S-4 REGISTRATION STATEMENT. "Form S-4 Registration Statement" shall
mean the registration statement on Form S-4 to be filed with the SEC by Parent
in connection with the
A-2
issuance of Parent Common Stock in the Merger, as said registration statement
may be amended prior to the time it is declared effective by the SEC.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
HSR ACT. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
INCREASED AUTHORIZATION. "Increased Authorization" shall have the
meaning ascribed to it in Section 5.4 of the Agreement.
JOINT PROXY STATEMENT/PROSPECTUS. "Joint Proxy Statement/Prospectus"
shall mean the joint proxy statement/prospectus to be sent to (i) the Parent's
stockholders in connection with the Parent Stockholders' Meeting and (ii) the
Company's stockholders in connection with the Company Stockholders' Meeting.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT. An event, violation, inaccuracy, circumstance
or other matter will be deemed to have a "Material Adverse Effect" on:
(a) Parent if such event, violation, inaccuracy, circumstance or other
matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in the Agreement but
for the presence of "Material Adverse Effect" or other materiality
qualifications, or any similar qualifications, in such representations and
warranties) would have a material adverse effect on (i) the business, condition,
capitalization,
A-3
assets, liabilities, operations or financial performance of Parent; (ii) the
ability of Parent to consummate the Merger or any of the other transactions
contemplated by this Agreement or to perform obligations under this Agreement;
or (iii) Parent's ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of the Surviving
Corporation. An event, violation, inaccuracy, circumstance or other matter will
be deemed to have a "Material Adverse Effect" on Parent if such event,
violation, inaccuracy, circumstance or other matter (considered together with
all other matters that would constitute exceptions to the representations and
warranties set forth in the Agreement but for the presence of "Material Adverse
Effect" or other materiality qualifications, or any similar qualifications, in
such representations and warranties) would have a material adverse effect on the
business, condition, assets, liabilities, operations or financial performance of
Parent and its subsidiaries, taken as a whole.
(b) The Acquired Corporations if such event, violation, inaccuracy,
circumstance or other matter (considered together with all other matters that
would constitute exceptions to the representations and warranties set forth in
the Agreement but for the presence of "Material Adverse Effect" or other
materiality qualifications, or any similar qualifications, in such
representations and warranties) would have a material adverse effect on (i) the
business, condition, capitalization, assets, liabilities, operations or
financial performance of the Acquired Corporations, taken as a whole; or (ii)
the ability of the Acquired Corporations to consummate the Merger or any of the
other transactions contemplated by this Agreement or to perform obligations
under this Agreement. An event, violation, inaccuracy, circumstance or other
matter will be deemed to have a "Material Adverse Effect" on the Acquired
Corporations if such event, violation, inaccuracy, circumstance or other matter
(considered together with all other matters that would constitute exceptions to
the representations and warranties set forth in the Agreement but for the
presence of "Material Adverse Effect" or other materiality qualifications, or
any similar qualifications, in such representations and warranties) would have a
material adverse effect on the business, condition, assets, liabilities,
operations or financial performance of the Acquired Corporations, taken as a
whole.
NAME CHANGE. "Name Change" shall have the meaning ascribed to it in
Section 5.4 of the Agreement.
PARENT AUDITED BALANCE SHEET. "Parent Audited Balance Sheet" shall have
the meaning ascribed to it in Section 3.4(c).
PARENT CONTRACT. "Parent Contract" shall mean any Contract: (a) to which
Parent is a party; (b) by which Parent or any asset of Parent is or may become
bound or under which Parent has, or may become subject to, any obligation; or
(c) under which Parent has or may acquire any right or interest.
PARENT DISCLOSURE SCHEDULE. "Parent Disclosure Schedule" shall mean the
disclosure schedule that has been prepared by Parent in accordance with the
requirements of Section 10.5 and that has been delivered by Parent to the
Company on the date of this Agreement and signed by the President of Parent.
A-4
PARENT PREFERRED STOCK CONVERSION. "Parent Preferred Stock Conversion"
shall have the meaning ascribed to it in Section 5.4 of the Agreement.
PARENT PROPRIETARY ASSET. "Parent Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to Parent or otherwise used by Parent.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PREFERRED SALE. "Preferred Sale" shall have the meaning ascribed to it
in Section 3.5(d).
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service mark (whether
registered or unregistered), service mark application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, source code, algorithm, invention, design,
blueprint, engineering drawing, proprietary product, technology, proprietary
right or other intellectual property right or intangible asset; or (b) right to
use or exploit any of the foregoing.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
REVERSE STOCK SPLIT "Reverse Stock Split" shall have the meaning
ascribed to it in Section 5.4 of the Agreement.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended.
SUBJECT CORPORATION. "Subject Corporation" shall mean Parent when the
context of the Agreement so indicates, or the Company when the context of the
Agreement so indicates.
SUPERIOR OFFER. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase more than 50% of outstanding
capital stock of the Subject Corporation on terms that the board of directors of
the Subject Corporation determines in its reasonable judgment, based upon the
written advice of its financial advisor, to be more favorable to the
stockholders of the Subject Corporation than the terms of the Merger; PROVIDED,
HOWEVER, that any such offer shall not be deemed to be a "Superior Offer" if any
financing required to consummate the transaction contemplated by such offer is
not committed and is not reasonably capable of being obtained by such third
party.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
A-5
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
TRIGGERING EVENT. A "Triggering Event" shall be deemed to have occurred
if: (i) the Board of Directors of Parent shall have failed to recommend, or
shall for any reason have withdrawn or shall have amended or modified in a
manner adverse to the Company its unanimous recommendation in favor of adoption
of each of this Agreement, the Parent Preferred Stock Conversion and the Reverse
Stock Split; (ii) Parent shall have failed to include in the Joint Proxy
Statement/Prospectus the unanimous recommendation of the Board of Directors of
Parent in favor of adoption of each of this Agreement, the Parent Preferred
Stock Conversion and the Reverse Stock Split; (iii) the Board of Directors of
Parent fails to reaffirm its unanimous recommendation in favor of adoption of
each of this Agreement, the Parent Preferred Stock Conversion and the Reverse
Stock Split within five business days after the Company requests in writing that
such recommendation be reaffirmed; (iv) the Board of Directors of Parent shall
have approved, endorsed or recommended any Acquisition Proposal; (v) Parent
shall have entered into any letter of intent or similar document or any Contract
relating to any Acquisition Proposal; (vi) Parent shall have failed to hold the
Parent Stockholders' Meeting as promptly as practicable and in any event within
45 days after the Form S-4 Registration Statement is declared effective under
the Securities Act; (vii) a tender or exchange offer relating to securities of
Parent shall have been commenced and Parent shall not have sent to its
securityholders, within five business days after the commencement of such tender
or exchange offer, a statement disclosing that Parent recommends rejection of
such tender or exchange offer; or (viii) an Acquisition Proposal is publicly
announced, and Parent (A) fails to issue a press release announcing its
opposition to such Acquisition Proposal within five business days after such
Acquisition Proposal is announced or (B) otherwise fails to actively oppose such
Acquisition Proposal.
A-6
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
[SURVIVING CORPORATION]
I.
The name of this corporation is [Surviving Corporation].
II.
The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 32 Loockerman
Square, Suite L-100, City of Dover, 19901, County of Kent; and the name of the
registered agent of the corporation in the State of Delaware at such address is
The Prentice-Hall Corporation System, Inc.
III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the Delaware General
Corporation Law.
IV.
1. This corporation is authorized to issue one class of stock to be
designated "Common Stock". The total number of shares of Common Stock which the
corporation is
authorized to issue is one thousand (1,000) shares each having a par value of
one-tenth of one cent ($0.001).
V.
For the management of the business and for the conduct of the affairs of
the corporation, and in further definition, limitation and regulation of the
powers of the corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
1. The management of the business and the conduct of the affairs of the
corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed by the Board
of Directors in the manner provided in the Bylaws.
2. The Board of Directors may from time to time make, amend, supplement
or repeal the Bylaws; provided, however, that the stockholders may change or
repeal any Bylaw adopted by the Board of Directors by the affirmative vote of
the holders of a majority of the voting power of all of the then outstanding
shares of the capital stock of the corporation (considered for this purpose as
one class); and, provided further, that no amendment or supplement to the Bylaws
adopted by the Board of Directors shall vary or conflict with any amendment or
supplement thus adopted by the stockholders.
3. The directors of the corporation need not be elected by written
ballot unless the Bylaws so provide.
2.
VI.
1. To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or as may hereafter be amended, no director of the
corporation shall be personally liable to the corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director except for
liability (I) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involved intentional misconduct or a knowing violation of law, (iii) under
section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. If the Delaware
General Corporation law is amended after approval by the stockholders of this
Article to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation law, as so amended.
2. Neither any amendment nor repeal of this Article VI, nor the adoption
of any provisions of the Corporation's Certificate of Incorporation inconsistent
with this Article VI, shall eliminate or reduce the effect on this Article VI,
in respect of any matter occurring, or any action, suite, claim or proceeding
accruing or arising or that, but for this Article VI, would accrue or arise,
prior to such amendment, repeal, or adoption of an inconsistent provision.
VII.
The name and mailing address of the incorporator is as follows:
James R. Jones
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-0663
3.
VIII.
The corporation is to have perpetual existence.
IX.
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon the stockholders
herein are granted subject to this right.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the Delaware General Corporation
Law, do make this Certificate, hereby declaring and certifying that this is my
act and deed and that the facts herein stated are true and accordingly have
hereunto set my hand this ___ day of _________, 1998.
__________________________________
JAMES R. JONES
SOLE INCORPORATOR
4.
EXHIBIT C
DIRECTORS OF SURVIVING CORPORATION
Nathan Zommer
Arnold Agbayani
EXHIBIT D
AFFILIATE AGREEMENT
THIS AFFILIATE AGREEMENT is being executed and delivered as of
___________________, 1998 by ____________________ ("Stockholder") in favor of
and for the benefit of Paradigm Technology, Inc., a Delaware corporation
("Parent").
RECITALS
A. Stockholder is a Stockholder and is an officer and director of IXYS
Corporation, a Delaware corporation (the "Company").
B. Parent, the Company, and Paradigm Enterprises, Inc., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"), have entered
into an Agreement and Plan of Merger and Reorganization dated as of March ___,
1998 (the "Merger Agreement"), providing for the merger of Merger Sub into the
Company (the "Merger"). The Merger Agreement contemplates that, upon
consummation of the Merger, (i) holders of shares of the capital stock of the
Company will receive shares of common stock of Parent ("Parent Common Stock") in
exchange for their shares of capital stock of the Company and (ii) the Company
will become a wholly owned subsidiary of Parent. It is accordingly contemplated
that Stockholder will receive shares of Parent Common Stock in the Merger.
C. Stockholder understands that the Parent Common Stock being issued in
the Merger will be issued pursuant to a registration statement on Form S-4, and
that Stockholder may be deemed an "affiliate" of Parent as such term is defined
for purposes of paragraphs (c) and (d) of Rule 145 of the General Rules and
Regulations of the Securities and Exchange Commission ("Rule 145") under the
Securities Act of 1933, as amended (the "Act"), and, as such, Stockholder may
only transfer, sell or dispose of such Parent Common Stock in accordance with
this Affiliate Agreement and Rule 145.
AGREEMENT
1. REPRESENTATIONS AND WARRANTIES. Stockholder represents and warrants
to Parent as follows:
a. Stockholder is the holder and "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of the number
and class of shares of capital stock of the Company set forth beneath
Stockholder's signature on the signature page hereof (the "Company Shares"), and
Stockholder has good and valid title to the Company Shares, free and clear of
any liens, pledges, security interests, adverse claims, equities, options,
proxies, charges, encumbrances or restrictions of any nature.
1.
b. Stockholder has carefully read this Affiliate Agreement, and to
the extent Stockholder felt necessary, has discussed with counsel the
limitations imposed on Stockholder's ability to sell, transfer or otherwise
dispose of the shares of Parent Common Stock that Stockholder is to receive in
the Merger (the "Parent Shares"). Stockholder fully understands the limitations
this Affiliate Agreement places upon Stockholder's ability to sell, transfer or
otherwise dispose of the Parent Shares.
c. Stockholder understands that the representations, warranties and
covenants set forth in this Affiliate Agreement will be relied upon by Parent
and its counsel for purposes of determining whether Parent should proceed with
the Merger and for various other purposes.
2. PROHIBITIONS AGAINST TRANSFER. Stockholder agrees that Stockholder
shall not effect any sale, transfer or other disposition of any Parent Shares
unless:
a. such sale, transfer or other disposition is effected pursuant to
an effective registration statement under the Act;
b. such sale, transfer or other disposition is made in conformity
with the requirements of Rule 145 under the Act, as evidenced by a broker's
letter and a representation letter executed by Stockholder (satisfactory in form
and content to Parent) stating that such requirements have been met;
c. counsel reasonably satisfactory to Parent shall have advised
Parent in a written opinion letter (satisfactory in form and content to Parent),
upon which Parent may rely, that such sale, transfer or other disposition will
be exempt from registration under the Act; or
d. an authorized representative of the SEC shall have rendered
written advice to Stockholder to the effect that the SEC would take no action,
or that the staff of the SEC would not recommend that the SEC take action, with
respect to such sale, transfer or other disposition, and a copy of such written
advice and all other related communications with the SEC shall have been
delivered to Parent.
3. STOP TRANSFER INSTRUCTIONS; LEGEND.
Stockholder acknowledges and agrees that (a) stop transfer instructions
will be given to Parent's transfer agent with respect to the Parent Shares, and
(b) each certificate representing any of such shares shall bear a legend
identical or similar in effect to the following legend (together with any other
legend or legends required by applicable state securities laws or otherwise):
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
IN A TRANSACTION TO WHICH RULE 145(d) OF THE SECURITIES ACT
OF 1933 APPLIES AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH RULE AND IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED AS OF ,
1998, BETWEEN THE REGISTERED HOLDER HEREOF AND PARADIGM
2.
TECHNOLOGY, INC., A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICES OF PARADIGM TECHNOLOGY, INC."
4. INDEPENDENCE OF OBLIGATIONS. The covenants and obligations of
Stockholder set forth in this Affiliate Agreement shall be construed as
independent of any other agreement or arrangement between Stockholder, on the
one hand, and the Company or Parent, on the other. The existence of any claim or
cause of action by Stockholder against the Company or Parent shall not
constitute a defense to the enforcement of any of such covenants or obligations
against Stockholder.
5. SPECIFIC PERFORMANCE. Stockholder agrees that in the event of
any breach or threatened breach by Stockholder of any covenant, obligation or
other provision contained in this Affiliate Agreement, Parent shall be entitled
(in addition to any other remedy that may be available to Parent) to: (a) a
decree or order of specific performance or mandamus to enforce the observance
and performance of such covenant, obligation or other provision; and (b) an
injunction restraining such breach or threatened breach.
6. INDEMNIFICATION. Without in any way limiting any of the rights
or remedies otherwise available to Parent, Stockholder shall hold harmless and
indemnify Parent from and against, and shall compensate and reimburse Parent
for, any loss, damage, injury, decline in value, lost opportunity, liability,
exposure, claim, demand, settlement, judgment, award, fine, penalty, tax, fee,
charge, cost or expense of any nature (whether or not relating to a third party
claim) which is directly or indirectly suffered or incurred at any time by
Parent or any of Parent's affiliates or to which Parent or any of Parent's
affiliates otherwise becomes subject and that arises from any inaccuracy in or
breach of any representation, warranty, covenant or obligation of Stockholder
contained in this Affiliate Agreement.
7. OTHER AGREEMENTS. Nothing in this Affiliate Agreement shall
limit any of the rights or remedies of Parent under the Merger Agreement, [or
the Voting Agreement dated as of March __, 1998 between Stockholder and Parent];
and nothing in the Merger Agreement [or said Voting Agreement] shall limit any
of the rights or remedies of Parent under this Affiliate Agreement.
8. NOTICES. Any notice or other communication required or permitted
to be delivered to Stockholder or Parent under this Affiliate Agreement shall be
in writing and shall be deemed properly delivered, given and received when
delivered (by hand, by registered mail, by courier or express delivery service
or by facsimile) to the address or facsimile telephone number set forth beneath
the name of such party below (or to such other address or facsimile telephone
number as such party shall have specified in a written notice given to the other
party):
3.
IF TO PARENT:
Paradigm Technology, Inc.
694 Tasman Drive
Milpitas, CA 95035
Attn: Michael Gullet
Phone: (408) 954-0500
Fax: (408) 954-1046
WITH A COPY TO:
Pillsbury Madison & Sutro LLP
2550 Hanover Street
Palo Alto, CA 94304-1115
Attn: Allison M. Leopold Tilley
Phone: (650) 233-4518
Fax: (650) 233-4545
IF TO STOCKHOLDER:
9. SEVERABILITY. If any provision of this Affiliate Agreement or
any part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Affiliate Agreement.
Each provision of this Affiliate Agreement is separable from every other
provision of this Affiliate Agreement, and each part of each provision of this
Affiliate Agreement is separable from every other part of such provision.
10. GOVERNING LAW. This Affiliate Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
Delaware (without giving effect to principles of conflicts of laws).
11. WAIVER. No failure on the part of Parent to exercise any power,
right, privilege or remedy under this Affiliate Agreement, and no delay on the
part of Parent in
4.
exercising any power, right, privilege or remedy under this Affiliate Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. Parent shall not be deemed to have waived any claim arising
out of this Affiliate Agreement, or any power, right, privilege or remedy under
this Affiliate Agreement, unless the waiver of such claim, power, right,
privilege or remedy is expressly set forth in a written instrument duly executed
and delivered on behalf of Parent; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
12. CAPTIONS. The captions contained in this Affiliate Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Affiliate Agreement and shall not be referred to in connection with the
construction or interpretation of this Affiliate Agreement.
13. FURTHER ASSURANCES. Stockholder shall execute and/or cause to be
delivered to Parent such instruments and other documents and shall take such
other actions as Parent may reasonably request to effectuate the intent and
purposes of this Affiliate Agreement.
14. ENTIRE AGREEMENT. This Affiliate Agreement, the Merger
Agreement, [and the Voting Agreement referred to in Section 7 of this Affiliate
Agreement] set forth the entire understanding of Parent and Stockholder relating
to the subject matter hereof and thereof and supersede all other prior
agreements and understandings between Parent and Stockholder relating to the
subject matter hereof and thereof.
15. NON-EXCLUSIVITY. The rights and remedies of Parent hereunder are
not exclusive of or limited by any other rights or remedies which Parent may
have, whether at law, in equity, by contract or otherwise, all of which shall be
cumulative (and not alternative).
16. AMENDMENTS. This Affiliate Agreement may not be amended,
modified, altered or supplemented other than by means of a written instrument
duly executed and delivered on behalf of Parent and Stockholder.
17. ASSIGNMENT. This Affiliate Agreement and all obligations of
Stockholder hereunder are personal to Stockholder and may not be transferred or
delegated by Stockholder at any time. Parent may freely assign any or all of its
rights under this Affiliate Agreement (including its indemnification rights
under Section 6), in whole or in part, to any other person or entity without
obtaining the consent or approval of Stockholder.
18. BINDING NATURE. Subject to Section 17, this Affiliate Agreement
will inure to the benefit of Parent and its successors and assigns and will be
binding upon Stockholder and Stockholder's representatives, executors,
administrators, estate, heirs, successors and assigns.
19. ATTORNEYS' FEES AND EXPENSES. If any legal action or other legal
proceeding relating to the enforcement of any provision of this Affiliate
Agreement is brought against Stockholder, the prevailing party shall be entitled
to recover reasonable attorneys' fees,
5.
costs and disbursements (in addition to any other relief to which the prevailing
party may be entitled).
20. SURVIVAL. Each of the representations, warranties, covenants and
obligations contained in this Affiliate Agreement shall survive the consummation
of the Merger.
Stockholder has executed this Affiliate Agreement on , 1998.
Signature: _______________________________
Number of
shares of capital stock of the Company beneficially
owned:
______ shares of common stock
6.
EXHIBIT E
FORM OF TAX REPRESENTATION LETTER
TO BE EXECUTED BY PARENT AND MERGER SUB
Cooley Godward, LLP Pillsbury Madison & Sutro LLP
One Maritime Plaza, 20th Fl. 2550 Hanover Street
San Francisco, California 94111-3580 Palo Alto, California 94304-1115
RE: MERGER PURSUANT TO THE AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
(THE "MERGER AGREEMENT") DATED __________, 1998, AMONG PARADIGM
TECHNOLOGY, INC., A DELAWARE CORPORATION ("PARENT"), PARADIGM
ENTERPRISES, INC., A DELAWARE CORPORATION AND A WHOLLY OWNED SUBSIDIARY
OF PARENT ("MERGER SUB"), AND IXYS CORPORATION, A DELAWARE CORPORATION
(THE "COMPANY"), AND THE RELATED CERTIFICATE OF MERGER BETWEEN MERGER
SUB AND THE COMPANY (THE "CERTIFICATE OF MERGER").
Gentlemen:
This letter is supplied to you in connection with your rendering of opinions
regarding certain federal income tax consequences of the Merger. Unless
otherwise indicated, capitalized terms not defined herein have the meanings set
forth in the Merger Agreement. The Merger Agreement and the Certificate of
Merger, including exhibits and schedules attached thereto, are collectively
referred to as the "AGREEMENTS."
After consulting with their counsel and auditors regarding the meaning of and
factual support for the following representations, the undersigned hereby
certify and represent that the following facts are now true and will continue to
be true as of the Effective Time of the Merger and thereafter where relevant:
1. Pursuant to the Merger, Merger Sub will merge with and into the
Company, and the Company will acquire all of the assets and liabilities of
Merger Sub. Specifically, the assets transferred to the Company pursuant to the
Merger will represent at least ninety percent (90%) of the fair market value of
the net assets and at least seventy percent (70%) of the fair market value of
the gross assets held by Merger Sub immediately prior to the Merger. In
addition, at least ninety percent (90%) of the fair market value of the net
assets and at least seventy percent (70%) of the fair market value of the gross
assets held by the Company immediately prior to the Merger will continue to be
held by the Company immediately after the Merger. For the purpose of determining
the percentage of the Company's and Merger Sub's net and gross assets held by
the Company immediately following the Merger, the following assets will be
treated as property held by Merger Sub or the Company, as the case may be,
immediately prior but not subsequent to the Merger: (i) assets disposed of by
the Company or Merger Sub (other than assets transferred from Merger Sub to the
Company in the Merger) prior to or subsequent to the Merger and in contemplation
thereof (including without limitation any asset disposed of by the Company,
other than in the ordinary course of business, pursuant to a plan or intent
existing
during the period ending at the Effective Time of the Merger and beginning with
the commencement of negotiations (whether formal or informal) with Parent
regarding the Merger (the "PRE-MERGER PERIOD"); (ii) assets used by the Company
or Merger Sub to pay stockholders perfecting appraisal rights or other expenses
or liabilities incurred in connection with the Merger and (iii) assets used to
make distribution, redemption or other payments in respect of stock of the
Company or rights to acquire such stock (including payments treated as such for
tax purposes) that are made in contemplation of the Merger or that are related
thereto;
2. Parent's principal reasons for participating in the Merger are bona
fide business purposes not related to taxes;
3. Prior to the Merger, Parent will be in "CONTROL" of Merger Sub. As
used in this letter, "CONTROL" shall consist of direct ownership of shares of
stock possessing at least eighty percent (80%) of the total combined voting
power of all classes of stock entitled to vote and at least eighty percent (80%)
of the total number of shares of all other classes of stock of the corporation.
For purposes of determining Control, a person shall not be considered to own
shares of voting stock if rights to vote such shares (or to restrict or
otherwise control the voting of such shares) are held by a third party
(including a voting trust) other than an agent of such person;
4. In the Merger, shares of stock of the Company representing Control of
the Company will be exchanged solely for shares of Parent Common Stock. For
purposes of this paragraph, shares of stock of the Company exchanged in the
Merger for cash and other property (including, without limitation, cash paid to
stockholders of the Company perfecting appraisal rights, if any, or in lieu of
fractional shares of Parent Common Stock) will be treated as shares of stock of
the Company outstanding on the date of the Merger but not exchanged for shares
of Parent Common Stock;
5. Parent has no plan or intention to cause the Company to issue
additional shares of stock after the Merger, or take any other action, that
would result in Parent losing Control of the Company;
6. Parent has no plan or intention to reacquire any of its stock issued
pursuant to the Merger;
7. Except for transfers described in both Section 368(a)(2)(C) of the
Code and Treasury Regulation Section 1.368-2(j)(4), Parent has no plan or
intention to: (a) liquidate the Company; (b) merge the Company with or into
another corporation including Parent or its affiliates; (c) sell, distribute or
otherwise dispose of the stock of the Company, to cause the Company to sell or
otherwise dispose of the stock of the Company; or (d) cause the Company to sell
or otherwise dispose of any of its assets or of any assets acquired from Merger
Sub, except for dispositions made in the ordinary course of business or payment
of expenses incurred by the Company pursuant to the Merger;
8. In the Merger, Merger Sub will have no liabilities assumed by the
Company and will not transfer to the Company any assets subject to liabilities,
except to the extent incurred in connection with the transactions contemplated
by the Agreements;
2.
9. Parent intends that, following the Merger, the Company will continue
its historic business or use a significant portion of its historic business
assets in a business;
10. During the past five (5) years, none of the outstanding shares of
capital stock of the Company, including the right to acquire or vote any such
shares have, directly or indirectly, been owned by Parent or affiliates of
Parent;
11. Parent is not an investment Company within the meaning of Section
368(a)(F)(iii) and (iv) of the Code;
12. No stockholder of the Company is acting as agent for Parent in
connection with the Merger or the approval thereof; Parent will not reimburse
any stockholder of the Company for any stock of the Company such stockholder may
have purchased or for other obligations such stockholder may have incurred;
13. Neither Parent nor Merger Sub is, or will be at the Effective Time
of the Merger, under the jurisdiction of a court in a Title 11 or similar case
within the meaning of Section 368(a)(3)(A) of the Code;
14. Except for repurchases or redemptions of Parent Common Stock that
are consistent with past practices and pursuant to pre-existing purchase
programs that were not created or modified in connection with the Merger,
neither Merger Sub nor Parent nor any "RELATED PERSON" of Merger Sub or Parent
(as such term is defined by Treasury Regulation Section 1.368-1(e)(3)) will
repurchase or redeem any of the Parent Common Stock to be issued to the
stockholders of the Company in connection with the Merger;
15. Except with respect to (i) payments of cash to stockholders of the
Company perfecting appraisal rights and (ii) payments of cash to stockholders of
the Company in lieu of fractional shares of Parent Common Stock, one hundred
percent (100%) of the stock of the Company outstanding immediately prior to the
Merger will be exchanged solely for Parent Common Stock. Thus, except as set
forth in the preceding sentence, Merger Sub and Parent intend that no
consideration be paid or received (directly or indirectly, actually or
constructively) for stock of the Company other than Parent Common Stock;
16. The total fair market value of all consideration other than Parent
Common Stock received by stockholders of the Company in the Merger (including,
without limitation, cash paid to stockholders of the Company perfecting
appraisal rights) will be less than ten percent (10%) of the aggregate fair
market value of stock of the Company outstanding immediately prior to the
Merger;
17. The fair market value of the Parent Common Stock received by each
stockholder of the Company will be approximately equal to the fair market value
of the stock of the Company surrendered in exchange therefor, and the aggregate
consideration received by stockholders of the Company in exchange for their
stock of the Company will be approximately equal to the fair market value of all
of the outstanding shares of stock of the Company immediately prior to the
Merger;
3.
18. Each of Merger Sub, Parent, the Company and each stockholder of the
Company will each pay separately his, her or its own expenses relating to the
Merger;
19. There is no intercorporate indebtedness existing between Parent and
the Company or between Merger Sub and the Company that was issued, acquired or
will be settled at a discount as a result of the Merger, and Parent will assume
no liabilities of the Company or any stockholder of the Company in connection
with the Merger;
20. The terms of the Merger Agreement and the agreements related thereto
are the product of arm's length negotiations;
21. None of the compensation received by any stockholder-employee of the
Company will be separate consideration for, or allocable to, any of their shares
of stock of the Company; none of the shares of Parent Common Stock received by
any stockholder-employee of the Company will be separate consideration for, or
allocable to, any employment agreement or any covenants not to compete; and the
compensation paid to any stockholder-employee of the Company will be for
services actually rendered and will be commensurate with amounts paid to third
parties bargaining at arm's length for similar services;
22. The payment of cash in lieu of fractional shares of Parent Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
Parent of issuing fractional shares and does not represent separately
bargained-for consideration. The total cash consideration that will be paid in
the transaction to the Company stockholders instead of issuing fractional shares
of Parent Common Stock will not exceed one percent (1%) of the total
consideration that will be issued in the transaction to the Company stockholders
in exchange for their shares of Company Capital Stock. The fractional share
interests of each Company stockholder will be aggregated, and no Company
stockholder will receive cash in an amount equal to or greater than the value of
one full share of Parent Common Stock;
23. With respect to each instance, if any, in which shares of stock of
the Company have been purchased by a stockholder of Parent (a "STOCKHOLDER")
during the Pre-Merger Period (a "STOCK PURCHASE"): (i) the Stock Purchase was
made by such Stockholder not as a representative of Parent; (ii) the purchase
price paid by such Stockholder pursuant to the Stock Purchase was not advanced,
and will not be reimbursed, either directly or indirectly, by Parent; (iii) at
no time was such Stockholder or any other party required or obligated to
surrender to Parent the Company Capital Stock acquired in the Stock Purchase,
and neither such Stockholder nor any other party will be required to surrender
to Parent the Parent Common Stock for which such shares of stock of the Company
will be exchanged in the Merger; and (iv) the Stock Purchase was not a formal or
informal condition to consummation of the Merger; and
24. Parent and Merger Sub are authorized to make all of the
representations set forth herein.
The undersigned recognize that (i) your opinions will be based on the
representations set forth herein and on the statements contained in the
Agreements and documents related thereto, and (ii) your opinions will be subject
to certain limitations and qualifications including that they may not be relied
upon if any such representations are not accurate in all material respects.
4.
The undersigned recognize that your opinions will not address any tax
consequences of the Merger or any action taken in connection therewith except as
expressly set forth in such opinions.
Very truly yours,
PARADIGM TECHNOLOGY, INC.,
a Delaware corporation
By:________________________________
Title:_____________________________
PARADIGM ENTERPRISES, INC.,
a Delaware corporation
By:________________________________
Title:_____________________________
5.
EXHIBIT F
FORM OF TAX REPRESENTATION LETTER
TO BE EXECUTED BY THE COMPANY
Cooley Godward LLP Pillsbury Madison & Sutro LLP
One Maritime Plaza, 20th Fl. 2550 Hanover Street
San Francisco, California CA 94111-3580 Palo Alto, California 94304-1115
RE: MERGER PURSUANT TO THE AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
(THE "MERGER AGREEMENT"), DATED ___________, 1998, AMONG PARADIGM
TECHNOLOGY, INC., A DELAWARE CORPORATION ("PARENT"), PARADIGM
ENTERPRISES, INC., A DELAWARE CORPORATION AND A WHOLLY OWNED SUBSIDIARY
OF PARENT ("MERGER SUB"), AND IXYS CORPORATION, A DELAWARE CORPORATION
(THE "COMPANY"), AND THE RELATED CERTIFICATE OF MERGER BETWEEN THE
COMPANY AND MERGER SUB (THE "CERTIFICATE OF MERGER").
Gentlemen:
This letter is supplied to you in connection with your rendering of opinions
regarding certain federal income tax consequences of the Merger. Unless
otherwise indicated, capitalized terms not defined herein have the meanings set
forth in the Merger Agreement or the Certificate of Merger. The Merger Agreement
and the Certificate of Merger, including exhibits and schedules attached
thereto, are collectively referred to as the "AGREEMENTS."
After consulting with its counsel and auditors regarding the meaning of and
factual support for the following representations, the undersigned hereby
certifies and represents that the following facts are now true and will continue
to be true as of the Effective Time of the Merger and thereafter where relevant:
1. Pursuant to the Merger, Merger Sub will merge with and into the
Company, and the Company will acquire all of the assets and liabilities of
Merger Sub. Specifically, the assets transferred to the Company pursuant to the
Merger will represent at least ninety percent (90%) of the fair market value of
the net assets and at least seventy percent (70%) of the fair market value of
the gross assets held by Merger Sub immediately prior to the Merger. In
addition, at least ninety percent (90%) of the fair market value of the net
assets and at least seventy percent (70%) of the fair market value of the gross
assets held by the Company immediately prior to the Merger will continue to be
held by the Company immediately after the Merger. For the purpose of determining
the percentage of the Company's and Merger Sub's net and gross assets held by
the Company immediately following the Merger, the following assets will be
treated as property held by Merger Sub or the Company, as the case may be,
immediately prior but not subsequent to the Merger: (i) assets disposed of by
the Company or Merger Sub (other than assets transferred from Merger Sub to the
Company in the Merger) prior to or subsequent to the Merger and in contemplation
thereof (including without limitation any asset disposed of by the
1.
Company, other than in the ordinary course of business, pursuant to a plan or
intent existing during the period ending on the Effective Time of the Merger and
beginning with the commencement of negotiations (whether formal or informal)
with Parent regarding the Merger (the "PRE-MERGER PERIOD"); (ii) assets used by
the Company or Merger Sub to pay stockholders perfecting appraisal rights or
other expenses or liabilities incurred in connection with the Merger and (iii)
assets used to make distribution, redemption or other payments in respect of
stock of the Company or rights to acquire such stock (including payments treated
as such for tax purposes) that are made in contemplation of the Merger or that
are related thereto;
2. Other than in the ordinary course of business or pursuant to its
obligations under the Agreements, the Company has made no transfer of any of its
assets (including any distribution of assets with respect to, or in redemption
of, stock) in contemplation of the Merger or during the Pre-Merger Period;
3. The Company's principal reasons for participating in the Merger are
bona fide business purposes unrelated to taxes;
4. On the Effective Time of the Merger, the Company will have no
outstanding equity interests other than those disclosed in Section 2.3 of the
Merger Agreement. At the time of the Merger, except as specified in the Merger
Agreement, the Company will have no outstanding warrants, options, or
convertible securities or any other type of right outstanding pursuant to which
any person could acquire shares of the Company Capital Stock or any other equity
interest in the Company, other than those disclosed in Section 2.3 of the Merger
Agreement or the Disclosure Schedule with respect thereto;
5. In the Merger, shares of stock of the Company representing "CONTROL"
of the Company will be exchanged solely for shares of voting stock of Parent. At
the Effective Time of the Merger, there will exist no rights to acquire the
Company Capital Stock or to vote (or restrict or otherwise control the vote of)
shares of stock of the Company which, if exercised, would affect Parent's
acquisition and retention of control of the Company. For purposes of this
paragraph, shares of the stock of Company exchanged in the Merger for cash and
other property (including, without limitation, cash paid to stockholders of the
Company perfecting appraisal rights, if any, or in lieu of fractional shares of
Parent Common Stock) will be treated as shares of stock of the Company
outstanding on the date of the Merger but not exchanged for shares of voting
stock of Parent. As used in this letter, "CONTROL" shall consist of direct
ownership of shares of stock possessing at least eighty percent (80%) of the
total combined voting power of shares of all classes of stock entitled to vote
and at least eighty percent (80%) of the total number of shares of all other
classes of stock of the corporation. For purposes of determining Control, a
person shall not be considered to own shares of voting stock if rights to vote
such shares (or to restrict or otherwise control the voting of such shares) are
held by a third party (including a voting trust) other than an agent of such
person;
6. The total fair market value of all consideration other than shares of
Parent Common Stock received by stockholders of the Company in the Merger
(including, without limitation, cash paid to Company stockholders perfecting
appraisal rights or in lieu of fractional shares of Parent Common Stock) will be
less than ten percent (10%) of the aggregate fair market value of shares of
stock of the Company outstanding immediately prior to the Merger;
2.
7. The Company has no plan or intention to issue additional shares of
stock after the Merger, or take any other action, that would result in Parent
losing Control of the Company;
8. Except for transfers described in both Section 368(a)(2)(C) of the
Code and Treasury Regulation Section 1.368-2(j)(4), the Company has no plan or
intention to sell or otherwise dispose of any of its assets or of any of the
assets acquired from Merger Sub in the Merger except for dispositions made in
the ordinary course of business or to pay expenses incurred by the Company
pursuant to the Merger;
9. The Company intends to continue its historic business or use a
significant portion of its historic business assets in a business following the
Merger;
10. The liabilities of the Company have been incurred by the Company in
the ordinary course of its business;
11. The fair market value of the Company's assets will, on the Effective
Time of the Merger, exceed the aggregate liabilities of the Company plus the
amount of liabilities, if any, to which such assets are subject;
12. The Company is not and will not be on the Effective Time of the
Merger an "INVESTMENT COMPANY" within the meaning of Section 368(a)(2)(F)(iii)
and (iv) of the Code;
13. The Company is not and will not be on the Effective Time of the
Merger under the jurisdiction of a court in a Title 11 or similar case within
the meaning of Section 368(a)(3)(A) of the Code;
14. The Company has made no extraordinary distributions within the
meaning of Temporary Federal Treasury Regulation Section 1.368-1T(e) with
respect to its stock, prior to and in connection with the Merger;
15. The Company has not redeemed and no "RELATED PERSON" with respect to
the Company, as such term is defined by Treasury Regulation Section
1.368-1(e)(3), (without regard to Section 1.368-1(e)(3)(i)(a)), has purchased
any Company Capital Stock prior to and in connection with the Merger;
16. Except with respect to (i) payments of cash to stockholders of the
Company in lieu of fractional shares of Parent Common Stock, and (ii) payments
of cash to stockholders of the Company perfecting appraisal rights, one hundred
percent (100%) of the shares of stock of the Company outstanding immediately
prior to the Merger will be exchanged solely for shares of Parent Common Stock.
Thus, except as set forth in the preceding sentence, the Company intends that no
consideration be paid or received (directly or indirectly, actually or
constructively) for shares of stock of the Company other than shares of Parent
Common Stock;
17. The fair market value of the shares of Parent Common Stock received
by each stockholder of the Company will be approximately equal to the fair
market value of the shares of stock of the Company surrendered in exchange
therefor and the aggregate consideration received by stockholders of the Company
in exchange for their shares of stock of the Company will be
3.
approximately equal to the fair market value of all of the outstanding shares
of stock of the Company immediately prior to the Merger;
18. Each of Merger Sub, Parent, the Company and each stockholder of the
Company will each pay separately his, her or its own expenses relating to the
Merger;
19. There is no intercorporate indebtedness existing between Parent and
the Company or between Merger Sub and the Company that was issued, acquired, or
will be settled at a discount as a result of the Merger; Parent will assume no
liabilities of the Company or any stockholder of the Company in connection with
the Merger;
20. The terms of the Merger Agreement and the other agreements relating
thereto are the product of arm's length negotiations;
21. None of the compensation received by any stockholder-employees of
the Company will be separate consideration for, or allocable to, any of their
shares of stock of the Company; none of the shares of Parent Common Stock
received by any stockholder-employees of the Company will be separate
consideration for, or allocable to, any employment agreement or any covenants
not to compete; and the compensation paid to any stockholder-employees of the
Company will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for similar services;
22. With respect to each instance, if any, in which shares of stock of
the Company have been purchased by a stockholder of Parent (a "Stockholder")
during the Pre-Merger period (a "Stock Purchase"): (i) to the best knowledge of
the Company, (A) the Stock Purchase was made by such Stockholder on its own
behalf, rather than as a representative, or for the benefit, of Parent, (B) the
Stock Purchase was entered into solely to satisfy the separate interests of such
Stockholder and the seller, and (C) the purchase price paid by such Stockholder
pursuant to the Stock Purchase was the product of arm's length negotiations; and
(ii) the Stock Purchase was not a formal or informal condition to consummation
of the Merger; and
23. The Company is authorized to make all of the representations set
forth herein.
The undersigned recognizes that (i) your opinions will be based on the
representations set forth herein and on the statements contained in the
Agreements and documents related thereto, and (ii) your opinions will be subject
to certain limitations and qualifications including that they may not be relied
upon if any such representations are not accurate in all material respects.
Notwithstanding anything herein to the contrary, the undersigned makes no
representations regarding any actions or conduct of the Company pursuant to
Parent's exercise of control over the Company after the Merger.
4.
The undersigned recognizes that your opinions will not address any tax
consequences of the Merger or any action taken in connection therewith except as
expressly set forth in such opinions.
Very truly yours,
IXYS CORPORATION,
a Delaware corporation
By:________________________________
Title:_____________________________
5.
EXHIBIT G
REGISTRATION AND STOCKHOLDER RIGHTS AGREEMENT
THIS REGISTRATION AND STOCKHOLDER RIGHTS AGREEMENT (the "Agreement")
is made as of the _____ day of ____________________, 1998, by and between
Paradigm Technology, Inc., a Delaware corporation (the "Company"), and Asea
Brown Boveri A.G., a corporation formed under the laws of Germany and Asea Brown
Boveri, Inc., a Delaware corporation (collectively, the "Stockholder").
R E C I T A L S
WHEREAS, the Company, IXYS Corporation, a Delaware corporation
("IXYS") and Paradigm Enterprises, Inc., a Delaware corporation and wholly owned
subsidiary of the Company ("Merger Sub"), have entered into an Agreement and
Plan of Merger and Reorganization dated as of March 6, 1998 (the "Merger
Agreement"), pursuant to which Merger Sub will be merged with and into IXYS with
IXYS as the surviving corporation (the "Merger");
WHEREAS, pursuant to the terms of the Merger, the Stockholder's shares
of common stock of IXYS, par value $0.001 per share, will be exchanged for the
right to receive shares of the common stock of the Company, par value $0.01;
(the "Common Stock"); and
WHEREAS, in connection with the Merger and pursuant to the Merger
Agreement, the Company has agreed to provide the Stockholder with certain
registration rights as set forth herein.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
I. REGISTRATION RIGHTS. The Company covenants and agrees as follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
(c) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(d) The term "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(e) The term "Registrable Securities" means (i) all or any shares
of Common Stock received by the Stockholder in connection with the Merger (all
such Shares, the "Merger Shares"), (ii) any shares of Common Stock issued as a
dividend or distribution with respect to, or in exchange for, or in replacement
of, the Merger Shares, and (iii) any shares of Common Stock issuable upon the
conversion or exercise of any warrant or right.
(f) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 DEMAND REGISTRATION.
(a) If at any time after the date hereof, the Company shall
receive a written request from the Stockholder that the Company file a
registration statement under the Act covering the registration of at least
twenty five percent (25%) of the Registrable Securities then outstanding (or a
lesser percent if the anticipated aggregate offering price, net of underwriting
discounts and commissions, would exceed $5,000,000), then the Company shall:
(i) effect as soon as practicable, and in any event within
90 days after receipt of such request, the registration under the Act of
all Registrable Securities which the Stockholder request to be registered.
(b) If the Stockholder intends to distribute the Registrable
Securities covered by its request by means of an underwriting, it shall so
advise the Company as a part of its request made pursuant to subsection 1.2(a).
The underwriter or underwriters will be selected by the Stockholder and shall be
reasonably acceptable to the Company. The Stockholder (together with the Company
as provided in subsection 1.4(e)) shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting.
(c) The Company shall not be obligated to effect, or to take any
action to effect, any registration pursuant to this Section 1.2:
(i) if more than one registration has been effected pursuant
to this Section 1.2 in any preceding twelve (12) month period and such
registration has been declared or ordered effective, or more than two such
registrations have been declared or ordered effective overall;
(ii) During the period starting with the date thirty (30)
days prior to the Company's good faith estimate of the date of filing of,
and ending on a date
2
ninety (90) days after the effective date of, a registration subject to
Section 1.3 hereof; provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;
(iii) If the Stockholder proposes to dispose of shares of
Registrable Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 1.10 below; or
(iv) if the Company shall furnish to the Stockholder a
certificate signed by the Chairman of the Board stating that in the good
faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such
registration statement to be effected at such time, in which event the
Company shall have the right to defer such filing for a period of not more
than ninety (90) days after receipt of the request of the Stockholder;
provided that such right to delay a request, whether pursuant to this
Section 1.2 or Section 1.10, shall be exercised by the Company not more
than once in any twelve (12) month period.
1.3 COMPANY REGISTRATION.
(a) If (but without any obligation to do so) the Company proposes
to register (including for this purpose a registration effected by the Company
for stockholders other than the Stockholder) any of its stock or other
securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company employee benefit plan, a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities or a registration in which the
only Common Stock being registered is Common Stock issuable upon conversion of
debt securities which are also being registered), the Company shall, at such
time, promptly give the Stockholder written notice of such registration. Upon
the written request of the Stockholder given within twenty (20) days after
mailing of such notice by the Company in accordance with Section 3.5, the
Company shall, subject to the provisions of Section 1.7, cause to be registered
under the Act all of the Registrable Securities that the Stockholder has
requested to be registered.
(b) The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 1.3 prior to the effectiveness
of such registration whether or not the Stockholder has elected to include
securities in such registration. The Registration Expenses of such withdrawn
registration shall be borne by the Company in accordance with Section 1.6
hereof.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
3
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its reasonable best efforts to
cause such registration statement to become effective, and, upon the request of
the Stockholder, keep such registration statement effective for a period of up
to one hundred twenty (120) days or until the distribution contemplated in the
Registration Statement has been completed; provided, however, that such 120-day
period shall be extended for a period of time equal to the period the
Stockholder refrains from selling any securities included in such registration
at the request of an underwriter of Common Stock (or other securities) of the
Company.
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement; provided that, except as to a registration statement and
prospectus pursuant to Section 1.3 hereof, the Company shall not file any
amendment or supplement to such registration statement or prospectus to which
the Stockholder shall have reasonably objected on the grounds that such
amendment or supplement does not comply in all material respects with the
requirements of the Act, having been furnished with a copy thereof at the
earliest practicable date.
(c) Furnish to the Stockholder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as the Stockholder may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by the Stockholder.
(d) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Stockholder; provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general Consent to service of process in any such states or jurisdictions,
unless the Company is already subject to service in such jurisdiction and except
as may be required by the Act.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. The Stockholder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify the Stockholder at any time when a prospectus relating
to the registration of Registrable Securities is required to be delivered under
the Act of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.
4
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable securities, in each case not later than the effective date of such
registration.
(i) Use its reasonable best efforts to furnish, at the request of
the Stockholder, on the date that such Registrable Securities are delivered to
the underwriters for sale in connection with a registration pursuant to this
Section 1, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Stockholder and (ii) a letter dated such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and, if permitted by applicable accounting standards, to the Stockholder
(or if delivery of such letter is not permitted by applicable accounting
standards, deliver to the Stockholder a copy of such letter addressed to the
underwriters, if any).
1.5 EXPENSES OF DEMAND REGISTRATION AND S-3 REGISTRATION. All
expenses, other than underwriting discounts and commissions, incurred in
connection with the first registration pursuant to this Agreement (other than
pursuant to Section 1.3) and related filings or qualifications, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, and the reasonable fees and disbursements of counsel for
the Company (collectively, the "Registration Expenses") shall be borne as
follows: (i) the Company shall pay the lesser of (A) fifty percent (50%) of the
Registration Expenses or (B) $100,000, and (ii) the Stockholder shall pay the
remaining Registration Expenses. The Stockholder shall pay (i) one hundred
percent (100%) of all Registration Expenses incurred following the first such
registration, (ii) the fees and disbursements of any counsel retained by it in
connection with any such registrations, and (iii) any underwriting discounts or
commissions payable with respect to any Registrable Securities sold by it.
1.6 EXPENSES OF COMPANY REGISTRATION. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for the Stockholder (which right may be assigned as
provided in Section 1.11), including (without limitation) all registration,
filing, and qualification fees, printers and accounting fees relating or
apportionable thereto but excluding underwriting discounts and commissions
relating to Registrable Securities. The fees and disbursements of any counsel
retained by the Stockholder in connection with any such registrations shall be
paid by the Stockholder.
5
1.7 UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Stockholder's
securities in such underwriting unless the Stockholder accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it (or by other persons entitled to select the underwriters), and then only in
such quantity as the underwriters determine in their sole discretion will not,
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders) but, except with respect to any one offering
pursuant to Section 1.3 following the first such offering pursuant to Section
1.3 to occur after the closing date of the Merger, in no event shall the amount
of securities of the Stockholder included in the offering be reduced below
twenty five percent (25%) of the total amount of securities included in such
offering. For purposes of the preceding parenthetical concerning apportionment,
for any selling stockholder which is a Stockholder of Registrable Securities and
which is a partnership or corporation, the partners, retired partners and
stockholders of such Stockholder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single "selling stockholder", and any
pro-rata reduction with respect to such "selling stockholder" shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "selling stockholder", as defined in
this sentence.
1.8 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless the Stockholder, any underwriter (as defined in the Act) for
the Stockholder and each person, if any, who controls the Stockholder or
underwriter within the meaning of the Act or the 1934 Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Act, or the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act,
6
any state securities law or any rule or regulation promulgated under the Act or
the 1934 Act or any state securities law; and the Company will reimburse the
Stockholder, underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this subsection 1.8(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be liable in
any such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Stockholder, underwriter or
controlling person.
(b) To the extent permitted by law, each Stockholder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
selling stockholder in such registration statement and any controlling person of
any such underwriter or other selling stockholder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, or the 1934 Act or other federal or
state-law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by such Stockholder
expressly for use in connection with such registration; and such Stockholder
will reimburse, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this subsection 1.8(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.8(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Stockholder (which consent shall not be unreasonably
withheld); provided, that, in no event shall any indemnity under this subsection
1.8(b) exceed the gross proceeds from the offering received by the Stockholder.
(c) Promptly after receipt by an indemnified party under this
Section 1.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.8, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party
7
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.8, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.8.
(d) If the indemnification provided for in this Section 1.8 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall, to the extent permitted by law, contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and of
the indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and the Stockholder under this
Section 1.8 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and the termination
of this Agreement.
1.9 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to
making available to the Stockholder the benefits of Rule 145 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Stockholder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times;
(b) take such action as is necessary to enable the Stockholder to
utilize Form S-3 for the sale of its Registrable Securities;
8
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to the Stockholder, so long as the Stockholder owns
any Registrable Securities, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of SEC Rule
144, the Act and the 1934 Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time when it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing the
Stockholder of any rule or regulation of the SEC which permits the selling of
any such securities without registration or pursuant to such form.
1.10 FORM S-3 REGISTRATION. In case the Company shall receive from the
Stockholder a written request that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to all or a part of the
Registrable Securities owned by the Stockholder, the Company will:
(a) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of the Stockholder's
Registrable Securities as are specified in such request; provided, however, that
the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this section 1.10: (A) if Form S-3 is
not available for such offering by the Stockholder; (B) if the Stockholder
proposes to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public (net of any underwriters' discounts or
commissions) of less than $500,000; (C) if the Company has, within the twelve
(12) month period preceding the date of such request, already effected two (2)
registrations on Form S-3 for the Stockholder pursuant to this Section 1.10 or
has already effected four (4) registrations under this Agreement for the
Stockholder (exclusive of registrations pursuant to Section 1.3), (D) if the
Company shall furnish to the Stockholder a certificate signed by the Chairman of
the Board of Directors of the Company stating that in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to the
Company and its stockholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement for a period of not more than ninety (90)
days after receipt of the request of the Stockholder under this Section 1.10;
provided, however, that such right to delay a request, whether pursuant to this
Section 1.10 or Section 1.2, shall be exercised by the Company not more than
once in any twelve (12) month period, or (D) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance.
(b) Subject to the foregoing, (i) the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Stockholder; and (ii) if requested by the
Stockholder, in a transaction constituting (1) a private placement under Section
3(b)
9
or 4(2) of the Act, or (2) under Rule 144A under the Act, the Company shall
undertake to register such shares after the conclusion of such placement to
permit such shares freely to be tradeable by the purchasers thereof.
(c) The Company shall use its reasonable best efforts to keep any
such registration described in Section 1.10(b) above , as the case may be,
continuously effective for the period beginning on the date on which such
registration is declared effective and ending on the first to occur of (A) one
hundred twenty (120) days thereafter and (B) on the first date that all such
Registrable Securities have been sold. During the period during which any such
registration is effective, the Company shall supplement or make amendments to
such registration, if required by the Act or if reasonably requested by the
Stockholder or an underwriter of Registrable Securities, including to reflect
any specific plan of distribution or method of sale, and shall use its
reasonable best efforts to have such supplements and amendments declared
effective as soon as practicable after filing.
(d) Registrations effected pursuant to this Section 1.10 shall
not be counted as registrations effected pursuant to Sections 1.2 or 1.3 herein.
1.11 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by the Stockholder to one or
more transferees or assignees of such securities who hold, pursuant to such
assignment(s), a number of Registrable Securities constituting in excess of five
percent (5%) of the outstanding shares of the Common Stock of the Company,
provided: (a) the Company is, within ten (10) days after any such transfer,
furnished with written notice of the name and address of such transferees or
assignees and the securities with respect to which such registration rights are
being assigned; (b) such transferees or assignees agrees in writing to be bound
by and subject to the terms and conditions of this Agreement, including without
limitation the provisions of Section 1.13 below; and (c) such assignment shall
be effective only if immediately following such transfer the further disposition
of such securities by the transferees or assignees is restricted under the Act.
In the event of any assignment by the Stockholder pursuant to this Section 1.11,
any right of the Stockholder hereunder may only be exercised by written
instrument executed by the holders of at least thirty percent (30%) of the
Registrable Securities then outstanding (the "Written Instrument") and the
Company may rely on the Written Instrument in effecting such right or rights to
register Registrable Securities pursuant to Section 1. Upon any proper
assignment of registration rights in accordance with this Section 1.11, any
reduction (pursuant to Section 1.7) in the participation among holders of
Registrable Securities in any registration subject to Section 1.7 shall, unless
the Stockholder and such other holders of Registrable Securities notify the
Company of their agreement otherwise, be allocated among such holders pro rata
in accordance with their respective holdings of Registrable Securities.
1.12 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Stockholder, enter into any agreement with any stockholder or prospective
stockholder of any
10
securities of the Company which would allow such stockholder or prospective
stockholder (a) to include such securities in any registration filed under
Section 1.2 hereof, unless under the terms of such agreement, such stockholder
or prospective stockholder may include such securities in any such registration
only to the extent that the inclusion of his securities will not reduce the
amount of the Registrable Securities of the Stockholder which is included or (b)
to make a demand registration which could result in such registration statement
being declared effective within one hundred twenty (120) days of the effective
date of any registration effected pursuant to Section 1.2.
1.13 TERMINATION OF REGISTRATION RIGHTS. The rights to registration
set forth in this Section 1 shall terminate as to any particular Registrable
Securities when (i) such Registrable Securities shall have been effectively
registered under the Act and sold by the Stockholder in accordance with such
registration, (ii) such Registrable Securities shall have been sold in
compliance with Rule 145 promulgated under the Act, or (iii) the date which is
four years after the earliest to occur of, after the Closing date of the Merger,
the date of initial listing of the Common Stock of the Company on (1) the Nasdaq
National Market System, (2) the American Stock Exchange, or (3) the New York
Stock Exchange.
1.14 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 1.2, 1.3 or 1.10 that the
Stockholder shall furnish to the Company such information regarding itself, the
Registrable Securities held by the Stockholder and the intended method of
disposition of such securities as shall be required to effect the registration
of the Stockholder's Registrable Securities.
II. COVENANTS.
2.1 BOARD OF DIRECTOR MEETINGS. As long as the Stockholder owns not
less than ten percent (10%) of the total number of outstanding shares of Common
Stock of the Company, (A) the Company shall, to the extent that the Stockholder
does not then have a representative as a member of the Board of Directors of the
Company, invite a representative of the Stockholder to attend all meetings of
its Board of Directors in a nonvoting observer capacity and, in this respect,
shall give such representative copies of all notices, minutes, consents, and
other materials that it provides to its directors at the same time as provided
to its directors; provided, however, that such representative and the
Stockholder shall agree to hold in confidence and trust and to act in a
fiduciary manner for the benefit of the stockholders of the Company with respect
to all information so provided, and (B) upon receipt of the agenda for a meeting
of the Board of Directors of the Company or at any other time, the Stockholder
may submit to the Company for discussion and consideration at the next
subsequent meeting of the Board of Directors such matters as the Stockholder in
its sole discretion shall determine. Notwithstanding the foregoing, the Company
may exclude the Stockholder or its representatives from any deliberation of the
Board of Directors if the Chairman of the Board of Directors delivers, prior to
the date of such deliberation, a letter to the Stockholder stating that legal
counsel to the Company
11
has advised the Board of Directors that such exclusion is necessary to preserve
attorney client privilege.
2.2 INSPECTION AND COOPERATION. As long as the Stockholder owns not
less than ten percent (10%) of the total number of outstanding shares of Common
Stock of the Company, the Company shall permit the Stockholder and its
representatives (including but not limited to accounting, legal and financial
advisors) to visit and inspect the Company's properties, to examine its books of
account and records and to discuss the Company's affairs, finances and accounts
with its officers, all at such reasonable times as may be requested by the
Stockholder for the purpose of evaluating its investment in the Company. In
addition, in connection with any attempt by the Stockholder to sell some or all
of the shares of Common Stock it owns in the Company to a potential purchaser (a
"Potential Purchaser"), in a private transaction, the Company shall permit the
Potential Purchaser and its representatives (including but not limited to
accounting, legal and financial advisors) to visit and inspect the Company's
properties, to examine its books of account and records and to discuss the
Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Stockholder and Potential Purchaser,
provided that such Potential Purchaser enters into a confidentiality agreement
containing customary terms and conditions for an agreement of that type;
provided, that the Company shall not be obligated under this Section 2.2 with
respect to a direct competitor of the Company.
2.3 CONFIDENTIALITY. The Stockholder agrees to use, and to use its
reasonable best efforts to cause its employees and its authorized
representatives to use the same degree of care as the Stockholder uses to
protect its own confidential information and to keep confidential any
information furnished to it which the Company reasonably identifies as being
confidential or proprietary (so long as such information is not in the public
domain). The Stockholder further agrees not to use, and to cause its
representatives and employees not to use any such confidential information for
any purpose other than to evaluate the Stockholder's investment in the Company.
2.4 NO ASSIGNMENT. The rights of the Stockholder under Sections 2.1
and 2.2 may not be assigned by the Stockholder without the consent of the
Company.
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Stockholder as follows:
3.1 REQUISITE CONSENTS; NONVIOLATION.
(a) The Company has obtained all consents, approvals or
authorizations of any third party that would be required as a result of the
execution and delivery of this Agreement by the Company and the consummation of
the transactions contemplated by this Agreement (the "Obtained Consents").
12
(b) The Company further represents and warrants that the
execution and delivery of this Agreement by the Company and the consummation of
the transactions contemplated by this Agreement will not (a) require the
consent, approval or authorization of any third party, other than the Obtained
Consents, or (b) constitute a default under, violate or conflict with or permit
any third party to modify, terminate, accelerate or rescind any term or
provision of, any contract, agreement, arrangement or understanding to which the
Company is a party or by which the Company is bound or to which the Company is
subject.
3.2 AUTHORITY FOR AGREEMENT. All corporate and other proceedings
required to be taken by or on behalf of the Company to authorize the Company to
enter into and carry out this Agreement have been duly and properly taken. This
Agreement has been duly executed and delivered by the Company and is valid and
binding upon the Company, subject as to enforceability, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general principles of equity.
IV. MISCELLANEOUS.
4.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
4.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California.
4.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
4.5 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given (a) upon personal delivery to the party to be notified, (b)
upon deposit with the United States Post Office, by registered or certified
mail, postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties, (c) upon being sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not,
13
then on the next business day, or (d) one day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt.
4.6 EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
4.7 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the Stockholder. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon the
Stockholder, each person who becomes a transferee or assignee of the Stockholder
after such amendment or waiver, and the Company.
4.8 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
4.9 AGGREGATION OF STOCK. All shares of Registrable Securities held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
4.10 ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement (including
the Exhibits hereto, if any) constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
14
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PARADIGM TECHNOLOGY, INC.
By: ____________________________________
Title: ____________________________________
ASEA BROWN BOVERI A.G.
By: ____________________________________
Title: ____________________________________
ASEA BROWN BOVERI, INC.
By: ____________________________________
Title: ____________________________________
EXHIBIT H
DIRECTORS OF PARENT
Arnold Agbayani
Rolf Karg
James Kochman
Nathan Zommer
EXHIBIT I
FORM OF OPINION OF COOLEY GODWARD LLP
[ALL CAPITALIZED TERMS SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN
THE AGREEMENT]
[THE BELOW OPINIONS SHALL BE SUBJECT TO CUSTOMARY QUALIFICATIONS]
1. The Company has been duly incorporated and is a validly existing corporation
in good standing under the laws of the State of Delaware and is qualified as a
foreign corporation to do business in the State of California.
2. The Company has the requisite corporate power to own its property and assets
and to conduct its business as it is currently being conducted and to consummate
the Merger pursuant to the terms of the Agreement.
3. The execution and delivery of the Agreement by the Company and the
consummation of the Merger pursuant thereto (i) do not violate any provision of
the Company's Certificate of Incorporation or Bylaws and (ii) do not violate or
contravene any provision of any law, rule or regulation applicable to the
Company in connection with transactions similar to that contemplated by the
Agreement.
4. The Agreement has been duly and validly authorized, executed and delivered by
the Company and constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws affecting creditors' rights, and
subject to general equity principles and to limitations on availability of
equitable relief, including specific performance. (Does not extend to Section
9.3).
5. All corporate action, including approval by the Company's Board of Directors
and stockholders, required to be taken on the part of the Company to authorize
the Agreement and consummate the Merger has been taken.
6. To our knowledge, all consents, approvals, authorizations, or orders of, and
filings, registrations, and qualifications with any regulatory authority or
governmental body in the United States required for the consummation by the
Company of the transactions contemplated by the Agreement, have been made or
obtained, except for the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware
EXHIBIT J
FORM OF OPINION OF PILLSBURY MADISON & SUTRO LLP
_________ __, 1998
IXYS Corporation
3540 Bassett Street
Santa Clara, CA 95054
Attn: Dr. Nathan Zommer
Re: Agreement and Plan of Merger and Reorganization
Ladies and Gentlemen:
We have acted as counsel to Paradigm Technology, Inc., a Delaware
corporation (the "Parent") and Paradigm Enterprises, Inc., a Delaware
corporation (the "Merger Sub") in connection with the Agreement and Plan of
Merger and Reorganization (the "Merger Agreement"), dated as of March __, 1998,
by and among the Parent, Merger Sub and IXYS Corporation (the "Company"). This
opinion is provided to you in satisfaction of the requirement set forth in
Section 8.8(d) of the Merger Agreement. Terms not otherwise defined herein have
the meanings given to them in the Merger Agreement.
We have served as counsel to the Parent since 1994, although our
representation has been limited to those matters referred to us by the Parent.
We have represented Merger Sub since its formation. We have also acted as
counsel to Paradigm and Merger Sub with respect to the preparation, execution
and delivery of the Merger Agreement, and are familiar with the proceedings
taken by the Parent and Merger Sub in connection therewith.
In connection with this opinion, we have examined executed copies of the
Merger Agreement (including exhibits and schedules thereto), records of
proceedings of the directors and stockholders of the Parent and Merger Sub, the
Certificate of Incorporation and Bylaws of the Parent and Merger Sub and such
other documents and certificates of public officials and representatives of the
Parent and Merger Sub as we have deemed necessary as a basis for the opinions
expressed herein. As to questions of fact material to such opinions, we have,
when relevant facts were not independently established, relied solely upon
certificates, statements and representations of the officers of the Parent and
Merger Sub.
IXYS Corporation
______________ ___, 1998
Page 2
Based upon and subject to the qualifications set forth herein, it is our
opinion that:
1. The Parent is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, and has full requisite
corporate power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties. The Parent is
qualified to transact business in the State of California.
2. The Merger Sub is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, and has full
requisite corporate power and authority to conduct its business as and to the
extent now conducted and to own, use and lease its assets and properties.
3. The Parent has full corporate power and authority to enter into the
Merger Agreement, to perform its obligations thereunder and to consummate the
transactions contemplated thereby. The execution, delivery and performance of
the Merger Agreement by Parent, and the consummation by the Parent of the
transactions contemplated thereby, have been duly and validly approved by the
Board of Directors of the Parent and by the stockholders of the Parent. The
Merger Agreement has been duly and validly authorized, executed and delivered by
the Parent and constitutes the legal, valid and binding obligation of the Parent
enforceable against the Parent in accordance with its terms.
4. The Merger Sub has full corporate power and authority to enter into
the Merger Agreement, to perform its obligations thereunder and to consummate
the transactions contemplated thereby. The execution, delivery and performance
of the Merger Agreement by the Merger Sub, and the consummation by the Merger
Sub of the transactions contemplated thereby, have been duly and validly
approved by the Board of Directors of the Merger Sub and by the stockholder of
the Merger Sub. The Merger Agreement has been duly and validly authorized,
executed and delivered by the Merger Sub and constitutes the legal, valid and
binding obligation of the Merger Sub enforceable against the Merger Sub in
accordance with its terms.
5. The execution, delivery and performance of the Merger Agreement and
the transactions contemplated thereby by the Parent do not violate any provision
of the Restated Certificate of Incorporation, as amended, to date, or By-Laws,
as amended to date, of the Parent and do not violate or contravene any
governmental statute, rule or regulation applicable to the Parent.
6. The execution, delivery and performance of the Merger Agreement and
the transactions contemplated thereby by the Merger Sub do not violate any
provision of the Certificate of Incorporation, as amended to date, or By-Laws,
as amended to date, of the Merger Sub and do not violate or contravene any
governmental statute, rule or regulation applicable to the Merger Sub.
IXYS Corporation
______________ ___, 1998
Page 3
7. To our knowledge, there is no consent, approval, authorization,
order, registration, qualification or filing of or with any court or any
regulatory authority or other governmental body (either foreign or domestic)
required by the Parent or Merger Sub or with respect to their assets or
properties or otherwise for the consummation of the transactions contemplated by
the Merger Agreement that has not been obtained or waived, except for (i) such
consents, approvals, authorizations, registration or qualifications as may be
required under state securities or Blue Sky laws in connection with the offer
and sale of the Parent's Common Stock pursuant to the Merger Agreement, which
are not required to be made until after the Effective Time and (ii) acceptance
for filing of the Certificate of Merger by the Secretary of State of Delaware.
8. To our knowledge, other than as set forth in the Merger Agreement
(including the Parent Disclosure Schedule), there are no actions, suits,
arbitrations or proceedings pending or overtly threatened against the Parent or
any of its assets or properties which seek to prohibit, restrain or enjoin the
transactions contemplated by the Merger Agreement and the Certificate of Merger.
9. The Form S-4 Registration Statement has become effective under the
Securities Act, and to our knowledge, no stop order proceeding with respect
thereto has been instituted or threatened by the Securities and Exchange
Commission.
10. The shares of the Parent Common Stock to be issued in connection
with the Merger will be, upon filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and upon issuance pursuant to the
terms of the Merger Agreement, be duly authorized, validly issued, fully paid
and nonassessable and free of preemptive or similar rights contained in the
Certificate of Incorporation or By-Laws of the Parent. Assuming the Company
Options to be assumed by the Parent in the Merger were valid and binding
obligations of the Company prior to the assumption thereof by the Parent, such
Company Options will represent valid and binding obligations of the Parent when
assumed by the Parent in accordance with the terms of the Merger Agreement. The
shares of the Parent Common Stock issuable upon exercise of the Company Options,
when issued in accordance with the respective terms of such Company Options,
will be duly authorized, validly issued, fully paid and nonassessable.
The foregoing opinions are subject to such matters as are set forth in
the Merger Agreement and the following qualifications:
Our opinions in paragraphs 3, 4 and 10 above are subject to and limited
by: (i) the effect of bankruptcy, insolvency, reorganization, receivership,
conservatorship, arrangement, fraudulent transfer, moratorium or other similar
laws affecting or relating to the rights of creditors generally; (ii) the rules
governing the availability of specific performance, injunctive relief or other
equitable remedies and general principles of equity, regardless of whether
considered in a proceeding in equity or at law; (iii) the effect of applicable
court decisions invoking statutes or principles of equity, which have held that
certain covenants and provisions of agreements are unenforceable where the
breach of such covenants or provisions imposes restrictions or
IXYS Corporation
______________ ___, 1998
Page 4
burdens upon an obligor, and it cannot be demonstrated that the enforcement of
such restrictions or burdens is necessary for the protection of the creditors,
or which have held that the creditor's enforcement of such covenants or
provisions under the circumstances would violate the creditor's covenants of
good faith and fair dealing implied under law; (iv) limitations under federal or
state securities laws or public policy relating thereto with respect to rights
to indemnification or contribution; and (v) the effect of statutes and rules of
law which cannot be waived prospectively by an obligor. We express no opinion
regarding Section 9.3 of the Merger Agreement.
We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as photostatic or telecopied originals, the
legal capacity of all natural persons, and, as to documents executed by entities
other than the Parent or Merger Sub, that each such entity has complied with any
applicable requirement to file returns and pay taxes under applicable California
law and had the power to enter into and perform its obligations thereunder, and
that such documents have been duly authorized, executed and delivered by, and
are binding upon and enforceable against, such entities.
We assume that you know of no agreements, understandings or negotiations
between the parties not set forth in the Merger Agreement that would modify the
terms or rights and obligations of the parties thereunder.
This opinion is limited in all respects to matters governed by the laws
of the State of California, the General Corporation Law, as amended, of the
State of Delaware and the laws of the United States, and we express no opinion
concerning the laws or regulations of any other jurisdiction or jurisdictions.
We express no opinion as to the effect on the transaction of the antitrust laws
of California, Delaware or the United States.
Whenever a statement herein is qualified by "to our knowledge," "we are
not aware" or similar phrase, it is limited to specific matters referred to us
by the Parent or Merger Sub, and indicates that in the course of our
representation of the Parent or Merger Sub no information that would give us
current actual knowledge of the inaccuracy of such statement has come to the
attention of the attorneys in this firm who have rendered legal services in
connection with this transaction. We have not made any special or independent
investigation to determine the accuracy of such statement, except as expressly
described herein.
This opinion is being delivered to you by us as counsel to the Parent
and Merger Sub and may not be delivered to or relied upon by any other person
without our express written approval.
Very truly yours,
E-05247