--------------------------------------------------
AGREEMENT AND PLAN OF MERGER
by and among
APPLIED MATERIALS, INC.,
ORION CORP. I,
and
OPAL, INC.
dated as of
November 24, 1996
--------------------------------------------------
Index of Defined Terms
----------------------
Defined Term Section No.
- ------------ -----------
Agreement.............................................. Recitals
Acquisition Proposal................................... 5.4
Appointment Date....................................... 5.1
Balance Sheet.......................................... 3.10(a)
Benefit Plans.......................................... 3.9(a)
By-laws................................................ 1.4
Certificate of Incorporation........................... 1.4
Certificates........................................... 2.2(b)
Chief Scientist........................................ 3.10(p)
Closing................................................ 1.6
Closing Date........................................... 1.6
Code................................................... 3.9(a)
Company................................................ Recitals
Company Agreements..................................... 3.4
Company Disclosure Schedule............................ 3.0
Company Option......................................... 2.4(b)
Company SEC Documents.................................. 3.5
Confidentiality Agreement.............................. 5.2
Copyrights............................................. 3.12(l)
DGCL................................................... 1.2(a)
Dissenting Stockholders................................ 2.1(c)
D&O Insurance.......................................... 5.9(b)
Effective Time......................................... 1.5
Encumbrances........................................... 3.2(b)
ERISA.................................................. 3.9(a)
ERISA Affiliate........................................ 3.9(a)
Exchange Act........................................... 1.1(a)
Financial Statements................................... 3.5
fully diluted basis.................................... 1.1(a)
GAAP................................................... 3.5
Governmental Entity.................................... 3.4
HSR Act................................................ 3.4
ICT.................................................... 3.15
ICT Agreements......................................... 3.15
Indemnified Party...................................... 5.9(a)
Independent Directors.................................. 1.3
Intellectual Property.................................. 3.12(l)
Licenses............................................... 3.12(l)
Mask Works............................................. 3.12(l)
Merger................................................. 1.4
Merger Consideration................................... 2.1(c)
Minimum Condition...................................... 1.1(a)
Offer.................................................. 1.1(a)
Offer Documents........................................ 1.1(b)
Offer Price............................................ 1.1(a)
i
Defined Term Section No.
- ------------ -----------
Offer to Purchase...................................... 1.1(a)
Option Exchange Ratio.................................. 2.4(a)
Option Plan............................................ 2.4(a)
Parent................................................. Recitals
Parent Common Stock.................................... 2.4(a)
Parent Option.......................................... 2.4(a)
Parent Option Plan..................................... 2.4(a)
Patents................................................ 3.12(l)
Paying Agent........................................... 2.2(a)
Preferred Stock........................................ 3.2(a)
Proxy Statement........................................ 1.8(a)
Purchaser.............................................. Recitals
Purchaser Common Stock................................. 2.1
Schedule 14D-1......................................... 1.1(b)
Schedule 14D-9......................................... 1.2(b)
SEC.................................................... 1.1(b)
Secretary of State..................................... 1.5
Securities Act......................................... 3.5
Service................................................ 3.9(g)
Shares................................................. 1.1(a)
Special Meeting........................................ 1.8(a)
Stockholder Agreements................................. Recitals
Subsidiary............................................. 3.1
Superior Proposal...................................... 5.4(a)
Surviving Corporation.................................. 1.4
Tax.................................................... 3.10(r)
Taxes.................................................. 3.10(r)
Tax Return............................................. 3.10(r)
Termination Fee........................................ 8.1(b)
Trademarks............................................. 3.12(l)
Transactions........................................... 1.2(a)
Trustee................................................ 2.4(a)
Unvested Company Option................................ 2.4(a)
Vested Company Option.................................. 2.4(b)
Voting Debt............................................ 3.2(a)
1995 Plan.............................................. 2.4(c)
1995 Premium........................................... 5.9(b)
ii
TABLE OF CONTENTS
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Page
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ARTICLE I
THE OFFER AND MERGER....................................................... 1
Section 1.1 The Offer........................................................................ 1
Section 1.2 Company Actions.................................................................. 4
Section 1.3 Directors........................................................................ 7
Section 1.4 The Merger....................................................................... 8
Section 1.5 Effective Time................................................................... 9
Section 1.6 Closing.......................................................................... 9
Section 1.7 Directors and Officers of the Surviving Corporation.............................. 9
Section 1.8 Stockholders' Meeting............................................................ 10
Section 1.9 Merger Without Meeting of Stockholders........................................... 11
ARTICLE II
CONVERSION OF SECURITIES.................................................... 11
Section 2.1 Conversion of Capital Stock...................................................... 11
Section 2.2 Exchange of Certificates......................................................... 12
Section 2.3 Dissenters' Rights............................................................... 14
Section 2.4 Company Plans.................................................................... 14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................... 17
Section 3.1 Organization..................................................................... 18
Section 3.2 Capitalization................................................................... 18
Section 3.3 Authorization; Validity of Agreement; Company Action............................. 20
Section 3.4 Consents and Approvals; No Violations............................................ 20
Section 3.5 SEC Reports and Financial Statements............................................. 21
Section 3.6 Absence of Certain Changes....................................................... 22
Section 3.7 No Undisclosed Liabilities....................................................... 23
Section 3.8 Litigation....................................................................... 23
Section 3.9 Employee Benefit Plans; ERISA.................................................... 23
Section 3.10 Tax Matters; Government Benefits................................................. 26
Section 3.11 Title and Condition of Properties............................................... 31
Section 3.12 Intellectual Property........................................................... 32
Section 3.13 Employment Matters.............................................................. 37
Section 3.14 Compliance with Laws............................................................ 37
Section 3.15 Contracts....................................................................... 37
Section 3.16 Potential Conflicts of Interest................................................. 38
Section 3.17 Vote Required................................................................... 39
Section 3.18 Suppliers and Customers......................................................... 39
Section 3.19 Information in Proxy Statement.................................................. 40
Section 3.20 Opinion of Financial Advisor.................................................... 40
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Page
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER................................................. 40
Section 4.1 Organization..................................................................... 40
Section 4.2 Authorization; Validity of Agreement; Necessary Action........................... 41
Section 4.3 Consents and Approvals; No Violations............................................ 41
Section 4.4 Information in Proxy Statement................................................... 42
Section 4.5 Financing........................................................................ 42
Section 4.6 Options.......................................................................... 43
Section 4.7 Company Shares................................................................... 43
ARTICLE V
COVENANTS........................................................... 43
Section 5.1 Interim Operations of the Company................................................ 43
Section 5.2 Access; Confidentiality.......................................................... 46
Section 5.3 Consents and Approvals........................................................... 47
Section 5.4 No Solicitation.................................................................. 47
Section 5.5 Brokers or Finders............................................................... 50
Section 5.6 Additional Agreements............................................................ 50
Section 5.7 Publicity........................................................................ 51
Section 5.8 Notification of Certain Matters.................................................. 51
Section 5.9 Directors' and Officers' Insurance and Indemnification........................... 51
Section 5.10 Purchaser Compliance............................................................. 53
Section 5.11 Actions of Parent and the Purchaser.............................................. 53
Section 5.12 ICT Action....................................................................... 53
ARTICLE VI
CONDITIONS.......................................................... 53
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger....................... 53
Section 6.2. Condition to Parent's and the Purchaser's Obligations to Effect the Merger....... 54
ARTICLE VII
TERMINATION.......................................................... 55
Section 7.1 Termination...................................................................... 55
Section 7.2 Effect of Termination............................................................ 57
ARTICLE VIII
MISCELLANEOUS......................................................... 57
Section 8.1 Fees and Expenses................................................................ 57
Section 8.2 Amendment and Modification....................................................... 58
Section 8.3 Nonsurvival of Representations and Warranties.................................... 58
Section 8.4 Notices.......................................................................... 58
Section 8.5 Interpretation................................................................... 59
ii
Page
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Section 8.6 Counterparts..................................................................... 60
Section 8.7 Entire Agreement; No Third Party Beneficiaries................................... 60
Section 8.8 Severability..................................................................... 60
Section 8.9 Governing Law.................................................................... 60
Section 8.10 Assignment....................................................................... 60
Section 8.11 Transfer and Similar Taxes....................................................... 61
Certain Conditions of the Offer....................................................................Annex A
iii
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated as of November 24, 1996, by and among Applied Materials,
Inc., a Delaware corporation ("Parent"), Orion Corp. I, a Delaware corporation
and a wholly owned subsidiary of Parent (the "Purchaser"), and Opal, Inc., a
Delaware corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, the
Purchaser and the Company has approved, and deems it advisable and in the best
interests of its respective stockholders to consummate, the acquisition of the
Company by Parent upon the terms and subject to the conditions set forth
herein; and
WHEREAS, concurrently with the execution of this Agreement,
and as an inducement to Parent and the Purchaser to enter into this Agreement,
certain stockholders of the Company have each entered into a Stockholder
Agreement, dated as of the date hereof (collectively, the "Stockholder
Agreements"), among Parent, the Purchaser and the stockholder named therein
providing, among other things, that such stockholders will vote in favor of the
Merger and will grant a proxy to Parent for that purpose;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
(a) As promptly as practicable (but in no
event later than five business days after the public announcement of the
execution hereof), the Purchaser shall commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) a tender offer (the "Offer") for all of the outstanding shares of Common
Stock, par value $.01
per share (the "Shares"), of the Company at a price of $18.50 per Share, net to
the seller in cash (such price, or such other price per Share as may be paid in
the Offer, being referred to herein as the "Offer Price"), subject to there
being validly tendered and not withdrawn prior to the expiration of the Offer,
that number of Shares which represents at least a majority of the Shares
outstanding on a fully diluted basis (the "Minimum Condition") and to the other
conditions set forth in Annex A hereto, and shall consummate the Offer in
accordance with its terms ("fully diluted basis" means issued and outstanding
Shares and Shares subject to issuance under Vested Company Options (as defined
in Section 2.4(b)) and Shares subject to issuance upon exercise of outstanding
warrants, calls, subscriptions or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock
of the Company or securities convertible or exchangeable for such capital
stock, but shall not include Unvested Company Options). The obligations of the
Purchaser to accept for payment and to pay for any Shares validly tendered on
or prior to the expiration of the Offer and not withdrawn shall be subject only
to the Minimum Condition and the other conditions set forth in Annex A hereto.
The Offer shall be made by means of an offer to purchase (the "Offer to
Purchase") containing the terms set forth in this Agreement, the Minimum
Condition and the other conditions set forth in Annex A hereto. The Purchaser
shall not amend or waive the Minimum Condition and shall not decrease the Offer
Price or decrease the number of Shares sought, or amend any other condition of
the Offer in any manner adverse to the holders of the Shares (other than with
respect to insignificant changes or amendments, not including changes in the
form of consideration payable under the Offer, in any of the conditions in
Annex A, or in the expiration date of the Offer, and subject to the last
sentence of this Section 1.1(a)) without the written consent of the Company
(such consent to be authorized by the Board of Directors of the Company or a
duly authorized committee thereof); provided, however, that if on the initial
scheduled expiration date of the Offer which shall be 20 business days after
the date the Offer is commenced, all conditions to the Offer shall not have
been satisfied or waived, the Purchaser may, from time to time, in its sole
discretion, extend the expiration date. The Purchaser shall, on the terms and
subject to the prior satisfaction or waiver of the conditions of the
2
Offer, accept for payment and pay for Shares tendered as soon as it is legally
permitted to do so under applicable law; provided, however, that if,
immediately prior to the initial expiration date of the Offer (as it may be
extended), the Shares tendered and not withdrawn pursuant to the Offer equal
less than 90% of the outstanding Shares, the Purchaser may extend the Offer for
a period not to exceed thirty business days, notwithstanding that all
conditions to the Offer are satisfied as of such expiration date of the Offer,
provided that upon such extension Parent and the Purchaser shall be deemed to
have waived all of the conditions set forth in Annex A other than the Minimum
Condition; provided, however, that if at the initial expiration date for the
Offer, any or all of the conditions set forth in clauses (i), (iii), (iv), (v)
or (vi) of Annex A shall not have been satisfied or waived or, as a result of
any statute, rule, regulation, judgment, order or injunction having been
enacted, entered, enforced, promulgated or deemed applicable, pursuant to an
authoritative interpretation by or on behalf of a Governmental Entity, to the
Offer or the Merger, or any other action shall be taken by any Governmental
Entity, which shall not have become final and non-appealable, the conditions
set forth in clause (vii) paragraph (b) of Annex A shall not have been
satisfied or waived and at such time all of the other conditions to the
Purchaser's obligation to consummate the Offer have been satisfied or waived,
the Purchaser shall be obligated to extend the Offer for a period of up to ten
business days, which extension shall be repeated one time further if necessary;
provided, however, that the Purchaser may, in any such event, extend the
expiration date of the Offer beyond such ten day period in its sole discretion.
(b) As soon as practicable on the date
the Offer is commenced, Parent and the Purchaser shall file with the United
States Securities and Exchange Commission (the "SEC") a Tender Offer Statement
on Schedule 14D-1 with respect to the Offer (together with all amendments and
supplements thereto and including the exhibits thereto, the "Schedule 14D-1").
The Schedule 14D-1 will include, as exhibits, the Offer to Purchase and a form
of letter of transmittal and summary advertisement (collectively, together with
any amendments and supplements thereto, the "Offer Documents"). The Offer
Documents will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published, sent
3
or given to the Company's stockholders, shall not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by Parent or the Purchaser with respect to information
furnished by the Company to Parent or the Purchaser, in writing, expressly for
inclusion in the Offer Documents. The information supplied by the Company to
Parent or the Purchaser, in writing, expressly for inclusion in the Offer
Documents and by Parent or the Purchaser to the Company, in writing, expressly
for inclusion in the Schedule 14D-9 (as hereinafter defined) will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of Parent and the Purchaser will take all steps necessary to
cause the Offer Documents to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by applicable
federal securities laws. Each of Parent and the Purchaser, on the one hand, and
the Company, on the other hand, will promptly correct any information provided
by it for use in the Offer Documents if and to the extent that it shall have
become false or misleading in any material respect and the Purchaser will take
all steps necessary to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent required by applicable federal securities laws. The Company
and its counsel shall be given the opportunity to review the Schedule 14D-1
before it is filed with the SEC. In addition, Parent and the Purchaser will
provide the Company and its counsel in writing with any comments, whether
written or oral, Parent, the Purchaser or their counsel may receive from time
to time from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
Section 1.2 Company Actions.
(a) The Company hereby approves of and
consents to the Offer and represents that the Board of Directors, at a meeting
duly called and held, has (i) unanimously (with the abstention of Rafi Yizhar,
Israel
4
Niv, Dan Maydan and Zvi Lapidot) determined that each of the Agreement, the
Offer and the Merger (as defined in Section 1.4) are fair to and in the best
interests of the stockholders of the Company, (ii) approved this Agreement and
the Stockholder Agreements and the transactions contemplated hereby and
thereby, including the Offer and the Merger (collectively, the "Transactions"),
and such approval constitutes approval of the Offer, this Agreement, the
Stockholders Agreement and the transactions contemplated hereby and thereby,
including the Merger, for purposes of Section 203 of the Delaware General
Corporation Law, as amended (the "DGCL")), such that Section 203 of the DGCL
will not apply to the transactions contemplated by this Agreement or the
Stockholder Agreements, and (iii) resolved to recommend that the stockholders
of the Company accept the Offer, tender their Shares thereunder to the
Purchaser and approve and adopt this Agreement and the Merger; provided, that
such recommendation may be withdrawn, modified or amended if, in the opinion of
the Board of Directors, only after receipt of written advice from outside legal
counsel, failure to withdraw, modify or amend such recommendation could
reasonably be expected to result in the Board of Directors violating its
fiduciary duties to the Company's stockholders under applicable law. The
Company represents that the actions set forth in this Section 1.2(a) and all
other actions it has taken in connection therewith are sufficient to render the
relevant provisions of such Section 203 of the DGCL inapplicable to the Offer,
the Merger and the Stockholders Agreement.
(b) Concurrently with the commencement of
the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto and including the exhibits thereto, the "Schedule 14D-9") which shall,
subject to the provisions of Section 5.4(b), contain the recommendation
referred to in clause (iii) of Section 1.2(a) hereof. The Schedule 14D-9 will
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
5
except that no representation is made by the Company with respect to
information furnished by Parent or the Purchaser for inclusion in the Schedule
14D-9. The Company further agrees to take all steps necessary to cause the
Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. Each of the Company, on the one hand, and Parent and the
Purchaser, on the other hand, agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false and misleading in any material respect and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given the opportunity to
review the Schedule 14D-9 before it is filed with the SEC. In addition, the
Company agrees to provide Parent, the Purchaser and their counsel with any
comments, whether written or oral, that the Company or its counsel may receive
from time to time from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments or other communications.
(c) In connection with the Offer, the
Company will promptly furnish or cause to be furnished to the Purchaser mailing
labels, security position listings and any available listing or computer file
containing the names and addresses of all recordholders of the Shares as of a
recent date, and shall furnish the Purchaser with such additional information
(including, but not limited to, updated lists of holders of the Shares and
their addresses, mailing labels and lists of security positions) and assistance
as the Purchaser or its agents may reasonably request in communicating the
Offer to the record and beneficial holders of the Shares. Except for such steps
as are necessary to disseminate the Offer Documents, Parent and the Purchaser
shall hold in confidence the information contained in any of such labels and
lists and the additional information referred to in the preceding sentence,
will use such information only in connection with the Offer, and, if this
Agreement is terminated, will upon request of the Company deliver or cause to
be delivered to the Company all copies of such
6
information then in its possession or the possession of its agents or
representatives.
Section 1.3 Directors. Promptly upon the purchase of and
payment for any Shares by Parent or any of its subsidiaries which represents at
least a majority of the outstanding Shares (on a fully diluted basis, as
defined in Section 1.1(a)), Parent shall be entitled to designate such number
of directors, rounded up to the next whole number, on the Board of Directors of
the Company as is equal to the product of the total number of directors on such
Board (giving effect to the directors designated by Parent pursuant to this
sentence) multiplied by the percentage that the number of Shares so accepted
for payment bears to the total number of Shares then outstanding. In
furtherance thereof, the Company shall, upon request of the Purchaser, use its
best reasonable efforts promptly either to increase the size of its Board of
Directors or secure the resignations of such number of its incumbent directors,
or both, as is necessary to enable Parent's designees to be so elected to the
Company's Board, and shall take all actions available to the Company to cause
Parent's designees to be so elected. At such time, the Company shall also cause
persons designated by Parent to constitute at least the same percentage
(rounded up to the next whole number) as is on the Company's Board of Directors
of (i) each committee of the Company's Board of Directors, (ii) each board of
directors (or similar body) of each Subsidiary (as defined in Section 3.1) of
the Company and (iii) each committee (or similar body) of each such board. The
Company shall promptly take all actions required pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its
obligations under this Section 1.3(a), including mailing to stockholders the
information required by such Section 14(f) and Rule 14f-1 as is necessary to
enable Parent's designees to be elected to the Company's Board of Directors.
Parent or the Purchaser will supply the Company and be solely responsible for
any information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1. The
provisions of this Section 1.3(a) are in addition to and shall not limit any
rights which the Purchaser, Parent or any of their affiliates may have as a
holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise. In the event
7
that Parent's designees are elected to the Company's Board of Directors, until
the Effective Time, the Company's Board shall have at least three directors who
are directors on the date hereof (the "Independent Directors"), provided that,
in such event, if the number of Independent Directors shall be reduced below
three for any reason whatsoever, any remaining Independent Directors (or
Independent Director, if there be only one remaining) shall be entitled to
designate persons to fill such vacancies who shall be deemed to be Independent
Directors for purposes of this Agreement or, if no Independent Director then
remains, the other directors shall designate three persons to fill such
vacancies who shall not be stockholders, affiliates or associates of Parent or
the Purchaser and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Notwithstanding anything in this Agreement to the
contrary, in the event that Parent's designees are elected to the Company's
Board, after the acceptance for payment of Shares pursuant to the Offer and
prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (a) amend or terminate this
Agreement by the Company, (b) exercise or waive any of the Company's rights,
benefits or remedies hereunder, (c) extend the time for performance of Parent's
and the Purchaser's respective obligations hereunder, (d) take any other action
by the Company's Board under or in connection with this Agreement or the
Stockholder Agreements, or (e) approve any other action by the Company which
could adversely affect the interests of the stockholders of the Company (other
than Parent, the Purchaser and their affiliates other than the Company and the
Subsidiaries) with respect to the transactions contemplated hereby.
Section 1.4 The Merger. Subject to the terms and conditions
of this Agreement, at the Effective Time, the Company and the Purchaser shall
consummate a merger (the "Merger") pursuant to which (a) the Purchaser shall be
merged with and into the Company and the separate corporate existence of the
Purchaser shall thereupon cease, (b) the Company shall be the successor or
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware, and (c) the separate corporate existence of the Company with
all its rights, privileges, immunities,
8
powers and franchises shall continue unaffected by the Merger, except as set
forth in this Section 1.4. Pursuant to the Merger, (x) the Certificate of
Incorporation of the Purchaser (the "Certificate of Incorporation"), as in
effect immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation, and (y) the Bylaws of the
Purchaser (the "By-laws"), as in effect immediately prior to the Effective Time
(as defined in Section 1.5), shall be the By-laws of the Surviving Corporation
until thereafter amended as provided by law, by such Certificate of
Incorporation or by such By-laws. The Merger shall have the effects specified
in the DGCL.
Section 1.5 Effective Time. Parent, the Purchaser and the
Company will cause a Certificate of Merger to be executed and filed on the
Closing Date (as defined in Section 1.6) (or on such other date as Parent and
the Company may agree) with the Secretary of State of Delaware (the "Secretary
of State") as provided in the DGCL. The Merger shall become effective on the
date on which the Certificate of Merger is duly filed with the Secretary of
State or such time as is agreed upon by the parties and specified in the
Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time."
Section 1.6 Closing. The closing of the Merger (the
"Closing") shall take place at 10:00 a.m. on a date to be specified by the
parties, which shall be no later than the second business day after
satisfaction or waiver of all of the conditions set forth in Article VI hereof
(the "Closing Date"), at the offices of Skadden, Arps, Slate, Meagher & Flom
LLP, 919 Third Avenue, New York, New York 10022, unless another date or place
is agreed to in writing by the parties hereto.
Section 1.7 Directors and Officers of the Surviving
Corporation. The directors and officers of the Purchaser at the Effective Time
shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors shall have
been duly elected or appointed or qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
the By-laws.
9
Section 1.8 Stockholders' Meeting.
(a) If required by applicable law in
order to consummate the Merger, the Company, acting through its Board of
Directors, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting") as
promptly as practicable following the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer for the
purpose of considering and taking action upon the approval of the
Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this
Agreement and use its best efforts (x) to obtain and furnish the
information required to be included by the SEC in the Proxy Statement
(as hereinafter defined) and, after consultation with Parent, to
respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive
proxy or information statement, including any amendment or supplement
thereto (the "Proxy Statement") to be mailed to its stockholders,
provided that no amendment or supplement to the Proxy Statement will
be made by the Company without consultation with Parent and its
counsel and (y) to obtain the necessary approvals of the Merger and
this Agreement by its stockholders; and
(iii) subject to the provisions of Section 5.4(b),
include in the Proxy Statement the recommendation of the Board that
stockholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to
be voted, all of the Shares then owned by it, the Purchaser or any of its other
subsidiaries and affiliates in favor of the approval of the Merger and the
adoption of this Agreement.
10
Section 1.9 Merger Without Meeting of Stockholders.
Notwithstanding Section 1.8 hereof, in the event that Parent, the Purchaser and
any other Subsidiaries of Parent shall acquire in the aggregate at least 90% of
the outstanding shares of each class of capital stock of the Company, pursuant
to the Offer or otherwise, the parties hereto shall, at the request of Parent
and subject to Article VI hereof, take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of stockholders of the Company, in accordance
with Section 253 of the DGCL.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any Shares or holders of common stock, par value $.01 per share, of the
Purchaser (the "Purchaser Common Stock"):
(a) the Purchaser Common Stock. Each
issued and outstanding share of the Purchaser Common Stock shall be converted
into and become one fully paid and nonassessable share of common stock of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and
Parent-Owned Stock. All Shares that are owned by the Company as treasury stock
and any Shares owned by Parent, the Purchaser or any other wholly owned
Subsidiary of Parent shall be cancelled and retired and shall cease to exist
and no consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and
outstanding Share (other than Shares to be cancelled in accordance with Section
2.1(b) and any Shares which are held by stockholders exercising appraisal
rights pursuant to Section 262 of the DGCL ("Dissenting Stockholders")) shall
be converted into the right to receive the Offer Price, payable to the holder
thereof, without interest (the "Merger Consideration"), upon surrender of
the certificate formerly representing such Share in the manner provided in
Section 2.2. All such Shares, when so
11
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 2.2, without interest,
or the right, if any, to receive payment from the Surviving Corporation of the
"fair value" of such Shares as determined in accordance with Section 262 of the
DGCL.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate
a bank or trust company reasonably acceptable to the Company to act as agent
for the holders of the Shares in connection with the Merger (the "Paying
Agent") to receive in trust the funds to which holders of the Shares
shall become entitled pursuant to Section 2.1(c). Such funds shall be invested
by the Paying Agent as directed by Parent or the Surviving Corporation.
(b) Exchange Procedures. As soon as rea-
sonably practicable after the Effective Time, the Paying Agent shall mail to
each holder of record of a certificate or certificates, which immediately prior
to the Effective Time represented outstanding Shares (the "Certificates"),
whose Shares were converted pursuant to Section 2.1 into the right to
receive the Merger Consideration (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as Parent and
the Company may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration for
each Share formerly represented by such Certificate and the Certificate so
surrendered shall forthwith be cancelled. If payment of the Merger
Consideration is to be made to a person other than the person in whose name the
surrendered Certificate is registered,
12
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that
the person requesting such payment shall have paid any transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the Certificate surrendered or shall have
established to the satisfaction of the Surviving Corporation that such tax
either has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger Consideration
in cash as contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership
Rights in the Shares. At the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration
of transfers of the Shares on the records of the Company. From and after the
Effective Time, the holders of Certificates evidencing ownership of the Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares, except as otherwise provided for herein or
by applicable law. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be cancelled and exchanged
as provided in this Article II.
(d) Termination of Fund; No Liability.
At any time following twelve months after the Effective Time, the Surviving
Corporation shall be entitled to require the Paying Agent to deliver to it any
funds (including any interest received with respect thereto) which had been
made available to the Paying Agent and which have not been disbursed to holders
of Certificates, and thereafter such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat or other similar
laws) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates, without any
interest thereon. Notwithstanding the foregoing, neither the Surviving
Corporation nor the Paying Agent shall be liable to any holder of a Certificate
for Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
13
Section 2.3 Dissenters' Rights. If any Dissenting
Stockholder shall be entitled to be paid the "fair value" of such holder's
Shares, as provided in Section 262 of the DGCL, the Company shall give Parent
notice thereof and Parent shall have the right to participate in all
negotiations and proceedings with respect to any such demands. Neither the
Company nor the Surviving Corporation shall, except with the prior written
consent of Parent, voluntarily make any payment with respect to, or settle or
offer to settle, any such demand for payment. If any Dissenting Stockholder
shall fail to perfect or shall have effectively withdrawn or lost the right
to dissent, the Shares held by such Dissenting Stockholder shall thereupon be
treated as though such Shares had been converted into the Merger Consideration
pursuant to Section 2.1.
Section 2.4 Company Plans.
(a) Parent and the Company shall, effec-
tive as of the Effective Time, cause each outstanding unvested employee stock
option to purchase Shares (an "Unvested Company Option") granted under the
Company's 1993 Employee Stock Option Plan and under prior plans included in the
representation in Section 3.2(a)(iv) (collectively, the "Option Plan") to be
assumed by Parent and converted into an option (or a new substitute option
shall be granted) (a "Parent Option") to purchase shares of common stock, par
value $.01 per share, of Parent ("Parent Common Stock") issued under and
pursuant to the terms and conditions of Parent's 1995 Equity Incentive Plan, as
amended, or any other stock option plan of Parent adopted specifically for
employees of the Company in order to issue Parent Options as provided in this
Section 2.4(a) (the "Parent Option Plan"). The issuance of shares of Parent
Common Stock under the Parent Options shall be registered under the Securities
Act pursuant to a Registration Statement of Parent on Form S-8. The parties
agree that (i) the number of shares of Parent Common Stock subject to such
Parent Option will be determined by multiplying the number of Shares subject to
the Unvested Company Option to be cancelled by the Option Exchange Ratio (as
hereinafter defined), rounding any fractional share up to the nearest whole
share, and (ii) the exercise price per share of such Parent Option will be
determined by dividing the exercise price per share under the Company Option in
effect immediately prior to the Effec-
14
tive Time by the Option Exchange Ratio, and rounding the exercise price thus
determined up to the nearest whole cent, subject to appropriate adjustments for
stock splits and other similar events. Except as provided above, the converted
or substituted Parent Options shall be subject to the same terms and conditions
(including, without limitation, expiration date, vesting and exercise
provisions) as were applicable to the Unvested Company Options immediately
prior to the Effective Time. The Company, the trustee under the Option Plan
that holds Shares and Company options on behalf of employees of the Company and
its Subsidiaries (the "Trustee") and Parent shall take all necessary action to
facilitate and effect the substitution described in this Section 2.4(a). Based
upon and subject to the accuracy of the Company's representation and warranty
set forth in Section 3.9(h), Parent will apply to qualify such Parent Options
issued to employees of the Company who are residents of Israel under Section
102 or another similar provision of the Israeli Income Tax Ordinance and will
obtain confirmation from the Israeli tax authorities that tacking shall be
allowed with respect to the two-year holding period required under Section 102
for such periods in which the Unvested Company Options were held before the
Effective Time; provided, that Parent shall not be required to agree to any
change in any of the economic terms of such options as established by this
Section 2.4(a) (including, without limitation, identity of employer, number of
shares, exercise price and vesting provisions) in order to obtain such
qualification. The issuance of Parent Options as provided herein shall be
subject to, and conditioned upon, obtaining an exemption by the Israeli
Securities Authority from the registration and prospectus delivery requirements
of the Israeli Securities laws. In the event such exemption is not obtained,
unless Parent elects to comply with the requirements of the Israeli Securities
laws, all Unvested Company Options held by the 35 persons holding the greatest
aggregate amount of Unvested Company Options shall be treated as provided in
this Section 2.4(a) and exchanged for Parent Options and the remaining Unvested
Company Options shall be treated in the same manner as the Vested Options
pursuant to Section 2.4(b). For purposes of this Agreement, the "Option
Exchange Ratio" shall be (x) the Offer Price divided by (y) the average of the
closing prices of the Parent Common Stock on the Nasdaq National Market System
during
15
the ten trading days preceding the fifth trading day prior to the Closing Date.
(b) At the Closing, immediately before
the Effective Time, each outstanding fully vested employee stock option to
purchase Shares (a "Vested Company Option", and together with an Unvested
Company Option, a "Company Option") granted under the Option Plan, except for
the Vested Company Options set forth in Section 2.4(b) of the Company
Disclosure Schedule (as defined in Article III) which shall be treated in the
same manner as the Unvested Company Options pursuant to Section 2.4(a), shall
be surrendered to the Company and shall be forthwith cancelled and the Company
or the Surviving Corporation shall pay to each holder of a Vested Company
Option, by check, an amount equal to (i) the product of the number of the
Shares which are issuable upon exercise of such Vested Company Option,
multiplied by the Offer Price, less (ii) the aggregate exercise price of such
Vested Company Option; provided that the foregoing cancellation and payment
shall be subject to the obtaining of any necessary consents of holders of
Vested Company Options and that any such payment may be withheld in respect of
any Vested Company Option until any necessary consents or releases are
obtained. From and after the Effective Time, each outstanding Vested Company
Option held by a holder who has failed to so consent shall be treated as
provided in Section 2.4(a). The Company and the Trustee shall take all
necessary action to facilitate the surrender, cancellation and payment in
consideration for the Vested Company Options described in this Section 2.4(b).
The Company or the Trustee shall withhold all income or other taxes as required
under applicable law prior to distribution of the cash amount received under
this Section 2.4(b) to the holders of Vested Company Options.
(c) Except as may be otherwise agreed to
by Parent or the Purchaser and the Company, the Option Plan and the Company's
1995 Employee Stock Purchase Plan (the "1995 Plan") shall terminate as of the
Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any of its Subsidiaries shall be deleted as of
the Effective Time. Each participant in the 1995 Plan shall be entitled to
receive, pursuant to the 1995 Plan,
16
a number of Shares based upon such participant's contributions in accordance
with the provisions of the 1995 Plan for the Purchase Period (as defined in the
1995 Plan) ending December 31, 1996, or such part of such Purchase Period as
has been completed at the Effective Time, and at the applicable purchase price
per Share determined in accordance with the provisions of the 1995 Plan for
such Purchase Period, provided that no such participant shall be entitled to
increase his or her rate of contribution after the date hereof, and the Shares
so purchased shall immediately be exchanged for cash pursuant to the Merger.
After the expiration of the Purchase Period ending December 31, 1996, no such
purchaser shall have any further right under the 1995 Plan to acquire any
equity securities of the Company, the Surviving Corporation or any subsidiary
thereof.
(d) For purposes of Sections 2.4(a) and
(b), any partially vested Company Option shall be treated as two separate
Company Options, one consisting of the vested portion and the other consisting
of the unvested portion of such Company Option.
(e) Holders of Company Options and par-
ticipants in the 1995 Plan shall be beneficiaries of the
agreements in this Section 2.4.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the
Purchaser that all of the statements contained in this Article III are true and
correct as of the date of this Agreement (or, if made as of a specified date,
as of such date), and will be true and correct in all material respects as of
the Closing Date as though made on the Closing Date, except as set forth in the
schedule attached to this Agreement setting forth exceptions to the Company's
representations and warranties set forth herein (the "Company Disclosure
Schedule"). The Company Disclosure Schedule will be arranged in sections
corresponding to the sections of this Agreement to be modified by such
disclosure schedule, provided that any disclosure made in any section of the
Company Disclosure Schedule shall be deemed incorporated in all other sections
thereof.
17
Section 3.1 Organization. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate its properties and
to carry on its business as now being conducted, except where the failure to be
so organized, existing and in good standing or to have such power, authority,
and governmental approvals would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole. As used in this Agreement, the
term "Subsidiary" shall mean all corporations or other entities in which the
Company or the Parent, as the case may be, owns a majority of the issued and
outstanding capital stock or similar interests. As used in this Agreement, any
reference to any event, change or effect being material or having a material
adverse effect on or with respect to any entity (or group of entities taken as
a whole) means such event, change or effect is materially adverse to (i) the
consolidated financial condition, businesses, prospects or results of
operations of such entity as a whole (or, if used with respect thereto, of such
group of entities taken as a whole) or (ii) the ability of such entity (or
group) to consummate the transactions contemplated hereby. The Company and each
of its Subsidiaries is duly qualified or licensed to do business and in good
standing in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not individually or in the aggregate have a
material adverse effect on the Company and its Subsidiaries, taken as a whole.
Except as set forth in Section 3.1 of the Company Disclosure Schedule, the
Company does not own (i) any equity interest in any corporation or other entity
or (ii) marketable securities where the Company's equity interest in any entity
exceeds five percent of the outstanding equity of such entity on the date
hereof.
Section 3.2 Capitalization. (a) The authorized capital stock
of the Company consists of 12,500,000 Shares and 1,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Stock"). As of the date hereof,
(i) 8,743,583 Shares are issued and outstanding, (ii) no Shares are issued and
held in the treasury of the
18
Company, (iii) no shares of Preferred Stock are issued and outstanding, (iv)
351,050 Shares are reserved for issuance upon exercise of Vested Company
Options and 859,533 Shares are reserved for issuance upon exercise of Unvested
Company Options, in each case under the Option Plan, and (vi) 298,278 Shares
remain reserved for issuance under the 1995 Plan, of which up to 40,000 Shares
will be issued in respect of outstanding employee contributions for the
Purchase Period ending December 31, 1996. All the outstanding shares of the
Company's capital stock are, and all Shares which may be issued pursuant to the
exercise of outstanding Company Options will be, when issued in accordance with
the respective terms thereof, duly authorized, validly issued, fully paid and
non-assessable. There are no bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such
rights) ("Voting Debt") of the Company or any of its Subsidiaries issued and
outstanding. Except as set forth above and except for the transactions
contemplated by this Agreement, as of the date hereof, (i) there are no shares
of capital stock of the Company authorized, issued or outstanding (ii) there
are no existing options, warrants, calls, pre-emptive rights, subscriptions or
other rights, agreements, arrangements or commitments of any character,
relating to the issued or unissued capital stock of the Company or any of its
Subsidiaries, obligating the Company or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or
any of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment and (iii)
except as set forth in Section 3.2(a) of the Company Disclosure Schedule, there
are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or the
capital stock of the Company, or any Subsidiary or affiliate of the Company or
to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary or any other entity.
(b) All of the outstanding shares of
capital stock of each of the Subsidiaries are beneficial-
19
ly owned by the Company, directly or indirectly, and all such shares have been
validly issued and are fully paid and nonassessable and are owned by either the
Company or one of its Subsidiaries free and clear of all liens, charges, claims
or encumbrances ("Encumbrances").
(c) There are no voting trusts or other
agreements or understandings to which the Company or any of its Subsidiaries is
a party with respect to the voting of the capital stock of the Company or any
of the Subsidiaries.
Section 3.3 Authorization; Validity of Agreement; Company
Action. The Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by the Company of this Agreement, and
the consummation by it of the transactions contemplated hereby, have been duly
authorized by its Board of Directors and, except for obtaining the approval of
its stockholders as contemplated by Section 1.8 hereof, no other corporate
action on the part of the Company is necessary to authorize the execution and
delivery by the Company of this Agreement and the consummation by it of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming due and valid authorization, execution
and delivery hereof by Parent and the Purchaser, is a valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms.
Section 3.4 Consents and Approvals; No Violations. Except for
the filings set forth in Section 3.4 of the Company Disclosure Schedule and the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), state securities or blue sky laws, and the DGCL, none of the execution,
delivery or performance of this Agreement by the Company, the consummation by
the Company of the transactions contemplated hereby or compliance by the
Company with any of the provisions hereof will (i) conflict with or result in
any breach of any provision of the Certificate of Incorporation, the By-laws or
similar organizational documents of the Company or of any of its
20
Subsidiaries, (ii) require any filing with, or permit, authorization, consent
or approval of, any court, arbitral tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency (a
"Governmental Entity"), (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, amendment, cancellation or acceleration) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound (the
"Company Agreements") or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, excluding from the foregoing clauses
(ii), (iii) and (iv) such violations, breaches or defaults which would not,
individually or in the aggregate, have a material adverse effect on the Company
and its Subsidiaries, taken as a whole. Section 3.4 of the Company Disclosure
Schedule sets forth a list of all third party consents and approvals required
to be obtained in connection with this Agreement under the Company Agreements
prior to the consummation of the transactions contemplated by this Agreement.
Section 3.5 SEC Reports and Financial Statements. The Company
has filed with the SEC, and has heretofore made available to Parent, true and
complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it under the Exchange Act or the Securities
Act of 1933, as amended (the "Securities Act") (as such documents have been
amended since the time of their filing, collectively, the "Company SEC
Documents"). As of their respective dates or, if amended, as of the date of the
last such amendment, the Company SEC Documents, including, without limitation,
any financial statements or schedules included therein (a) did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading and (b)
complied in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may
21
be, and the applicable rules and regulations of the SEC thereunder. None of the
Company's Subsidiaries is required to file any forms, reports or other
documents with the SEC. The financial statements of the Company included in the
Company SEC Documents (the "Financial Statements") have been prepared from, and
are in accordance with, the books and records of the Company and its
consolidated Subsidiaries, comply in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position and the consolidated
results of operations and cash flows (and changes in financial position, if
any) of the Company and its consolidated Subsidiaries as of the times and for
the periods referred to therein. The financial statements of Opal Technologies
Ltd. and of ICT Integrated Circuit Testing GmbH have been prepared from, and
are in accordance with, their respective books and records, comply in all
material respects with applicable accounting requirements, have been prepared
in accordance with Israeli and German generally accepted accounting principals,
respectively, applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present the financial
position, results of operations and cash flows (and changes in financial
position, if any) of Opal Technologies Ltd. and ICT Integrated Circuit Testing
GmbH as of the times and for the periods referred to therein.
Section 3.6 Absence of Certain Changes. Except as disclosed
in Section 3.6 of the Company Disclosure Schedule, since December 31, 1995, the
Company and its Subsidiaries have conducted their respective businesses only in
the ordinary and usual course and (i) there has not occurred any events or
changes (including the incurrence of any liabilities of any nature, whether or
not accrued, contingent or otherwise) having or reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Company and
its Subsidiaries, taken as a whole, other than such events or changes which
relate to general conditions in the economy or in the Company's industry or
arise solely from the Company's execution and delivery of this Agreement, and
22
(ii) the Company has not taken any action which would have been prohibited
under Section 5.1 hereof.
Section 3.7 No Undisclosed Liabilities. Except (a) as
disclosed in the Financial Statements and (b) for liabilities and obligations
(x) incurred in the ordinary course of business and consistent with past
practice (y) pursuant to the terms of this Agreement or (z) as set forth in
Section 3.7 of the Company Disclosure Schedule, since December 31, 1995,
neither the Company nor any of its Subsidiaries has incurred any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise,
that have, or would be reasonably likely to have, a material adverse effect on
the Company and its Subsidiaries, taken as a whole, or would be required by
GAAP to be reflected on a consolidated balance sheet of the Company and its
Subsidiaries (including the notes thereto).
Section 3.8 Litigation. Except as set forth in Section 3.8 of
the Company Disclosure Schedule, as of the date hereof, there are no suits,
claims, actions, proceedings, including, without limitation, arbitration
proceedings or alternative dispute resolution proceedings, or investigations
pending or, to the Company's knowledge, threatened against the Company or any
of its Subsidiaries before any Governmental Entity. Except as disclosed in
Section 3.8 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is subject to any outstanding order, writ, injunction or
decree.
Section 3.9 Employee Benefit Plans; ERISA.
(a) Section 3.9(a) of the Company Disclo-
sure Schedule sets forth a true and complete list (or, in the case of an
unwritten plan, a description) of all material employee benefit plans,
arrangements, contracts or agreements (including employment agreements,
severance agreements and managers' insurance plans) of any type, statutory or
otherwise, (including but not limited to plans described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
maintained by the Company, any of its Subsidiaries or any trade or business,
whether or not incorporated (an "ERISA Affiliate"), which together with the
Company would be deemed a "single employer" within the meaning of Section
23
414(b), 414(c) or 414(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), or the regulations, issued under Section 414(o) of the Code ("Benefit
Plans"). Except as disclosed in Section 3.9 of the Company Disclosure Schedule,
neither the Company nor any ERISA Affiliate has any formal plan or commitment,
whether legally binding or not, to create any additional Benefit Plan or modify
or change any existing Benefit Plan that would affect any employee or
terminated employee of the Company or any of its Subsidiaries.
(b) With respect to each Benefit Plan:
(i) if intended to qualify under Section 401(a) of the Code, such plan so
qualifies, and its trust is exempt from taxation under Section 501(a) of the
Code, there have been no amendments to any such Benefit Plan which are not the
subject of a favorable determination letter, and no condition exists that would
reasonably be expected to affect such qualification; (ii) such plan has been
administered in all material respects in accordance with its terms and
applicable statutes, orders or governmental rules or regulations, including but
not limited to ERISA and the Code, no notice has been issued by any
Governmental Entity questioning or challenging such compliance, and no
condition exists that would be expected to affect such compliance; (iii) no
breaches of fiduciary duty have occurred which might reasonably be expected to
give rise to material liability on the part of the Company; (iv) no disputes
are pending, or, to the Company's knowledge, threatened that might reasonably
be expected to give rise to material liability on the part of the Company; (v)
no prohibited transaction (within the meaning of Section 406 of ERISA) has
occurred that would give rise to material liability on the part of the Company
or any ERISA Affiliate; and (vi) all contributions and premiums due as of the
date hereof in respect of any Benefit Plan (taking into account any extensions
for such contributions and premiums) have been made in full or accrued on the
Company's balance sheet.
(c) Except as set forth in Section 3.9(c)
of the Company Disclosure Schedule, neither the Company nor any ERISA Affiliate
(i) has incurred an accumulated funding deficiency, as defined in the Code and
ERISA, or (ii) has any material liability under Title IV of ERISA with respect
to any employee benefit plan that is subject to Title IV of ERISA.
24
(d) With respect to each Benefit Plan
that provides employee benefits other than pension benefits (including but not
limited to each Benefit Plan that is a "welfare plan" (as defined in section
3(1) of ERISA)), except as disclosed in Section 3.9(d) of the Company
Disclosure Schedule, no such plan provides medi-cal or death benefits with
respect to current or former employees of the Company or any of its
Subsidiaries beyond their termination of employment, other than as required by
law.
(e) Except as set forth in Section 3.9(e)
of the Company Disclosure Schedule, neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will (i) entitle any
individual to severance pay or accelerate the time of payment or vesting, or
increase the amount, of compensation or benefits due to any individual, (ii)
constitute or result in a prohibited transaction under Section 4975 of the Code
or Section 406 of ERISA or (iii) subject the Company, any of its Subsidiaries,
any ERISA Affiliate, any of the Benefit Plans, any related trust, any trustee
or administrator of any thereof, or any party dealing with the Benefit Plans or
any such trust to either a civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a tax imposed pursuant to Section 4975 of the Code.
(f) There is no Benefit Plan that is a
"multiemployer plan," as such term is defined in Section 3(37) of ERISA.
(g) With respect to each Benefit Plan,
the Company has previously delivered to Parent or its representatives accurate
and complete copies of all plan documents, summary plan descriptions, summary
of material modifications, trust agreements and other related agreements,
including all amendments to the foregoing; the most recent annual report; the
annual and periodic accounting of plan assets in respect of the two most recent
plan years; the most recent determination letter received from the United
States Internal Revenue Service (the "Service"); and the actuarial valuation,
to the extent any of the foregoing may be applicable to a particular Benefit
Plan, in respect of the two most recent plan years.
25
(h) The Option Plan is qualified under
Section 102 of the Israeli Income Tax Ordinance and all steps necessary to
maintain such qualification have been taken.
Section 3.10 Tax Matters; Government Benefits.
(a) The Company and each of its Subsid-
iaries have filed all Tax Returns (as hereinafter defined) that are required to
be filed and have paid or caused to be paid all Taxes (as hereinafter defined)
that are either shown on such Tax Returns as due and payable or otherwise due
or claimed to be due by any taxing authority, in each case excluding only such
Tax Returns or Taxes as to which any failure to file or pay does not have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
All such Tax Returns are correct and complete in all material respects and
accurately reflect all liability for Taxes for the periods covered thereby. All
Taxes owed and due by the Company and each of its Subsidiaries for results of
operations through December 31, 1995 (whether or not shown on any Tax Return)
have been paid or have been adequately reflected on the Company's balance sheet
as of December 31, 1995 included in the Financial Statements (the "Balance
Sheet"). Since December 31, 1995, the Company has not incurred liability for
any Taxes other than in the ordinary course of business. Neither the Company
nor any of its Subsidiaries has received written notice of any claim made by an
authority in a jurisdiction where neither the Company nor any of its
Subsidiaries file Tax Returns, that the Company is or may be subject to
taxation by that jurisdiction.
(b) Neither the Company nor any of its
Subsidiaries has violated any applicable law of any jurisdiction relating to
the payment and withholding of Taxes, including, without limitation, (x)
withholding of Taxes pursuant to Sections 1441 and 1442 of the Code or similar
provisions under non-U.S. law and (y) withholding of Taxes in respect of
amounts paid or owing to any employee, creditor, independent contractor, or
other third party, excluding unintended violations which do not have a material
adverse effect on the Company and its Subsidiaries taken as a whole. The
Company and each of its Subsidiaries have, in the manner prescribed by law,
26
withheld and paid when due all Taxes required to have been withheld and paid
under all applicable laws.
(c) There are no Encumbrances upon the
shares of capital stock of any of the Company's Subsidiaries or any of the
assets or properties of the Company or any of its Subsidiaries or, to the
Company's knowledge, on any of the Shares that arose in connection with any
failure (or alleged failure) to pay any Tax when due.
(d) Neither the Company nor any of its
Subsidiaries has waived any statute of limitations in any jurisdiction in
respect of Taxes or Tax Returns or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(e) No federal, state, local or foreign
audits, examinations or other administrative proceedings have been commenced
or, to the Company's knowledge, are pending with regard to any Taxes or Tax
Returns of the Company or of any of its Subsidiaries. No written notification
has been received by the Company or by any of its Subsidiaries that such an
audit, examination or other proceeding is pending or threatened with respect to
any Taxes due from or with respect to or attributable to the Company or any of
its Subsidiaries or any Tax Return filed by or with respect to the Company or
any of its Subsidiaries. To the Company's knowledge, there is no dispute or
claim concerning any Tax liability of the Company or any of its Subsidiaries
either claimed or raised by any taxing authority in writing.
(f) During their most recent five taxable
years respectively, neither the Company nor any of its Subsidiaries has made a
change in tax accounting methods, received a ruling from any taxing authority
or signed an agreement with any taxing authority which could have a material
adverse effect on the Company or any of its Subsidiaries. Neither the Company
nor any of its Subsidiaries is required to include in income any adjustment
pursuant to Section 481(a) of the Code or any similar provision of foreign,
state or local law, by reason of a voluntary change in tax accounting method
(nor has any taxing authority proposed in writing any such adjustment or change
of accounting method).
27
(g) Neither the Company nor any of its
Subsidiaries is a party to, is bound by or has any obligation under any Tax
sharing agreement, Tax indemnification agreement or similar contract or
arrangement (other than contracts or arrangements among the Company and its
Subsidiaries). Neither the Company nor any of its Subsidiaries is aware of any
potential liability or obligation to any person as a result of, or pursuant to,
any such agreement, contract or arrangement. Neither the Company nor any of its
Subsidiaries has any liability for Taxes of another person by contract or
otherwise.
(h) No power of attorney with respect to
any matter relating to Taxes or Tax Returns has been granted by or with respect
to the Company or any of its Subsidiaries.
(i) Neither the Company nor any of its
Subsidiaries is a party to any agreement, plan, contract or arrangement that
could result, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code.
(j) During the most recent five taxable
years of the Company and of each of its Subsidiaries, no closing agreement
pursuant to Section 7121 of the Code (or any predecessor provision, or any
similar provision of any state, local or foreign law) has been entered into by
or with respect to the Company or any of its Subsidiaries.
(k) Neither the Company nor any of its
Subsidiaries has filed a consent pursuant to Section 341(f) of the Code (or any
predecessor provision) concerning collapsible corporations, or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a "subsection (f)
asset" (as such term is defined in Section 341(f)(4) of the Code) owned by the
Company or any of its Subsidiaries.
(l) The Company has never been a United
States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. The Company has never been a member of an
Affiliated Group within the meaning of Section 1504 of the Code. None of the
Subsidiaries of the Company is a
28
foreign personal holding company within the meaning of Section 552 of the Code
or a passive foreign investment company within the meaning of Section 1296 of
the Code.
(m) No taxing authority is asserting or
threatening to assert a claim against the Company or any of its Subsidiaries
under or as a result of Section 482 of the Code or any similar provision of
state, local or foreign law.
(n) Section 3.10(n) of the Company Dis-
closure Schedule lists all United States federal, state, local, and foreign Tax
Returns in respect of which an audit is in progress or is, to the Company's
knowledge, pending, which was filed by, on behalf of or with respect to the
Company and its Subsidiaries. The Company has delivered to Parent complete and
accurate copies of each of: (A) all audit, examination and similar reports and
all letter rulings and technical advice memoranda relating to United States
federal, state, local, and foreign Taxes due from or with respect to the
Company and its Subsidiaries; (B) all United States federal, state and local,
and foreign Tax Returns, Tax examination reports and similar documents filed by
the Company and its Subsidiaries; and (C) all closing agreements entered into
by the Company and its Subsidiaries with any taxing authority and all
statements of Tax deficiencies assessed against or agreed to by the Company and
its Subsidiaries. The Company will deliver to the Purchaser all materials with
respect to the foregoing for all matters arising after the date hereof.
(o) Section 3.10(o) of the Company Disc-
losure Schedule lists each tax incentive, other than incentives generally
available by operation of law without application or governmental action, given
to the Company or any of its Subsidiaries under the laws of the State of
Israel, including but not limited to tax benefits granted under the Law for the
Encouragement of Capital Investments, 1959, the period for which such tax
incentive applies, and the nature of such tax incentive. The Company and each
of its Subsidiaries have complied with all requirements of Israeli law to be
entitled to claim each such tax incentive. Subject to the receipt of the
approvals listed in Section 3.4 of the Company Disclosure Schedule, the
consummation of the transactions contemplated hereby will not adversely affect
the ability
29
of the Company or any of its Subsidiaries to claim the benefit of any tax
incentive for the remaining duration of the incentive or require any recapture
of any previously claimed incentive, and, except as set forth in Section
3.10(o) of the Company Disclosure Schedule, no consent or approval of any
Governmental Entity is required in order to preserve the entitlement of the
Company to any such incentive and, to the Company's knowledge, there is no
intention to change the terms of such tax incentives.
(p) Section 3.10(p) of the Company Dis-
closure Schedule lists with respect to each grant that the Company or any of
its Subsidiaries received or is entitled pursuant to outstanding grant awards
to receive from the Office of the Chief Scientist in the Israeli Ministry of
Industry and Trade (the "Chief Scientist"), the German Minister of Research and
Technology and any other similar organization, the following information: (A)
the total amount of the grant received by the Company or any of its
Subsidiaries and the amount available for future use by the Company or any of
its Subsidiaries; (B) the time period in which the Company or any of its
Subsidiaries received, or will be entitled to receive, each grant; (C) a
general description of the research and development program for which such
grant was approved; (D) the royalty repayment schedule applicable to such grant
and the total repayment due; (E) the type of revenues from which royalty
payments should be made; and (F) the total amount of royalties paid as of a
recent date and the total royalty obligations due as of such date.
(q) The Company and each of its Subsid-
iaries have complied in all material respects with all applicable laws and
regulations, agreements, letters of commitments and any other requirements with
respect to the terms and conditions of each of the grants listed in Section
3.10(p) of the Company Disclosure Schedule and no claim was made by the Chief
Scientist or any other person with respect to compliance by the Company or any
of its Subsidiaries with such terms and conditions or for any repayment in
excess of the amounts specified in Section 3.10(p) of the Company Disclosure
Schedule and, to the Company's knowledge, there is no threatened or possible
claim for any breach of such terms and conditions or any intention to change
such terms and conditions.
30
(r) As used in this Agreement, the fol-
lowing terms shall have the following meanings:
(i) "Tax" or "Taxes" shall mean all taxes, charges,
fees, duties, levies, penalties or other assessments imposed by any
federal, state, local or foreign governmental authority, including,
but not limited to, income, gross receipts, excise, property, sales,
gain, use, license, custom duty, unemployment, capital stock,
transfer, franchise, payroll, withholding, social security, minimum
estimated, and other taxes, and shall include interest, penalties or
additions attributable thereto; and
(ii) "Tax Return" shall mean any return,
declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
Section 3.11 Title and Condition of Properties. Neither the
Company nor any of its Subsidiaries own any real property. The Company and its
Subsidiaries own good and marketable title, free and clear of all Encumbrances,
to all of the personal property and assets shown on the Balance Sheet or
acquired after December 31, 1995, except for (A) assets which have been
disposed of to nonaffiliated third parties since December 31, 1995 in the
ordinary course of business, (B) Encumbrances reflected in the Balance Sheet or
in the notes thereto, (C) Encumbrances or imperfections of title which are not,
individually or in the aggregate, material in character, amount or extent and
which do not materially detract from the value or materially interfere with the
present or presently contemplated use of the assets subject thereto or affected
thereby, and (D) Encumbrances for current Taxes not yet due and payable. All of
the machinery, equipment and other tangible personal property and assets owned
or used by the Company and its Subsidiaries are in good condition and repair,
except for ordinary wear and tear not caused by neglect, and are useable in the
ordinary course of business. The personal property and assets reflected on the
Balance Sheet or acquired after December 31, 1995, the rights under the Company
Agreements and the Intellectual Property (as defined in Section 3.12) owned or
used by the Company under valid Li-
31
cense (as defined in Section 3.12), collectively include all assets necessary
to provide, produce, sell and license the services and products currently
provided, produced, sold and licensed by the Company and its Subsidiaries and
to conduct the business of the Company and its Subsidiaries as presently
conducted or as currently contemplated to be conducted, provided that the
Company makes no warranty with respect to infringement of intellectual property
rights of third parties except as expressly provided in Section 3.12(e).
Section 3.12 Intellectual Property.
(a) Section 3.12(a) of the Company Disclosure Schedule
contains an accurate and complete listing setting forth (x) all registered
Trademarks, Patents, registered Copyrights and registered Mask Works (as each
such term is hereinafter defined) which are owned by the Company or any of its
Subsidiaries and (y) all Licenses to which the Company or any of its
Subsidiaries is a party (other than shrink-wrap software and databases licensed
to the Company or to any of its Subsidiaries under non-exclusive software
licenses granted to end-user customers by third parties in the ordinary course
of business of such third parties' businesses), such schedule indicating, as to
each such License, whether the Company or any of its Subsidiaries is the
licensee or licensor, whether it is royalty bearing, the territory, whether it
is exclusive or non-exclusive, and the nature of the licensed property.
(b) Except as set forth in Section 3.12(b)(i) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is under
any obligation to pay any royalty or other compensation to any third party or
to obtain any approval or consent for the use of any Intellectual Property used
in or necessary for its business as currently conducted or as currently
proposed to be conducted. None of the Intellectual Property owned by the
Company or by any of its Subsidiaries, or to the Company's knowledge, licensed
to the Company or to any of its Subsidiaries, is subject to any outstanding
judgment, order, decree, stipulation, injunction or charge. Except as set forth
in Section 3.12(b)(ii) of the Company Disclosure Schedule, there is no claim,
charge, complaint, action, suit, proceeding, hearing, investigation or demand
pending or, to the Company's knowledge, threat-
32
ened, which challenges the legality, validity, enforceability, or the
Company's or any of its Subsidiaries' use or ownership of any of the
Intellectual Property owned by the Company or any of its Subsidiaries or, to
the Company's knowledge, licensed to the Company or to any of its Subsidiaries.
Neither the Company nor any of its Subsidiaries has agreed to indemnify any
person for or against any interference, infringement, misappropriation, or
other conflict with respect to any Intellectual Property, except as may be
contained within agreements for the sale of the Company's products in the
ordinary course or the Licenses set forth in Section 3.12(a) of the Company
Disclosure Schedule.
(c) No material breach or default (or event which with notice
or lapse of time or both would result in a material event of default) by the
Company or any of its Subsidiaries exists or has occurred under any License or
other agreement pursuant to which the Company or any of its Subsidiaries uses
any Intellectual Property owned by a third party or has granted any third party
the right to use its Intellectual Property, and the consummation of the
transactions contemplated by this Agreement will not violate or conflict with
or constitute a material default (or an event which, with notice or lapse of
time or both, would constitute a material default), result in a forfeiture
under, or constitute a basis for termination of any such License or other
agreement.
(d) The Company and its Subsidiaries own all items of
Intellectual Property set forth in Schedule 3.12(a) and own or have the right
to use all items of Intellectual Property necessary to provide, produce, sell
and license the services and products currently provided, produced, sold and
licensed by the Company and its Subsidiaries and to conduct the business of the
Company and its Subsidiaries as presently conducted or as currently proposed to
be conducted, free and clear of all Encumbrances, provided that the Company
makes no warranty with respect to infringement of intellectual property rights
of third parties except as expressly provided in Section 3.12(e).
(e) To the Company's knowledge, except as set forth in
Section 3.12(e) of the Company Disclosure Schedule, the conduct of the
Company's and its Subsidiaries' business, the Intellectual Property owned or
used by the
33
Company and its Subsidiaries, and the products or services produced, sold or
licensed by or under development by the Company and its Subsidiaries do not
infringe any Intellectual Property rights or any other proprietary right of any
person or give rise to any obligations to any person as a result of
co-authorship, co-inventorship, or an express or implied contract for any use
or transfer. The Company and its Subsidiaries have received no notice of any
allegations or threats that the Company's and its Subsidiaries' use of any of
the Intellectual Property infringes upon or is in conflict with any
Intellectual Property or proprietary rights of any third party, and to the
Company's knowledge, no basis exists for any such allegations or threats.
(f) Except as set forth on Section 3.12(f) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has sent
or otherwise communicated to any other person any notice, charge, claim or
assertion of any present, impending or threatened infringement by any other
person of any Intellectual Property of the Company and its Subsidiaries.
(g) None of the Company's and its Subsidiaries' products or
services incorporate, are based upon or are derived or adapted from, any
Intellectual Property of any other person in violation of any statutory or
other legal obligation or any agreement to which the Company and its
Subsidiaries is a party or by which it is bound.
(h) All of the Company's and its Subsidiaries' Patents,
Trademarks and Copyrights issued by, registered with or filed with the United
States Patent and Trademark Office or Register of Copyrights or the
corresponding offices of other countries have been so duly registered, filed in
or issued, as the case may be, have been properly maintained and renewed in
accordance with all applicable provisions of law and administrative
regulations, and the Company and its Subsidiaries, as the case may be, are the
record owners thereof. The Company and its Subsidiaries have taken reasonable
steps in accordance with normal industry practice to maintain the
confidentiality of its trade secrets and other confidential Intellectual
Property, and, to the Company's knowledge, there have been no acts or omissions
by the Company or its Subsidiaries, the result of which would be to compromise
the rights of the Company or its Subsidiaries to apply for or
34
enforce appropriate legal protection of such Intellectual Property.
(i) Except as described in Section 3.12(i) of the Company
Disclosure Schedule, each of the Company's and its Subsidiaries' employees,
officers, agents, directors and each independent contractor retained by the
Company or any of its Subsidiaries has entered into a written agreement with
the Company or any of its Subsidiaries (x) providing that all of the Company's
and its Subsidiaries' Intellectual Property is confidential and proprietary to
the Company or any of its Subsidiaries, and (y) obligating the disclosure and
transfer to the Company or any of its Subsidiaries, in consideration for no
more than normal salary and continued employment or consultant fees, as the
case may be, of all inventions, developments and work product which during the
period of his or her employment or consultancy with the Company or any of its
Subsidiaries, as the case may be, such employee, officer, agent, director or
independent contractor made or makes that related or relate to any subject
matter with which such employee's, officer's, agent's, director's or
independent contractor's work for the Company or any of its Subsidiaries was
concerned, or, in the case of employees, officers, agents and directors, are
made during such person's period of employment (or contractual relationship) or
in connection therewith. No former employees, officers, directors or
independent contractors of the Company or any of its Subsidiaries have asserted
any claim, or have any, valid claim or valid right to any of the Company's or
any of its Subsidiaries' Intellectual Property used in or necessary for the
conduct of the Company's or its Subsidiaries' business as now conducted or as
currently proposed to be conducted. To the Company's knowledge, no employee,
officer, agent or director of the Company or any of its Subsidiaries is a party
to or otherwise bound by any agreement with or obligated to any other person
(including, any former employer) which conflicts with any obligation or
commitment of such employee to the Company or any of its Subsidiaries under any
agreement to which he or she is a party or otherwise.
(j) Section 3.12(j) of the Company Disclosure Schedule
identifies each person to whom the Company or any of its Subsidiaries has sold
or otherwise transferred any interest or rights to any Intellectual Property
35
(other than end users under licenses for computer software and related
documentation transferred in the ordinary course of business) or purchased
rights in any Intellectual Property, and the date, if applicable, of each such
sale, transfer or purchase.
(k) The Company and each of its Subsidiaries have taken
reasonable steps in accordance with normal industry practice to preserve and
maintain, reasonably complete notes and records (including, without limitation,
drawings, flow-charts, prototypes and models) relating to its know-how,
inventions, processes, procedures, drawings, specifications, designs, plans,
written proposals, technical data, works of authorship and other proprietary
technical information, sufficient to cause such proprietary information to be
readily identified, understood and available.
(l) As used in this Agreement, "Intellectual Property" means
all of the following: (i) U.S., Israeli and foreign registered and unregistered
trademarks, trade dress, service marks, logos, trade names, corporate names and
all registrations and applications to register the same (the "Trademarks");
(ii) issued U.S., Israeli and foreign patents and pending patent applications,
patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and extension thereof, any
counterparts claiming priority therefrom, utility models, patents of importa-
tion/confirmation, certificates of invention and like statutory rights (the
"Patents"); (iii) U.S., Israeli and foreign registered and unregistered
copyrights (including, but not limited to, those in computer software and
databases) rights of publicity and all registrations and applications to
register the same (the "Copyrights"); (iv) U.S., Israeli and foreign rights in
any semi-conductor chip product works or "mask works" as such term is defined
in 17 U.S.C. 901, et seq. and any registrations or applications therefor ("Mask
Works"); (v) all categories of trade secrets as defined in the Uniform Trade
Secrets Act including, but not limited to, business information; (vi) all
licenses and agreements pursuant to which the Company has acquired rights in or
to any Trademarks, Patents, Copyrights or Mask Works, or licenses and
agreements pursuant to which the Company has licensed or transferred the right
to use any of the foregoing ("Licenses").
36
Section 3.13 Employment Matters. To the Company's knowledge,
no key employee or group of employees has any plans to terminate their
employment with the Company or any of its Subsidiaries as a result of the
transactions contemplated hereby or otherwise. Neither the Company nor any of
its Subsidiaries has experienced any strikes, collective labor grievances,
other collective bargaining disputes or Claims of unfair labor practices in the
last five years. To the Company's knowledge, there is no organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company and its Subsidiaries.
Section 3.14 Compliance with Laws. The Company and its
Subsidiaries are in substantial compliance with, and have not violated any
applicable law, rule or regulation of any United States federal, state, local,
Israeli or other foreign government or agency thereof which materially affects
the business, properties or assets of the Company and its Subsidiaries, and no
notice, charge, claim, action or assertion has been received by the Company or
any of its Subsidiaries or has been filed, commenced or, to the Company's
knowledge, threatened against the Company or any of its Subsidiaries alleging
any such violation, except for any matter otherwise covered by this sentence
which does not have a material adverse effect on the Company and its
Subsidiaries taken as a whole. All licenses, permits and approvals required
under such laws, rules and regulations are in full force and effect except
where the failure to be in full force and effect would not have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
Section 3.15 Contracts. Each Company Agreement is legally
valid and binding and in full force and effect, except where failure to be
legally valid and binding and in full force and effect would not have a
material adverse effect on the Company and its Subsidiaries, taken as a whole,
and there are no defaults by the Company or any of its Subsidiaries thereunder,
except those defaults that would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole. The Company has previously made
available for inspection by Parent or the Purchaser or their representatives
all of the Company Agreements. Set forth in
37
Section 3.15 of the Company Disclosure Schedule is a true and complete list
of all agreements, contracts or other arrangements, written or oral, to which
ICT Integrated Circuit Testing GmbH ("ICT") or any of its Subsidiaries is a
party or by which ICT or any of its Subsidiaries or any of its or their assets
may be bound (the "ICT Agreements") concerning or relating to (i) Intellectual
Property, (ii) the spin-off or other disposition of assets, (iii) which are
necessary to provide, produce, sell and license the services and products
currently provided, produced, sold and licensed by ICT and its Subsidiaries and
to conduct the business of ICT and its Subsidiaries as presently conducted or
as currently contemplated to be conducted. Each ICT Agreement is valid,
binding, enforceable and in full force and effect. None of the execution,
delivery or performance of this Agreement by the Company, the consummation by
the Company of the transactions contemplated hereby or compliance by the
Company with any of the provisions hereof will result in a breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any ICT Agreement. None of
ICT or any of its Subsidiaries is or, to the Company's knowledge, any other
party is in breach or default (including, with respect to any express or
implied warranty), and no event has occurred which with notice or lapse of time
or both would constitute a material breach or default or permit termination,
modification or acceleration under any ICT Agreement, except for any breaches,
defaults, terminations, modifications or accelerations which have been cured or
waived; and no party has, to the Company's knowledge, repudiated any provision
of any such ICT Agreement.
Section 3.16 Potential Conflicts of Interest. Except as set
forth in Section 3.16 of the Company Disclosure Schedule or in the Company SEC
Reports, to the Company's knowledge, no officer of the Company or any of its
Subsidiaries owns, directly or indirectly, any interest in (excepting not more
than 1% stock holdings for investment purposes in securities of publicly held
and traded companies) or is an officer, director, employee or consultant of any
person which is a competitor, lessor, lessee, customer or supplier of the
Company or any of its Subsidiaries; and no officer or director of the Company
or any of its Subsidiaries (i) owns, directly or indi-
38
rectly, in whole or in part, any Intellectual Property which the Company or any
of its Subsidiaries is using or the use of which is necessary for the business
of the Company or any of its Subsidiaries; (ii) has any claim, charge, action
or cause of action against the Company or any of its Subsidiaries, except for
claims for accrued vacation pay, accrued benefits under the Benefit Plans and
similar matters and agreements existing on the date hereof; (iii) has made, on
behalf of the Company or any of its Subsidiaries, any payment or commitment to
pay any commission, fee or other amount to, or to purchase or obtain or
otherwise contract to purchase or obtain any goods or services from, any other
person of which any officer or director of the Company, or, to the Company's
knowledge, a relative of any of the foregoing, is a partner or stockholder
(except stock holdings solely for investment purposes in securities of publicly
held and traded companies); (iv) owes any money to the Company or any of its
Subsidiaries; or (v) is owed any money by the Company or any of its
Subsidiaries. Opal Technologies Ltd. is not a party to any contract with an
"interested party" or any contract in which an "officer" has a "personal
interest" (as each of such terms is defined in Chapter 4A of the Israeli
Companies Ordinance, 1983).
Section 3.17 Vote Required. The affirmative vote of the
holders of a majority of the outstanding Shares are the only votes of the
holders of any class or series of the Company's capital stock necessary to
approve this Agreement and the transactions contemplated hereby.
Section 3.18 Suppliers and Customers. From December 31, 1995
to the date of this Agreement, no material licensor, vendor, supplier, licensee
or customer of the Company or any of its Subsidiaries has cancelled or
otherwise modified its relationship with the Company or its Subsidiaries and,
to the Company's knowledge, no such person has any intention to do so. Except
as set forth in Section 3.18 of the Company Disclosure Schedule, no material
customer of the Company or any of its Subsidiaries has expressed to the Company
any material dissatisfaction with any of the products of the Company or any of
its Subsidiaries, respectively, which is likely to result in an adverse impact
on such customer's continuing relationship with the Company or any of its
Subsidiaries, and the Company and its Subsidiaries have not experienced any
39
complaints of a recurring nature with respect to any of their products.
Section 3.19 Information in Proxy Statement. The Proxy
Statement, if any (or any amendment thereof or supplement thereto), will, at
the date mailed to Company stockholders and at the time of the meeting of
Company stockholders to be held in connection with the Merger, not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, except
that no representation is made by the Company with respect to statements made
therein based on information supplied by Parent or the Purchaser for inclusion
in the Proxy Statement. The Proxy Statement will comply in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
Section 3.20 Opinion of Financial Advisor. The Company has
received the opinion of Robertson Stephens & Company, dated the date hereof, to
the effect that, as of such date, the consideration to be received in the Offer
and the Merger by the Company's stockholders is fair to the Company's
stockholders from a financial point of view, a copy of which opinion has been
delivered to Parent and the Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company
that the statements contained in this Article IV are true and correct as of the
date of this Agreement and will be correct and complete as of the Closing Date
as though made on the Closing Date.
Section 4.1 Organization. Each of Parent and the Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of Delaware and has all requisite corporate or other power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its
40
business as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power, authority, and
governmental approvals would not have a material adverse effect on Parent and
its Subsidiaries, taken as a whole. Parent and each of its Subsidiaries is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a material adverse
effect on Parent and its Subsidiaries, taken as a whole.
Section 4.2 Authorization; Validity of Agreement; Necessary
Action. Each of Parent and the Purchaser has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Parent and the
Purchaser of this Agreement, and the consummation of the Merger and of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Parent and the Purchaser and by Parent as the sole stockholder of
the Purchaser and no other corporate action on the part of Parent and the
Purchaser is necessary to authorize the execution and delivery by Parent and
the Purchaser of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and the Purchaser, as the case may be, and, assuming due and valid
authorization, execution and delivery hereof by the Company, is a valid and
binding obligation of each of Parent and the Purchaser, as the case may be,
enforceable against each of them in accordance with its respective terms.
Section 4.3 Consents and Approvals; No Violations. Except as
set forth in Section 4.3 of the schedule attached to this Agreement setting
forth exceptions to Parent's representations and warranties set forth herein
and except for filings, permits, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the Exchange Act, the
HSR Act, state securities or blue sky laws and the DGCL, none of the execution,
delivery or performance of this Agreement by Parent or the Purchaser, the
consummation by
41
Parent or the Purchaser of the transactions contemplated hereby or compliance
by Parent or the Purchaser with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the respective certificate of
incorporation or by-laws of Parent or the Purchaser, (ii) require any filing
with, or permit, authorization, consent or approval of, any Governmental Entity,
(iii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Parent, or any of its
Subsidiaries or the Purchaser is a party or by which any of them or any of their
respective properties or assets may be bound, or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
Subsidiaries or any of their properties or assets, excluding from the foregoing
clauses (ii),(iii) and (iv) such violations, breaches or defaults which would
not, individually or in the aggregate, have a material adverse effect on Parent
and its Subsidiaries, taken as a whole.
Section 4.4 Information in Proxy Statement. None of the
information supplied by Parent or the Purchaser specifically for inclusion or
incorporation by reference in the Proxy Statement will, at the date mailed to
stockholders and at the time of the meeting of stockholders to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
Section 4.5 Financing. Parent and the Purchaser (i) have bank
facilities in place which, either alone or with cash presently on hand, will
provide sufficient funds to purchase and pay for the Shares pursuant to the
Offer and the Merger in accordance with the terms of this Agreement and to
consummate the other transactions contemplated hereby and (ii) will have on the
expiration date of the Offer and the Effective Date sufficient funds to
purchase and pay for the Shares pursuant to the Offer and the Merger,
respectively, in
42
accordance with the terms of this Agreement. The Parent's bank facilities permit
Parent to borrow money under such facilities and use such funds to purchase and
pay for the Shares pursuant to the Offer and the Merger in accordance with the
terms of this Agreement and to consummate the other transactions contemplated
hereby.
Section 4.6 Options. The Parent Options to be granted by
Parent under Section 2.4(a) shall be duly authorized, valid and enforceable in
accordance with the terms of said Section 2.4(a), and any shares of Parent
Common Stock issued upon proper exercise thereof shall be duly and validly
issued, fully paid and non-assessable.
Section 4.7 Company Shares. As of the date of this Agreement,
neither Parent nor any of its Subsidiaries owns any Shares or is acting
together with any other person in connection with the Offer.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company
covenants and agrees that, except (i) as expressly contemplated by this
Agreement, (ii) as set forth in Section 5.1 of the Company Disclosure Schedule,
or (iii) as agreed in writing by Parent, after the date hereof, and prior to
the time the directors of the Purchaser have been elected to, and shall
constitute a majority of, the Board of Directors of the Company pursuant to
Section 1.3 (the "Appointment Date"):
(a) the business of the Company and its
Subsidiaries shall be conducted only in the ordinary and usual course and, to
the extent consistent therewith, each of the Company and its Subsidiaries shall
use its best reasonable efforts to preserve its business organization intact
and maintain its existing relations with customers, suppliers, employees,
creditors and business partners;
(b) the Company will not, directly or
indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge
any treasury stock of the Company or any capital stock of any of its
Subsidiaries beneficially owned by it, (ii) amend its Certificate of
43
Incorporation or By-laws or similar organizational documents; or (iii) split,
combine or reclassify the outstanding Shares or Preferred Stock or any
outstanding capital stock of any of the Subsidiaries of the Company;
(c) neither the Company nor any of its
Subsidiaries shall: (i) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock; (ii) issue, sell, pledge, dispose of or encumber any additional shares
of, or securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital
stock of any class of the Company or its Subsidiaries, other than Shares
reserved for issuance on the date hereof pursuant to the exercise of Company
Options outstanding on the date hereof or pursuant to the 1995 Plan as
permitted in Section 2.4 hereof; (iii) transfer, lease, license, sell,
mortgage, pledge, dispose of, or encumber any material assets other than in the
ordinary and usual course of business and consistent with past practice, or
incur or modify any material indebtedness or other liability, other than in the
ordinary and usual course of business and consistent with past practice; or
(iv) redeem, purchase or otherwise acquire directly or indirectly any of its
capital stock except pursuant to stock restriction agreements with employees
existing at the date hereof and set forth in Section 3.2(a) of the Company
Disclosure Schedule;
(d) neither the Company nor any of its
Subsidiaries shall: (i) grant any increase in the compensation payable or to
become payable by the Company or any of its Subsidiaries to any of its
executive officers or key employees except inflationary increases given in
accordance with past practice; or (ii)(A) adopt any new, or (B) amend or
otherwise increase, or accelerate the payment or vesting of the amounts payable
or to become payable under any existing bonus, incentive compensation, deferred
compensation, severance, profit sharing, stock option, stock purchase,
insurance, pension, retirement or other employee benefit plan, agreement or
arrangement, including, without limitation, the Option Plan and the 1995 Plan;
or (iii) enter into any employment or severance agreement with or, except in
accordance with the existing written policies of the Company, grant any
44
severance or termination pay to any officer, director or employee of the
Company or any its Subsidiaries;
(e) neither the Company nor any of its
Subsidiaries shall modify, amend or terminate any of its material contracts or
waive, release or assign any material rights or claims, except in the ordinary
course of business and consistent with past practice;
(f) neither the Company nor any of its
Subsidiaries shall permit any material insurance policy naming it as a
beneficiary or a loss payable payee to be cancelled or terminated without
notice to Parent, except in the ordinary course of business and consistent with
past practice;
(g) neither the Company nor any of its
Subsidiaries shall: (i) incur or assume any long-term debt, or except in the
ordinary course of business, incur or assume any short-term indebtedness in
amounts not consistent with past practice; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, except in the ordinary
course of business and consistent with past practice; (iii) make any loans,
advances or capital contributions to, or investments in, any other person
(other than to wholly owned Subsidiaries of the Company); or (iv) enter into
any material commitment or transaction (including, but not limited to, any
material capital expenditure or purchase or lease of assets or real estate
other than the purchase of products for inventory and supplies in the ordinary
course of business);
(h) neither the Company nor any of its
Subsidiaries shall change any of the accounting methods
used by it unless required by GAAP;
(i) neither the Company nor any of its
Subsidiaries shall pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice, of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial state-
45
ments (or the notes thereto) of the Company and its consolidated Subsidiaries;
(j) neither the Company nor any of its
Subsidiaries will adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its Subsidiaries (other than the Merger);
(k) neither the Company nor any of its
Subsidiaries will take, or agree to commit to take, any action that would or is
reasonably likely to result in any of the conditions to the Offer set forth in
Annex A or any of the conditions to the Merger set forth in Article VI not
being satisfied, or would make any representation or warranty of the Company
contained herein inaccurate in any respect at, or as of any time prior to, the
Effective Time, or that would materially impair the ability of the Company to
consummate the Offer or the Merger in accordance with the terms hereof or
materially delay such consummation; and
(l) neither the Company nor any of its
Subsidiaries will enter into an agreement, contract, commitment or arrangement
to do any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
Section 5.2 Access; Confidentiality. Upon reasonable notice,
the Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, access, during normal business hours during the
period prior to the Appointment Date, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to the Parent (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of federal
securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. After the
Appointment Date the Company shall provide Parent and such persons as Parent
shall designate with all such information, at such time as Parent shall request.
46
Unless otherwise required by law and until the Appointment Date, Parent will
hold any such information which is nonpublic in confidence in accordance with
the provisions of a letter agreement dated October 21, 1996 between the Company
and the Parent (the "Confidentiality Agreement").
Section 5.3 Consents and Approvals. (a) Each of the Company,
Parent and the Purchaser will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on it with respect to
this Agreement and the transactions contemplated hereby (which requirements
shall include, without limitation, those identified in Section 5.3(a) of the
Company Disclosure Schedule attached to this Agreement, and which actions shall
include, without limitation, furnishing all information required under the HSR
Act and in connection with approvals of or filings with any other Governmental
Entity) and will promptly cooperate with and furnish information to each other
in connection with any such requirements imposed upon any of them or any of
their Subsidiaries in connection with this Agreement and the transactions
contemplated hereby. Each of the Company, Parent and the Purchaser will, and
will cause its Subsidiaries to, take all reasonable actions necessary to obtain
(and will cooperate with each other in obtaining) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity or other
public or private third party required to be obtained or made by Parent, the
Purchaser, the Company or any of their Subsidiaries in connection with the
Merger or the taking of any action contemplated thereby or by this Agreement.
(b) The Company and Parent shall take all
reasonable actions necessary to file as soon as practicable notifications under
the HSR Act and to respond as promptly as practicable to any inquiries received
from the Federal Trade Commission and the Antitrust Division of the Department
of Justice for additional information or documentation and to respond as
promptly as practicable to all inquiries and requests received from any State
Attorney General or other Governmental Entity in connection with antitrust
matters.
Section 5.4 No Solicitation. (a) Neither the Company nor
any of its Subsidiaries shall (and the Company shall use its best efforts to
cause its officers, directors, employees, representatives and agents, includ-
47
ing, but not limited to, investment bankers, attorneys and accountants, not to),
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
any of its affiliates or representatives) concerning any proposal or offer to
acquire all or a substantial part of the business and properties of the Company
or any of its Subsidiaries or any capital stock of the Company or any of its
Subsidiaries, whether by merger, tender offer, exchange offer, sale of assets or
similar transactions involving the Company or any Subsidiary, division or
operating or principal business unit of the Company (an "Acquisition Proposal"),
except that nothing contained in this Section 5.4 or any other provision hereof
shall prohibit the Company or the Company's Board from (i) taking and disclosing
to the Company's stockholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act, or (ii) making such disclosure to the Company's stockholders as,
in the good faith judgment of the Board, after receiving advice from outside
counsel, is required under applicable law, provided that the Company may not,
except as permitted by Section 5.4(b), withdraw or modify, or propose to
withdraw or modify, its position with respect to the Offer or the Merger or
approve or recommend, or propose to approve or recommend, any Acquisition
Proposal, or enter into any agreement with respect to any Acquisition Proposal.
The Company will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. Notwithstanding the foregoing, the Company may furnish information
concerning its business, properties or assets to any corporation, partnership,
person or other entity or group pursuant to appropriate confidentiality
agreements, and may negotiate and participate in discussions and negotiations
with such entity or group concerning an Acquisition Proposal if (x) such entity
or group has on an unsolicited basis submitted a bona fide written proposal to
the Board of Directors of the Company relating to any such transaction which
the Board determines in good faith, represents a superior transaction to the
Offer and the Merger and which is not conditioned upon obtaining additional
financing and (y) in the opinion of the Board of Directors of the Company, only
after receipt of advice from outside legal counsel to the
48
Company, the failure to provide such information or access or to engage in such
discussions or negotiations could reasonably be expected to cause the Board of
Directors to violate its fiduciary duties to the Company's stockholders under
applicable law (an Acquisition Proposal which satisfies clauses (x) and (y)
being referred to herein as a "Superior Proposal"). The Company will immediately
notify Parent of the existence of any proposal or inquiry received by the
Company and the identity of the party making such proposal or inquiry which it
may receive in respect of any such transaction.
(b) Except as set forth herein, neither
the Board of Directors of the Company nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or the Purchaser, the approval or recommendation by such Board of
Directors or any such committee of the Offer, this Agreement or the Merger,
(ii) approve or recommend, or propose to approve or recommend, any Acquisition
Proposal or (iii) enter into any agreement with respect to any Acquisition
Proposal. Notwithstanding the foregoing, prior to the time of acceptance for
payment of Shares in the Offer, the Board of Directors of the Company may
(subject to the terms of this and the following sentence) withdraw or modify
its approval or recommendation of the Offer, this Agreement or the Merger,
approve or recommend a Superior Proposal, or enter into an agreement with
respect to Superior Proposal, in each case at any time after the second
business day following Parent's receipt of written notice advising Parent that
the Board of Directors has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal; provided that the Company shall not enter
into an agreement with respect to a Superior Proposal unless the Company shall
have furnished Parent with written notice not later than 12:00 noon one day in
advance of any date that it intends to enter into such agreement and shall have
caused its financial and legal advisors to negotiate with Parent to make such
adjustments in the terms and conditions of this Agreement as would enable the
Company to proceed with the transactions contemplated herein on such adjusted
terms. In addition, if the Company proposes to enter into an agreement with
respect to any Acquisition Proposal, it shall concurrently with entering into
such agreement pay, or cause to be paid, to
49
Parent the Termination Fee (as defined in Section 8.1(b)) subject to the
provisions of Section 8.1(b).
Section 5.5 Brokers or Finders. The Company represents, as to
itself and its Subsidiaries and affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee from the
Company or any of its Subsidiaries in connection with any of the transactions
contemplated by this Agreement except for Robertson, Stephens & Company LLC and
Evergreen Capital Markets Ltd., whose engagement letter is attached as Section
5.5 of the Company Disclosure Schedule.
Section 5.6 Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to achieve the satisfaction of the Minimum Condition and all
conditions set forth in Annex A and Article VI, and to consummate and make
effective the Merger and the other transactions contemplated by this Agreement.
Without limitation of the foregoing, Parent, Purchaser and the Company shall
take such steps and provide and comply with such undertakings as may be
required by any Governmental Entity whose approval or consent, or with respect
to which a waiting period must expire, to satisfy the conditions set forth in
Annex A and to assure that the Parent Options may properly be issued under
Section 2.4(a); provided that such steps and undertakings shall not impose upon
the Company or Parent and the Purchaser any terms or conditions which Parent
determines reasonably and in good faith to be unreasonably burdensome to Parent
or the Purchaser or to the operations of the Company on a going-forward basis.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of the Company, Parent and the Purchaser shall use all reasonable
efforts to take, or cause to be taken, all such necessary actions.
Section 5.7 Publicity. The initial press release with respect
to the execution of this Agreement
50
shall be a joint press release acceptable to Parent and the Company. Thereafter,
so long as this Agreement is in effect, neither the Company, Parent nor any of
their respective affiliates shall issue or cause the publication of any press
release or other announcement with respect to the Merger, this Agreement or the
other transactions contemplated hereby without the prior consultation of the
other party, except as may be required by law or by any listing agreement with
a national securities exchange or trading market.
Section 5.8 Notification of Certain Matters. The Company
shall give prompt notice to Parent and Parent shall give prompt notice to the
Company, of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior
to the Effective Time and (ii) any material failure of the Company, Parent or
the Purchaser, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.8
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 5.9 Directors' and Officers' Insurance and
Indemnification. (a) For seven years after the Effective Time, Parent shall,
and shall cause the Surviving Corporation (or any successor to the Surviving
Corporation) to, (i) retain all provisions of the Company's Certificate of
Incorporation as now in effect respecting the limitation of liabilities of
directors and officers, and (ii) indemnify, defend and hold harmless the
present and former officers and directors of the Company and its Subsidiaries,
and persons who become any of the foregoing prior to the Effective Time (each
an "Indemnified Party") against all losses, claims, damages, liabilities,
costs, fees and expenses (including reasonable fees and disbursements of
counsel and judgments, fines, losses, claims, liabilities and amounts paid in
settlement (provided that any such settlement is effected with the written
consent of the Parent or the Surviving Corporation which consent shall not
unreasonably be withheld)) arising out of actions or omissions occurring at or
prior to the Effective Time to the full extent permitted under
51
Delaware law, subject to the terms of the Company's Certificate of Incorporation
or the By-laws, as in effect at the date hereof, including provisions relating
to advancement of expenses incurred in the defense of any action or suit;
provided that, in the event any claim or claims are asserted or made within
such seven year period, all rights to indemnification in respect of any such
claim or claims shall continue until disposition of any and all such claims;
provided, further, that any determination required to be made with respect to
whether an Indemnified Party's conduct complies with the standards set forth
under Delaware law, the Certificate of Incorporation or the By-Laws, as the
case may be, shall be made by independent counsel mutually acceptable to Parent
and the Indemnified Party and; provided, further, that nothing herein shall
impair any rights or obligations of any present or former directors or officers
of the Company. In the event the Surviving Corporation or any of its successors
or assigns consolidates with or merges into any other person or entity and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or transfers or conveys all or substantially all of its properties and
assets to any person or entity, then, and in each such case, proper provision
shall be made so that the successors and assigns of the Surviving Corporation
assume the obligations set forth in this Section 5.9.
(b) Parent or the Surviving Corporation
shall maintain the Company's existing officers' and directors' liability
insurance ("D&O Insurance") for a period of not less than seven years after the
Effective Date; provided, that the Parent may substitute therefor policies of
substantially equivalent coverage and amounts containing terms no less
favorable to such former directors or officers; provided, further, if the
existing D&O Insurance expires, is terminated or cancelled during such period,
Parent or the Surviving Corporation will use all reasonable efforts to obtain
substantially similar D&O Insurance; provided, further, however, that in no
event shall the Company be required to pay aggregate premiums for insurance
under this Section in excess of 150% of the aggregate premiums paid by the
Company in 1995 on an annualized basis for such purpose (the "1995 Premium");
and provided, further, that if the Parent or the Surviving Corporation is unable
to obtain the amount of insurance required by this Section 5.9(b) for such
aggregate
52
premium, Parent or the Surviving Corporation shall obtain as much insurance as
can be obtained for an annual premium not in excess of 150% of the 1995 Premium.
Section 5.10 Purchaser Compliance. Parent shall cause the
Purchaser to comply with all of its obligations under or related to this
Agreement.
Section 5.11 Actions of Parent and the Purchaser. Neither
Parent nor the Purchaser will take, or agree to commit to take, any action that
would or is reasonably likely to result in any of the conditions to the Offer
set forth in Annex A or any of the conditions to the Merger set forth in
Article VI not being satisfied, or would make many representation or warranty
of Parent or the Purchaser contained herein inaccurate in any respect at, or as
of any time prior to, the Effective Time, or that would materially impair the
ability of the parties to consummate the Offer or the Merger in accordance with
the terms hereof or materially delay such consummation. Neither Parent nor the
Purchaser will enter into an agreement, contract, commitment or arrangement to
do any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
Section 5.12 ICT Action. The Company agrees that, prior to
the Closing Date, it shall cause its representatives and agents to consult with
Parent on an ongoing basis with respect to any decisions and other matters in
respect of ICT's discussions with Carl Zeiss and Advantest Corporation and
neither the Company nor any of its representatives shall enter into any
contractual obligation or waive any rights in respect thereof without Parent's
prior written consent.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger
shall be subject to the satisfaction on or prior to the Closing Date of
each of the following conditions, any and all of which may be waived in whole
or in part by the Company, Parent
53
or the Purchaser, as the case may be, to the extent permitted by applicable law:
(a) Stockholder Approval. This Agreement
shall have been approved and adopted by the requisite vote of the holders of
the Shares, if required by applicable law, in order to consummate the Merger;
(b) Statutes; Consents. No law, statute,
rule, order, decree or regulation shall have been enacted or promulgated by any
Governmental Entity of competent jurisdiction which declares this Agreement
invalid or unenforceable in any material respect or which prohibits
consummation of the Merger and all governmental consents, orders and approvals
(including, without limitation, those identified in Section 5.3(a) of the
Schedule attached to this Agreement) required for the consummation of the
Merger and the other transactions contemplated hereby shall have been obtained
and shall be in effect at the Effective Time;
(c) Purchase of Shares in Offer. Parent,
the Purchaser or their affiliates shall have purchased Shares pursuant to the
Offer, except that this condition shall not apply if Parent, the Purchaser or
their affiliates shall have failed to purchase Shares pursuant to the Offer in
breach of their obligations under this Agreement; and
(d) HSR Approval. The applicable waiting
period under the HSR Act shall have expired or been
terminated.
Section 6.2. Condition to Parent's and the Purchaser's
Obligations to Effect the Merger. The obligations of Parent and the Purchaser
to consummate the Merger are further subject to the fulfillment of the
condition that all actions contemplated by Section 2.4 hereof shall have been
taken, which may be waived in whole or in part by Parent and the Purchaser.
54
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and
the transaction contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after stockholder approval thereof:
(a) By the mutual written consent of the
Board of Directors of Parent or the Purchaser and the Board of Directors of the
Company.
(b) By either of the Board of Directors
of the Company or the Board of Directors of Parent or the
Purchaser:
(i) if (x) the Offer shall have expired without any
Shares being purchased therein or (y) the Purchaser shall not have
accepted for payment any Shares pursuant to the Offer by August 24,
1997; provided, however, that the right to terminate this Agreement
under this Section 7.1(b)(i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of Parent or the Purchaser, as
the case may be, to purchase the Shares pursuant to the Offer on or
prior to such date; or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their best
efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such order, decree, ruling or
other action shall have become final and non-appealable.
(c) By the Board of Directors of the
Company:
(i) if Parent, the Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to five
business days following the date of the initial public announcement of
the
55
Offer; provided, that the Company may not terminate this Agreement
pursuant to this Section 7.1(c)(i) if the Company is at such time in
material breach of its obligations under this Agreement;
(ii) in connection with entering into a definitive
agreement in accordance with Section 5.4(b), provided it has complied
with all provisions thereof, including the notice provisions therein,
and that it makes simultaneous payment of the Termination Fee; or
(iii) if Parent or the Purchaser shall have breached
in any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement,
which breach cannot be or has not been cured within 30 days after the
giving of written notice to Parent or the Purchaser, as applicable.
(d) By the Board of Directors of Parent
or the Purchaser:
(i) if, due to an occurrence, not involving a breach
by Parent or the Purchaser of their obligations hereunder, which makes
it impossible to satisfy any of the conditions set forth in Annex A
hereto, Parent, the Purchaser, or any of their affiliates shall have
failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer;
(ii) if prior to the purchase of Shares pursuant to
the Offer, the Company shall have breached any representation,
warranty, covenant or other agreement contained in this Agreement
which (A) would give rise to the failure of a condition set forth in
paragraph (f) or (g) of Annex A hereto and (B) cannot be or has not
been cured within 30 days after the giving of written notice to the
Company; or
(iii) if either Parent or the Purchaser is entitled
to terminate the Offer as a result of the occurrence of any event set
forth in paragraph (e) of Annex A hereto.
56
Section 7.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to its terms, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void, and there shall be no liability on the part of
the Parent or the Company except (A) for fraud or for breach of this Agreement
prior to such termination and (B) as set forth in Section 8.1.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. (a) Except as contemplated by
this Agreement, including Section 8.1(b) hereof, all costs and expenses
incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
(b) If (x) the Board of Directors of the
Company shall terminate this Agreement pursuant to Section 7.1(c)(ii), (y) the
Board of Directors of Parent or the Purchaser shall terminate this Agreement
pursuant to Section 7.1(d)(iii) hereof, or (z) prior to the termination of this
Agreement (other than by the Board of Directors of the Company pursuant to
Section 7.1(c)(i) or 7.1(c)(iii)), an Acquisition Proposal shall have been made
and within one year of such termination, the Company enters into an agreement
with respect to, approves or recommends or takes any action to facilitate an
Acquisition Proposal with the person making such original Acquisition Proposal
and at a price and on terms at least as favorable to the stockholders of the
Company as the Offer and the Merger and such later Acquisition Proposal is
consummated, the Company shall pay to Parent (concurrently with such
termination, in the case of clauses (x) or (y) above, and not later than the
consummation of such later Acquisition Proposal, in the case of clause (z)
above) an amount equal to $4,000,000 (the "Termination Fee"); provided that no
Termination Fee shall be payable if the Purchaser or Parent was in material
breach of its representations, warranties or obligations under this Agreement
at the time of its termination.
57
Section 8.2 Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action
taken by their respective Boards of Directors (which in the case of the Company
shall include approvals as contemplated in Section 1.3(b)), at any time prior
to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the
stockholders of the Company, no such amendment, modification or supplement
shall reduce the amount or change the form of the Merger Consideration.
Section 8.3 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
schedule, instrument or other document delivered pursuant to this Agreement
shall survive the Effective Time.
Section 8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed) or sent by an overnight courier
service, such as Federal Express, to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
Applied Materials, Inc.
Attention: Joseph J. Sweeney
Telephone No.: (408) 748-5420
Telecopy No.: (408) 563-4635
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000
and
58
(b) if to the Company, to:
Opal, Inc.
3203 Scott Boulevard
Santa Clara, CA 95054
Attention: Israel Niv
Telephone No.: (408) 727-6060
Telecopy No.: (408) 727-6332
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Thomas P. Storer, P.C.
Telephone No.: (617) 570-1145
Telecopy No.: (617) 523-1231
and
Goldfarb, Levy, Eran & Co.
Eliahu House
2 Ibn Gvirol Street
Tel Aviv 64077
Israel
Attention: Yehuda M. Levy, Adv.; Marc
A. Rabin, Adv.; and Shirin
Halpern-Herzog, Adv.
Telephone No.: (972-3) 695-4343
Telecopy No.: (972-3) 695-4344
Section 8.5 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation". As used in this Agreement, (a) the term
"affiliate(s)" shall have the meaning set forth in Rule l2b-2 of the Exchange
Act, and (b) the term "Company's knowledge" means the actual knowledge after
due inquiry of any of Rafi Yizhar, Henry Schwartzbaum or Israel Niv, provided
that none of the foregoing individuals shall have any personal liability to the
Parent or the Purchaser by reason of the foregoing.
59
Section 8.6 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 8.7 Entire Agreement; No Third Party Beneficiaries.
This Agreement and the Confidentiality Agreement (including the documents and
the instruments referred to herein and therein): (a) constitute the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Sections 2.4 and 5.9 is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 8.8 Severability. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section 8.9 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
Section 8.10 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the
60
prior written consent of the other parties, except that the Purchaser may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
Subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
Section 8.11 Transfer and Similar Taxes. Notwithstanding any
other provision of this Agreement to the contrary, each of the Company's
stockholders shall be responsible for the payment of any sales, use, privilege,
transfer, documentary, gains, stamp, duties, recording and similar Taxes and
fees (including any penalties, interest and additions to such fees) incurred in
connection with such stockholder's sale of Shares to the Purchaser pursuant to
this Agreement and for the accurate filing of all necessary Tax Returns and
other documentation with respect to any transfer Tax.
61
IN WITNESS WHEREOF, Parent, the Purchaser and the Company
have caused this Agreement to be signed by their respective officers thereunto
duly authorized as of the date first written above.
APPLIED MATERIALS, INC.
By: /s/ James C. Morgan
--------------------------------------
Name: James C. Morgan
Title: Chairman and Chief Executive Officer
ORION CORP. I
By: /s/ Joseph J. Sweeney
--------------------------------------
Name: Joseph J. Sweeney
Title: Vice President
OPAL, INC.
By: /s/ Mendy Erad
--------------------------------------
Name: Mendy Erad
Title: Chairman of the Board
By: /s/ Rafi Yizhar
--------------------------------------
Name: Rafi Yizhar
Title: President and Chief Executive
Officer
ANNEX A
Certain Conditions of the Offer. Notwithstanding any other
provisions of the Offer, and in addition to (and not in limitation of) the
Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Merger Agreement), the Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Shares, and may terminate or amend the Offer as
to any Shares not then paid for, if (i) any applicable waiting period under the
HSR Act has not expired or terminated, (ii) the Minimum Condition has not been
satisfied, (iii) the approval of the Offer and the Merger by the Israeli
Investments Center shall not have been obtained, (iv) any applicable waiting
period under the Israeli Restrictive Trade Practices Act of 1988 has not
expired or terminated, (v) the approval of the Offer and the Merger by the
Israeli Office of Chief Scientist shall not have been obtained, (vi) the
exemption by the Israeli Securities Authority from the registration and
prospectus delivery requirements of the Israeli Securities laws for the
issuance of the Parent Options pursuant to Section 2.4(a) shall not have been
obtained or (vii) at any time on or after the date of the Merger Agreement and
before the time of acceptance for payment for any such Shares, any of the
following events shall occur or shall be determined by the Purchaser to have
occurred:
(a) there shall be threatened or pending any
suit, action or proceeding by any Governmental Entity against the Purchaser,
Parent, the Company or any Subsidiary of the Company (i) seeking to prohibit or
impose any material limitations on Parent's or the Purchaser's ownership or
operation (or that of any of their respective Subsidiaries or affiliates) of
all or a material portion of their or the Company's businesses or assets, or to
compel Parent or the Purchaser or their respective Subsidiaries and affiliates
to dispose of or hold separate any material portion of the business or assets
of the Company or Parent and their respective Subsidiaries, in each case taken
as a whole, (ii) challenging the acquisi-
1
tion by Parent or the purchaser of any Shares under the Offer or pursuant to
the Stockholder Agreements, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the other
transactions contemplated by this Agreement or the Stockholder Agreements
(including the voting provisions thereunder), or seeking to obtain from the
Company, Parent or the Purchaser any damages that are material in relation to
the Company and its Subsidiaries taken as a whole, (iii) seeking to impose
material limitations on the ability of the Purchaser, or render the Purchaser
unable, to accept for payment, pay for or purchase some or all of the Shares
pursuant to the Offer and the Merger, (iv) seeking to impose material
limitations on the ability of the Purchaser or Parent effectively to exercise
full rights of ownership of the Shares, including, without limitation, the
right to vote the Shares purchased by it on all matters properly presented to
the Company's stockholders, or (v) which otherwise is reasonably likely to have
a material adverse affect on the consolidated financial condition, businesses
or results of operations of the Company and its Subsidiaries, taken as a whole;
(b) there shall be any statute, rule, regula-
tion, judgment, order or injunction enacted, entered, enforced, promulgated, or
deemed applicable, pursuant to an authoritative interpretation by or on behalf
of a Government Entity, to the Offer or the Merger, or any other action shall
be taken by any Governmental Entity, other than the application to the Offer or
the Merger of applicable waiting periods under HSR Act, that is reasonably
likely to result, directly or indirectly, in any of the consequences referred
to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange or in the NASDAQ National Market System, for a period in
excess of 24 hours (excluding suspensions or limitations resulting solely from
physical damage or interference with such exchanges not related to market
conditions), (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory),
(iii) a commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States or
involving Israel and, in the case of armed hostilities involving Israel,
having, or which could reasonably be expected to have, a substantial continuing
general effect on business and financial conditions in Isra-
2
el, (iv) any limitation (whether or not mandatory) by any United States or
Israeli governmental authority on the extension of credit generally by banks or
other financial institutions, or (v) a change in general financial bank or
capital market conditions which materially and adversely affects the ability of
financial institutions in the United States and in Israel to extend credit or
syndicate loans or (vi) in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or worsening
thereof;
(d) there shall have occurred any material
adverse change (or any development that, insofar as reasonably can be foreseen,
is reasonable likely to result in any material adverse change) in the
consolidated financial condition, businesses, results of operations or
prospects of the Company and its Subsidiaries, taken as a whole, other than any
such change which relates to general conditions in the economy or in the
Company's industry or arises solely from the Company's execution and delivery
of this Agreement;
(e)(i) the Board of Directors of the Company
or any committee thereof shall have withdrawn or modified in a manner adverse
to Parent or the Purchaser its approval or recommendation of the Offer, the
Merger or this Agreement, or approved or recommended any Acquisition Proposal
or (ii) the Company shall have entered into any agreement with respect to any
Superior Proposal in accordance with Section 5.4(b) of this Agreement;
(f) any of the representations and warranties
of the Company set forth in this Agreement that are qualified as to materiality
shall not be true and correct and any such representations and warranties that
are not so qualified shall not be true and correct in any material respect, in
each case (i) as of the date referred to in any representation or warranty
which addresses matters as of a particular date, or (ii) as to all other
representations and warranties, as of the date of this Agreement and as of the
scheduled expiration of the Offer;
(g) the Company shall have failed to perform
in any material respect any material obligation or to comply in any material
respect with any material agreement or covenant of the Company to be performed
or complied with by it under this Agreement; or
3
(h) the Agreement shall have been terminated
in accordance with its terms;
which in the reasonable good faith judgment of Parent or the Purchaser, in any
such case, and regardless of the circumstances (including any action or
inaction by Parent or the Purchaser) giving rise to such condition makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
of or payment for Shares.
The foregoing conditions are for the sole benefit of Parent
and the Purchaser and may be waived by Parent or the Purchaser, in whole or in
part at any time and from time to time in the sole discretion of Parent or the
Purchaser. The failure by Parent or the Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
4