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AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 4, 1999
AMONG
INTEL CORPORATION,
LEVEL ONE COMMUNICATIONS, INCORPORATED
AND
INTEL RSW CORPORATION
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 THE MERGER......................................................... 1
Section 1.1. The Merger.................................................. 1
Section 1.2. Effective Time.............................................. 1
Section 1.3. Closing of the Merger....................................... 1
Section 1.4. Effects of the Merger....................................... 1
Section 1.5. Certificate of Incorporation and Bylaws..................... 1
Section 1.6. Directors................................................... 2
Section 1.7. Officers.................................................... 2
Section 1.8. Conversion of Shares........................................ 2
Section 1.9. Dissenters' Rights.......................................... 2
Section 1.10. Exchange of Certificates.................................... 2
Section 1.11. Stock Options............................................... 4
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................... 5
Section 2.1. Organization and Qualification; Subsidiaries; Investments... 5
Section 2.2. Capitalization of the Company and its Subsidiaries.......... 6
Section 2.3. Authority Relative to this Agreement; Recommendation........ 7
Section 2.4. SEC Reports; Financial Statements........................... 7
Section 2.5. Information Supplied........................................ 7
Section 2.6. Consents and Approvals; No Violations....................... 8
Section 2.7. No Default.................................................. 8
Section 2.8. No Undisclosed Liabilities; Absence of Changes.............. 8
Section 2.9. Litigation.................................................. 9
Section 2.10. Compliance with Applicable Law.............................. 9
Section 2.11. Employee Benefits........................................... 10
Section 2.12. Labor and Employment Matters................................ 13
Section 2.13. Environmental Laws and Regulations.......................... 14
Section 2.14. Taxes....................................................... 14
Section 2.15. Intellectual Property....................................... 15
Section 2.16. Insurance................................................... 19
Section 2.17. Certain Business Practices.................................. 19
Section 2.18. Product Warranties.......................................... 20
Section 2.19. Suppliers and Customers..................................... 20
Section 2.20. Vote Required............................................... 20
Section 2.21. Tax Treatment............................................... 20
Section 2.22. Affiliates.................................................. 20
Section 2.23. Opinion of Financial Adviser................................ 20
Section 2.24. Brokers..................................................... 20
Section 2.25. Representations Complete.................................... 20
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION...........
21
Section 3.1. Organization................................................ 21
Section 3.2. Capitalization of Parent and its Subsidiaries............... 21
Section 3.3. Authority Relative to this Agreement........................ 22
Section 3.4. SEC Reports; Financial Statements........................... 22
Section 3.5. Information Supplied........................................ 22
Section 3.6. Consents and Approvals; No Violations....................... 22
Section 3.7. Litigation.................................................. 23
Section 3.8. Tax Treatment............................................... 23
Section 3.9. Brokers..................................................... 23
Section 3.10. No Prior Activities......................................... 23
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Section 3.11. No Undisclosed Liabilities; Absence of Changes.............. 23
Section 3.12. Compliance with Applicable Law.............................. 23
Section 3.13. Representations Complete.................................... 23
ARTICLE 4 COVENANTS.......................................................... 24
Section 4.1. Conduct of Business of the Company.......................... 24
Section 4.2. Preparation of S-4 and the Proxy Statement.................. 26
Section 4.3. No Solicitation or Negotiation.............................. 26
Section 4.4. Comfort Letters............................................. 27
Section 4.5. Meeting of Stockholders..................................... 28
Section 4.6. Nasdaq National Market...................................... 28
Section 4.7. Access to Information....................................... 28
Section 4.8. Certain Filings; Reasonable Efforts......................... 29
Section 4.9. Public Announcements........................................ 30
Section 4.10. Indemnification and Directors' and Officers' Insurance...... 30
Section 4.11. Notification of Certain Matters............................. 31
Section 4.12. Affiliates; Tax-Free Reorganization......................... 31
Section 4.13. Additions to and Modification of Company Disclosure
Schedule.................................................... 31
Section 4.14. Access to Company Employees................................. 32
Section 4.15. Company Compensation and Benefit Plans...................... 32
Section 4.16. Convertible Subordinated Notes.............................. 32
Section 4.17. Immigration, Visas.......................................... 32
ARTICLE 5 CONDITIONS TO CONSUMMATION OF THE MERGER........................... 32
Section 5.1. Conditions to Each Party's Obligations to Effect the
Merger...................................................... 32
Section 5.2. Conditions to the Obligations of the Company................ 33
Section 5.3. Conditions to the Obligations of Parent and Acquisition..... 33
ARTICLE 6 TERMINATION; AMENDMENT; WAIVER..................................... 34
Section 6.1. Termination................................................. 34
Section 6.2. Effect of Termination....................................... 35
Section 6.3. Fees and Expenses........................................... 35
Section 6.4. Amendment................................................... 36
Section 6.5. Extension; Waiver........................................... 36
ARTICLE 7 MISCELLANEOUS...................................................... 36
Section 7.1. Nonsurvival of Representations and Warranties............... 36
Section 7.2. Entire Agreement; Assignment................................ 36
Section 7.3. Service Credit.............................................. 36
Section 7.4. Validity.................................................... 37
Section 7.5. Notices..................................................... 37
Section 7.6. Governing Law and Venue; Waiver of Jury Trial............... 38
Section 7.7. Descriptive Headings........................................ 39
Section 7.8. Parties in Interest......................................... 39
Section 7.9. Certain Definitions......................................... 39
Section 7.10. Personal Liability.......................................... 40
Section 7.11. Specific Performance........................................ 40
Section 7.12. Counterparts................................................ 40
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TABLE OF EXHIBITS
Exhibit A...................... Form of Affiliate Agreement
Form of Representations Relating to Tax Matters of the
Exhibit B-1.................... Company
Form of Representations Relating to Tax Matters of Parent
Exhibit B-2.................... and Acquisition
Matters to be Covered by Opinion of Legal Counsel to the
Exhibit C...................... Company
Matters to be Covered by Opinion of Legal Counsel to Parent
Exhibit D...................... and Acquisition
Exhibit E...................... Form of Certificate of Merger
TABLE OF CONTENTS
TO
COMPANY DISCLOSURE SCHEDULE
[THE COMPANY AGREES TO FURNISH SUPPLEMENTALLY TO THE SECURITIES AND EXCHANGE
COMMISSION COPIES OF ANY OF THE FOLLOWING OMITTED SCHEDULES UPON REQUEST OF THE
COMMISSION]
Section 2.1(a)............................................. Subsidiaries
Section 2.1(b)............................................. Good Standing
Section 2.1(c)............................................. Equity Investments
Section 2.2................................................ Warrants
Section 2.6................................................ Consents and Approval
Section 2.7................................................ Defaults
Undisclosed Liabilities; Absence of
Section 2.8................................................ Changes
Section 2.9................................................ Litigation
Section 2.11(a)............................................ Employee Plans
Section 2.11(b)............................................ Employment and Related Agreements
Employee Benefits Affected by this
Section 2.11(c)............................................ Transaction
Section 2.11(d)............................................ Employee Benefits to Former Employees
Section 2.11(e)............................................ Employee Matters
Section 2.11(f)............................................ Lawsuits
Section 2.11(h)............................................ Reportable Events/Prohibited Transactions
Section 2.11(i)............................................ Outstanding Options
Section 2.11(k)............................................ Compensation and Benefit Plan Events
Section 2.11(l)............................................ Foreign Plans
Section 2.11(m)............................................ Post Effective Time Amendments
Section 2.11(p)............................................ Limitations on Amendments and Terminations
Section 2.12............................................... Labor and Employment Matters
Section 2.13............................................... Environmental Laws and Regulations
Section 2.14(b)............................................ Delinquent or Inaccurate Tax Returns
Section 2.14(c)............................................ All Taxes Paid
Section 2.14(d)............................................ Tax Claims
Section 2.14(e)............................................ Excess Parachute Payments
Section 2.15............................................... Copyrights
Section 2.15(b)............................................ Trademarks
Section 2.15(c)............................................ Patents
Section 2.15(e)(1)......................................... Inbound License Agreements
Section 2.15(e)(2)......................................... Outbound License Agreements
Section 2.15(h)............................................ Infringement
Section 2.15(i)............................................ Pending or Threatened Infringement Claims
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Section 2.15(j)............................................ Infringement Matters
Section 2.15(k)............................................ Existing Software Products
Section 2.15(l)............................................ Non Company Intellectual Property Rights
Existing and Currently Manufactured
Section 2.15(m)............................................ Software
Section 2.15(o)............................................ Year 2000 Compliance
Section 2.15(p)............................................ Foundry Relationships
Section 2.16............................................... Insurance
Section 2.18............................................... Product Warranties
Section 2.19............................................... Suppliers and Customers
Section 2.22............................................... Affiliates
Section 4.1................................................ Conduct of Business
Section 5.3(i)............................................. Third Party Consents
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of March 4,
1999, is by and among Level One Communications, Incorporated, a Delaware
corporation (the "Company"), Intel Corporation, a Delaware corporation
("Parent"), and Intel RSW Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent ("Acquisition"). Capitalized terms not otherwise defined
herein shall have the meanings ascribed to such terms in Section 7.9 of this
Agreement.
WHEREAS, the Boards of Directors of the Company, Parent and Acquisition
have each (i) determined that the Merger (as defined below) is advisable and
fair and in the best interests of their respective stockholders and (ii)
approved the Merger upon the terms and subject to the conditions set forth in
this Agreement; and
WHEREAS, for Federal income tax purposes it is intended that the Merger
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Acquisition hereby
agree as follows:
ARTICLE 1
THE MERGER
Section 1.1. The Merger. At the Effective Time (as defined below) and upon
the terms and subject to the conditions of this Agreement and in accordance with
the Delaware General Corporation Law (the "DGCL"), Acquisition shall be merged
with and into the Company (the "Merger"). Following the Merger, the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
the separate corporate existence of Acquisition shall cease. The Merger is
intended to qualify as a tax-free reorganization under Section 368(a) of the
Code. Parent, as the sole stockholder of Acquisition, hereby approves the Merger
and this Agreement.
Section 1.2. Effective Time. Subject to the terms and conditions set forth
in this Agreement, on the Closing Date (as defined in Section 1.3), (a) a
Certificate of Merger substantially in the form of Exhibit E (the "Certificate
of Merger") shall be duly executed and acknowledged by Acquisition and the
Company and thereafter delivered for filing to the Secretary of State of the
State of Delaware for filing pursuant to Section 251 of the DGCL and (b) the
parties shall make such other filings with the Secretary of State of the State
of Delaware as shall be necessary to effect the Merger. The Merger shall become
effective at such time as a properly executed copy of the Certificate of Merger
is duly filed with the Secretary of State of the State of Delaware in accordance
with Section 251 of the DGCL, or such later time as Parent and the Company may
agree upon and as may be set forth in the Certificate of Merger (the time the
Merger becomes effective being referred to herein as the "Effective Time").
Section 1.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date (the "Closing Date") to be
specified by the parties, which shall be no later than the second business day
after satisfaction (or waiver) of the latest to occur of the conditions set
forth in Article 5, at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, Xxx
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, unless another time, date or
place is agreed to in writing by the parties hereto.
Section 1.4. Effects of the Merger. The Merger shall have the effects set
forth in the DGCL. Without limiting the generality of the foregoing and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and Acquisition shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.5. Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of Acquisition in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until
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amended in accordance with Applicable Law. The bylaws of Acquisition in effect
at the Effective Time shall be the bylaws of the Surviving Corporation until
amended in accordance with Applicable Law.
Section 1.6. Directors. The directors of Acquisition at the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and bylaws of the Surviving
Corporation until such director's successor is duly elected or appointed and
qualified.
Section 1.7. Officers. The officers of Acquisition at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
Section 1.8. Conversion of Shares.
(a) At the Effective Time, each share of common stock of the Company
(individually a "Share" and collectively the "Shares") issued and outstanding
immediately prior to the Effective Time (other than (i) Shares held in the
Company's treasury or by any of the Company's subsidiaries and (ii) Shares held
by Parent, Acquisition or any other subsidiary of Parent) shall, by virtue of
the Merger and without any action on the part of Acquisition, the Company or the
holder thereof, be converted into and shall become a number of fully paid and
nonassessable shares of common stock, par value $.01 per share, of Parent
("Parent Common Stock") equal to the Exchange Ratio (as defined below) (the
"Merger Consideration"). Notwithstanding the foregoing, if, between the date of
this Agreement and the Effective Time, the outstanding shares of Parent Common
Stock or the Shares shall have been changed into a different number of shares or
a different class by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
then the Exchange Ratio shall be correspondingly adjusted to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares.
(b) The "Exchange Ratio" shall be 0.43.
(c) At the Effective Time, each outstanding share of the common stock of
Acquisition shall be converted into one share of common stock of the Surviving
Corporation.
(d) At the Effective Time, each Share held in the treasury of the Company
and each Share held by Parent, Acquisition or any subsidiary of Parent,
Acquisition or the Company immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of Acquisition, the
Company or the holder thereof, be canceled, retired and cease to exist, and no
shares of Parent Common Stock shall be delivered with respect thereto.
Section 1.9. Dissenters' Rights. In accordance with Section 262 of the
DGCL, the holders of the Shares shall not be entitled to dissenters' or
appraisal rights.
Section 1.10. Exchange of Certificates.
(a) From time to time following the Effective Time, as required by
subsections (b) and (c) below, Parent shall deliver to its transfer agent, or a
depository or trust institution of recognized standing selected by Parent and
Acquisition (the "Exchange Agent") for the benefit of the holders of Shares for
exchange in accordance with this Article I: (i) certificates representing the
appropriate number of shares of Parent Common Stock issuable pursuant to Section
1.8; and (ii) cash to be paid in lieu of fractional shares of Parent Common
Stock (such shares of Parent Common Stock and such cash are hereinafter referred
to as the "Exchange Fund"), in exchange for outstanding Shares.
(b) Not later than two (2) business days after the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") and whose shares were converted into the
right to receive shares of Parent Common Stock pursuant to Section 1.8: (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 Exchange 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 certificates representing shares of Parent Common Stock and, if applicable,
cash to be paid for fractional
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shares of Parent Common Stock. Upon surrender of a Certificate for cancellation
to the Exchange Agent together with such letter of transmittal duly executed,
the holder of such Certificate shall be issued a certificate representing that
number of whole shares of Parent Common Stock and, if applicable, a check
representing the cash consideration to which such holder is entitled on account
of a fractional share of Parent Common Stock that such holder has the right to
receive pursuant to the provisions of this Article I, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Shares that is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock and
a check representing the amount of consideration payable in lieu of fractional
shares shall be issued to a transferee if the Certificate representing such
Shares is presented to the Exchange Agent accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
1.10, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the certificate
representing shares of Parent Common Stock and cash in lieu of any fractional
shares of Parent Common Stock as contemplated by this Section 1.10.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of fractional shares shall be paid to any such holder pursuant
to Section 1.10(f), until the holder of record of such Certificate shall
surrender such Certificate. Subject to the effect of Applicable Law, following
surrender of any such Certificate there shall be paid to the record holder of
the certificates representing whole shares of Parent Common Stock issued in
exchange therefor without interest (i) the amount of any cash payable in lieu of
a fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 1.10(f) and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such number of whole shares of Parent Common Stock and (ii) at the appropriate
payment date the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Parent Common Stock.
(d) In the event that any Certificate for Shares shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange therefor upon
the making of an affidavit of that fact by the holder thereof such shares of
Parent Common Stock and cash in lieu of fractional shares, if any, as may be
required pursuant to this Agreement; provided, however, that Parent or the
Exchange Agent may, in its discretion, require the delivery of a suitable bond
or indemnity.
(e) All shares of Parent Common Stock issued upon the surrender for
exchange of Shares in accordance with the terms hereof (including any cash paid
pursuant to Section 1.10(c) or 1.10(f)) shall be deemed to have been issued in
full satisfaction of all rights pertaining to such Shares; subject, however, to
the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the date hereof that remain unpaid at
the Effective Time, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the Shares that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
(f) No fractions of a share of Parent Common Stock shall be issued in the
Merger but in lieu thereof each holder of Shares otherwise entitled to a
fraction of a share of Parent Common Stock shall upon surrender of his or her
Certificate or Certificates be entitled to receive an amount of cash (without
interest) determined by multiplying the closing price for Parent Common Stock as
reported on the Nasdaq National Market on the business day immediately preceding
the date hereof by the fractional share interest to which such holder would
otherwise be entitled. The parties acknowledge that payment of the cash
consideration in lieu of issuing fractional shares was not separately bargained
for consideration, but merely represents a mechanical rounding off for purposes
of simplifying the corporate and accounting complexities that would otherwise be
caused by the issuance of fractional shares.
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(g) Any portion of the Exchange Fund that remains undistributed to the
stockholders of the Company upon the expiration of one (1) year after the
Effective Time shall be delivered to Parent upon demand and any stockholders of
the Company who have not theretofore complied with this Article 1 shall
thereafter look only to Parent as general creditors for payment of their claim
for Parent Common Stock and cash in lieu of fractional shares, as the case may
be, and any applicable dividends or distributions with respect to Parent Common
Stock.
(h) Neither Parent nor the Company shall be liable to any holder of Shares
or Parent Common Stock for such shares (or dividends or distributions with
respect thereto) or cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar Applicable
Law.
Section 1.11. Stock Options.
(a) At the Effective Time, each outstanding option, warrant or other right
to purchase Shares (a "Company Stock Option" or collectively "Company Stock
Options") issued pursuant to the Level One Communications, Incorporated 1993
Stock Option Plan, the Level One Communications, Incorporated 1985 Stock Option,
Nonqualified Stock Option and Restricted Stock Purchase Plan, the Jato
Technologies, Inc. 1997 Stock Option Plan, the San Francisco Telecom Stock
Option Plan and the Acclaim Communications 1996 Stock Incentive Plan, as amended
July 14, 1997, or other agreement or arrangement other than options held by the
Company's outside directors, whether vested or unvested, shall be converted as
of the Effective Time into an option, warrant or right, as applicable, to
purchase shares of Parent Common Stock in accordance with the terms of this
Section 1.11. All plans or agreements described above pursuant to which any
Company Stock Option has been issued or may be issued other than outstanding
warrants or rights are referred to collectively as the "Company Plans." Each
Company Stock Option shall be deemed to constitute an option to acquire, on the
same terms and conditions as were applicable under such Company Stock Option, a
number of shares of Parent Common Stock equal to the number of shares of Parent
Common Stock that the holder of such Company Stock Option would have been
entitled to receive pursuant to the Merger had such holder exercised such option
or warrant, whether or not vested, in full immediately prior to the Effective
Time rounded to the nearest whole share at a price per share equal to (x) the
aggregate exercise price for the Shares otherwise purchasable pursuant to such
Company Stock Option divided by (y) the product of (i) the number of Shares
otherwise purchasable pursuant to such Company Stock Option, multiplied by (ii)
the Exchange Ratio; provided, however, that in the case of any option to which
Section 421 of the Code applies by reason of its qualification under Sections
422 through 424 of the Code, the option price, the number of shares purchasable
pursuant to such option and the terms and conditions of exercise of such option
shall be determined in order to comply with Section 424(a) of the Code.
(b) As soon as practicable after the Effective Time, Parent shall deliver
to the holders of Company Stock Options appropriate notices setting forth such
holders' rights pursuant to the Company Plan and that the agreements evidencing
the grants of such Options shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 1.11 after
giving effect to the Merger). Parent shall comply with the terms of the Company
Plans and ensure, to the extent required by and subject to the provisions of
such Plans, that Company Stock Options that qualified as incentive stock options
prior to the Effective Time continue to qualify as incentive stock options of
Parent after the Effective Time.
(c) At or before the Effective Time, Parent shall take all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery upon exercise of Company Stock Options assumed in accordance
with this Section 1.11. Not later than five (5) business days after the
Effective Time, Parent shall, if no registration statement is in effect covering
such Parent shares, file a registration statement on Form S-8 (or any successor
or other appropriate forms) with respect to the shares of Parent Common Stock
subject to any Company Stock Options held by persons who are directors, officers
or employees of the Company or its subsidiaries and shall use all commercially
reasonable efforts to maintain the effectiveness of such registration statement
or registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.
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(d) At or before the Effective Time, the Company shall cause to be
effected, in a manner reasonably satisfactory to Parent, amendments to the
Company Plans to give effect to the foregoing provisions of this Section 1.11.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent and
Acquisition, subject to the exceptions set forth in the Disclosure Schedule (the
"Company Disclosure Schedule") delivered by the Company to Parent in accordance
with Section 4.13 (which exceptions shall specifically identify a Section,
Subsection or clause of a single Section or Subsection hereof, as applicable, to
which such exception relates) that:
Section 2.1. Organization and Qualification; Subsidiaries; Investments.
(a) Section 2.1(a) of the Company Disclosure Schedule sets forth a true and
complete list of all the Company's directly or indirectly owned subsidiaries and
branch offices, together with the jurisdiction of incorporation of each
subsidiary and the percentage of each subsidiary's outstanding capital stock or
other equity interests owned by the Company or another subsidiary of the
Company. Each of the Company and its subsidiaries is duly organized, validly
existing and, except as set forth in Section 2.1 of the Company Disclosure
Schedule, in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite power and authority to own,
lease and operate its properties and to carry on its businesses as now being
conducted. The Company has heretofore delivered to Acquisition or Parent
accurate and complete copies of the Certificate of Incorporation and bylaws (or
similar governing documents), as currently in full force and effect, of the
Company and each of its subsidiaries. Section 2.1(a) of the Company Disclosure
Schedule specifically identifies each subsidiary of the Company that contains
any material assets or through which the Company conducts any material
operations. Except as set forth in Section 2.1(a) of the Company Disclosure
Schedule, the Company has no operating subsidiaries other than those
incorporated in a state of the United States.
(b) Except as set forth in Section 2.1(b) of the Company Disclosure
Schedule, each of the Company and its subsidiaries is duly qualified or licensed
and in good standing to do business 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 in such jurisdictions
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. When used in connection with the Company or its subsidiaries, the term
"Material Adverse Effect on the Company" means any circumstance, change in, or
effect on the Company and its subsidiaries, taken as a whole, that is, or is
reasonably likely in the future to be, materially adverse to the operations,
financial condition, earnings or results of operations, or the business
(financial or otherwise), of the Company and its subsidiaries, taken as a whole,
provided that none of the following shall be deemed, either alone or in
combination, to constitute a Material Adverse Effect on the Company; (i) a
change in the market price or trading volume of the Company Common Stock, (ii) a
failure by the Company to meet internal earnings or revenue projections or the
revenue or earnings predictions of equity analysts as reflected in the First
Call consensus estimate, or any other revenue or earnings predictions or
expectations, for any period ending (or for which earnings are released) on or
after the date of this Agreement and prior to the Effective Date, provided
further that this Section 2.1(b)(ii) shall not exclude any underlying change,
effect, event, occurrence, state of facts or developments which resulted in such
failure to meet such estimates, predictions or expectations, (iii) conditions
affecting the semi-conductor industry as a whole or the U.S. economy as a whole,
or (iv) any disruption of customer or supplier relationships arising primarily
out of or resulting primarily from actions contemplated by the parties in
connection with the announcement of this Agreement and the transactions
contemplated hereby, to the extent so attributable.
(c) Section 2.1(c) of the Company Disclosure Schedule sets forth a true and
complete list of each equity investment in an amount of Three Hundred Thousand
Dollars ($300,000) or more or that represents a
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five percent (5%) or greater ownership interest in the subject of such
investment made by the Company or any of its subsidiaries in any person other
than the Company's subsidiaries ("Other Interests"). Except as described in
Section 2.1(c) of the Company Disclosure Schedule, the Other Interests are owned
by the Company, by one or more of the Company's subsidiaries or by the Company
and one or more of its subsidiaries, in each case free and clear of all Liens
(as defined below).
Section 2.2. Capitalization of the Company and its Subsidiaries.
(a) The authorized capital stock of the Company consists of Two Hundred
Thirty-Six Million Two Hundred Fifty Thousand (236,250,000) Shares, of which, as
of March 1, 1999, 38,992,734 Shares were issued and outstanding and Ten Million
(10,000,000) shares of preferred stock, no shares of which are outstanding. All
of the outstanding Shares have been validly issued and are fully paid,
nonassessable and free of preemptive rights. As of March 1, 1999, approximately
7,430,200 Shares were reserved for issuance and, as of March 1, 1999,
approximately 6,770,200 were issuable upon or otherwise deliverable in
connection with the exercise of outstanding Company Stock Options issued
pursuant to the Company Plans. Between March 1, 1999 and the date hereof, no
shares of the Company's capital stock have been issued other than pursuant to
Company Stock Options already in existence on such first date, and between March
1, 1999 and the date hereof, no stock options have been granted. Except as set
forth above and for the Company's 4% Convertible Subordinated Notes due 2004
(the "Subordinated Notes") issued pursuant to the Indenture dated as of August
15, 1997, by and between the Company and State Street Bank and Trust Company of
California, N.A. (the "Indenture"), as of the date hereof, there are outstanding
(i) no shares of capital stock or other voting securities of the Company, (ii)
no securities of the Company or any of its subsidiaries convertible into or
exchangeable or exercisable for shares of capital stock or other securities of
the Company, (iii) no options, preemptive or other rights to acquire from the
Company or any of its subsidiaries, and, except as described in the Company SEC
Reports (as defined below), no obligations of the Company or any of its
subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or other
securities of the Company and (iv) no equity equivalent interests in the
ownership or earnings of the Company or its subsidiaries or other similar rights
(collectively "Company Securities"). Except as set forth in Section 2.2(a) of
the Company Disclosure Schedule, as of the date hereof, there are no outstanding
rights or obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any Company Securities. There are no stockholder
agreements, voting trusts or other agreements or understandings to which the
Company is a party or by which it is bound relating to the voting or
registration of any shares of capital stock of the Company. The Company has not
voluntarily accelerated the vesting of any Company Stock Options as a result of
the Merger or any other change in control of the Company.
(b) All of the outstanding capital stock of the Company's subsidiaries
owned by the Company is owned, directly or indirectly, free and clear of any
Lien or any other limitation or restriction (including any restriction on the
right to vote or sell the same except as may be provided as a matter of
Applicable Law). Except as set forth in Section 2.2(b) of the Company Disclosure
Schedule, there are no (i) securities of the Company or any of its subsidiaries
convertible into or exchangeable or exercisable for, (ii) options or (iii) other
rights to acquire from the Company or any of its subsidiaries any capital stock
or other ownership interests in or any other securities of any subsidiary of the
Company, and there exists no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the issuance or sale,
directly or indirectly, of any such capital stock. There are no outstanding
contractual obligations of the Company or its subsidiaries to repurchase, redeem
or otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of the Company. For purposes of this Agreement,
"Lien" means, with respect to any asset (including any security), any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such asset; provided, however, that the term "Lien" shall not include (i)
statutory liens for Taxes that are not yet due and payable or are being
contested in good faith by appropriate proceedings and are disclosed in Section
2.14 of the Company Disclosure Schedule or that are otherwise not material, (ii)
statutory or common law liens to secure obligations to landlords, lessors or
renters under leases or rental agreements confined to the premises rented, (iii)
deposits or pledges made in connection with, or to secure payment of, workers'
compensation, unemployment insurance, old age pension or other social security
programs mandated under Applicable Laws, (iv) statutory or common law liens in
favor of carriers,
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warehousemen, mechanics and materialmen, to secure claims for labor, materials
or supplies and other like liens, and (v) restrictions on transfer of securities
imposed by applicable state and federal securities laws.
(c) The Shares constitute the only class of equity securities of the
Company or its subsidiaries registered or required to be registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Section 2.3. Authority Relative to this Agreement; Recommendation.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement and the Stock Option Agreement, to perform its
obligations under this Agreement and the Stock Option Agreement, and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the Stock Option Agreement, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by the Board of Directors of the Company (the "Company Board"), and
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the Stock Option Agreement, or to consummate the
transactions contemplated hereby or thereby, except the approval of this
Agreement by the holders of a majority of the outstanding Shares. This Agreement
and the Stock Option Agreement have been duly and validly executed and delivered
by the Company and constitute the valid, legal and binding agreements of the
Company, enforceable against the Company in accordance with their terms, subject
to any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to creditors' rights generally or to
general principles of equity.
(b) Without limiting the generality of the foregoing, the Board of
Directors of the Company has unanimously (1) approved this Agreement, the Stock
Option Agreement, the Merger and the other transactions contemplated hereby, (2)
resolved to recommend approval and adoption of this Agreement, the Merger and
the other transactions contemplated hereby by the Company's stockholders, and
(3) has not withdrawn or modified such approval or resolution to recommend
(except as otherwise permitted in this Agreement).
Section 2.4. SEC Reports; Financial Statements.
(a) The Company has filed all required forms, reports and documents
("Company SEC Reports") with the Securities and Exchange Commission (the "SEC")
since January 1, 1997, each of which complied at the time of filing in all
material respects with all applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act, each law as in
effect on the dates such forms, reports and documents were filed. None of such
Company SEC Reports, including any financial statements or schedules included or
incorporated by reference therein, contained when filed any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not misleading,
except to the extent superseded by a Company SEC Report filed subsequently and
prior to the date hereof. The audited consolidated financial statements of the
Company included in the Company SEC Reports fairly present, in conformity in all
material respects with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and their consolidated results of operations and changes
in financial position for the periods then ended. Notwithstanding the foregoing,
the Company shall not be deemed to be in breach of any of the representations or
warranties in this Section 2.4(a) as a result of any changes to the Company SEC
Reports that the Company may make in response to comments received from the SEC
on the S-4 or the Proxy Statement (each as defined below).
(b) The Company has heretofore made, and hereafter will make, available to
Acquisition or Parent a complete and correct copy of any amendments or
modifications that are required to be filed with the SEC but have not yet been
filed with the SEC to agreements, documents or other instruments that previously
had been filed by the Company with the SEC pursuant to the Exchange Act.
Section 2.5. Information Supplied. None of the information supplied or to
be supplied by the Company in writing for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of shares of Parent Common Stock in
the Xxxxxx
0
00
(xxx "X-0") will, at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading or (ii) the proxy statement relating to the meeting of the
Company's stockholders to be held in connection with the Merger (the "Proxy
Statement") will, at the date mailed to stockholders of the Company and at the
time of the meeting of stockholders of the Company 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. The Proxy Statement insofar as it relates to the meeting of the
Company's stockholders to vote on the Merger will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, the Company makes no
representation, warranty or covenant with respect to any information supplied or
required to be supplied by Parent or Acquisition that is contained in or omitted
from any of the foregoing documents.
Section 2.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under
applicable requirements of the Securities Act, the Exchange Act, state
securities or blue sky laws, and the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), any filings under similar merger
notification laws or regulations of foreign Governmental Entities and the filing
and recordation of the Certificate of Merger as required by the DGCL, no
material filing with or notice to and no material permit, authorization, consent
or approval of any United States (federal, state or local) or foreign court or
tribunal, or administrative, governmental or regulatory body, agency or
authority (a "Governmental Entity") is necessary for the execution and delivery
by the Company of this Agreement or the Stock Option Agreement or the
consummation by the Company of the transactions contemplated hereby or thereby.
Neither the execution, delivery and performance of this Agreement or the Stock
Option Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby or thereby will (i) conflict with or result in
any breach of any provision of the respective Certificate of Incorporation or
bylaws (or similar governing documents) of the Company or any of its
subsidiaries, (ii) except as set forth in Section 2.6 of the Company Disclosure
Schedule, 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 or Lien) under any of the
terms, conditions or provisions of any material note, bond, mortgage, indenture,
lease, license, contract (including any material Supply 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 respective properties or
assets are bound or (iii) except as set forth in Section 2.6 of the Company
Disclosure Schedule, violate any material order, writ, injunction, decree, law,
statute, rule or regulation applicable to the Company or any of its subsidiaries
or any of their respective properties or assets.
Section 2.7. No Default. Except as set forth in Section 2.7 of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is in
breach, default or violation (and no event has occurred that with notice or the
lapse of time or both would constitute a breach, default or violation) of any
term, condition or provision of (i) its Certificate of Incorporation or bylaws
(or similar governing documents), (ii) any material note, bond, mortgage,
indenture, lease, license, contract (including any material Supply Contract),
agreement or other instrument or obligation to which the Company or any of its
subsidiaries is now a party or by which it or any of its properties or assets
are bound or (iii) any material order, writ, injunction, decree, law, statute,
rule or regulation applicable to the Company or any of its subsidiaries or any
of its properties or assets.
Section 2.8. No Undisclosed Liabilities; Absence of Changes. Except as and
to the extent publicly disclosed by the Company in the Company SEC Reports or as
set forth in Section 2.8 of the Company Disclosure Schedule, neither the Company
nor any of its subsidiaries has any material liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be required
by generally accepted accounting principles to be reflected on a consolidated
balance sheet of the Company (including the notes thereto). Except as publicly
disclosed by the Company in the Company SEC Reports or as set forth in Section
2.8 of the Company Disclosure Schedule, since September 30, 1998, there have
been no events, changes or effects with respect to the Company or its
subsidiaries that, individually or in the aggregate, have
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14
had or reasonably would be expected to have had a Material Adverse Effect on the
Company. Without limiting the generality of the foregoing, except as and to the
extent publicly disclosed by the Company in the Company SEC Reports or as set
forth in Section 2.8 of the Company Disclosure Schedule, since September 30,
1998, the Company and its subsidiaries have conducted their respective
businesses in all material respects only in, and have not engaged in any
material transaction other than according to, the ordinary and usual course of
such businesses consistent with past practices, and there has not been any (i)
material adverse change in the financial condition, properties, business or
results of operations of the Company and its subsidiaries; (ii) material damage,
destruction or other casualty loss with respect to any material asset or
property owned, leased or otherwise used by the Company or any of its
subsidiaries, not covered by insurance; (iii) declaration, setting aside or
payment of any dividend or other distribution in respect of the capital stock of
the Company or any of its subsidiaries (other than wholly-owned subsidiaries) or
any repurchase, redemption or other acquisition by the Company or any of its
subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of its subsidiaries; (iv)
amendment of any material term of any outstanding security of the Company or any
of its subsidiaries; (v) incurrence, assumption or guarantee by the Company or
any of its subsidiaries of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with past
practices; (vi) creation or assumption by the Company or any of its subsidiaries
of any Lien on any material asset other than in the ordinary course of business
consistent with past practices; (vii) loan, advance or capital contributions
made by the Company or any of its subsidiaries to, or investment in, any person
other than (x) loans or advances to employees in connection with
business-related travel, (y) loans made to employees consistent with past
practices that are not in the aggregate in excess of Fifty Thousand Dollars
($50,000), and (z) loans, advances or capital contributions to or investments in
wholly-owned subsidiaries, and in each case made in the ordinary course of
business consistent with past practices; (viii) material transaction or
commitment made, or any material contract or agreement entered into, by the
Company or any of its subsidiaries relating to its material assets or business
(including the acquisition (by sale, license or otherwise) or disposition (by
sale, license or otherwise) of any material assets) or any relinquishment by the
Company or any of its subsidiaries of any contract, agreement or other right, in
any such case, material to the Company and its subsidiaries, taken as a whole,
other than transactions and commitments in the ordinary course of business
consistent with past practices and those contemplated by this Agreement; (ix)
labor dispute, other than routine individual grievances, or any activity or
proceeding by a labor union or representative thereof to organize any employees
of the Company or any of its subsidiaries, or any lockouts, strikes, slowdowns,
work stoppages or threats thereof by or with respect to such employees; (x) any
exclusive license, distribution, marketing, sales or other agreement entered
into or any agreement to enter into any exclusive license, distribution,
marketing, sales or other agreement; (xi) "development services" or other
similar agreement with Thinkit Technologies, Inc.; or (xii) change by the
Company or any of its subsidiaries in its accounting principles, practices or
methods. Since September 30, 1998, except as disclosed in the Company SEC
Reports filed prior to the date hereof or increases in the ordinary course of
business consistent with past practices, there has not been any material
increase in the compensation payable or that could become payable by the Company
or any of its subsidiaries to (a) officers of the Company or any of its
subsidiaries or (b) any employee of the Company or any of its subsidiaries whose
annual cash compensation is One Hundred Thousand Dollars ($100,000) or more.
Section 2.9. Litigation. Except as publicly disclosed by the Company in the
Company SEC Reports or as set forth in Section 2.9 of the Company Disclosure
Schedule, there is no suit, claim, action, arbitration, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries or any of their respective properties or
assets before any Governmental Entity or brought by any person that is material
or would reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement beyond the Final Date. Except as
publicly disclosed by the Company in the Company SEC Reports, neither the
Company nor any of its subsidiaries is subject to any outstanding order, writ,
injunction or decree that would reasonably be expected to be material or would
reasonably be expected to prevent or delay the consummation of the transactions
contemplated hereby.
Section 2.10. Compliance with Applicable Law. Except as publicly disclosed
by the Company in the Company SEC Reports, the Company and its subsidiaries hold
all material permits, licenses, variances,
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exemptions, orders and approvals of all Governmental Entities necessary for the
lawful conduct of their respective businesses (the "Company Permits"). Except as
publicly disclosed by the Company in the Company SEC Reports, the Company and
its subsidiaries are in material compliance with the terms of the Company
Permits. Except as publicly disclosed by the Company in the Company SEC Reports,
the businesses of the Company and its subsidiaries have been and are being
conducted in material compliance with all material Applicable Laws. Except as
publicly disclosed by the Company in the Company SEC Reports, no investigation
or review by any Governmental Entity with respect to the Company or any of its
subsidiaries is pending or, to the knowledge of the Company, threatened, nor, to
the knowledge of the Company, has any Governmental Entity indicated an intention
to conduct the same.
Section 2.11. Employee Benefits.
(a) For purposes of this Agreement, "Compensation and Benefit Plans" means,
collectively, each written bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, termination, severance,
compensation, medical, health, or other plan, agreement, policy or arrangement,
that covers employees or directors of the Company or any of its subsidiaries, or
pursuant to which former employees or directors of the Company or any of its
subsidiaries are entitled to current or future benefits. To the knowledge of the
Company, there are no oral Compensation and Benefit Plans to which the Company
is a party. The Company has made available to Parent copies of all "employee
pension benefit plans" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (sometimes referred to herein
as "Pension Plans"), "employee welfare benefit plans" (as defined in Section
3(l) of ERISA) and all other Compensation and Benefit Plans maintained, or
contributed to, by the Company or of its subsidiaries or any person or entity
that, together with the Company and its subsidiaries, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code (the Company and each
such other person or entity, a "Commonly Controlled Entity") for the benefit of
any current employees, officers or directors of the Company or any of its
subsidiaries. The Company has also made available to Parent true, complete and
correct copies of (1) the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Compensation and Benefit Plan (if
any such report was required), (2) the most recent summary plan description for
each Compensation and Benefit Plan for which such summary plan description is
required and (3) each trust agreement and group annuity contract related to any
Compensation and Benefit Plan. Each Compensation and Benefit Plan has been
administered in accordance with its terms. Each of Company's subsidiaries and
all the Compensation and Benefit Plans are all in compliance with applicable
provisions of ERISA and the Code.
(b) Except as otherwise provided in Section 2.11(b) of the Company
Disclosure Schedule, the Company and its subsidiaries have performed in all
material respects their obligations under each Compensation and Benefit Plan;
each Compensation and Benefit Plan and each trust or other funding medium, if
any, established in connection therewith has at all times been established,
maintained and operated in material compliance with its terms and the
requirements prescribed by Applicable Law, including, without limitation, ERISA
and the Code.
(c) With respect to those Pension Plans that are intended to be qualified
under Section 401(a) of the Code, such Pension Plans have been the subject of
determination letters from the Internal Revenue Service to the effect that such
Pension Plans are qualified and exempt from Federal income taxes under Sections
401(a) and 501(a), respectively, of the Code, and no such determination letter
has been revoked nor has any event occurred since the date of its most recent
determination letter or application therefor that would materially adversely
affect its qualification or materially increase its costs.
(d) Except as otherwise provided Section 2.11(d) of the Company Disclosure
Schedule, with respect to each Pension Plan currently or formerly maintained by
the Company or any entity which is under "common control" with the Company
(within the meaning of Section 4001 of ERISA) which is subject to Title IV of
ERISA, neither Company or its subsidiaries has incurred, nor do any of them
reasonably expect to incur, any liability to the Pension Plan or to the Pension
Benefit Guaranty Corporation ("PBGC") in connection with any Pension Plan,
including, without limitation, any liability under Section 4069 of ERISA or any
penalty
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imposed under Section 4071 of ERISA, or ceased operations at any facility or
withdrawn from any Pension Plan in a manner which could subject it to liability
under Section 4062, 4063 or 4064 of ERISA, or knows of any facts or
circumstances that might give rise to any liability of the Company and its
subsidiaries to the Pension Plan or to the PBGC under Title IV of ERISA that
could reasonably be anticipated to result in any claims being made against
Parent, the Company or its subsidiaries by the PBGC subsequent to the Closing
Date.
(e) At all times on and after the effective date of ERISA, neither Company
nor any of its subsidiaries nor any entity which is under "common control" with
the Company (within the meaning of Section 4001 of ERISA) has maintained,
contributed to or otherwise had any obligation with respect to any
"multiemployer plan" (as defined in Section 3(37) of ERISA).
(f) Except as disclosed in Section 2.11(f) of the Company Disclosure
Schedule, there are no suits, actions, disputes, claims (other than routine
claims for benefits), arbitrations, administrative or other proceedings pending
to the knowledge of Company, threatened, anticipated or expected to be asserted
with respect to any Compensation and Benefits Plan or any related trust or other
funding medium thereunder or with respect to Company or its subsidiaries, as the
sponsor or fiduciary thereof or with respect to any other fiduciary thereof.
(g) No Compensation and Benefit Plan maintained by Company or its
subsidiaries or any related trust or other funding medium thereunder or any
fiduciary thereof is, to the knowledge of Company, the subject of a material
audit, investigation or examination by an governmental or quasi-governmental
agency.
(h) Except as provided in Section 2.11(h) of the Company Disclosure
Schedule, (1) no "reportable event" (as such term is used in Section 4043 of
ERISA), "accumulated funding deficiency" (as such terms is used in Section 412
or 4971 of the Code or Section 302 of ERISA), application for or receipt of a
waiver from the IRS of any minimum funding requirement under Section 412 of the
Code or "prohibited transaction" (as such term is used in Section 4975 of the
Code and/or Section 406 of ERISA), has occurred with respect to any Compensation
and Benefit Plan established or maintained by Company or its subsidiaries
primarily for the benefit of participants employed within the United States; (2)
neither Company nor its subsidiaries has any commitment, intention or
understanding to create, terminate or adopt any Compensation and Benefit Plan
that would result in any additional liability to Parent, the Company or its
subsidiaries; and (3) since the beginning of the current fiscal year of any
Compensation and Benefit Plan, no event had occurred and no condition or
circumstance has existed that could result in a material increase in the
benefits under or the expense of maintaining such Compensation and Benefit Plan
maintained by Company, and its subsidiaries from the level of benefits or
expense incurred for the most recently completed fiscal year of such
Compensation and Benefit Plan.
(i) Section 2.11(i) of the Company Disclosure Schedule lists all
outstanding Stock Options as of March 1, 1999, identifying for each such option:
(1) the number of shares issuable, (2) the number of vested shares, (3) the date
of expiration and (4) the exercise price.
(j) All contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof have been timely made.
(k) Except as provided by this Agreement or in Section 2.11(k) of the
Company Disclosure Schedule, the execution of, and performance of the
transactions contemplated by, this Agreement will not (either along with or upon
the occurrence of any additional or subsequent events) constitute an event under
any Compensation and Benefit Plan or agreement that will or may reasonably be
expected to result in any payment (whether severance pay or otherwise),
acceleration, vesting or increase in benefits with respect to any employee,
former employee or director of the Company, or its subsidiaries, whether or not
any such payment would be an "excess parachute payment" (within the meaning of
Section 280G of the Code).
(l) With respect to each Compensation and Benefit Plan required to be
maintained or contributed to by the law or applicable custom or rule of the
relevant jurisdiction outside of the United States (the "Foreign
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Plans"), are listed on Section 2.11(l) of the Company Disclosure Schedule. As
regards each such Foreign Plan:
(i) Each of the Foreign Plans is in compliance in all material
respects with the provisions of the laws of each jurisdiction in which each
such Foreign Plan is maintained, to the extent those laws are applicable to
the Foreign Plans;
(ii) All contributions to, and payments from, the Foreign Plans which
may have been required to be made in accordance with the terms of any such
Foreign Plan, and, when applicable, the law of the jurisdiction in which
such Foreign Plan is maintained, have been timely made or shall be made by
the Effective Date. All such contributions to the Foreign Plans, and all
payments under the Foreign Plans, for any period ending before the Closing
Date that are not yet, but will be, required to be made, are reflected as
an accrued liability on the Balance Sheet, or disclosed to Parent within 15
days following the date hereof in Section 2.11(d)(ii) of the Company
Disclosure Schedule;
(iii) All material reports, returns and similar documents, if any,
with respect to any Foreign Plan required to be filed with any governmental
body or distributed to any Foreign Plan participant have been duly and
timely filed or distributed or will be filed or distributed by the Closing
Date, and all of the Foreign Plans have obtained from the governmental body
having jurisdiction with respect to such plans any required determinations,
if any, that such Foreign Plans are in compliance with the laws of the
relevant jurisdiction if such determinations are required in order to give
effect to the Foreign Plan;
(iv) Each of the Foreign Plans has been administered at all times, and
in all material respects, in accordance with its terms. To the knowledge of
Company, there are no pending investigations by any governmental body
involving the Foreign Plans, and no pending claims (except for claims for
benefits payable in the normal operation of the Foreign Plans), suits or
proceedings against any Foreign Plan or asserting any rights or claims to
benefits under any Foreign Plan; and
(v) The consummation of the transactions contemplated by this
Agreement will not by itself create or otherwise result in any material
liability with respect to any Foreign Plan other than the triggering of
payment to participants.
(m) Each Compensation and Benefit Plan complies in all material respects
with all applicable requirements of (i) the Age Discrimination in Employment Act
of 1967, as amended, and the regulations thereunder and (ii) Title VII of the
Civil Rights Act of 1964, as amended, and the regulations thereunder and all
other applicable laws. All amendments and actions required to bring each of the
Compensation and Benefit Plans into conformity with all of the applicable
provisions of ERISA and other applicable laws have been made or taken except to
the extent that such amendments or actions are not required by law to be made or
taken until a date after the Effective Time and are disclosed Section 2.11(m) of
the Company Disclosure Schedule or will be provided to Parent within fourteen
(14) days of the date hereof.
(n) Each group medical plan sponsored by the Company or its subsidiaries
materially complies with the Medicare Secondary Payor Provisions of Section
1826(b) of the Social Security Act, and the regulations promulgated thereunder.
(o) Neither Company nor its subsidiaries is, nor do any of them expect to
be, subject to (1) a security interest pursuant to Section 412(f) of the Code or
(2) a lien pursuant to Section 412(n) of the Code or Section 4068 or 302(f) of
ERISA.
(p) Except as set forth on Section 2.11(p) of the Company Disclosure
Schedule, Parent, the Company and its subsidiaries may terminate or amend any
Compensation and Benefit Plan maintained by the Company or its subsidiaries or
may cease contributions to any such Compensation and Benefit Plans without
incurring any material liability other than a benefit liability accrued in
accordance with the terms of such Compensation and Benefit Plan immediately
prior to such amendment, termination or ceasing of contributions.
(q) Neither the Company nor its subsidiaries maintained any Compensation
and Benefit Plan which is a "group health plan" (as such term is defined in
Section 5000(b)(1) of the Code) that has not been administered and operated in
all respects in compliance with the applicable requirements of Section 601 of
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ERISA and section 4980B(b) of the Code and the Company and its subsidiaries are
not subject to any liability, including without limitation, additional
contributions, fines, penalties or loss of tax deduction as a result of such
administration and operation.
(r) Neither the Company nor its subsidiaries has incurred, nor does the
Company reasonably expect either it or any subsidiary to incur, any liability
for any tax imposed under Sections 4971 through 4980B of the Code or civil
liability under Section 501(i) or (1) of ERISA;
(s) Neither the Company nor its subsidiaries has incurred any liability for
any tax, excise tax, penalty or fee with respect to any Compensation and Benefit
Plan, including, but not limited to, taxes arising under Section 4971, 4977,
4978, 4878B, 4979, 4980 or 4980B of the Code, and no event has occurred and no
circumstance has existed that could give rise to any such liability.
(t) Except as provided in Section 2.11(t) of the Company Disclosure
Schedule, no insurance policy nor any other contract or agreement affecting any
Compensation and Benefit Plan requires or permits a retroactive increase in
premiums or payments due thereunder.
Section 2.12. Labor and Employment Matters. Except as set forth on Section
2.12 of the Company Disclosure Schedule:
(a) No collective bargaining agreement exists that is binding on the
Company or any of its subsidiaries, and the Company has not been officially
apprised that any petition has been filed or proceeding instituted by an
employee or group of employees of the Company, or any of its subsidiaries,
with the National Labor Relations Board seeking recognition of a bargaining
representative.
(b) (i) To the Company's knowledge, there is no labor strike, dispute,
slow down or stoppage pending or threatened against the Company or any of
its subsidiaries; and
(ii) Neither the Company nor any of its subsidiaries has received
any demand letters, civil rights charges, suits or drafts of suits with
respect to claims made by any of their respective employees.
(c) All individuals who are performing consulting or other services
for the Company or any of its subsidiaries are or were correctly classified
by the Company as either "independent contractors" or "employees" as the
case may be, and, at the Closing Date, will qualify for such
classification.
(d) Section 2.12(d) of the Company Disclosure Schedule, which has been
delivered supplementally to Parent by the Company on the date hereof,
contains a preliminary list of the name of each officer, employee and
consultant of the Company or any of the Company's subsidiaries, together
with such person's position or function, annual base salary or wages and
any incentives or bonus arrangement with respect to such person, and within
twenty-one (21) days of the date hereof, the Company will deliver
supplementally to Parent a final list of the name of each officer, employee
and consultant of the Company or any of the Company's subsidiaries,
together with such person's position or function, annual base salary or
wages and any incentives or bonus arrangement with respect to such person.
As of the date hereof, the Company has not received any information that
would lead it to believe that any such person will or may cease to be
engaged by the Company or such subsidiary for any reason, including because
of the consummation of the transactions contemplated by this Agreement.
(e) The Company and each of its subsidiaries is in compliance in all
material respects with all applicable foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices,
terms and conditions of employment and wages and hours, in each case, with
respect to employees.
(f) The Company and each of its subsidiaries has in all material
respects withheld and reported all amounts required by law or by agreement
to be withheld and reported with respect to wages, salaries and other
payments to employees.
(g) To the knowledge of the Company, there are no pending or
threatened claims or actions against the Company or any of its subsidiaries
under any worker's compensation policy or long-term disability policy.
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Section 2.13. Environmental Laws and Regulations.
(a) The term "Environmental Laws" means any applicable federal, state,
local or foreign law, statute, treaty, ordinance, rule, regulation, policy,
permit, consent, approval, license, judgment, order, decree or injunction
relating to: (a) Releases (as defined in 42 U.S.C. sec. 9601(22)) or threatened
Releases of Hazardous Material (as hereinafter defined) into the environment,
(b) the generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Material, (c) the health or safety of
employees in the workplace, (d) protecting or restoring natural resources or (e)
the environment. The term "Hazardous Material" means (1) hazardous substances
(as defined in 42 U.S.C. sec. 9601(14)), including "hazardous waste" as defined
in 42 U.S.C. sec. 6903, (2) petroleum, including crude oil and any fractions
thereof, (3) natural gas, synthetic gas and any mixtures thereof, (4) asbestos
and/or asbestos containing materials, (5) PCBs or materials containing PCBs, (6)
any material regulated as a medical waste, (7) lead containing paint, (8)
radioactive materials and (9) "Hazardous Substance" or "Hazardous Material" as
those terms are defined in any indemnification provision in any contract, lease,
or agreement to which the Company or any of its subsidiaries is a party.
(b) During the period of ownership or operation by the Company and its
subsidiaries of any of their current or previously owned or leased properties,
there have been no Releases of Hazardous Material by the Company or any of its
subsidiaries in, on, under or affecting such properties or any surrounding site,
and neither the Company nor any of its subsidiaries has disposed of any
Hazardous Material in a manner that has led, or could reasonably be anticipated
to lead to a Release, except in each case for those which, individually or in
the aggregate, would not have a Material Adverse Effect on the Company. There
have been no Releases of Hazardous Material by the Company or any of its
subsidiaries in, on, under or affecting their current or previously owned or
leased properties or any surrounding site at times outside of such periods of
ownership, operation or lease, except in each case for those which, individually
on in the aggregate, would not have a Material Adverse Effect on the Company.
Since January 1, 1995, the Company and its subsidiaries have not received any
written notice of, or entered into any order, settlement or decree relating to:
(a) any violation of any Environmental Laws or the institution or pendency of
any suit, action, claim, proceeding or investigation by any Governmental Entity
or any third party in connection with any alleged violation of Environmental
Laws or (b) the response to or remediation of Hazardous Material at or arising
from any of the Company's properties or any subsidiary's properties. There have
been no violations of any Environmental Laws by the Company or any subsidiary
which violations, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect on the Company.
(c) There are no past or present events, conditions, circumstances,
activities, practices, incidents, actions, omissions or plans that constitute a
violation by the Company or any of the Company's subsidiaries of, or are
reasonably likely to prevent or interfere with the Company's or any of the
Company's subsidiaries' future compliance with, any Environmental Laws, other
than any of the foregoing that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company.
Section 2.14. Taxes.
(a) Definitions. For purposes of this Agreement:
(i) the term "Tax" (including "Taxes") means (A) all federal, state,
local, foreign and other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service,
service use, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties or other
taxes, fees, assessments or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or additional amounts with
respect thereto, (B) any liability for payment of amounts described in
clause (A) whether as a result of transferee liability, of being a member
of an affiliated, consolidated, combined or unitary group for any period,
or otherwise through operation of law, and (C) any liability for the
payment of amounts described in clauses (A) or (B) as a result of any tax
sharing, tax indemnity or tax allocation agreement or any other express or
implied agreement to indemnify any other person; and
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(ii) the term "Tax Return" means any return, declaration, report,
statement, information statement and other document filed or required to be
filed with respect to Taxes.
(b) Except as set forth in Section 2.14(b) of the Company Disclosure
Schedule, the Company and its subsidiaries have duly and timely filed all Tax
Returns required to be filed; and such Tax Returns are complete and accurate and
correctly reflect the Tax liability required to be reported thereon. Such Tax
Returns do not contain a disclosure statement under Section 6662 of the Code (or
any predecessor provision or comparable provision of state, local or foreign
law).
(c) Except as set forth in Section 2.14(c) of the Company Disclosure
Schedule, the Company and its subsidiaries have paid or adequately provided in
the financial statements included in the SEC Reports for all Taxes (whether or
not shown on any Tax Return) accrued through the date of such Company SEC
Reports; all Taxes the Company and its subsidiaries accrued following the end of
the most recent period covered by the Company SEC Report have been accrued in
the ordinary course of business of the Company and each such subsidiary and have
been paid when due in the ordinary course of business; and no material election
has been made with respect to Taxes of the Company or its subsidiaries in any
Tax Returns that have not been provided to Parent.
(d) Except as set forth in Section 2.14(d) of the Company Disclosure
Schedule, no material claim for assessment or collection of Taxes is presently
being asserted against the Company or its subsidiaries and neither the Company
nor any of its subsidiaries is a party to any pending action, proceeding, or
investigation by any governmental taxing authority nor does the Company have
knowledge of any such threatened action, proceeding or investigation.
(e) Except as set forth in Section 2.14(e) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
individually or in the aggregate, in connection with this Agreement or any
change of control of the Company or any of its subsidiaries, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code.
(f) Except as set forth in Section 2.14(f) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to or bound
by any obligation under any Tax sharing, Tax allocation, Tax indemnity or
similar agreement or arrangement.
(g) Except as set forth in Section 2.14(g) of the Company Disclosure
Schedule, there is currently no limitation on the utilization of net operating
losses, built-in losses, tax credits or other similar items of the Company or
its subsidiaries under Section 382, 383, 384 or 1502 of the Code and the
Treasury Regulations thereunder.
(h) Except as set forth in Section 2.14(h) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has agreed to, or is
required to make, any adjustment under Section 481 of the Code by reason of a
change in accounting method.
(i) Neither the Company nor any of its subsidiaries are "consenting
corporations" within the meaning of Section 341(f)(1) of the Code.
Section 2.15. Intellectual Property.
(a) Section 2.15(a) of the Company Disclosure Schedule sets forth, for the
Intellectual Property owned, in whole or in part, including jointly with others,
by the Company or any of its subsidiaries, a complete and accurate list of all
United States and foreign (a) patents and patent applications; (b) Trademark
registrations and applications and material unregistered Trademarks; and (c)
copyright registrations and applications, indicating for each, the applicable
jurisdiction, registration number (or application number) and date issued (or
date filed). For purposes of this Agreement, "Intellectual Property" means:
trademarks and service marks (whether register or unregistered), trade names,
designs and general intangibles of like nature, together with all goodwill
related to the foregoing (collectively, "Trademarks"); patents (including any
continuations, continuations in part, renewals and applications for any of the
foregoing) (collectively "Patents"); copyrights (including any registrations and
applications therefor and whether registered or unregistered) (collectively
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"Copyrights"); computer software; databases; works of authorship; mask works;
trade secrets and other confidential information, know-how, proprietary
processes, formulae, algorithms, models, user interfaces, customer lists,
inventions, discoveries, concepts, ideas, techniques, methods, source codes,
object codes, methodologies and, with respect to all of the foregoing, related
confidential data or information (collectively, "Trade Secrets").
(b) Trademarks.
(i) All Trademark registrations are currently in compliance in all material
respects with all legal requirements (including the timely post-registration
filing of affidavits of use and incontestability and renewal applications) other
than any requirement that, if not satisfied, would not result in a cancellation
of any such registration or otherwise materially affect the priority and
enforceability of the Trademark in question.
(ii) No registered Trademark has been within the last three (3) years or is
now involved in any opposition or cancellation proceeding in the United States
Patent and Trademark Office. To the Company's knowledge, no such action has been
threatened in writing within the one (1)-year period prior to the date of this
Agreement.
(iii) To the knowledge of the Company, there has been no prior use of any
material Trademark by any third party that confer upon said third party superior
rights in any such Trademark.
(iv) All material Trademarks registered in the United States have been in
continuous use by the Company or its subsidiaries.
(v) The Company and its subsidiaries have adequately policed the Trademarks
against third party infringement, and the material Trademarks registered in the
United States have been continuously used in the form appearing in, and in
connection with the goods and services listed in, their respective registration
certificates or renewal certificates, as the case may be.
(c) Patents.
(i) All Patents are currently in compliance with legal requirements
(including payment of filing, examination, and maintenance fees and proofs of
working or use) other than any requirement that, if not satisfied, would not
result in a revocation or otherwise materially affect the enforceability of the
Patent in question.
(ii) No Patent has been or is now involved in any interference, reissue,
reexamination or opposing proceeding in the United States Patent and Trademark
Office. To the Company's knowledge, no such action has been threatened in
writing within the one (1)-year period prior to the date of this Agreement.
(iii) There is no patent or, to the Company's knowledge, patent application
of any person that conflicts in any material respect with any Patent or
invalidates any claim the Company, or any of the Company's subsidiaries, has in
any Patent.
(d) Trade Secrets.
(i) The Company and each of its subsidiaries has taken reasonable steps in
accordance with normal industry practice to protect their respective rights in
its Trade Secrets.
(ii) Without limiting the generality of Section 2.15(d)(i) and except as
would not be materially adverse to the Company or its business, the Company and
each subsidiary enforces a policy of requiring each relevant employee,
consultant and contractor to execute proprietary information, confidentiality
and assignment agreements substantially in the Company's standard forms that
assign to the Company all rights to any Intellectual Property rights relating to
the Company's business that are developed by the employee, consultant or
contractor, as applicable, in the course of his or her activities for the
Company or are developed during working hours or using Company resources and
that otherwise appropriately protect the Intellectual Property of the Company
and its subsidiaries, and, except under confidentiality obligations, there has
been no disclosure by the Company or any subsidiary of material confidential
information or Trade Secrets.
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(e) License Agreements.
Section 2.15(e)(1) of the Company Disclosure Schedule sets forth a complete
and accurate list of all license agreements granting to the Company or any of
its subsidiaries any material right to use or practice any rights under any
Intellectual Property other than software commercially available on reasonable
terms to any person for a license fee of no more than One Hundred Thousand
Dollars ($100,000) or otherwise material to the Company (collectively, the
"Inbound License Agreements"), indicating for each the title and the parties
thereto. Section 2.15(e)(2) of the Company Disclosure Schedule sets forth a
complete and accurate list of all license agreements under which the Company or
any of its subsidiaries licenses software or grants other rights in to use or
practice any rights under any Intellectual Property, excluding licenses with
customers that in the twelve-month period prior to the date hereof have
purchased or licensed products for which the total payments to the Company and
its subsidiaries did not exceed One Hundred Thousand Dollars ($100,000) or
otherwise material to the Company (collectively, the "Outbound License
Agreements"), indicating for each the title and the parties thereto. There is no
material outstanding or, to the Company's knowledge, threatened dispute or
disagreement with respect to any Inbound License Agreement or any Outbound
License Agreement.
(f) Ownership; Sufficiency of IP Assets. The Company or one of its
subsidiaries owns or possesses adequate licenses or other rights to use, free
and clear of Liens, orders and arbitration awards, all of its Intellectual
Property material to its business. The Intellectual Property identified in
Section 2.15(a) of the Company Disclosure Schedule, together with the Company's
and its subsidiaries' unregistered copyrights and the Company's and such
subsidiaries' rights under the licenses granted to the Company or any of its
subsidiaries under the Inbound License Agreements, constitute all the material
Intellectual Property rights used in the operation of the Company's and its
subsidiaries' businesses as they are currently conducted and are all the
Intellectual Property rights necessary to operate such businesses after the
Effective Time in substantially the same manner as such businesses have been
operated by the Company prior thereto.
(g) Protection of IP. The Company has taken reasonable steps to protect the
Intellectual Property of the Company and its subsidiaries.
(h) No Infringement by the Company. Except as set forth on Schedule 2.15(c)
of the Company Disclosure Schedule, the products used, manufactured, marketed,
sold or licensed by the Company and its subsidiaries, and all Intellectual
Property used in the conduct of the Company's and its subsidiaries' businesses
as currently conducted, do not, or with respect to any Trademark, or patent
application, to the knowledge of the Company, do not infringe upon, violate or
constitute the unauthorized use of any valid and enforceable rights owned or
controlled by any third party, including any Intellectual Property of any third
party.
(i) No Pending or Threatened Infringement Claims. Except and to the extent
publicly disclosed in the Company SEC Reports, no litigation is now or, within
the three (3) years prior to the date of this Agreement, was pending and, to the
Company's knowledge, no notice or other claim in writing has been received by
the Company within the one (1) year prior to the date of this Agreement, (A)
alleging that the Company any of its subsidiaries has engaged in any activity or
conduct that infringes upon, violates or constitutes the unauthorized use of the
Intellectual Property rights of any third party or (B) challenging the
ownership, use, validity or enforceability of any Intellectual Property owned or
exclusively licensed by or to the Company. Except as specifically disclosed in
one or more Sections of the Company Disclosure Schedule pursuant to this Section
2.15, no Intellectual Property (a) that is owned by the Company or any of its
subsidiaries or the subject of an Inbound License Agreement, is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting the
use thereof by the Company or any such subsidiary, except as may be provided in
an Inbound License Agreement, or (b) that is the subject of an Outbound License
Agreement, is subject to any outstanding order, judgment, decree, stipulation or
agreement restricting the sale, transfer, assignment or licensing thereof by the
Company or any of its subsidiaries to any person.
(j) No Infringement by Third Parties. Except as and to the extent publicly
disclosed in the Company SEC Reports or as set forth in Section 2.15(j) of the
Company Disclosure Schedule, to the knowledge of the Company, no third party is
misappropriating, infringing, diluting or violating any Intellectual Property
owned or exclusively licensed by the Company or any of its subsidiaries, and no
such claims have been brought against any third party by the Company or any of
its subsidiaries.
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(k) Assignment; Change of Control. Except as set forth in Section 2.14(k)
to the Company Disclosure Schedule, the execution, delivery and performance by
the Company of this Agreement, and the consummation of the transactions
contemplated hereby, will not result in the loss or impairment of, or give rise
to any right of any third party to terminate, any of the Company's or any of its
subsidiaries' rights to own any of its Intellectual Property or their respective
rights under any Inbound License Agreement or Outbound License Agreement, nor
require the consent of any Governmental Authority or third party in respect of
any such Intellectual Property.
(l) Software. The Software owned or purported to be owned by the Company or
any of its subsidiaries, was either (i) developed by employees of the Company or
any of its subsidiaries within the scope of their employment; (ii) developed by
independent contractors who have assigned their rights to the Company or any of
its subsidiaries pursuant to written agreements; or (iii) otherwise acquired by
the Company or a subsidiary from a third party. Except as set forth in Section
2.15(l) of the Company Disclosure Schedule, the Software does not contain any
programming code, documentation or other materials or development environments
that embody Intellectual Property rights of any person other than the Company or
any of its subsidiaries, except for such materials or development environments
obtained by the Company or any of its subsidiaries from other persons who make
such materials or development environments generally available to all interested
purchasers or end-users on standard commercial terms. For purposes of this
Section 2.15(l), "Software" means any and all (i) computer programs, including
any and all software implementations of algorithms, models and methodologies,
whether in source code or object code, (ii) databases and compilations,
including any and all data and collections of data, whether machine readable or
otherwise, (iii) descriptions, schematics, flow-charts and other work product
used to design, plan, organize and develop any of the foregoing, and (iv) all
documentation, including user manuals and training materials, relating to any of
the foregoing.
(m) Performance of Existing Software Products. The Company's and its
subsidiaries' existing and currently manufactured and marketed Software products
listed and described on Section 2.15(m) of the Company Disclosure Schedule
perform in all material respects, free of significant bugs, viruses or
programming errors, the functions described in any agreed specifications or end
user documentation or other information provided to customers of the Company or
its subsidiaries on which such customers relied when licensing or otherwise
acquiring such products.
(n) Documentation. The Company and its subsidiaries have taken all actions
customary in the software industry to document the Software and its operation,
such that the materials comprising the Software, including the source code and
documentation, have been written in a clear and professional manner so that they
may be understood, modified and maintained in an efficient manner by reasonably
competent programmers.
(o) Year 2000 Compliance.
(i) Except as set forth in Section 2.15(o) of the Company Disclosure
Schedule, all of the Company's and its subsidiaries' material products
(including products currently under development) will record, store, process and
calculate and present calendar dates falling on and after December 31, 1998, and
will calculate any information dependent on or relating to such dates in the
same manner and with the same functionality, data integrity and performance as
the products record, store, process, calculate and present calendar dates on or
before December 31, 1998, or calculate any information dependent on or relating
to such dates (collectively "Year 2000 Compliant"). Except as set forth in
Section 2.15(o) of the Company Disclosure Schedule, (A) all of the Company's and
its subsidiaries' material products will lose no significant functionality with
respect to the introduction of records containing dates falling on or after
December 31, 1998; and (B) all of the Company's and its subsidiaries' internal
computer systems comprised of software, hardware, databases or embedded control
systems (microprocessor controlled, robotic or other device) related to the
Company's and its subsidiaries' businesses (collectively, a "Business System"),
that constitutes any material part of, or is used in connection with the use,
operation or enjoyment of, any material tangible or intangible asset or real
property of the Company and its subsidiaries, including its accounting systems,
are Year 2000 Compliant. Except as set forth on Section 2.15(o) of the Company
Disclosure Schedule, the current versions of the Company's and its subsidiaries'
software and all other Intellectual Property may be used prior to, during and
after December 31,
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1998, such that such Software and Intellectual Property will operate prior to,
during and after such time period without error caused by date data that
represents or references different centuries or more than one century.
(ii) The Company's material products and the conduct of the Company's
business with its material customers and suppliers will not be materially
adversely affected by the advent of the year 2000, the advent of the
twenty-first century or the transition from the twentieth century through the
year 2000 and into the twenty-first century. Except as set forth on Section
2.15(o) of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is reasonably likely to incur material expenses arising from or
relating to the failure of any of its Business Systems or any products
(including all products sold on or prior to the date hereof) as a result of the
advent of the year 2000, the advent of the twenty-first century or the
transition from the twentieth century through the year 2000.
(p) Foundry Relationships. Section 2.15(p) of the Company Disclosure
Schedule sets forth a complete and correct description of each and every (1)
foundry relationship, wafer manufacturing and fabricating agreement,
understanding or commitment, and (2) integrated circuit die or device purchase,
supply or service agreement, understanding or commitment, used by or in
connection with the Company's business, in whole or in part, whether written or
oral ("Supply Contracts"). The Company has delivered to Parent a correct and
complete copy or oral summary of each Supply Contract. There are no fees,
penalties, price uplifts, shortfall payments, xxxx backs or other amounts
outstanding under such Supply Contracts. The quantities available for purchase
under each such written Supply Contract are as stated on the face of such Supply
Contract and are either summarized in Section 2.15(p) of the Company Disclosure
Schedule or will be provided to Parent within twenty-one (21) days of the date
hereof. Each manufacturing or service site that requires qualification under the
terms of a Supply Contract is qualified, and no unresolved differences with
respect to product or process specifications remains outstanding. All
manufacturing or service terms and conditions are as they appear to be on the
face of the Supply Contracts. The Company has not received any written or oral
notice from the other party to any Supply Contract, or from any other supplier
to the Company, to the effect that such party will not accept purchase orders
from the Company on such terms, conditions and quantities consistent with past
practices. Prices required to be paid for products or services under such Supply
Contract are either summarized on Section 2.15(p) of the Disclosure Schedule or
will be provided to Parent within twenty-one (21) days of the date hereof. No
condition exists that permit a termination or a material change of such Supply
Contracts by the other party under such Supply Contract. Either section 2.15(p)
of the Company Disclosure Schedule sets forth information regarding wafer starts
and products in production as of the date hereof or such information will be
provided to Parent within twenty-one (21) days of the date hereof. Schedule
2.15(p) of the Company Disclosure Schedule sets forth manufacturing information
since January 1, 1998 regarding yields under the Supply Contracts or such
information will be provided to Parent within twenty-one (21) days of the date
hereof.
Section 2.16. Insurance. Each of the Company and its subsidiaries maintains
insurance policies (the "Insurance Policies") against all risks of a character
and in such amounts as are customarily insured against by similarly situated
companies in the same or similar businesses. Each material Insurance Policy is
in full force and effect and is valid, outstanding and enforceable, and all
premiums due thereon have been paid in full. Except as set forth in Section 2.16
of the Company Disclosure Schedule, none of the material Insurance Policies will
terminate or lapse (or be affected in any other materially adverse manner) by
reason of the transactions contemplated by this Agreement. Each of the Company
and its subsidiaries has complied in all material respects with the provisions
of each Insurance Policy under which it is the insured party. No insurer under
any Insurance Policy has canceled or generally disclaimed liability under any
such policy or, to the Company's knowledge, indicated any intent to do so or not
to renew any such policy. All material claims of which the Company has knowledge
under the Insurance Policies have been filed in a timely fashion.
Section 2.17. Certain Business Practices. None of the Company, any of its
subsidiaries or any directors or officers or, to the Company's knowledge, agents
or employees of the Company or any of its subsidiaries has (i) used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
related to political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns or violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or (iii) made any other unlawful payment.
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Section 2.18. Product Warranties. Section 2.18 of the Company Disclosure
Schedule sets forth complete and accurate copies of the forms of written
warranties and guaranties by the Company or any of its subsidiaries currently in
effect with respect to its products. There have not been any material deviations
from such warranties and guaranties, and neither the Company, any of its
subsidiaries nor any of their respective salesmen, employees, distributors and
agents is authorized to undertake obligations to any customer or to other third
parties materially in excess of such warranties or guaranties. Neither the
Company nor any of its subsidiaries has made any material oral warranty or
guaranty with respect to its products not described on such schedule.
Section 2.19. Suppliers and Customers. The documents and information
supplied by the Company to Parent or any of its representatives with respect to
relationships and volumes of business done with its significant suppliers and
customers are accurate in all material respects. During the last twelve (12)
months, neither the Company nor any of its subsidiaries has received notices of
termination or written threats of termination from any of the ten (10) largest
suppliers or the Twenty-Five (25) largest customers of the Company and its
subsidiaries.
Section 2.20. Vote Required. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any class
or series of the Company's capital stock necessary to approve and adopt this
Agreement.
Section 2.21. Tax Treatment. Neither the Company (including any of its
subsidiaries) nor any of its affiliates has taken or agreed to take action that
would prevent the Merger from constituting a reorganization qualifying under the
provisions of Section 368(a) of the Code.
Section 2.22. Affiliates. Except for the directors and executive officers
of the Company, each of whom is listed in Section 2.22 of the Company Disclosure
Schedule, there are no persons who, to the knowledge of the Company, may be
deemed to be affiliates of the Company under Rule 145 of the Securities Act
("Company Affiliates").
Section 2.23. Opinion of Financial Adviser. Xxxxxx Brothers Inc. (the
"Company Financial Adviser") has delivered to the Company Board its written
opinion dated the date of this Agreement to the effect that as of such date the
Merger Consideration is fair, from a financial point of view, to the holders of
Shares. Such opinion has not been withdrawn, revoked or modified. A true and
complete copy of such opinion has been delivered to Parent.
Section 2.24. Brokers. No broker, finder or investment banker (other than
the Company Financial Adviser, a true and correct copy of whose engagement
agreement has been provided to Parent) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.
Section 2.25. Representations Complete. None of the representations or
warranties made by the Company in this Agreement or any statement made in any
Schedule or certificate furnished by the Company pursuant to this Agreement, or
furnished in or in connection with documents mailed or delivered to the
stockholders in connection with soliciting their proxy or consent to this
Agreement and the Merger, contains or will contain at the Effective Time, any
untrue statement of a material fact, or omits or will omit at the Effective Time
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION
Parent and Acquisition hereby jointly and severally represent and warrant
to the Company as follows:
Section 3.1. Organization.
(a) Each of Parent and Acquisition is duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Parent has heretofore made available to the
Company accurate and complete copies of the Certificates of Incorporation and
bylaws as currently in full force and effect, of Parent and Acquisition.
(b) Each of Parent and Acquisition is duly qualified or licensed and in
good standing to do business 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 in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not
have a Material Adverse Effect on Parent. When used in connection with Parent or
Acquisition the term "Material Adverse Effect on Parent" means any circumstance,
change in, or effect on Parent and its subsidiaries, taken as a whole, that is,
or is reasonably likely in the future to be, materially adverse to the
operations, financial condition, assets, earnings, or results of operations, or
the business (financial or otherwise) of Parent and its subsidiaries, taken as a
whole, provided that none of the following shall be deemed, either alone or in
combination, to constitute a Material Adverse Effect on the Parent; (i) a change
in the market price or trading volume of the Parent Common Stock, (ii) a failure
by the Parent to meet internal earnings or revenue projections or the revenue or
earnings predictions of equity analysts as reflected in the First Call consensus
estimate, or any other revenue or earnings predictions or expectations, for any
period ending (or for which earnings are released) on or after the date of this
Agreement and prior to the Effective Date, provided further that this Section
3.1(b)(ii) shall not exclude any underlying change, effect, event, occurrence,
state of facts or developments which resulted in such failure to meet such
estimates, predictions or expectations, (iii) conditions affecting the
semi-conductor industry as a whole or the U.S. economy as a whole, or (iv) any
disruption of customer or supplier relationships arising primarily out of or
resulting primarily from actions contemplated by the parties in connection with
or resulting primarily from actions contemplated by the parties in connection
with, or which is primarily attributable to, the announcement of this Agreement
and the transactions contemplated hereby, to the extent so attributable.
Section 3.2. Capitalization of Parent and its Subsidiaries.
(a) The authorized capital stock of Parent consists of Four Billion, Five
Hundred Million (4,500,000,000) shares of Parent Common Stock, of which, as of
February 19, 1999, approximately One Billion, Six Hundred Sixty One Million
(1,661,000,000) shares of Parent Common Stock were issued and outstanding. All
of the outstanding shares of Parent Common Stock have been validly issued and
are fully paid, nonassessable and free of preemptive rights. As of February 19,
1999, approximately Three Hundred Twenty Two Million (322,000,000) shares of
Parent Common Stock were available for issuance under Parent's option plans, of
which approximately One Hundred Fifty One Million (151,000,000) were issuable
upon or otherwise deliverable in connection with the exercise of options
outstanding on such date. Between February 19, 1999 and the date hereof, no
shares of Parent's capital stock have been issued other than pursuant to stock
options and warrants already in existence on such date and except for grants of
stock options to employees, officers and directors in the ordinary course of
business consistent with past practice. The amounts set forth above do not
reflect the special stock distribution announced by Parent on January 28, 1999,
pursuant to which each stockholder of record on March 23, 1999 will receive one
share of Parent Common Stock for each share of Parent Common Stock held on such
record date, which special stock distribution will be payable on April 11, 1999.
(b) The Parent Common Stock constitutes the only class of equity securities
of Parent or any of its subsidiaries registered or required to be registered
under the Exchange Act.
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Section 3.3. Authority Relative to this Agreement. Each of Parent and
Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the boards of directors of Parent and
Acquisition and by Parent as the sole stockholder of Acquisition, and no other
corporate proceedings on the part of Parent or Acquisition are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of
Parent and Acquisition and constitutes, assuming the due authorization,
execution and delivery hereof by the Company, a valid, legal and binding
agreement of each of Parent and Acquisition enforceable against each of Parent
and Acquisition in accordance with its terms, subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally or to general
principles of equity.
Section 3.4. SEC Reports; Financial Statements. Parent has filed all
required forms, reports and documents ("Parent SEC Reports") with the SEC since
January 1, 1997, each of which, complied at the time of filing in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act, each law as in effect on the dates such forms, reports and documents were
filed. None of such Parent SEC Reports, including any financial statements or
schedules included or incorporated by reference therein, contained when filed
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein in light of the circumstances under which they
were made not misleading, except to the extent superseded by a Parent SEC Report
filed subsequently and prior to the date hereof. The audited consolidated
financial statements of Parent included in the Parent SEC Reports fairly present
in conformity in all material respects with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto) the consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and their consolidated results
of operations and changes in financial position for the periods then ended.
Notwithstanding the foregoing, Parent shall not be deemed to be in breach of any
of the representations or warranties in this Section 3.4 as a result of any
changes to the Parent SEC Reports that Parent may make in response to comments
received from the SEC on the S-4 or the Proxy Statement.
Section 3.5. Information Supplied. None of the information supplied or to
be supplied by Parent or Acquisition in writing for inclusion or incorporation
by reference to (i) the S-4 will at the time the S-4 is filed with the SEC and
at the time it becomes effective under the Securities Act contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) the Proxy Statement will at the date mailed to stockholders and at the
times of the meeting or meetings of stockholders of the Company 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. The S-4 will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
thereunder. Notwithstanding the foregoing, Parent makes no representation,
warranty or covenant with respect to any information supplied or required to be
supplied by the Company that is contained in or omitted from any of the
foregoing documents.
Section 3.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under and
other applicable requirements of the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, and any filings under similar merger
notification laws or regulations of foreign Governmental Entities and the filing
and recordation of the Certificate of Merger as required by the DGCL, no
material filing with or notice to, and no material permit, authorization,
consent or approval of any Governmental Entity is necessary for the execution
and delivery by Parent or Acquisition of this Agreement or the consummation by
Parent or Acquisition of the transactions contemplated hereby. Neither the
execution, delivery and performance of this Agreement by Parent or Acquisition
nor the consummation by Parent or Acquisition of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
respective Certificates of Incorporation or bylaws (or similar governing
documents) of Parent or Acquisition, (ii) result in a violation or breach of or
constitute (with or without due
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notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or Lien) under any of the
terms, conditions or provisions of any material note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Parent or Acquisition or any of Parent's other subsidiaries is a party or by
which any of them or any of their respective properties or assets are bound or
(iii) violate any material order, writ, injunction, decree, law, statute, rule
or regulation applicable to Parent or Acquisition or any of Parent's other
subsidiaries or any of their respective properties or assets.
Section 3.7. Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Parent threatened, against Parent
or any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity that could reasonably be expected to prevent or
delay the consummation of the transactions contemplated by this Agreement beyond
the Final Date. Neither Parent nor any of its subsidiaries is subject to any
outstanding order, writ, injunction or decree that could reasonably be expected
to prevent or delay the consummation of the transactions contemplated hereby.
Section 3.8. Tax Treatment. Neither Parent, Acquisition nor, to the
knowledge of Parent, any of its affiliates has taken, proposes to take, or has
agreed to take any action that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
Section 3.9. Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Acquisition.
Section 3.10. No Prior Activities. Except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby,
Acquisition has neither incurred any obligation or liability nor engaged in any
business or activity of any type or kind or entered into any agreement or
arrangement with any person.
Section 3.11. No Undisclosed Liabilities; Absence of Changes. Except as and
to the extent publicly disclosed by Parent in the Parent SEC Reports, neither
Parent nor any of its subsidiaries has any material liabilities or obligations
of any nature, whether or not accrued, contingent or otherwise, that would be
required by generally accepted accounting principles to be reflected on a
consolidated balance sheet of Parent (including the notes thereto). There have
been no events, changes or effects with respect to Parent or its subsidiaries
that have had a Material Adverse Effect on Parent that have not been publicly
disclosed by Parent in the Parent SEC Reports.
Section 3.12. Compliance with Applicable Law. Except as publicly disclosed
by Parent in the Parent SEC Reports, to the knowledge of Parent, Parent and its
subsidiaries hold all material permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "Parent Permits"). Except as publicly disclosed
by Parent in the Parent SEC Reports, Parent and its subsidiaries are in material
compliance with the terms of Parent Permits. Except as publicly disclosed by
Parent in the Parent SEC Reports, to the knowledge of Parent, the businesses of
Parent and its subsidiaries have been and are being conducted in material
compliance with all material Applicable Laws. Except as publicly disclosed by
Parent in the Parent SEC Reports, no investigation or review by any Governmental
Entity with respect to Parent or any of its subsidiaries is pending or, to the
knowledge of Parent, threatened, nor, to the knowledge of Parent, has any
Governmental Entity indicated an intention to conduct the same.
Section 3.13 Representations Complete. None of the representations or
warranties made by Parent in this Agreement or any statement made in any
Schedule or certificate furnished by Parent pursuant to this Agreement, or
furnished in or in connection with documents mailed or delivered to the
stockholders of the Company in connection with soliciting their proxy or consent
to this Agreement and the Merger, contains or will contain at the Effective
Time, any untrue statement of a material fact, or omits or will omit at the
Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
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ARTICLE 4
COVENANTS
Section 4.1. Conduct of Business of the Company. Except as contemplated by
this Agreement or as described in Section 4.1 of the Company Disclosure
Schedule, during the period from the date hereof to the Effective Time, the
Company will and will cause each of its subsidiaries to conduct its operations
in the ordinary course of business consistent with past practice and, to the
extent consistent therewith, with no less diligence and effort than would be
applied in the absence of this Agreement, use commercially reasonable efforts to
preserve intact its current business organizations, keep available the service
of its current officers and employees and preserve its relationships with
customers, suppliers, distributors, lessors, creditors, employees, contractors
and others having business dealings with it with the intention that its goodwill
and ongoing businesses shall be unimpaired at the Effective Time. Without
limiting the generality of the foregoing, except as otherwise expressly provided
in this Agreement and except as described in Section 4.1 of the Company
Disclosure Schedule, prior to the Effective Time, neither the Company nor any of
its subsidiaries will, without the prior written consent of Parent:
(a) amend its Certificate of Incorporation or bylaws (or other similar
governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other debt or equity securities or
equity equivalents (including any stock options or stock appreciation
rights) except for the issuance and sale of Shares pursuant to options
granted under the Company Plans prior to the date hereof and except for
grants of options in the ordinary course of the Company's business
consistent with past practices;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, make any other actual, constructive or deemed distribution
in respect of its capital stock or otherwise make any payments to
stockholders in their capacity as such, or redeem or otherwise acquire any
of its securities or any securities of any of its subsidiaries except as
may be required under the Indenture, any Company Option or any other
agreement set forth in Section 4.1(c) of the Company Disclosure Schedule,
provided that the Company shall not reduce, or agree to reduce, the
conversion price of the Subordinated Notes;
(d) 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);
(e) alter through merger, liquidation, reorganization, restructuring
or any other fashion the corporate structure of any subsidiary;
(f) (i) incur or assume any long-term or short-term debt or issue any
debt securities in each case, except for borrowings under existing lines of
credit in the ordinary course of business, or modify or agree to any
amendment of the terms of any of the foregoing (including the Subordinated
Notes); (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person except for obligations of subsidiaries of
the Company incurred in the ordinary course of business; (iii) make any
loans, advances or capital contributions to or investments in any other
person (other than to subsidiaries of the Company or customary loans or
advances to employees in each case in the ordinary course of business
consistent with past practice); (iv) pledge or otherwise encumber shares of
capital stock of the Company or any of its subsidiaries; or (v) mortgage or
pledge any of its material assets, tangible or intangible, or create or
suffer to exist any material Lien thereupon;
(g) except as may be required by Applicable Law, enter into, adopt or
amend or terminate any bonus, special remuneration, compensation,
severance, stock option, stock purchase agreement, retirement, health,
life, or disability insurance, severance or other employee benefit plan
agreement, trust, fund
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or other arrangement for the benefit or welfare of any director, officer,
employee or consultant in any manner or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay
any benefit not required by any plan and arrangement as in effect as of the
date hereof (including the granting of stock appreciation rights or
performance units);
(h) grant any severance or termination pay to any director, officer,
employee or consultant, except payments made pursuant to written agreements
outstanding on the date hereof, the terms of which are in all material
respects completely and correctly disclosed on Schedule 4.1(j) or as
required by applicable federal, state or local law or regulations;
(i) exercise its discretion or otherwise voluntarily accelerate the
vesting of any Company Stock Option as a result of the Merger, any other
change of control of the Company (as defined in the Company Plans) or
otherwise.
(j) (1) acquire, sell, lease, license, transfer or otherwise dispose
of any material assets in any single transaction or series of related
transactions (including in any transaction or series of related
transactions having a fair market value in excess of Five Hundred Thousand
Dollars ($500,000) in the aggregate), other than sales of its products and
licenses of software in the ordinary course of business consistent with
past practices, (2) enter into any exclusive license, distribution,
marketing, sales or other agreement, (3) enter into a "development
services" or other similar agreement with Thinkit Technologies, Inc., or
(4) sell, transfer or otherwise dispose of any Intellectual Property;
(k) except as may be required as a result of a change in law or in
generally accepted accounting principles, materially change any of the
accounting principles, practices or methods used by it;
(l) revalue in any material respect any of its assets, including
writing down the value of inventory or writing-off notes or accounts
receivable, other than in the ordinary course of business;
(m) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other entity or division thereof or
any equity interest therein; (ii) enter into any contract or agreement that
would be material to the Company and its subsidiaries, taken as a whole;
(iii) amend, modify or waive any right under any material contract of the
Company or any of its subsidiaries; (iv) modify its standard warranty terms
for its products or amend or modify any product warranties in effect as of
the date hereof in any material manner that is adverse to the Company or
any of its subsidiaries; (v) authorize any additional or new capital
expenditure or expenditures in excess of One Million Dollars ($1,000,000)
in the aggregate in any calendar quarter, if any such expenditure or
expenditures are not listed in the capital budget attached as Section
4.1(m)(v) of the Company Disclosure Schedule; provided that nothing in the
foregoing clause (v) shall limit any capital expenditure required pursuant
to existing customer contracts; or (vi) authorize any new or additional
manufacturing capacity expenditure or expenditures for any manufacturing
capacity contracts or arrangements;
(n) make any material tax election or settle or compromise any
material income tax liability or permit any material insurance policy
naming it as a beneficiary or loss-payable to expire, or to be canceled or
terminated, unless a comparable insurance policy reasonably acceptable to
Parent is obtained and in effect;
(o) fail to file any Tax Returns when due (or, alternatively, fail to
file for available extensions) or fail to cause such Tax Returns when filed
to be complete and accurate in all material respects;
(p) fail to pay any Taxes or other material debts when due;
(q) settle or compromise any pending or threatened suit, action or
claim that (i) relates to the transactions contemplated hereby or (ii) the
settlement or compromise of which would involves more than One Million
Dollars ($1,000,000) or that would otherwise be material to the Company or
relates to any Intellectual Property matters;
(r) take any action or fail to take any action that could reasonably
be expected to (i) limit the utilization of any of the net operating
losses, built-in losses, tax credits or other similar items of the
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Company or its subsidiaries under Section 382, 383, 384 or 1502 of the Code
and the Treasury Regulations thereunder, or (ii) cause any transaction in
which the Company or any of its subsidiaries was a party that was intended
to be treated as a reorganization under Section 368(a) of the Code to fail
to qualify as a reorganization under Section 368(a) of the Code; or
(s) take or agree in writing or otherwise to take any of the actions
described in Sections 4.1(a) through 4.1(q) (and it shall use all
reasonable efforts not to take any action that would make any of the
representations or warranties of the Company contained in this Agreement
(including the exhibits hereto) untrue or incorrect).
Section 4.2. Preparation of S-4 and the Proxy Statement. The Company and
Parent shall diligently work together and promptly prepare and file with the SEC
the Proxy Statement and the S-4, respectively. Each of Parent and the Company
shall use all reasonable efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing. Parent shall also
take any action (other than qualifying to do business in any jurisdiction in
which it is now not so qualified) required to be taken under any applicable
state securities laws in connection with the issuance of Parent Common Stock in
the Merger and upon the exercise of Company Stock Options, and the Company shall
furnish all information concerning the Company and the holders of Shares as may
be reasonably requested in connection with any such action.
Section 4.3. No Solicitation or Negotiation.
(a) The Company, its affiliates (as reasonably determined by the Company)
and their respective officers and other employees with managerial
responsibilities, directors, representatives (including the Financial Advisor or
any other investment banker and any attorneys and accountants) and agents shall
immediately cease any discussions or negotiations with any parties with respect
to any Third Party Acquisition (as defined below). The Company also agrees
promptly to request each person that has heretofore executed a confidentiality
agreement in connection with its consideration of acquiring (whether by merger,
acquisition of stock or assets or otherwise) the Company or any of its
subsidiaries, if any, to return all confidential information heretofore
furnished to such person by or on behalf of the Company or any of its
subsidiaries. Neither the Company nor any of its affiliates shall, nor shall the
Company authorize or permit any of its or their respective officers, directors,
employees, representatives or agents to, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with or provide
any non-public information to any person or group (other than Parent and
Acquisition or any designees of Parent and Acquisition) concerning any Third
Party Acquisition; provided, however, that if the Board of Directors of the
Company determines in good faith, after consultation with legal counsel, that it
is necessary to do so in order to comply with its fiduciary duties to the
Company's stockholders under the DGCL, the Company may, in response to a
proposal or offer for a Third Party Acquisition which was not solicited and
which the Board of Directors of the Company determines, based on consultation
with the Company Financial Advisor, is from a Third Party that is capable of
consummating a Superior Proposal and only for so long as the Board of Directors
so determines that its actions are likely to lead to a Superior Proposal, (i)
furnish information only of the type and scope with respect to the Company that
the Company provided to Parent prior to the date hereof to any such person
pursuant to a customary confidentiality agreement as was executed by Parent
prior to the execution of this Agreement and (ii) participate in the discussions
and negotiations regarding such proposal or offer; provided, further, that
nothing herein shall prevent the Company Board from taking and disclosing to the
Company's stockholders a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to any tender or exchange offer.
The Company shall promptly (and in any event within one business day after
becoming aware thereof) (1) notify the Parent in the event it receives any
proposal or inquiry concerning a Third Party Acquisition, including the terms
and conditions thereof and the identity of the party submitting such proposal,
and any request for confidential information is requested in connection with a
potential Third Party Acquisition, (2) provide a copy of any written agreements,
proposals or other materials the Company receives from any such person or group
(or its representatives), and (3) advise Parent from time to time of the status
and promptly following any material developments the Company has knowledge of
concerning the same.
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(b) Except as set forth in this Section 4.3(b), the Company Board shall not
withdraw or modify its recommendation of the transactions contemplated hereby or
approve or recommend, or cause or permit the Company to enter into any agreement
or obligation with respect to, any Third Party Acquisition. Notwithstanding the
foregoing, if the Company Board by a majority vote determines in its good faith
judgment, after consultation with and based upon the advice of legal counsel,
that it is required to do so in order to comply with its fiduciary duties, the
Company Board may withdraw its recommendation of the transactions contemplated
hereby or approve or recommend a Superior Proposal (as defined in subsection (c)
below), but in each case only (i) after providing written notice to Parent (a
"Notice of Superior Proposal") advising Parent that the Company Board has
received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal and identifying the person making such Superior Proposal
and (ii) if Parent does not, within five (5) business days of Parent's receipt
of the Notice of Superior Proposal, make an offer that the Company Board by a
majority vote determines in its good faith judgment (based on the written advice
of a financial advisor of nationally recognized reputation) to be at least as
favorable to the Company's stockholders as such Superior Proposal; provided,
however, that the Company shall not be entitled to enter into any binding
agreement with respect to a Superior Proposal (other than any confidentiality
agreement entered into in accordance with clause (i) of Section 4.3(a)) unless
concurrently therewith this Agreement is terminated by its terms pursuant to
Section 6.1 and the Company pays all amounts due to Parent pursuant to Section
6.3. Any disclosure that the Company Board may be compelled to make with respect
to the receipt of a proposal for a Third Party Acquisition or otherwise in order
to comply with its fiduciary duties or Rule 14d-9 or 14e-2 will not constitute a
violation of this Agreement, provided that such disclosure states that no action
will be taken by the Company Board in violation of this Section 4.3(b).
(c) For the purposes of this Agreement, "Third Party Acquisition" means the
occurrence of any of the following events: (i) the acquisition of the Company by
merger or otherwise by any person (which includes a "person" as such term is
defined in Section 13(d)(3) of the Exchange Act) other than Parent, Acquisition
or any affiliate thereof (a "Third Party"); (ii) the acquisition by a Third
Party of any material portion (which shall include fifteen percent (15%) or
more) of the assets of the Company and its subsidiaries taken as a whole, other
than the sale of its products in the ordinary course of business consistent with
past practices; (iii) the acquisition by a Third Party of fifteen percent (15%)
or more of the outstanding Shares; (iv) the adoption by the Company of a plan of
liquidation or the declaration or payment of an extraordinary dividend; (v) the
repurchase by the Company or any of its subsidiaries of more than ten percent
(10%) of the outstanding Shares; or (vi) the acquisition (or any group of
acquisitions) by the Company or any of its subsidiaries by merger, purchase of
stock or assets, joint venture or otherwise of a direct or indirect ownership
interest or investment in any business (or businesses) whose annual revenues,
net income or assets is equal or greater than ten percent (10%) of the annual
revenues, net income or assets of the Company. For purposes of this Agreement, a
"Superior Proposal" means any bona fide proposal (1) to acquire, directly or
indirectly, for consideration consisting solely of cash and/or securities, all
of the Shares then outstanding, or all or substantially all the assets, of the
Company, (2) that is fully financed or is financeable and contains terms and
conditions that the Company Board by a majority vote determines in its good
faith judgment (based on the written advice of the Company Financial Advisor or
another financial advisor of nationally recognized reputation) to be more
favorable to the Company's stockholders than the Merger, taking into account all
aspects of the transactions including taxation, form of consideration,
conditions to closing and strategic synergies, (3) that the Company Board by a
majority vote determines in its good faith judgment (following and based on
consultation with the Financial Adviser or another financial advisor of
nationally recognized reputation and its legal and other advisors) to be
reasonably capable of being completed (taking into account all legal, financial,
regulatory and other aspects of the proposal and the person making the
proposal), and (4) that does not contain a "right of first refusal" or "right of
first offer" with respect to any proposal that Parent may make.
Section 4.4. Comfort Letters.
(a) The Company shall use all reasonable efforts to cause Xxxxxx Xxxxxxxx
LLP to deliver a letter dated not more than five days prior to the date on which
the S-4 shall become effective and addressed to itself and Parent and their
respective Boards of Directors in form and substance reasonably satisfactory to
Parent and
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customary in scope and substance for agreed-upon procedures letters delivered by
independent public accountants in connection with registration statements and
proxy statements similar to the S-4 and the Proxy Statement.
(b) Parent shall use all reasonable efforts to cause Ernst & Young LLP to
deliver a letter dated not more than five (5) days prior to the date of the S-4
shall become effective and addressed to itself and the Company and their
respective Boards of Directors in form and substance reasonably satisfactory to
the Company and customary in scope and substance for agreed-upon procedures
letters delivered by independent accountants in connection with registration
statements and proxy statements similar to the S-4 and the Proxy Statement.
Section 4.5. Meeting of Stockholders. The Company shall take all actions
necessary in accordance with the DGCL and its Certificate of Incorporation and
bylaws to duly call, give notice of, convene and hold a meeting of its
stockholders as promptly as practicable to consider and vote upon the adoption
and approval of this Agreement and the transactions contemplated hereby (the
"Meeting"). The stockholder vote required for the adoption and approval of the
transactions contemplated by this Agreement shall be the vote required by the
DGCL and the Company's Certificate of Incorporation and bylaws. The Company
will, through the Company Board, recommend to its stockholders approval of such
matters subject to the provisions of Section 4.3(b). The Company and the Parent
shall promptly prepare and file with the SEC the Proxy Statement and the S-4 for
the solicitation of a vote of the holders of Shares approving the Merger, which,
subject to the provisions of Section 4.3(b), shall include the recommendation of
the Company Board that stockholders of the Company vote in favor of the approval
and adoption of this Agreement and the written opinion of the Company Financial
Advisor that the consideration to be received by the stockholders of the Company
pursuant to the Merger is fair to such stockholders from a financial point of
view. The Company shall use all reasonable efforts to have the Proxy Statement
cleared by the SEC as promptly as practicable after such filing, and promptly
thereafter mail the Proxy Statement to the stockholders of the Company. Whenever
any event occurs which is required to be set forth in an amendment or supplement
to the S-4 and/or the Proxy Statement, the Company or Parent, as the case may
be, will promptly inform the other of such occurrence and cooperate in filing
with the SEC or its staff or any other government officials, and/or mailing to
stockholders of the Company, such amendment or supplement. Notwithstanding
anything to the contrary contained in this Agreement, the Company may adjourn or
postpone (i) the Meeting to the extent necessary to ensure that any necessary
supplement or amendment to this S-4 and/or the Proxy Statement is provided to
the Company's stockholders in advance of a vote on the Merger and this Agreement
or (ii) the time for which the Meeting is originally scheduled (as set forth in
the S-4 and the Proxy Statement), if there are insufficient Shares represented,
either in person or by proxy, to constitute a quorum necessary to conduct the
business of the Meeting. Parent shall use all reasonable efforts to obtain all
necessary state securities law or "blue sky" permits and approvals required in
connection with the Merger and to consummate the other transactions contemplated
by this Agreement and will pay all expenses incident thereto, provided that the
Company shall cooperate with Parent in obtaining such permits and approvals as
reasonably requested.
Section 4.6. Nasdaq National Market. Parent shall use all reasonable
efforts to cause the shares of Parent Common Stock to be issued in the Merger
and the shares of Parent Common Stock to be reserved for issuance upon exercise
of Company Stock Options to be approved for listing on the Nasdaq National
Market, subject to official notice of issuance, prior to the Effective Time.
Section 4.7. Access to Information.
(a) Between the date hereof and the Effective Time, the Company will give
Parent and its authorized representatives reasonable access during normal
business hours to all employees, plants, offices, warehouses and other
facilities, to all books and records and all personnel files of current
employees of the Company and its subsidiaries as Parent may reasonably require,
and will cause its officers and those of its subsidiaries to furnish Parent with
such financial and operating data and other information with respect to the
business and properties of the Company and its subsidiaries as Parent may from
time to time reasonably request. Notwithstanding the foregoing, access to the
Company's personnel files shall be only permitted to persons from Parent's
Network Communications Group and Parent's other employees for which access is
reasonably necessary to facilitate the consummation of the Merger and the
transactions contemplated thereby. Without
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limiting any of Parent's other confidentiality obligations, Parent shall
maintain all information contained in the Company's personnel files in strictest
confidence, will not use such information in violation of any applicable laws,
and shall not disclose such information to any third party whatsoever without
the prior written consent of the Company and the applicable employee or
employees. Between the date hereof and the Effective Time, Parent shall make
available to the Company, as reasonably requested by the Company, a designated
officer of Parent to answer questions and make available such information
regarding Parent and its subsidiaries as is reasonably requested by the Company
taking into account the nature of the transactions contemplated by this
Agreement.
(b) Between the date hereof and the Effective Time, the Company shall
furnish to Parent (1) within two (2) business days following preparation thereof
(and in any event within twenty (20) business days after the end of each fiscal
quarter) an unaudited balance sheet as of the end of such quarter and the
related statements of earnings, stockholders' equity (deficit) and cash flows
for the quarter then ended, and (3) within two (2) business days following
preparation thereof (and in any event within ninety (90) calendar days after the
end of each fiscal year) an audited balance sheet as of the end of such year and
the related statements of earnings, stockholders' equity (deficit) and cash
flows, all of such financial statements referred to in clauses (1), (2) and (3)
to prepared in accordance with generally accepted accounting principles in
conformity with the practices consistently applied by the Company with respect
to such financial statements. All the foregoing shall be in accordance with the
books and records of the Company and shall fairly present its financial position
(taking into account the differences between the monthly, quarterly and annual
financial statements prepared by the Company in conformity with its past
practices) as of the last day of the period then ended.
(c) Parent shall, promptly upon the Company's request, furnish to the
Company a complete and correct copy of any Parent SEC Report filed with the SEC
after the date hereof.
(d) Each of the parties hereto will hold, and will cause its consultants
and advisers to hold, in confidence all documents and information furnished to
it by or on behalf of another party to this Agreement in connection with the
transactions contemplated by this Agreement pursuant to the terms of that
certain Corporate Nondisclosure Agreement Number 76308 entered into between the
Company and Parent dated as of August 18, 1995, and amended as of January 25,
1999 and as of February 27, 1999.
Section 4.8. Certain Filings; Reasonable Efforts.
(a) Subject to the terms and conditions herein provided, including Section
4.3(b), each of the parties hereto agrees to use all reasonable efforts to take
or cause to be taken all action and to do or cause to be done all things
reasonably necessary, proper or advisable under Applicable Law to consummate and
make effective the transactions contemplated by this Agreement, including using
all reasonable efforts to do the following, (i) cooperate in the preparation and
filing of the Proxy Statement and the S-4 and any amendments thereto, any
filings that may be required under the HSR Act and any filings under similar
merger notification laws or regulations of foreign Governmental Entities; (ii)
obtain consents of all third parties and Governmental Entities necessary,
proper, advisable or reasonably requested by Parent or the Company, for the
consummation of the transactions contemplated by this Agreement; (iii) contest
any legal proceeding relating to the Merger; and (iv) execute any additional
instruments necessary to consummate the transactions contemplated hereby.
Subject to the terms and conditions of this Agreement, Parent and Acquisition
agree to use all reasonable efforts to cause the Effective Time to occur as soon
as practicable after the Company stockholder vote with respect to the Merger.
The Company agrees to use all reasonable efforts to encourage its employees to
accept any offers of employment extended by Parent. If at any time after the
Effective Time any further action is necessary to carry out the purposes of this
Agreement the proper officers and directors of each party hereto shall take all
such necessary action.
(b) Parent and the Company will consult and cooperate with one another, and
consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, letters, white papers, memoranda, briefs,
arguments, opinions or proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to the HSR Act or any
other foreign, federal, or state antitrust, competition, or fair trade law. In
this regard but without limitation, each party hereto shall promptly inform
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the other of any material communication between such party and the Federal Trade
Commission, the Antitrust Division of the United States Department of Justice,
or any other federal, foreign or state antitrust or competition Governmental
Entity regarding the transactions contemplated herein. Nothing in the Agreement,
however, shall require or be construed to require any party hereto to sell or
divest any assets or business or to restrict any business operations in order to
obtain the consent or successful termination of any review of any such
Governmental Entity regarding the transactions contemplated hereby.
Section 4.9. Public Announcements. Neither Parent, Acquisition nor the
Company shall issue any press release or otherwise make any public statements
with respect to the transactions contemplated by this Agreement, including the
Merger, or any Third Party Acquisition, without the prior consent of Parent and
Acquisition (in the case of the Company) or the Company (in the case of Parent
or Acquisition, which consent may be unreasonably withheld), except (i) as may
be required by Applicable Law, or by the rules and regulations of, or pursuant
to any agreement with, the Nasdaq National Market, or (ii) following a change,
if any, of the Company Board's recommendation of the Merger (in accordance with
Section 4.3(b)). The first public announcement of this Agreement and the Merger
shall be a joint press release agreed upon by Parent, Acquisition and the
Company.
Section 4.10. Indemnification and Directors' and Officers' Insurance.
(a) After the Effective Time, the Company shall indemnify and hold harmless
(and shall also advance expenses as incurred to the fullest extent permitted
under Applicable Law to), to the extent not covered by insurance, each person
who is now or has been prior to the date hereof or who becomes prior to the
Effective Time an officer or director of the Company or any of the Company's
subsidiaries (the "Indemnified Persons") against (i) all losses, claims,
damages, costs, expenses (including counsel fees and expenses), settlement,
payments or liabilities arising out of or in connection with any claim, demand,
action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was an
officer or director of the Company or any of its subsidiaries, whether or not
pertaining to any matter existing or occurring at or prior to the Effective Time
and whether or not asserted or claimed prior to or at or after the Effective
Time ("Indemnified Liabilities"); and (ii) all Indemnified Liabilities based in
whole or in part on or arising in whole or in part out of or pertaining to this
Agreement or the transactions contemplated hereby, in each case to the fullest
extent required or permitted under Applicable Law. Nothing contained herein
shall make Parent, Acquisition, the Company or the Surviving Corporation, an
insurer, a co-insurer or an excess insurer in respect of any insurance policies
which may provide coverage for Indemnified Liabilities, nor shall this Section
4.10 relieve the obligations of any insurer in respect thereto. The parties
hereto intend, to the extent not prohibited by Applicable Law, that the
indemnification provided for in this Section 4.10 shall apply without limitation
to negligent acts or omissions by an Indemnified Person. Each Indemnified Person
is intended to be a third party beneficiary of this Section 4.10 and may
specifically enforce its terms. This Section 4.10 shall not limit or otherwise
adversely affect any rights any Indemnified Person may have under any agreement
with the Company or under the Company's Certificate of Incorporation or bylaws
as presently in effect.
(b) From and after the Effective Time, the Parent shall cause the Surviving
Corporation to fulfill and honor in all respects the obligations of the Company
pursuant to any indemnification agreements between the Company and its directors
and officers as of or prior to the date hereof (or indemnification agreements in
the Company's customary form for directors joining the Company's Board of
Directors prior to the Effective Time) and any indemnification provisions under
the Company's certificate of incorporation or bylaws as in effect immediately
prior to the Effective Time. In the event that the Surviving Corporation or any
of its successors or assigns (i) consolidates with or merges into any other
person and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any person, then, and in each such case, Parent
shall cause proper provision to be made so that the successors and assigns of
the Surviving Corporation assume the obligations set forth in this Section 4.10.
(c) For a period of six years after the Effective Time, Parent will
maintain or cause the Surviving Corporation to maintain in effect, if available,
directors' and officers' liability insurance covering those persons
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who, as of immediately prior to the Effective Time, are covered by the Company's
directors' and officers' liability insurance policy (the "Insured Parties") on
terms no less favorable to the Insured Parties than those of the Company's
present directors' and officers' liability insurance policy; provided, however,
that in no event will Parent or the Company be required to expend in excess of
200% of the annual premium currently paid by the Company for such coverage (or
such coverage as is available for 200% of such annual premium); provided
further, that, in lieu of maintaining such existing insurance as provided above,
Parent, at its election, may cause coverage to be provided under any policy
maintained for the benefit of Parent or any of its subsidiaries, so long as the
terms are not materially less advantageous to the intended beneficiaries thereof
than such existing insurance.
(d) Neither Parent nor any of its Affiliates shall be obligated to
guarantee the payment or performance of the Company's obligations under Clauses
(a) or (b) of this Section 4.10 so long as the Company honors such obligations
to the extent of its net worth at the Effective Time, and neither Parent nor any
such Affiliate shall have any liability or obligation to any Indemnified Person
arising from the Company's breach of, or inability to perform its obligations
under, such Clauses in excess of the difference between the net worth of the
Company at the Effective Time and the aggregate of all amounts paid by the
Company in satisfaction of such obligations. The provisions of this Section 4.10
are intended to be for the benefit of, and will be enforceable by, each person
entitled to indemnification hereunder and the heirs and representatives of such
person. Parent will not permit the Company to merge or consolidate with any
other Person unless the Company will ensure that the surviving or resulting
entity assumes the obligations imposed by this Section 4.10.
Section 4.11. 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 nonoccurrence of any event the occurrence or nonoccurrence
of which has caused or would be likely to cause any representation or warranty
contained in this Agreement by such first party to be untrue or inaccurate such
that the conditions in Section 5.2(a) or 5.3(a) would not be satisfied at or
prior to the Effective Time and (ii) any material failure by such first party to
comply with or satisfy in any material respect 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 4.11 shall not cure
such breach or non-compliance or limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 4.12. Affiliates; Tax-Free Reorganization.
(a) The Company shall use all reasonable efforts to obtain from all Company
Affiliates and from any person who may be deemed to have become a Company
Affiliate, after the date of this Agreement and on or prior to the Effective
Time, a letter agreement substantially in the form of Exhibit A hereto as soon
as practicable.
(b) Parent shall not be required to maintain the effectiveness of the S-4
for the purpose of resale of shares of Parent Common Stock by stockholders of
the Company who may be affiliates of the Company or Parent pursuant to Rule 145
under the Securities Act.
(c) The Company, on the one hand, and Parent and Acquisition, on the other
hand, shall execute and deliver to legal counsel to the Company and Parent
certificates substantially in the form attached hereto as Exhibits B-1 and B-2,
respectively, at such time or times as reasonably requested by such legal
counsel in connection with its delivery of an opinion with respect to the
transactions contemplated hereby and the Company and Parent shall each provide a
copy thereof to the other parties hereto. Prior to the Effective Time, none of
the Company, Parent or Acquisition shall take or cause to be taken any action
that would cause to be untrue (or fail to take or cause not to be taken any
action that would cause to be untrue) any of the representations in Exhibits B-1
or B-2.
Section 4.13. Additions to and Modification of Company Disclosure
Schedule. Concurrently with the execution and delivery of this Agreement, the
Company has delivered a Company Disclosure Schedule that includes all of the
information required by the relevant provisions of this Agreement. In addition,
the Company shall deliver to Parent and Acquisition such additions to or
modifications of any Sections of the Company Disclosure Schedule necessary to
make the information set forth therein true, accurate and
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complete in all material respects as soon as practicable after such information
is available to the Company after the date of execution and delivery of this
Agreement; provided, however, that such disclosure shall not be deemed to
constitute an exception to its representations and warranties under Article 2,
nor limit the rights and remedies of Parent and Acquisition under this Agreement
for any breach by the Company of such representation and warranties; provided,
further, that failure to comply with the disclosure obligations required
hereunder shall not be deemed to constitute a failure of the conditions set
forth in Sections 5.2(b) or 5.3(b) unless the information to be disclosed would
constitute a breach of representations or warranties that would cause a failure
of the conditions set forth in Section 5.2(a) or 5.3(a) as the case may be.
Section 4.14. Access to Company Employees. The Company agrees to provide
Parent with, and to cause each of its subsidiaries to provide Parent with,
reasonable access to its employees during normal working hours following the
date of this Agreement, to among other things, deliver offers of continued
employment and to provide information to such employees about Parent. All
communications by Parent with Company employees shall be conducted in a manner
that does not disrupt or interfere with the Company's efficient and orderly
operation of its business.
Section 4.15. Company Compensation and Benefit Plans. The Company agrees to
take all actions necessary to amend, merge, freeze or terminate all compensation
and benefit plans, effective at the Closing Date, as requested in writing by
Parent.
Section 4.16. Convertible Subordinated Notes. Parent, Acquisition and the
Company shall take all necessary actions to ensure that the Surviving
Corporation shall (i) assume the due and punctual payment of the principal of,
premium, if any, and interest (including liquidated damages, if any) on all the
Subordinated Notes and the performance or observance of every covenant of the
Indenture on the part of the Company to be performed or observed, and (ii) have
provided for the applicable conversion rights set forth in Section 15.6 of the
Indenture and the repurchase rights set forth in Article XVI of the Indenture.
Without limiting the foregoing, the Company shall take no actions that would
result in an event of default under the Indenture.
Section 4.17. Immigration, Visas. Parent shall be responsible for obtaining
any required visas or other immigration approvals to allow Transferred Employees
(defined below) to become employed by Parent at whatever location is specified
by Parent.
ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 5.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the stockholders of the Company;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States federal or state court or United States federal or state
Governmental Entity that prohibits, restrains, enjoins or restricts the
consummation of the Merger;
(c) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired;
(d) any governmental or regulatory notices, approvals or other
requirements necessary to consummate the transactions contemplated hereby
and to operate the Business after the Effective Time in all material
respects as it was operated prior thereto (other than under the HSR Act)
shall have been given, obtained or complied with, as applicable; and
(e) the S-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop
order, and Parent shall have received all state securities laws or
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"blue sky" permits and authorizations necessary to issue shares of Parent
Common Stock in exchange for Shares in the Merger.
Section 5.2. Conditions to the Obligations of the Company. The obligation
of the Company to effect the Merger is subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(a) the representations and warranties of Parent and Acquisition
contained in this Agreement shall be true and correct (except to the extent
that the aggregate of all breaches thereof would not have a Material
Adverse Effect on Parent) at and as of the Effective Time with the same
effect as if made at and as of the Effective Time (except to the extent
such representations specifically relate to an earlier date, in which case
such representations shall be true and correct as of such earlier date, and
in any event, subject to the foregoing Material Adverse Effect
qualification) and, at the Closing, Parent and Acquisition shall have
delivered to the Company a certificate to that effect, executed by two (2)
executive officers of Parent and Acquisition;
(b) each of the covenants and obligations of Parent and Acquisition to
be performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or
before the Effective Time and, at the Closing, Parent and Acquisition shall
have delivered to the Company a certificate to that effect, executed by two
(2) executive officers of Parent and Acquisition;
(c) the shares of Parent Common Stock issuable to the Company's
stockholders pursuant to this Agreement and such other shares required to
be reserved for issuance in connection with the Merger shall have been
approved for quotation on the Nasdaq National Market, upon official notice
of issuance;
(d) the Company shall have received the opinion of tax counsel to the
Company or tax counsel to Parent to the effect that (i) the Merger will be
treated for Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and (ii) each of Parent, Acquisition
and the Company will be a party to the reorganization within the meaning of
Section 368(b) of the Code, which opinion may rely on the representations
set forth in Exhibits B-1 and B-2 and such other representations as such
counsel reasonably deems appropriate and such opinion shall not have been
withdrawn or modified in any material respect; and
(e) the Company shall have received the opinion of legal counsel to
Parent and Acquisition as to the matters set forth in Exhibit D.
Section 5.3. Conditions to the Obligations of Parent and Acquisition. The
respective obligations of Parent and Acquisition to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) the representations and warranties of the Company contained in
this Agreement (other than those contained in Section 2.24) shall be true
and correct (except to the extent that the aggregate of all breaches
thereof would not have a Material Adverse Effect on the Company) at and as
of the Effective Time with the same effect as if made at and as of the
Effective Time (except to the extent such representations specifically
relate to an earlier date, in which case such representations shall be true
and correct as of such earlier date, and in any event, subject to the
foregoing Material Adverse Effect qualification) and the representations
and warranties of the Company contained in Section 2.24 shall be true and
correct in all respects at and as of the Effective Time, and, at the
Closing, the Company shall have delivered to Parent and Acquisition a
certificate to that effect, executed by two (2) executive officers of the
Company;
(b) each of the covenants and obligations of the Company to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or
before the Effective Time and, at the Closing, the Company shall have
delivered to Parent and Acquisition a certificate to that effect, executed
by two (2) executive officers of the Company;
(c) Parent shall have received from each affiliate of the Company
referred to in Sections 2.21 and 4.12(a) an executed copy of the letter
attached hereto as Exhibit A;
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(d) there shall have been no events, changes or effects, individually
or in the aggregate, with respect to the Company or its subsidiaries
having, or that would reasonably be expected to have, a Material Adverse
Effect on the Company;
(e) Parent shall have received the opinion of tax counsel to Parent or
tax counsel to the Company to the effect that (i) the Merger will be
treated for Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and (ii) each of Parent, Acquisition
and the Company will be a party to the reorganization within the meaning of
Section 368(b) of the Code, which opinion may rely on the representations
set forth in Exhibits B-1 and B-2 and such other representations as such
counsel reasonably deems appropriate, and such opinion shall not have been
withdrawn or modified in any material respect; and
(f) Parent shall have received the opinion of legal counsel to the
Company as to the matters set forth in Exhibit C.
ARTICLE 6
TERMINATION; AMENDMENT; WAIVER
Section 6.1. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time whether before or after
approval and adoption of this Agreement by the Company's stockholders:
(a) by mutual written consent of Parent, Acquisition and the Company;
(b) by Parent and Acquisition or the Company if (i) any court of
competent jurisdiction in the United States or other United States federal
or state Governmental Entity shall have issued a final order, decree or
ruling, or taken any other final action, restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other
action is or shall have become nonappealable or (ii) the Merger has not
been consummated by December 31, 1999 (the "Final Date"); provided that no
party may terminate this Agreement pursuant to this clause (ii) if such
party's failure to fulfill any of its obligations under this Agreement
shall have been a principal reason that the Effective Time shall not have
occurred on or before said date;
(c) by the Company if (i) there shall have been a breach of any
representations or warranties on the part of Parent or Acquisition set
forth in this Agreement or if any representations or warranties of Parent
or Acquisition shall have become untrue, such that the conditions set forth
in Section 5.2(a) would be incapable of being satisfied by the Final Date,
provided that the Company has not breached any of its obligations hereunder
in any material respect; (ii) there shall have been a breach by Parent or
Acquisition of any of their respective covenants or agreements hereunder
having a Material Adverse Effect on Parent or materially adversely
affecting (or materially delaying) the ability of Parent, Acquisition or
the Company to consummate the Merger, and Parent or Acquisition, as the
case may be, has not cured such breach within fifteen (15) business days
after notice by the Company thereof, provided that the Company has not
breached any of its obligations hereunder in any material respect; (iii)
the Company shall have convened a meeting of its stockholders to vote upon
the Merger in accordance with this Agreement and shall have failed to
obtain the requisite vote of its stockholders at such meeting (including
any adjournments thereof); or (iv) the Company Board has received a
Superior Proposal, has complied with the provisions of Section 4.3(b), and
has made the payment called for by Section 6.3(a); or
(d) by Parent and Acquisition if (i) there shall have been a breach of
any representations or warranties on the part of the Company set forth in
this Agreement or if any representations or warranties of the Company shall
have become untrue, such that the conditions set forth in Section 5.3(a)
would be incapable of being satisfied by the Final Date, provided that
neither Parent nor Acquisition has breached any of their respective
obligations hereunder in any material respect; (ii) there shall have been a
breach by the Company of one or more of its covenants or agreements
hereunder having a Material Adverse
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Effect on the Company (or, in the case of Section 4.3, any material breach
thereof) or materially adversely affecting (or materially delaying) the
ability of Parent, Acquisition or the Company to consummate the Merger, and
the Company has not cured such breach within fifteen (15) business days
after notice by Parent or Acquisition thereof, provided that neither Parent
nor Acquisition has breached any of their respective obligations hereunder
in any material respect; (iii) the Company Board shall have recommended to
the Company's stockholders a Superior Proposal; (iv) the Company Board
shall have withdrawn or adversely modified its approval or recommendation
of this Agreement or the Merger; (v) the Company shall have ceased using
all reasonable efforts to call, give notice of, or convene or hold a
stockholders' meeting to vote on the Merger as promptly as practicable
after the date hereof or shall have adopted a resolution not to effect any
of the foregoing; or (vi) the Company shall have convened a meeting of its
stockholders to vote upon the Merger and shall have failed to obtain the
requisite vote of its stockholders at such meeting (including any
adjournments thereof).
Section 6.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any party hereto or its affiliates, directors, officers or stockholders other
than the provisions of this Section 6.2 and Sections 4.7(d) and 6.3 hereof.
Nothing contained in this Section 6.2 shall relieve any party from liability for
any breach of this Agreement prior to such termination.
Section 6.3. Fees and Expenses.
(a) In the event that this Agreement shall be terminated pursuant to:
(i) Section 6.1(c)(iv) or 6.1(d)(iii);
(ii) Section 6.1(d)(i), (ii), (iv) or (v) and within twelve (12)
months thereafter the Company enters into an agreement with respect to a
Company Acquisition or a Company Acquisition occurs involving any Third
Party (or any affiliate thereof); or
(iii) Section 6.1(c)(iii) or 6.1(d)(vi) and within twelve (12) months
following the stockholders' meeting referred to in either such clause, the
Company enters into an agreement with respect to a Company Acquisition or a
Company Acquisition occurs involving any Third Party (or an affiliate
thereof);
Parent and Acquisition would suffer direct and substantial damages, which
damages cannot be determined with reasonable certainty. To compensate Parent and
Acquisition for such damages the Company shall pay to Parent the amount of
Seventy-Five Million Dollars ($75,000,000) as liquidated damages immediately
upon the occurrence of the event described in this Section 6.3(a) giving rise to
such damages. It is specifically agreed that the amount to be paid pursuant to
this Section 6.3(a) represents liquidated damages and not a penalty.
(b) Upon the termination of this Agreement pursuant to Section 6.1(c)(iii)
or (iv), or Section 6.1(d)(i), (ii), (iii), (iv), (v) or (vi), in addition to
any other remedies that Parent, Acquisition or their affiliates may have as a
result of such termination (including pursuant to Section 6.3(a)), the Company
shall pay to Parent the amount of Three Million Dollars ($3,000,000) as
reimbursement for the costs, fees and expenses incurred by any of them or on
their behalf in connection with this Agreement, the Merger and the consummation
of all transactions contemplated by this Agreement (including fees payable to
investment bankers, counsel to any of the foregoing and accountants).
(c) Upon the termination of this Agreement pursuant to Section 6.1(c)(i) or
(ii), in addition to any other remedies that the Company or its affiliates may
have as a result of such termination, Parent shall pay to the Company the amount
of Three Million Dollars ($3,000,000) as reimbursement for the costs, fees and
expenses incurred by any of them or on their behalf in connection with this
Agreement, the Merger and the consummation of all transactions contemplated by
this Agreement (including fees payable to investment bankers, counsel to any of
the foregoing and accountants).
(d) Except as specifically provided in this Section 6.3, each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby.
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(e) Each of the Company, Parent and Acquisition acknowledge that the
agreements contained in this Article 6 (including this Section 6.3) are an
integral part of the transactions contemplated by this Agreement and that,
without these agreements, Company, Parent and Acquisition would not enter into
this Agreement. Accordingly, if the Company fails promptly to pay the amounts
required pursuant to Section 6.3 when due (including circumstances where, in
order to obtain such payment Parent or Acquisition commences a suit that results
in a final nonappealable judgment against the Company for such amounts), the
Company shall pay to Parent or Acquisition (i) their costs and expenses
(including attorneys' fees) in connection with such suit and (ii) interest on
the amount that was determined to be due and payable hereunder at the rate
announced by Chase Manhattan Bank as its "reference rate" in effect on the date
such payment was required to be made.
Section 6.4. Amendment. This Agreement may be amended by action taken by
the Company, Parent and Acquisition at any time before or after approval of the
Merger by the stockholders of the Company but after any such approval no
amendment shall be made that requires the approval of such stockholders under
Applicable Law without such approval. This Agreement (including, subject to
Section 4.14, the Company Disclosure Schedule) may be amended only by an
instrument in writing signed on behalf of the parties hereto.
Section 6.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document certificate or writing delivered pursuant hereto or (iii) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any agreement on the part of any party hereto to any such extension or
waiver shall be valid only if set forth in an instrument, in writing, signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.
ARTICLE 7
MISCELLANEOUS
Section 7.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 7.1 shall not
limit any covenant or agreement of the parties hereto that by its terms requires
performance after the Effective Time.
Section 7.2. Entire Agreement; Assignment. This Agreement (including the
Company Disclosure Schedule) (a) constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
other prior and contemporaneous agreements and understandings both written and
oral between the parties with respect to the subject matter hereof and (b) shall
not be assigned by operation of law or otherwise; provided, however, that
Acquisition may assign any or all of its rights and obligations under this
Agreement to any wholly owned subsidiary of Parent, but no such assignment shall
relieve Acquisition of its obligations hereunder if such assignee does not
perform such obligations.
Section 7.3. Service Credit.
(a) To the extent that any employees which accept offers of continued
employment become participants in any of Parent's Compensation and Benefits
Plans, they shall be given credit for service performed for the Company
("Service Credit") for purposes of the following Parent benefits:
(i) 401(k)/Profit Sharing Plan (participation and vesting only, not
benefit accrual);
(ii) Vacation;
(iii) Short Term Disability Plan;
(iv) Service Awards;
(v) Service component of any retirement definition (early retirement,
rule of 75);
(vi) Defined Benefit Plan (participation and vesting only);
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(vii) Supplemental Employee Medical Account Plan ("SERMA")
(participation only).
(b) Transferred Employees shall not be given Service Credit for the
following Parent benefits:
(i) Sabbatical;
(ii) Parent Stock Option Plan (acceleration of vesting upon
retirement);
(iii) Benefit accrual under Parent's Defined Benefit Plan;
(iv) Benefit accrual under Parent's SERMA;
(v) Benefit accrual under Parent's 401(k)/Profit Sharing Plan.
With respect to the foregoing Parent benefits, service credit shall be
counted as of the Effective Time.
Section 7.4. Validity. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
Section 7.5. Notices. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the addresses set forth below or to such other address as the party
to whom notice is to be given may have furnished to the other parties hereto in
writing in accordance herewith. Any such notice or communication shall be deemed
to have been delivered and received (A) in the case of personal delivery, on the
date of such delivery, (B) in the case of telecopier, on the date sent if
confirmation of receipt is received and such notice is also promptly mailed by
registered or certified mail (return receipt requested), (C) in the case of a
nationally-recognized overnight courier in circumstances under which such
courier guarantees next business day delivery, on the next business day after
the date when sent and (D) in the case of mailing, on the third business day
following that on which the piece of mail containing such communication is
posted:
if to Parent or Acquisition:
Intel Corporation
0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: General Counsel
and
Intel Corporation
0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Treasurer
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
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if to the Company to:
Level One Communications Incorporated
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Telecopier: 000-000-0000
Attention: Xx. Xxxxxx X. Xxxxxx
with a copy to:
Xxxxxx & Xxxxx LLP
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.6. Governing Law and Venue; Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL
BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The
parties hereby irrevocably submit to the jurisdiction of the courts of the State
of Delaware and the Federal courts of the United States of America located in
the State of Delaware solely in respect of the interpretation and enforcement of
the provisions of this Agreement and of the documents referred to in this
Agreement, and in respect of the transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
7.5 or in such other manner as may be permitted by Applicable Law, shall be
valid and sufficient service thereof.
(b) The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of Delaware or in Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED
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TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.6.
Section 7.7. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 7.8. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns and, except as expressly provided herein, including in
Sections 1.11(c), 4.11 and 7.2, nothing in this Agreement is intended to or
shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement nor shall any such person
be entitled to assert any claim hereunder. In no event shall this Agreement
constitute a third party beneficiary contract.
Section 7.9. Certain Definitions. For the purposes of this Agreement the
term:
(a) "affiliate" means (except as otherwise provided in Sections 2.21
and 4.13) a person that, directly or indirectly, through one or more
intermediaries controls, is controlled by or is under common control with
the first-mentioned person;
(b) "Applicable Law" means, with respect to any person, any domestic
or foreign, federal, state or local statute, law, ordinance, rule,
regulation, order, writ, injunction, judgment, decree or other requirement
of any Governmental Entity existing as of the date hereof or as of the
Effective Time applicable to such Person or any of its respective
properties, assets, officers, directors, employees, consultants or agents.
(c) "business day" means any day other than a day on which the Nasdaq
National Market is closed;
(d) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof;
(e) "Company Acquisition" means the occurrence of any of the following
events: (i) the acquisition by a Third Party of fifty percent (50%) or more
of the assets of the Company and its subsidiaries taken as a whole; (ii)
the acquisition by a Third Party of fifty percent (50%) or more of the
outstanding Shares or any securities convertible into or exchangeable for
Shares that would constitute fifty percent (50%) or more of the outstanding
Shares upon such conversion or exchange, or any combination of the
foregoing; or (iii) the acquisition by the Company of the assets or stock
of a Third Party if, as a result of which the outstanding shares of the
Company immediately prior thereto are increased by one hundred percent
(100%) or more, or (iv) the merger, consolidation or business combination
of the Company with or into a Third Party, where, following such merger,
consolidation or business combination, the stockholders of the Company
prior to such transaction do not hold, immediately after such transaction,
securities of the surviving entity constituting more than fifty percent
(50%) of the total voting power of the surviving entity.
(f) "knowledge" or "known" means, with respect to any fact,
circumstance, event or other matter in question, the knowledge of such
fact, circumstance, event or other matter of any executive officer of the
Company or Parent, as the case may be, and, in addition, with respect to
the Company, the persons listed on Section 7.9(f) of the Company Disclosure
Schedule. Any such individual will be deemed to have knowledge of a
particular fact, circumstance, event or other matter if (1) such individual
has actual knowledge of such fact, circumstance, event or other matter, or
(2) such fact, circumstance, event or other matter is reflected in one or
more documents (including e-mails sent to such individual) in, or that have
been in, such individual's files.
(g) "include" or "including" means "include, without limitation" or
"including, without limitation," as the case may be, and the language
following "include" or "including" shall not be deemed to set forth an
exhaustive list.
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(h) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity including any Governmental Entity;
(i) "Stock Option Agreement" means that certain Stock Option Agreement
of even date herewith between the Company and Parent; and
(j) "subsidiary" or "subsidiaries" of the Company, Parent, the
Surviving Corporation or any other person means any corporation,
partnership, limited liability company, association, trust, unincorporated
association or other legal entity of which the Company, Parent, the
Surviving Corporation or any such other person, as the case may be (either
alone or through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the capital stock the holders of which are
generally entitled to vote for the election of the board of directors or
other governing body of such corporation or other legal entity.
Section 7.10. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part of
any direct or indirect stockholder of the Company or Parent or Acquisition or
any officer, director, employee, agent, representative or investor of any party
hereto.
Section 7.11. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties, for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder; provided, however, that if a party
hereto is entitled to receive any payment or reimbursement of expenses pursuant
to Section 6.3(a), (b) or (c) it shall not be entitled to specific performance
to compel the consummation of the Merger.
Section 7.12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
INTEL CORPORATION
By: /s/ XXXXXX XXXXXXX
-----------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President and Treasurer
Date: March 4, 1999
LEVEL ONE COMMUNICATIONS, INCORPORATED
By: /s/ XX. XXXXXX X. XXXXXX
-----------------------------------------
Name: Xx. Xxxxxx X. Xxxxxx
Title: President & Chief Executive Officer
Date: March 4, 1999
INTEL RSW CORPORATION
By: /s/ XXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
Date: March 4, 1999
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER BY AND AMONG INTEL CORPORATION,
LEVEL ONE COMMUNICATIONS, INCORPORATED AND INTEL RSW CORPORATION]
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