Exhibit 99(d)(1)
Execution Copy
AGREEMENT & PLAN OF MERGER
BY AND AMONG
▇▇▇▇▇▇▇ CORPORATION
("Parent")
PHOENIX ACQUISITION CORP.,
("Purchaser")
and
MICROTEST, INC.
(the "Company")
June 12, 2001
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June 12,
2001, by and among ▇▇▇▇▇▇▇ Corporation, a Delaware corporation ("Parent"),
Phoenix Acquisition Corp., a Delaware corporation and an indirect, wholly owned
subsidiary of Parent (the "Purchaser"), and Microtest, Inc., a Delaware
corporation (the "Company"). Unless otherwise expressly set forth, the term
"Company" when used herein shall refer to Microtest, Inc. and each of its
subsidiaries.
WHEREAS, the respective Boards of Directors of Parent, the Company and
Purchaser, have approved the acquisition of the Company by Parent on the terms
and subject to the conditions set forth in this Agreement; and
WHEREAS, pursuant to and subject to the terms and conditions of this
Agreement the Purchaser has agreed to commence a tender offer (the "Offer") to
purchase all of the Company's common stock, par value $0.001 per share that are
issued and outstanding, including the associated preferred share purchase rights
(the "Rights") issued pursuant to the Rights Agreement, dated as of April 4,
2001, between the Company and American Stock Transfer & Trust Company as Rights
Agent (the "Rights Agreement") (each share of common stock of the Company,
together with its associated Rights, is referred to herein as a "Share" or
"Common Share," and in the aggregate as the "Shares" or the "Common Shares") at
a price per Share of $8.15 net to the seller in cash (such amount or any greater
amount per Share paid pursuant to the Offer being hereinafter referred to as the
"Offer Price"); and
WHEREAS, the Board of Directors of the Company (the "Company Board")
has, on the terms and subject to the conditions set forth herein, unanimously
(i) approved the Offer and the Merger and adopted this Agreement in
accordance with the General Corporation Law of the State of Delaware (the
"GCL"), and (ii) resolved to recommend that the stockholders of the Company
accept the Offer, tender their Shares pursuant to the Offer and approve the
Merger (if such approval is required by applicable Law); and
WHEREAS, the Board of Directors of Purchaser, and Fluke Networks, Inc.
as the sole stockholder of the Purchaser, have approved the merger of the
Purchaser with and into the Company with the Company as the surviving
corporation, as set forth below (the "Merger"), in accordance with the GCL, and
upon the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Parent, the Purchaser and the Company agree as
follows:
ARTICLE ONE
THE OFFER
Section 1.1 The Offer.
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(a) Provided that this Agreement shall not have been terminated in
accordance with Article Eight hereof, none of the events set forth in Annex I
hereto (the "Tender Offer Conditions") shall have occurred and be continuing,
and the sales of the Excluded Business shall have closed, as promptly as
reasonably practicable following the execution of this Agreement (but in no
event later than 10 business days after the public announcement of the execution
hereof), the Purchaser shall, and Parent shall cause the Purchaser to commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (including the rules and regulations promulgated thereunder, the
"Exchange Act")) the Offer at the Offer Price, shall, upon commencement of the
Offer but after affording the Company and its counsel a reasonable opportunity
to review and comment thereon, file Schedule TO and all other necessary
documents with the Securities and Exchange Commission (the "SEC") and make all
deliveries, mailings and telephonic notices required by Rule 14d-3 under the
Exchange Act, in each case in connection with the Offer (the "Offer Documents")
and shall use its commercially reasonable efforts to consummate the Offer,
subject to the terms and conditions thereof. The obligation of the Purchaser to
accept for payment or pay for any Shares tendered pursuant to the Offer will be
subject only to the satisfaction, or waiver by Purchaser, of the Tender Offer
Conditions.
(b) Without the prior written consent of the Company, the
Purchaser shall not decrease the Offer Price or change the form of consideration
payable in the Offer, decrease the number of Shares sought to be purchased in
the Offer, impose conditions to the Offer in addition to the Tender Offer
Conditions or amend any other term of the Offer in any manner adverse to the
holders of Shares. The Offer shall remain open until the date that is 20
business days (as such term is defined in Rule 14d-1(g)(3) under the Exchange
Act) after the commencement of the Offer (the "Expiration Date"), unless the
Purchaser shall have extended the period of time for which the Offer is open
pursuant to, and in accordance with, the two succeeding sentences or as may be
required by applicable Law, in which event the term "Expiration Date" shall mean
the latest time and date as the Offer, as so extended, may expire; provided,
however, that the Purchaser may provide a subsequent offering period after the
Expiration Date, in accordance with and subject to the requirements of Rule
14d-11 under the Exchange Act. If at any Expiration Date, any of the Tender
Offer Conditions are not satisfied or waived by the Purchaser, the Purchaser may
extend the Offer from time to time; provided, however, that, on the scheduled
expiration date of the Offer, (i) if the waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR Act")
or under any material applicable foreign statutes or regulations applicable to
the Merger, in each case to the extent such waiting period suspends the right to
close the transactions contemplated hereby, shall have not expired or been
terminated, the Purchaser shall extend the Offer from time to time until the
earlier of (1) September 30, 2001, or (2) expiration or termination under the
HSR Act or any other applicable foreign statutes or regulations, and (ii) if any
of the conditions set forth in paragraphs (a) or (b) of Annex I hereto shall
have occurred and be continuing, the Purchaser shall extend the Offer from time
to time until the earliest of (A) September 30, 2001, (B) five business days
after the time such condition shall no longer exist, or (C) such time at which
the matters described in such paragraphs (a) or (b) shall
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have become final and nonappealable. Subject to the terms of the Offer and this
Agreement and the satisfaction of all the Tender Offer Conditions as of any
Expiration Date, the Purchaser will accept for payment and pay for all Shares
validly tendered and not validly withdrawn pursuant to the Offer as soon as
practicable after such Expiration Date of the Offer; provided that, if all of
the Tender Offer Conditions are satisfied and more than 70% but less than 90% of
the outstanding Common Shares have been validly tendered and not withdrawn in
the Offer, the Purchaser shall have the right, in its sole discretion, to extend
the Offer from time to time for up to a maximum of ten additional business days
in the aggregate for all such extensions. Without the prior written consent of
the Company, the Purchaser shall not accept for payment or pay for any Shares in
the Offer if, as a result, Purchaser would acquire less than the number of
Shares necessary to satisfy the Minimum Condition (as defined in Annex I
hereto). Notwithstanding the foregoing and subject to the applicable rules of
the SEC and the terms and conditions of the Offer, Purchaser expressly reserves
the right to delay payment for Shares in order to comply in whole or in part
with applicable Laws. Any such delay shall be effected in compliance with Rule
14e-1(c) under the Exchange Act. The Company agrees that no Common Shares held
by the Company or any of its subsidiaries will be tendered in the Offer. If the
payment for tendered Shares is to be made to a person other than the person in
whose name the surrendered certificate formerly evidencing such Shares is
registered on the stock transfer books of the Company, it shall be a condition
of payment that the certificate so surrendered shall be endorsed properly or
otherwise be in proper form for transfer and that the person requesting such
payment shall have paid all transfer and other taxes required by reason of the
payment of the purchase price therefor to a person other than the registered
holder of the certificate surrendered, or shall have established to the
satisfaction of Purchaser that such taxes either have been paid or are not
applicable.
(c) Parent and the Purchaser represent that the Offer Documents
will comply in all material respects with the provisions of applicable federal
securities Laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading, except
that no representation is made by Parent or the Purchaser with respect to
information supplied by the Company in writing for inclusion in the Offer
Documents. Each of Parent and the Purchaser, on the one hand, and the Company,
on the other hand, agrees promptly to correct any information provided by it for
use in the Offer Documents if and to the extent that it shall have become false
or misleading in any material respect and the Purchaser further agrees to take
all steps necessary to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to stockholders of the Company, in each
case, as and to the extent required by applicable federal securities Laws.
Section 1.2 Company Actions.
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(a) The Company shall, after affording Parent and its counsel a
reasonable opportunity to review and comment thereon, file with the SEC and mail
to the holders of Shares, on the date of the filing by Parent and the Purchaser
of the Offer Documents, a Solicitation/Recommendation Statement on Schedule
14D-9 (together with any amendments or supplements thereto, the "Schedule
14D-9") reflecting the recommendation of the Company Board that holders of
Shares tender their Shares pursuant to the Offer and shall disseminate the
Schedule
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14D-9 as required by Rule 14d-9 promulgated under the Exchange Act. The
Schedule 14D-9 will set forth, and the Company hereby represents, that the
Company Board, at a meeting duly called and held at which a quorum was present
throughout, has unanimously (i) determined that this Agreement and each of the
transactions contemplated hereby, including each of the Offer and the Merger, is
advisable, fair to and in the best interests of the Company and its
stockholders, (ii) approved the Offer and the Merger and adopted this Agreement
in accordance with the GCL, (iii) resolved to recommend that the stockholders of
the Company accept the Offer, tender their Shares pursuant to the Offer and
approve the Merger (if such approval is required by applicable Law), (iv) taken
all other action necessary to render the restrictions on "business combinations"
under Section 203 of the GCL inapplicable to the Offer and the Merger, and (v)
taken all other action necessary to render the Rights inapplicable to the Offer
and the Merger; provided, that such recommendation and approval may be
withdrawn, modified or amended only after the Company Board has made the
determinations described in Section 6.9(a)(i) and (ii). The Company further
represents that, as of the date of this Agreement, ▇.▇. ▇▇▇▇▇ ("Financial
Advisor"), the Company's financial advisor, has delivered to the Company Board
its oral or written opinion that, as of the date of this Agreement, the
consideration to be received by the holders of Shares (other than Parent or any
of its subsidiaries) pursuant to the Offer and the Merger is fair to the
Company's stockholders from a financial point of view. The Financial Advisor has
consented to the inclusion of a written copy of the foregoing fairness opinion
in the Schedule 14D-9. The Company hereby consents to the inclusion in the Offer
Documents of the recommendations of the Company Board described in this Section
1.2(a).
(b) The Company represents that the Schedule 14D-9 will comply in
all material respects with the provisions of applicable federal securities Laws
and, on the date filed with the SEC and on the date first published, sent or
given to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Parent or the Purchaser in writing for inclusion in the Schedule 14D-9. Each of
the Company, on the one hand, and Parent and the Purchaser, on the other hand,
agree promptly to correct any information provided by either of them for use in
the Schedule 14D-9 if and to the extent that it shall have become false or
misleading, and the Company further agrees to take all steps necessary to cause
the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to the holders of Shares, in each case, as and to the extent
required by applicable federal securities Law.
(c) In connection with the Offer, the Company will promptly (and
in any event within three business days after the date hereof) furnish the
Purchaser with mailing labels, security position listings, any available
non-objecting beneficial owner lists and any available listing or computer list
containing the names and addresses of the record holders of the Shares as of the
most recent practicable date and shall furnish the Purchaser with such
additional available information (including, but not limited to, updated lists
of holders of Shares and their addresses, mailing labels and lists of security
positions and non-objecting beneficial owner lists) and such other assistance as
the Purchaser or its agents may reasonably request in communicating the Offer to
the Company's record and beneficial stockholders. Subject to the requirements of
applicable Law, and except for such steps as are necessary to disseminate the
Offer Documents and any other
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documents necessary to consummate the Merger, Parent, the Purchaser and their
subsidiaries, affiliates, associates, agents and advisors, shall keep such
information confidential and use the information contained in any such labels,
listings and files only in connection with the Offer and the Merger and, should
the Offer terminate or if this Agreement shall be terminated, will deliver to
the Company all copies of such information then in their possession.
Section 1.3 Directors.
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(a) Subject to compliance with applicable Law, promptly upon the
payment by the Purchaser for Shares pursuant to the Offer representing at least
such number of Shares as shall satisfy the Minimum Condition, and from time to
time thereafter, Parent shall be entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board as is equal to the
product of the total number of directors on the Company Board (determined after
giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that the aggregate number of Common Shares beneficially owned by
Parent or its affiliates bears to the total number of Common Shares then
outstanding, and the Company shall, upon request of Parent, promptly take all
actions necessary to cause Parent's designees to be so elected, including, if
necessary, increasing the size of the Company Board and/or seeking the
resignations of one or more existing directors; provided, however, that prior to
the Effective Time (as defined in Section 2.2), the Company Board shall always
have at least two members who are not officers, directors, employees or
designees of the Purchaser or any of its affiliates (other than the Company)
("Purchaser Insiders"). If the number of directors who are not Purchaser
Insiders is reduced below two prior to the Effective Time, the remaining
director who is not a Purchaser Insider shall be entitled to designate a person
to fill such vacancy who is not a Purchaser Insider and who shall be a director
not deemed to be a Purchaser Insider for all purposes of this Agreement.
(b) The Company's obligations to appoint Parent's designees to the
Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. The Company shall promptly take all actions required pursuant to
such Section and Rule in order to fulfill its obligations under this Section 1.3
and shall include in the Schedule 14D-9 such information with respect to the
Company and its officers and directors as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.3. Parent will
supply to the Company any information with respect to itself and its officers,
directors and affiliates required by such Section and Rule.
(c) Following the election or appointment of Parent's designees
pursuant to this Section 1.3 and prior to the Effective Time, any amendment or
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or the Purchaser or waiver of any of the Company's rights or conditions to
consummation of the Merger hereunder, in addition to any required approval
thereof by the full Company Board, will require the concurrence of a majority of
the directors of the Company then in office who are not Purchaser Insiders (or
in the case where there are two or fewer directors who are not Purchaser
Insiders, the concurrence of one director who is not a Purchaser Insider) if
such amendment, termination, extension or waiver would be reasonably likely to
have an adverse effect on the minority stockholders of the Company. The Company
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Board shall not delegate any matter set forth in this Section 1.3(c) to any
committee of the Company Board.
ARTICLE TWO
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the satisfaction or
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waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the GCL, at the Effective Time the Purchaser
shall be merged with and into the Company. Following the Merger, the separate
corporate existence of the Purchaser shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation"), and shall continue
its existence under the GCL.
Section 2.2 Effective Time. As soon as practicable after the
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satisfaction or waiver of the conditions set forth in Section 7.1(a) and (b),
but subject to satisfaction of the conditions set forth in Section 7.1(c) and
(d), the Merger shall become effective as set forth in the certificate of merger
which shall be filed with the Secretary of State of the State of Delaware. The
parties shall take such other and further actions as may be required by Law to
make the Merger effective. The time the Merger becomes effective in accordance
with applicable Law is referred to herein as the "Effective Time." Prior to such
filing, a closing (the "Closing") shall be held at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, or such other place as the
parties shall agree, for the purpose of confirming the satisfaction or waiver,
as the case may be, of the conditions set forth in Article Seven. The date on
which the Closing occurs is referred to as the "Closing Date."
Section 2.3 Effects of the Merger. At and after the Effective Time the
-------------------
Merger shall have the effects set forth in Section 259 of the GCL. 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 the Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and the Purchaser shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 2.4 Certificate of Incorporation and Bylaws of the Surviving
--------------------------------------------------------
Corporation.
-----------
(a) The certificate of incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended, subject to
the provisions of Section 6.6 of this Agreement, in accordance with the
provisions thereof and hereof and applicable Law.
(b) The bylaws of the Purchaser in effect at the Effective Time
shall be the bylaws of the Surviving Corporation until amended, subject to the
provisions of Section 6.6 of this Agreement, in accordance with the provisions
thereof and applicable Law.
Section 2.5 Directors. Subject to applicable Law, the directors of the
---------
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation
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and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
Section 2.6 Officers. Subject to applicable Law, the officers of the
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Purchaser immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
Section 2.7 Conversion of Shares. At the Effective Time, by virtue of
--------------------
the Merger and without any action on the part of the holders thereof, each
Common Share issued and outstanding immediately prior to the Effective Time
(other than (i) any Common Shares held by Parent, the Purchaser, any wholly
owned subsidiary of Parent or the Purchaser, in the treasury of the Company or
by any wholly owned subsidiary of the Company, which Common Shares, by virtue of
the Merger and without any action on the part of the holder thereof, shall be
cancelled and shall cease to exist with no payment being made with respect
thereto, and (ii) Dissenting Shares (as defined in Section 3.1)), shall be
cancelled and retired and shall be converted into the right to receive the Offer
Price in cash (the "Merger Price"), payable to the holder thereof, without
interest thereon, upon surrender of the certificate formerly representing such
Common Share.
Section 2.8 Conversion of Purchaser Stock. The Purchaser has outstanding
-----------------------------
ten shares of common stock, par value $0.001 per share, all of which are
entitled to vote with respect to the approval of this Agreement. At the
Effective Time, each share of common stock of the Purchaser issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and become one validly issued, fully paid and non-assessable share of
common stock, par value $0.001 per share, of the Surviving Corporation.
Section 2.9 Options; Stock Plans. Prior to the Effective Time, the Company
--------------------
Board (or, if appropriate, any committee thereof) shall adopt appropriate
resolutions and take all other actions necessary to provide for the cancellation
or exercise, effective at the Effective Time, of all the outstanding stock
options or similar rights (the "Options") heretofore granted by the Company,
whether under a stock option or similar plan (the "Stock Plans") or otherwise,
without any payment therefor except as otherwise provided in this Section 2.9.
Immediately prior to the Effective Time, the Company shall accelerate the
vesting of all unvested Options and each then vested Option shall thereafter no
longer be exercisable but shall entitle each holder thereof, in cancellation and
settlement therefor, to a payment in cash by the Company (subject to any
applicable withholding taxes), at the Effective Time, equal to the product of
(i) the total number of Common Shares subject to such vested Option and (ii) the
excess, if any, of the Merger Price over the exercise price per Common Share
subject to such vested Option (such amounts payable hereunder being referred to
as the "Cash Payment"). All other Stock Plans and any other plan, program or
arrangement providing for the issuance or grant of any other interest in respect
of the capital stock of the Company or any subsidiary shall terminate as of the
Effective Time; provided that the Microtest, Inc. Employee Stock Purchase Plan
shall be suspended as of the end of the current enrollment period expiring on
June 30, 2001, and terminated as of the Effective Time. The Company will obtain
all necessary consents to ensure that after the Effective Time, holders of
Options will have no rights other than the rights of the holders of vested
Options to receive the
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Cash Payment in cancellation and settlement thereof. The Company shall also take
all necessary action to approve the disposition of the Options in connection
with the transactions contemplated by this Agreement to the extent necessary to
exempt such transactions and dispositions under Rule 16b-3 of the Exchange Act.
Section 2.10 Stockholders' Meeting.
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(a) Subject to Section 2.10(d), if required by applicable Law or
the applicable rules and regulations of the Nasdaq National Market in order to
consummate the Merger, the Company, acting through the Company Board, shall, in
accordance with applicable Law, the Company's certificate of incorporation and
bylaws and the applicable rules and regulations of the Nasdaq National Market:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting")
as soon as practicable following the acceptance for payment
of and payment for Shares by the Purchaser pursuant to the
Offer for the purpose of considering and taking action upon
this Agreement;
(ii) prepare and file with the SEC a preliminary
proxy statement relating to this Agreement, and use its
commercially reasonable efforts (x) to obtain and furnish
the information required to be included by the SEC in the
Proxy Statement (as hereinafter defined) and, after
consultation with Parent, to respond promptly to any
comments made by the SEC with respect to the preliminary
proxy statement and cause a definitive proxy statement (the
"Proxy Statement") to be mailed to its stockholders and (y)
to obtain the necessary approvals of the Merger and this
Agreement by its stockholders;
(iii) subject to Section 1.2(a), include in the
Proxy Statement the recommendation of the Company Board that
stockholders of the Company vote in favor of the approval of
this Agreement; and
(iv) include in the Proxy Statement the written
opinion of Financial Advisor referred to in Section 1.2(a).
(b) Company shall notify Parent of the receipt of any
comments of the SEC with respect to the Proxy Statement and of any requests by
the SEC for any amendment or supplement thereto or for additional information
and shall provide to Parent promptly copies of all correspondence between the
Company or any representative of the Company and the SEC with respect thereto.
The Company shall give Parent and its counsel the opportunity to review the
Proxy Statement, including all amendments and supplements thereto, prior to its
being filed with the SEC and shall give Parent and its counsel the opportunity
to review all responses to, requests for additional information and replies to
comments prior to their being filed with, or sent to, the SEC, and shall include
in the Proxy Statement and all such amendments, supplements, responses and
requests all comments reasonably proposed by Parent.
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(c) Parent agrees that it will vote, or cause to be voted, all
of the Shares then owned by it, the Purchaser or any of its other subsidiaries
in favor of the approval of the Merger and of this Agreement.
(d) If, following expiration of the Offer and satisfaction or
waiver of all of the Tender Offer Conditions, applicable Law or the applicable
rules and regulations of the Nasdaq National Market require a vote of the
stockholders of the Company in order to consummate the Merger, Parent and
Purchaser may, in their sole discretion, in lieu of having the Company call a
special meeting of the stockholders as contemplated above, elect to approve the
Merger by written consent without a meeting of the stockholders, to the extent
permitted by the certificate of incorporation and bylaws of the Company. If
Parent and Purchaser elect to approve the Merger by written consent, the Company
shall take all actions necessary to permit Parent and the Purchaser to take such
action by written consent, including without limitation making and assisting in
such filings with the SEC, and preparing and mailing an information statement
and such other materials, as may be required under the federal securities laws
and the GCL.
Section 2.11 Merger Without Meeting of Stockholders. Notwithstanding
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Section 2.10, in the event that Parent, the Purchaser or any other subsidiary of
Parent shall acquire at least 90% of the then outstanding Common Shares,
pursuant to the Offer or otherwise, the parties hereto agree to take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the acceptance for payment of and payment for Shares by the
Purchaser pursuant to the Offer without a meeting of stockholders of the
Company, in accordance with Section 253 of the GCL.
ARTICLE THREE
DISSENTING SHARES; PAYMENT FOR SHARES
Section 3.1 Dissenting Shares Notwithstanding Section 2.7, Shares
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outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with the GCL ("Dissenting
Shares") shall not be converted into a right to receive the Merger Price, unless
such holder fails to perfect or withdraws or otherwise loses his right to
appraisal. If after the Effective Time such holder fails to perfect or withdraws
or loses his right to appraisal, such Shares shall be treated as if they had
been converted as of the Effective Time into a right to receive the Merger
Price. The Company shall give Parent prompt notice of any demands received by
the Company for appraisal of any Shares, and Parent shall have the right to
participate in and to control all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands.
Section 3.2 Payment for Shares.
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(a) From and after the Effective Time, such bank or trust
company as shall be designated by Parent shall act as paying agent (the "Paying
Agent") in effecting the payment of the Merger Price in respect of certificates
(the "Certificates") that, prior to the Effective Time, represented Common
Shares entitled to payment of the Merger Price pursuant to Section 2.7.
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Promptly following the Effective Time, Parent shall deposit, or cause to be
deposited, with the Paying Agent the aggregate Merger Price to which holders of
Shares shall be entitled at the Effective Time pursuant to Section 2.7 (the
"Exchange Fund"). The Exchange Fund shall be invested by the Paying Agent as
directed by the Parent.
(b) Promptly after the Effective Time, Parent shall cause the
Paying Agent to mail to each record holder of Certificates that immediately
prior to the Effective Time represented Shares (other than Certificates
representing Shares held by Parent, the Purchaser, any wholly owned subsidiary
of Parent or the Purchaser, in the treasury of the Company or by any wholly
owned subsidiary of the Company, and other than Certificates representing
Dissenting Shares) a form of letter of transmittal which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Paying Agent, and
instructions for use in surrendering such Certificates and receiving the Merger
Price in respect thereof. Upon the surrender of each such Certificate, the
Paying Agent shall pay the holder of such Certificate the Merger Price,
multiplied by the number of Common Shares formerly represented by such
Certificate, in consideration therefor, and such Certificate shall forthwith be
cancelled. Until so surrendered, each such Certificate (other than Certificates
representing Shares held by Parent, the Purchaser, any wholly owned subsidiary
of Parent or the Purchaser, in the treasury of the Company or by any wholly
owned subsidiary of the Company, and other than Certificates representing
Dissenting Shares) shall represent solely the right to receive the aggregate
Merger Price relating thereto. No interest or dividends shall be paid or accrued
on the Merger Price. If the Merger Price (or any portion thereof) is to be
delivered to any person other than the person in whose name the Certificate
formerly representing Shares surrendered therefor is registered, it shall be a
condition to such right to receive such Merger Price that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person surrendering such Shares shall pay to the Paying
Agent any transfer or other similar taxes required by reason of the payment of
the Merger Price to a person other than the registered holder of the Certificate
surrendered, or shall establish to the satisfaction of the Paying Agent that
such tax has been paid or is not applicable. If any holder of Shares shall be
unable to surrender such holder's Certificates because such Certificates have
been lost, mutilated or destroyed, such holder may deliver in lieu thereof an
affidavit and indemnity bond (if reasonably required by the Surviving
Corporation) in form and substance and with surety reasonably satisfactory to
the Surviving Corporation.
(c) Promptly following the date which is 180 days after the
Effective Time, the Paying Agent shall deliver to the Surviving Corporation all
cash, Certificates and other documents in its possession relating to the
transactions described in this Agreement, and the Paying Agent's duties shall
terminate. Thereafter, each holder of a Certificate formerly representing a
Share may surrender such Certificate to the Surviving Corporation and (subject
to applicable abandoned property, escheat and similar laws) receive in
consideration therefor the aggregate Merger Price relating thereto, without any
interest thereon.
(d) Parent or the Paying Agent will be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Shares such amounts as Parent (or any affiliate thereof) or the
Paying Agent shall determine in good faith they are required to deduct and
withhold with respect to the making of such payment under the Internal
10
Revenue Code of 1986, as amended (the "Code"), or any provision of federal,
state, local or foreign Tax Law. To the extent that amounts are so withheld by
Parent or the Paying Agent, such withheld amounts will be treated for all
purposes of this Agreement as having been paid to the holder of the Shares in
respect of whom such deduction and withholding were made.
(e) After the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation of any Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates formerly representing Shares are presented to the Surviving
Corporation or the Paying Agent, they shall be surrendered and cancelled in
return for payment as and to the extent provided in this Article Three.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser as
follows:
Section 4.1 Organization and Qualification; Subsidiaries. The Company is
--------------------------------------------
a corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware. Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation. The Company and each of its
subsidiaries has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. The term "Material Adverse Effect on the
Company," as used in this Agreement, means any change in or effect on the
business, assets, liabilities, financial condition or results of operations of
the Company and its subsidiaries taken as a whole that, individually or in the
aggregate with all other changes and effects, would reasonably be expected to be
materially adverse to the Company and its subsidiaries taken as a whole, other
than (a) the effects of changes that are generally applicable to (i) the United
States economy or securities markets, or (ii) the world economy or international
securities markets, and (b) changes or effects to the extent arising from the
announcement of this Agreement and the transactions contemplated hereby
(including the sale or other disposition of the Excluded Business and the shut-
down of the NAS Business (excluding the Excluded Business) (each as defined in
Section 6.13 hereof) contemplated by this Agreement and any loss of
relationships with customers, suppliers, distributors, sales representatives or
employees or the delay or cancellation of orders for products or services, in
each case to the extent arising from such announcement); provided, that a change
in the market price or trading volume of the Common Shares shall not, in and of
itself, constitute a Material Adverse Effect on the Company (it being understood
that this proviso shall not exclude any underlying change or effect which
resulted in such change in the market price or trading volume). The Company has
heretofore provided to Parent and the Purchaser a complete and correct copy of
the certificate of incorporation and the bylaws or comparable organizational
documents, each as amended to the date hereof, of the Company and
11
each of its subsidiaries, and has provided a complete and correct copy of the
Rights Agreement as amended to the date hereof. Neither the Company nor any of
its subsidiaries is in violation of or default under any of the provisions of
its respective certificate of incorporation, bylaws or comparable organizational
documents. The Company has made available to Parent and its representatives true
and complete copies of the minutes of all meetings of the stockholders, the
Board of Directors and each committee of the Board of Directors of the Company
held since January 1, 1998, and such minutes accurately reflect all proceedings
of the stockholders and Board of Directors (and all committees thereof) of the
Company.
Section 4.2 Subsidiaries; Capitalization. Section 4.2(a) of the disclosure
----------------------------
schedule delivered by the Company to Parent prior to the execution of this
Agreement (the "Company Disclosure Schedule") lists each subsidiary of the
Company and its respective jurisdiction of incorporation. All the outstanding
shares of capital stock and other securities of each such subsidiary have been
validly issued and are fully paid and nonassessable and, except as set forth on
Section 4.2(a) of the Company Disclosure Schedule, are owned by the Company, by
another subsidiary of the Company or by the Company and another such subsidiary,
free and clear of all Liens and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock and securities). Except for the capital stock of its
subsidiaries, the Company does not own, directly or indirectly, any capital
stock, security or other ownership or equity interest in any person. There are
no restrictions of any kind which prevent the payment of dividends by any of the
Company's subsidiaries, and neither the Company nor any of its subsidiaries is
subject to any obligation or requirement to provide funds for or to make any
investment (in the form of a loan or capital contribution) to or in any person.
(b) The authorized capital stock of the Company consists of
15,000,000 Common Shares and 5,000,000 shares of preferred stock, par value
$0.001 per share. As of the close of business on the date immediately preceding
the date hereof (1) 8,576,540 Common Shares were issued and outstanding, (2) no
shares of preferred stock were issued or outstanding, (3) 233,213 Common Shares
were held by the Company in its treasury, and (4) 1,466,674 Common Shares were
reserved for issuance pursuant to outstanding Options, including 34,672 Shares
reserved for issuance pursuant to the Microtest, Inc. Employee Stock Purchase
Plan. No Common Shares are owned by any subsidiary of the Company. Except as set
forth above or as contemplated by the Rights Agreement, at the time of execution
of this Agreement, no shares of capital stock or other equity or voting
securities of the Company are issued, reserved for issuance or outstanding. All
outstanding shares of capital stock and other equity or voting securities of the
Company (including all options, warrants and other convertible securities) are,
and all shares which may be issued pursuant to outstanding options, warrants or
other convertible securities will be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and nonassessable and not
subject to, or issued in violation of, any preemptive right, purchase option,
call option, right of first refusal, preemptive right, subscription right or any
similar right. Except for the Common Shares, there are no outstanding bonds,
debentures, notes or other indebtedness or securities of the Company or any of
its subsidiaries, having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which any
stockholders of the Company or of any of its subsidiaries may vote.
12
(c) Except as set forth above and except for the Rights, there
are no outstanding securities, options, warrants, calls, rights, commitments,
stock subscriptions or Contracts of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound obligating the Company
or any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other equity or voting
securities (including options, warrants and other convertible securities) of the
Company or of any of its subsidiaries or obligating the Company or any of its
subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment or Contract. Except as contemplated by this
Agreement or the Rights Agreement and except for the Company"s obligations in
respect of the Options under the Stock Plans, there are no outstanding rights,
commitments or Contracts of any kind obligating the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock or other equity or voting securities of the Company or any of its
subsidiaries or any securities of the type described in the two immediately
preceding sentences. The Company has delivered or made available to Parent
complete and correct copies of all Company option plans and all forms of
Options. Section 4.2(c) of the Company Disclosure Schedule sets forth a complete
and accurate list of all Options outstanding as of the date hereof and the
exercise price of and number of shares underlying each such outstanding Option.
Other than the Options set forth on Section 4.2(c) of the Company Disclosure
Schedules, there are no Options, warrants or other convertible securities
outstanding, and no other Options, warrants or other convertible securities will
be or become outstanding at any time prior to the Effective Time. Except as set
forth on Section 4.2(c) of the Company Disclosure Schedule, each Option
outstanding as of the date hereof is immediately exercisable and vested as of
the date hereof. Except as set forth on Section 4.2(c) of the Company Disclosure
Schedule, no Options will become vested or exercisable, in whole or in part, as
a result of the transactions contemplated hereby. Except as described in Section
4.2(c)of the Company Disclosure Schedule, as of the date hereof, there are no
stock-appreciation rights, stock-based performance units, "phantom" stock rights
or other Contracts of any character (contingent or otherwise) pursuant to which
any person is or may be entitled to (1) receive any payment or other value based
on the assets, revenues, earnings or financial performance, stock price
performance or other attribute of the Company or any of its subsidiaries or
calculated in accordance therewith (other than ordinary course payments or
commissions to sales representatives of the Company based upon revenues
generated by them without augmentation as a result of the transactions
contemplated hereby), or (2) cause the Company or any of its subsidiaries to
file a registration statement under the Securities Act, or which otherwise
relate to the registration of any securities of the Company. Except as set forth
in Section 4.2(c) of the Company Disclosure Schedule, there are no voting
trusts, proxies, antitakeover plans or other Contracts of any character to which
the Company or any of its subsidiaries is a party or by which any of them is
bound or, to the knowledge of the Company and except as have been disclosed in
the SEC Reports, to which any of the Company's stockholders is a party or by
which any of them is bound, in each case, with respect to the issuance, holding,
acquisition, voting or disposition of any shares of capital stock of the Company
or any of its subsidiaries.
Section 4.3 Authority Relative to this Agreement and Related Matters.
--------------------------------------------------------
The Company has all necessary corporate power and authority to execute and
deliver this Agreement and, except for any required approval by the Company's
stockholders in connection with consummation of the Merger, to consummate the
transactions contemplated hereby. The execution and delivery of this
13
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized and approved by the
Company Board and no other corporate proceedings on the part of the Company are
necessary to authorize or approve this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval of this Agreement by the affirmative vote of the holders of a majority
of the voting power of the then outstanding Common Shares entitled to vote
thereon, to the extent required by applicable Law and the filing of the
certificate of merger pursuant to the GCL). This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due and valid
authorization, execution and delivery of this Agreement by Parent and the
Purchaser, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
Section 4.4 Conflict; Required Filings and Consents.
---------------------------------------
(a) Assuming (i) the filings required under the HSR Act and any
domestic, foreign or supranational antitrust Laws are made and any waiting
periods thereunder that suspend the right to close the transactions contemplated
hereby have been terminated or have expired, (ii) the requirements of the
Exchange Act and any applicable state securities, "blue sky" or takeover Law are
met, (iii) the filing of the certificate of merger and other appropriate merger
documents, if any, as required by the GCL, is made, and (iv) with respect to the
Merger, approval of this Agreement by the affirmative vote of the holders of a
majority of the voting power of the then outstanding Common Shares entitled to
vote thereon, if required by the GCL, is received, none of the execution and
delivery of this Agreement by the Company, the consummation by the Company of
the transactions contemplated hereby or compliance by the Company with any of
the provisions hereof will (i) conflict with or violate the certificate of
incorporation or bylaws of the Company or the comparable organizational
documents of any of its subsidiaries, (ii) except as disclosed on Section 4.4(a)
of the Company Disclosure Schedule, result in a breach or violation of, a
default under or the triggering of any payment or other material obligations
pursuant to, any of the Company's existing Employee Benefit Arrangements (as
hereinafter defined) or any grant or award made under any of the foregoing,
(iii) except as disclosed on Section 4.4(a) of the Company Disclosure Schedule,
conflict with or violate in any material respect any statute, ordinance, rule,
regulation, order, judgment, decree, permit or license applicable to the Company
or any of its subsidiaries, or by which any of them or any of their respective
properties or assets may be bound or affected, or (iv) except as disclosed on
Section 4.4(a) of the Company Disclosure Schedule, result in a violation or
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in any loss
of any benefit, or the creation of any Lien on any of the properties or assets
of the Company or any of its subsidiaries (any of the foregoing referred to in
clause (ii), (iii) or this clause (iv) being a "Violation") pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
any of their respective properties may be bound or affected, other than, in the
case of clause (iv) above, any such Violations that, individually or in the
aggregate, would not (A) reasonably be expected to have a Material Adverse
Effect on the Company, (B) materially impair the ability of the Company to
perform its obligations under this Agreement or (C) prevent or materially delay
consummation of the Offer or the Merger.
14
(b) None of the execution and delivery of this Agreement by the
Company, the consummation by the Company of the transactions contemplated hereby
or compliance by the Company with any of the provisions hereof will require any
consent, waiver, approval, authorization or permit of, or registration or filing
with or notification to (any of the foregoing being a "Consent"), any government
or subdivision thereof, domestic, foreign or supranational or any
administrative, governmental or regulatory authority, agency, commission,
tribunal or body, domestic, foreign or supranational (each, a "Governmental
Entity"), except for (i) compliance with any applicable requirements of the
Exchange Act, (ii) the filing of the certificate of merger pursuant to the GCL,
(iii) compliance with the HSR Act and any requirements of domestic, foreign and
supranational antitrust Laws, and (iv) such filings, authorizations, orders and
approvals as to which failure to obtain or make would not (x) reasonably be
expected to have a Material Adverse Effect on the Company or (y) prevent or
materially delay the consummation of the Offer or the Merger.
Section 4.5 SEC Reports and Financial Statements.
------------------------------------
(a) The Company has filed with the SEC all forms, reports,
schedules, registration statements, definitive proxy statements and other
documents required to be filed by the Company with the SEC under the Securities
Act or the Exchange Act since January 1, 1996 (as they have been amended or
superseded by subsequent filings under the Securities Act or Exchange Act since
the time of their filing, and including any documents filed as exhibits thereto
and all financial statements or schedules included or incorporated by reference
therein, collectively, the "SEC Reports") and complete and correct copies of all
of the SEC Reports are available to Parent on ▇▇▇▇▇. The SEC Reports complied in
all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act"), as applicable, and
the rules and regulations of the SEC promulgated thereunder. Except as set forth
in Section 4.5(a) of the Company Disclosure Schedule, as of their respective
dates, as of the date they were filed or, if amended or superseded by subsequent
filings under the Securities Act or Exchange Act, as of the date of such
amendment or superseding filing, none of the SEC Reports contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. None of the Company's
subsidiaries is required to file any form, report or other document with the
SEC.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the SEC Reports (as such financial
statements have been amended or restated since the time of that filing) was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") (except, in the case of unaudited quarterly statements, as
permitted by Form 10-Q of the Exchange Act and subject to normal year-end audit
adjustments which are not individually or in the aggregate material) applied on
a consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto) and each fairly presents, in all material respects, the
consolidated financial position, results of operations and cash flows of the
Company and its consolidated subsidiaries as at the respective dates thereof and
for the respective periods indicated therein (except as otherwise noted
therein).
15
(c) The consolidated balance sheets as of December 31, 2000 and
1999 and the consolidated statements of income, stockholders' equity and cash
flows for each of the three fiscal years in the period ended December 31, 2000
(including the related notes and schedules thereto) of the Company contained in
the Company's Form 10-K for the fiscal year ended December 31, 2000 present
fairly the consolidated financial position and the consolidated results of
operations and cash flows of the Company and its consolidated subsidiaries as of
the dates and for the periods presented therein and were prepared in accordance
with GAAP consistently applied during the periods involved except as otherwise
noted therein, including the related notes.
(d) Except as reflected, reserved against or otherwise disclosed
in the consolidated balance sheet of the Company and its consolidated
subsidiaries contained in the Company's Form 10-Q for the fiscal quarter ended
March 31, 2001, neither the Company nor any of its subsidiaries has any material
liabilities, indebtedness or obligations (absolute, accrued, fixed, contingent
or otherwise) other than liabilities that have been (i) disclosed in the SEC
Reports prior to the date hereof or in Section 4.5(d) of the Company Disclosure
Schedule, or (ii) incurred in the ordinary course of business consistent with
past practice since March 31, 2001 which, in the case of clause (ii), would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
(e) The Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications which have not yet been filed
with the SEC to agreements, documents or other instruments which previously had
been filed by the Company with the SEC pursuant to the Securities Act and the
rules and regulations promulgated thereunder or the Exchange Act and the rules
and regulations promulgated thereunder.
(f) The Company is, and has been, in compliance in all material
respects with all listing requirements required to maintain listing on the
Nasdaq National Market.
Section 4.6 Environmental Matters.
---------------------
Except as may be set forth in Section 4.6 of the Company Disclosure
Schedule:
(a) The business and operations of the Company and its
subsidiaries comply in all material respects with all applicable Environmental
Laws; the Company and its subsidiaries have obtained all material Governmental
Permits relating to Environmental Laws necessary for the operation of their
businesses; and all such Governmental Permits are set forth on Section 4.6 of
the Company Disclosure Schedule and are in full force and effect and the Company
and its subsidiaries are in compliance with terms and conditions of such permits
except, in the case of each of the foregoing, for such events or noncompliance
as would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect on the Company. Neither the Company nor any of its
subsidiaries has received notice of, or, to the knowledge of the Company, is
subject to any pending or threatened investigation by, order from or claim by
any person (including without limitation any Governmental Entity or prior owner
or operator of any of the Company Property) respecting (i) any Environmental
Law, (ii) any Remedial Action or (iii) any claim arising from the Release or
threatened Release of a Contaminant into the environment. Neither the Company
nor any of its subsidiaries is subject to any pending, or to the knowledge of
16
the Company, threatened, judicial or administrative proceeding, order, judgment,
decree or settlement alleging or addressing a violation of or liability under
any Environmental Law.
(b) Neither the Company nor any of its subsidiaries has (i)
reported a Release of a hazardous substance pursuant to Section 103(a) of
CERCLA, or any state equivalent; (ii) filed a notice pursuant to Section 103(c)
of CERCLA; or (iii) filed any notice under any applicable Environmental Law
reporting a violation of any applicable Environmental Law. To the knowledge of
the Company, there is not now nor has there ever been, on or in any Company
Property: (A) any Release, (B) any treatment, recycling, disposal or storage,
other than short term storage prior to removal by a licensed transporter for
off-site disposal, of any hazardous waste, as that term is defined under RCRA or
any state equivalent, or (C) any underground storage tank or surface impoundment
or landfill or waste pile, except, in the case of each of the foregoing, for
such events which would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(c) To the knowledge of the Company, there is not now on or in any
Company Property any polychlorinated biphenyls (PCB) used in the Company's
operations in pigments, hydraulic oils, electrical transformers or other
equipment.
(d) To the knowledge of the Company, any asbestos-containing
material or presumed asbestos-containing material which is on or part of any
Company Property presently owned, leased or operated by the Company or any of
its subsidiaries, as currently configured and operated, is in good repair
according to the current standards and practices governing such material, and
its presence or condition does not materially violate any currently applicable
Environmental Law. None of the products manufactured, distributed or sold by the
Company or any of its subsidiaries contained asbestos or asbestos-containing
material.
(e) For purposes of this Section:
(i) "Company Property" means any real or personal property,
plant, building, facility, structure, underground storage tank,
equipment or unit, or other asset now or, to the Company's knowledge,
previously owned, leased or operated primarily by the Company or any
of its present or, to the Company's knowledge, past subsidiaries.
(ii) "CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, and any
regulations promulgated thereunder.
(iii) "Contaminant" means any waste, pollutant, hazardous or
toxic substance or waste, petroleum, petroleum-based substance or
waste, special waste, hazardous material or any constituent of any
such substance, waste or material, in each case to the extent
regulated by Environmental Law.
(iv) "Environmental Law" means all foreign, federal, state
and local Laws or regulations relating to or addressing the
environment, health and
17
safety as related to Contaminants, including but not limited to
CERCLA, OSHA and RCRA, any analogous foreign, state or local law, and
the common law.
(v) "Governmental Permits" means any permits, licenses,
certificates, orders, Consents, authorizations franchises and other
approvals from, or required by, any Governmental Entity that are used
by, or are necessary to own and to operate, the business of the
Company and its subsidiaries as currently configured and operated,
together with any applications for the issuance, renewal, modification
or extension thereof and all supporting information and analyses.
(vi) "OSHA" means the Occupational Safety and Health Act, as
amended, and any regulations promulgated thereunder.
(vii) "RCRA" means the Resource Conservation and Recovery
Act, as amended, and any regulations promulgated thereunder.
(viii) "Release" means release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration of a Contaminant into the environment or into or out of
any Company Property, including the movement of Contaminants through
or in the air, soil, surface water, or groundwater of Company
Property.
Section 4.7 Compliance with Applicable Laws.
-------------------------------
(a) Except with respect to those matters that are the subject of
the representations and warranties set forth in Sections 4.6, 4.12 and 4.16 of
this Agreement, and except as set forth in Section 4.7 of the Company Disclosure
Schedule, the Company and its subsidiaries hold all permits, registrations,
clearances, licenses, variances, exemptions, orders and approvals of all
Governmental Entities material to the Company or required for them to own their
assets and conduct their business as now owned, conducted and performed (the
"Company Permits"). The Company and its subsidiaries are in compliance in all
material respects with the terms of the Company Permits. Except with respect to
those matters that are the subject of the representations and warranties set
forth in Sections 4.6, 4.12 and 4.16 of this Agreement, the business operations
of the Company and its subsidiaries have been conducted in compliance, in all
respects material to the Company and its subsidiaries, with all Laws, ordinances
and regulations of any Governmental Entity. No suspension or cancellation of any
of the Company Permits is pending or, to the knowledge of the Company,
threatened. Neither the Company nor any Subsidiary is in material default,
breach or violation of any Law applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected. No person other than the Company or one of
its subsidiaries owns or has any proprietary, financial or other interest in any
Company Permit.
(b) The Company and its subsidiaries have not made, directly or
indirectly, any payment or promise to pay, or gift or promise to give or
authorized such a promise or gift, of any money or anything of value, directly
or indirectly, to (i) any foreign official (as such term is defined in the
Foreign Corrupt Practices Act of 1977, as amended (the "FCPA") for the purpose
of influencing any official act or decision of such official or inducing him or
her to do or omit to do
18
any act in violation of his or her lawful duty, to affect any act or decision of
such official, or to secure any improper advantage, or inducing him or her to
use his or her influence to affect any act or decision of a foreign government,
or any agency or subdivision thereof or (ii) any foreign political party or
official thereof or candidate for foreign political office for the purpose of
influencing any official act or decision of such party, official or candidate or
inducing him or her to do any act in violation of his or her lawful duty, or to
secure any improper advantage, or inducing such party, official or candidate to
use his, her or its influence to affect any act or decision of a foreign
government or agency or subdivision thereof, in the case of both clauses (i) and
(ii) above in order to assist the Company or any of its subsidiaries in
obtaining or retaining business for or directing business to the Company or any
of its subsidiaries or under circumstances which would subject the Company or
any of its subsidiaries to liability under the FCPA (or any comparable foreign
statute or regulation). The Company has not made any bribe, kickback or other
illegal payment in violation of any foreign or domestic Law.
Section 4.8 Change of Control. Except as set forth in Section 4.2(c),
-----------------
Section 4.4(a) or Section 4.8 of the Company Disclosure Schedule, the
transactions contemplated by this Agreement will not constitute a "change of
control" under, require the Consent from or the giving of notice to a third
party pursuant to, permit a third party to terminate or accelerate vesting or
repurchase rights or create any other detriment under the terms, conditions or
provisions of any material note, bond, mortgage, indenture, license, lease,
agreement or other instrument, obligation or Contract to which the Company or
any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound. Section 4.8 of the Company Disclosure
Schedule sets forth the Company's best estimates of the amounts payable to the
executives listed therein, as a result of the transactions contemplated by this
Agreement and/or any subsequent employment termination (including any cash-out
or acceleration of options and restricted stock and any "gross-up" payments with
respect to any of the foregoing), based on compensation data applicable as of
the date of such Schedule and the assumptions stated on that Schedule.
Section 4.9 Litigation. Except as set forth on Section 4.9 of the Company
----------
Disclosure Schedule, there is no Litigation pending or, to the knowledge of the
Company, threatened, against the Company or any of its subsidiaries which,
individually or in the aggregate, would reasonably be expected to (i) have a
Material Adverse Effect on the Company and its subsidiaries as a whole or (ii)
prevent or materially delay the consummation of the Offer and the Merger. Except
as disclosed in the SEC Reports filed prior to the date of this Agreement,
neither the Company nor any of its subsidiaries, nor any of their respective
rights, properties or assets, is subject to any outstanding Order which would
reasonably be expected to (i) have a Material Adverse Effect on the Company or
(ii) prevent or materially delay the consummation of the Offer and the Merger.
To the knowledge of the Company, there are no Litigation or Orders pending or
threatened against any person whom the Company or any of its subsidiaries has
agreed to indemnify, concerning such person's conduct as a director, officer,
employee or agent of the Company or any of its subsidiaries.
Section 4.10 Information. Neither the Schedule 14D-9 nor any of the
-----------
information supplied by the Company specifically for inclusion or incorporation
by reference in (i) the Offer Documents, (ii) the Proxy Statement or (iii) any
other document to be filed with the SEC or any other Governmental Entity in
connection with the transactions contemplated by this Agreement
19
(the "Other Filings") will, at the respective times filed with the SEC or other
Governmental Entity and, in addition, at the date any of such Other Filings or
any amendment or supplement thereto is published, sent or given to stockholders,
as the case may be, 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 made therein, in light of the circumstances under which they
were made, not misleading. The Proxy Statement shall not, at the date it is
first mailed to stockholders of the Company, at the time of the Stockholders'
Meeting and at the Effective Time, contain any statement which, at the time and
in light of the circumstances under which it was made, is false or misleading
with respect to any material fact, or which omits to state any material fact
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. The Schedule 14D-9 and the Proxy Statement will
comply as to form in all material respects with the provisions of the Exchange
Act and the rules and regulations thereunder, except that no representation is
made by the Company with respect to any statements made therein based on
information supplied by Parent or the Purchaser in writing specifically for
inclusion in the Proxy Statement.
Section 4.11 Certain Approvals. The Company has taken all necessary action
-----------------
to ensure that the restrictions on "business combinations" under Section 203 of
the GCL do not and shall not apply to or be triggered by this Agreement or the
consummation of the transactions contemplated hereby and such action is
effective as of the date hereof. To the knowledge of the Company, no state
takeover statute or similar statute or regulation applies to the Offer, the
Merger or the transactions contemplated by this Agreement.
Section 4.12 Employee Benefit Plans.
----------------------
(a) Section 4.12(a) of the Company Disclosure Schedule includes a
complete list of all material employee benefit plans, programs, and other
arrangements providing incentive compensation or benefits to any employee or
former employee or beneficiary or dependent thereof, whether or not written, and
whether covering one person or more than one person, sponsored or maintained by
the Company or any of its subsidiaries or to which the Company or any of its
subsidiaries contributes or is obligated to contribute ("Plans"). Without
limiting the generality of the foregoing, the term "Plans" includes all employee
welfare benefit plans within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended, and the regulations
thereunder ("ERISA") and all employee pension benefit plans within the meaning
of Section 3(2) of ERISA.
(b) With respect to each material Plan, the Company has delivered
to Parent a true, correct and complete copy of: (i) each writing constituting a
part of such Plan, including without limitation all plan documents, amendments,
benefit schedules, trust agreements, and insurance contracts and other funding
vehicles; (ii) the most recent Annual Report (Form 5500 Series) and accompanying
schedule, if any; (iii) the current summary plan description, if any; (iv) the
most recent annual financial report, if any; (v) the most recent actuarial
report, if any; and (vi) the most recent determination letter from the Internal
Revenue Service (the "IRS"), if any. Except as set forth on Section 4.12(b) of
the Company Disclosure Schedule, neither the Company nor any of its subsidiaries
has undertaken to make any amendments to any Plan.
20
(c) Section 4.12(c) of the Company Disclosure Schedule identifies each
Plan that is intended to be a "qualified plan" within the meaning of Section
401(a) of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations thereunder (the "Code") ("Qualified Plans"). The IRS has issued a
favorable determination letter with respect to each Qualified Plan that has not
been revoked, and there are no existing circumstances nor any events that have
occurred that could reasonably be expected to result in the loss of the
qualified status of any Qualified Plan or the related trust. The Company does
not provide benefits through a voluntary employee beneficiary association as
defined in Code Section 501(c)(9)).
(d) In all material respects, all contributions required to be made to
any Plan by applicable Law or regulation or by any plan document or other
contractual undertaking, and all premiums due or payable with respect to
insurance policies funding any Plan, for any period through the date hereof have
been timely made or paid in full or, to the extent not required to be made or
paid on or before the date hereof, have been fully reflected in the financial
statements of the Company included in the SEC Reports to the extent required
under generally accepted accounting principles.
(e) The Company and each of its subsidiaries has complied, and is now
in compliance, in all material respects with all provisions of ERISA, the Code
and all Laws and regulations applicable to the Plans. There is not now, nor do
any circumstances exist that could give rise to, any requirement for the posting
of security with respect to a Plan or the imposition of any lien on the assets
of the Company or any of its subsidiaries under ERISA or the Code. No non-exempt
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code) has occurred with respect to any Plan that could reasonably be
expected to result in the imposition of any penalty or tax on the Company or for
which the Company would be liable.
(f) Neither the Company, any of its subsidiaries, nor any ERISA
Affiliate has ever sponsored or maintained or had any liability (whether actual
or contingent) with respect to any Plan subject to Code Section 412, ERISA
Section 302, Title IV (including any plan described in ERISA Section 302) or any
comparable plan not covered by ERISA ("Pension Plan"); neither the Company nor
any of its subsidiaries has any liability (whether actual or contingent) with
respect to any Pension Plan maintained by any predecessor entity (or any of
their ERISA Affiliates); neither the Company nor any of its subsidiaries has any
liability (whether actual or contingent) with respect to any Plans maintained,
now or in the past (or that should have been maintained), by any ERISA Affiliate
or predecessor.
(g) No Plan is a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA and which is subject to Title IV of ERISA
(a "Multiple Employer Plan"), nor has the Company or any of its subsidiaries, or
any of their respective ERISA Affiliates (as defined in the next sentence), at
any time during the last six years, contributed to or been obligated to
contribute to any Multiemployer Plan or Multiple Employer Plan. An "ERISA
Affiliate" means any entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the Company or any of its subsidiaries, or that
21
is a member of the same "controlled group" as the Company or any of its
subsidiaries, pursuant to Section 4001(a)(14) of ERISA.
(h) There does not now exist, nor do any circumstances exist that
could reasonably be expected to result in, any liability under (i) Title IV of
ERISA, (ii) Section 302 of ERISA, (iii) Sections 412 and 4971 of the Code, (iv)
the continuation coverage requirements of Section 601 et seq. of ERISA and
Section 4980B of the Code, or (v) corresponding or similar provisions of foreign
Laws or regulations, other than a liability that arises solely out of, or
relates solely to, the Plans, that would be a liability of the Company or any of
its subsidiaries following the Effective Time. Without limiting the generality
of the foregoing, none of the Company, its subsidiaries nor any ERISA Affiliate
of the Company or any of its subsidiaries has engaged in any transaction
described in Section 4069 or Section 4204 or 4212 of ERISA.
(i) Neither the Company nor any of its subsidiaries has any liability
for life, health, medical or other welfare benefits to former employees or
beneficiaries or dependents thereof, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA and at no
additional expense to the Company and its subsidiaries.
(j) There are no pending or, to the Company's knowledge, threatened
claims (other than claims for benefits in the ordinary course), lawsuits or
arbitrations which have been asserted or instituted against the Plans, any
fiduciaries thereof with respect to their duties to the Plans or the assets of
any of the trusts under any of the Plans which could reasonably be expected to
result in any material liability of the Company or any of its subsidiaries to
the Pension Benefit Guaranty Corporation, the Department of Treasury, the
Department of Labor or any Multiemployer Plan.
(k) Except as set forth in Section 4.2(c), or Section 4.8 of the
Company Disclosure Schedule, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(either alone or in conjunction with any other event) result in, cause the
accelerated vesting, funding or delivery of, or increase the amount or value of,
any payment or benefit to any employee, officer or director of the Company or
any of its subsidiaries or result in any limitation on the right of the Company
or any of its subsidiaries to amend, merge, terminate or receive a reversion of
assets from any Plan or related trust. Without limiting the generality of the
foregoing, no amount paid or payable (whether in cash, in property, or in the
form of benefits) by the Company or any of its subsidiaries in connection with
the transactions contemplated hereby (either solely as a result thereof or as a
result of such transactions in conjunction with any other event) will be an
"excess parachute payment" within the meaning of Section 280G of the Code.
(l) All Plans subject to the Laws of any jurisdiction outside of the
United States: (i) have been maintained in all material respects in accordance
with all applicable requirements, (ii) if they are intended to qualify for
special tax treatment meet all requirements for such treatment, and (iii) if
they are intended to be funded and/or book-reserved are fully funded and/or book
reserved, as appropriate, based upon reasonable actuarial assumptions.
22
(m) Except as set forth in Section 4.12(m) of the Company
Disclosure Schedule, since January 1, 2001, the Company has not increased the
compensation or fringe benefits payable or to be payable to its directors,
officers or employees (whether from the Company or any of its subsidiaries), or
paid or awarded any benefit not required by any existing plan or arrangement to
any officer, director or employee (including, without limitation, the granting
of stock options, stock appreciation rights, shares of restricted stock or
performance units pursuant to the Stock Plans or otherwise), or granted any
severance or termination pay to any officer, director or other employee of the
Company or any of its subsidiaries (other than as required by existing
agreements or policies described in the Company Disclosure Schedule), or entered
into any employment or severance agreement with, any director, officer or other
employee of the Company or any of its subsidiaries or established, adopted,
entered into, amended or waived any Employee Benefit Arrangement (as hereinafter
defined), except, in each case, to the extent required by applicable Law.
Section 4.13 Intellectual Property.
---------------------
(a) Set forth on Section 4.13(a) of the Company Disclosure
Schedule is a list of all material patents, patent applications, patent
disclosures, trademark registrations and trademark applications, Internet domain
names, service ▇▇▇▇ registrations and service ▇▇▇▇ applications, certification
▇▇▇▇ registrations and certification ▇▇▇▇ applications, copyright registrations
and copyright registration applications, mask works registrations and mask works
registration applications, both domestic and foreign, which are owned or used by
the Company or any of its subsidiaries. The assets described on Section 4.13(a)
of the Company Disclosure Schedule and all other material computer software,
trade secrets, trademarks, trade names, service marks, certification marks,
copyrights, know-how, methods, processes, procedures, apparatus, equipment,
industrial property, discoveries, inventions, patent disclosures, invention
disclosures (whether or not patentable or reduced to practice), designs,
drawings, plans, specifications, engineering data, manuals, development
projects, research and development work in progress, technology and other
proprietary rights, confidential information or intellectual property
("Intellectual Property") which are owned or used by the Company or any of its
subsidiaries are referred to as the "Company Intellectual Property." To the
knowledge of the Company, the Company and its subsidiaries own all right, title
and interest in and to the Company Intellectual Property validly and
beneficially, free and clear of all material Liens, with the sole and exclusive
right to use the same, subject to those licenses listed on Section 4.13(b) of
the Company Disclosure Schedule. To the knowledge of the Company, the Company
Intellectual Property constitutes all the Intellectual Property necessary or
appropriate to conduct the business of the Company and its subsidiaries as
presently conducted and as currently proposed to be conducted.
(b) Set forth on Section 4.13(b) of the Company Disclosure
Schedule is a list of (i) all material licenses, assignments and other transfers
of Company Intellectual Property granted or assigned to others by the Company or
any of its subsidiaries, and (ii) all Intellectual Property licensed, granted or
assigned to the Company or any of its subsidiaries by others. Neither the
execution of this Agreement nor the consummation of any of the transactions
contemplated hereby will adversely affect any of the Company's or any of its
subsidiaries' rights with respect to any of the Company Intellectual Property,
and none of the material licenses, assignments or other transfers described
above is subject to termination or cancellation or change in its terms or
23
provisions as a result of this Agreement or the transactions provided for in
this Agreement. To the knowledge of the Company, there is no material
unauthorized use, infringement or misappropriation of any Company Intellectual
Property by any third party.
(c) Except as set forth on Section 4.13(c) of the Company
Disclosure Schedule, no material claim by a third party against the Company, any
of its subsidiaries or any of their respective assets with respect to the
Company Intellectual Property has been asserted or, to the knowledge of the
Company, is threatened by any person, nor does the Company have knowledge of any
valid ground for any bona fide claims, (i) to the effect that the manufacture,
sale or use of any product, service or process as used (currently or in the
past) or offered or proposed for use or sale by the Company infringes on any
Intellectual Property of any person, (ii) against the Company or any subsidiary
relating to the use of any Intellectual Property, or (iii) challenging the
ownership, validity or effectiveness of any Company Intellectual Property. All
granted and issued patents and all registered trademarks and service marks
listed in Section 4.13(a) of the Company Disclosure Schedule and all copyrights
held by the Company are valid, enforceable and subsisting.
(d) No Company Intellectual Property is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting in any
manner the licensing, assignment or other transfer, use or enforceability
thereof by the Company. The Company has not entered into any agreement to
indemnify any other person against any charge of infringement of any
Intellectual Property, except indemnities agreed to in the ordinary course of
business in connection with the sale, delivery or transfer of Company products
or services or included as part of the Company's license agreements. The Company
or its subsidiaries have the exclusive right to file, prosecute and maintain all
applications and registrations with respect to the Company Intellectual
Property.
Section 4.14 Taxes.
-----
(a) All Tax Returns (as hereinafter defined) required to be filed
by the Company and each of its subsidiaries have been timely filed after giving
effect to any extensions. All such Tax Returns were correct and complete in all
material respects. Except as set forth in Section 4.14(a) of the Company
Disclosure Schedule, all Taxes required to be paid by the Company and each of
its subsidiaries that are due and payable have been paid, whether or not shown
on any Tax Return. Each of the Company and its subsidiaries has made adequate
provision in reserves established in its financial statements and accounts for
all Taxes which have accrued but are not yet due and payable. Except as set
forth in Section 4.14(a) of the Company Disclosure Schedule, neither the Company
nor any of its subsidiaries is currently the beneficiary of any extension of
time within which to file any Tax Return.
(b) There are no material liens for Taxes upon the assets of the
Company or any of its subsidiaries other than liens for current Taxes not yet
due and payable.
(c) The Company and its subsidiaries have withheld or collected
and paid over to the appropriate governmental authorities or are properly
holding for such payment all Taxes required by law to be withheld or collected.
24
(d) Except as set forth in Section 4.14(d) of the Company Disclosure
Schedule, there is no claim or dispute concerning any material Tax liability of
the Company or its subsidiaries either (i) claimed or raised by any authority in
writing or (ii) as to which any of the directors and officers (and employees
responsible for Tax matters) of the Company and its subsidiaries has knowledge
based on personal contact with any agent of such authority. There is no audit,
examination, or similar proceeding currently in progress or pending with respect
to Taxes or Tax Returns of the Company or any of its subsidiaries.
(e) Section 4.14(e) of the Company Disclosure Schedule lists the
periods for which the Tax Returns required to be filed by the Company or any of
its subsidiaries have been examined by the IRS or other appropriate taxing
authority. All material deficiencies and assessments asserted as a result of
such examinations or other audits by federal, state, local or foreign taxing
authorities have been paid, fully settled or adequately provided for in the
Company's financial statements, and no issue or claim has been asserted in
writing for Taxes by any taxing authority for any prior period, other than those
heretofore paid or provided for in the Company's financial statements. There are
no outstanding agreements or waivers extending the statutory period of
limitation applicable to any Tax Return of the Company or any of its
subsidiaries.
(f) Neither the Company nor any of its subsidiaries is required to
include in income any adjustment pursuant to Section 481(a) of the Code (or
similar provision of state or local law) by reason of a change in accounting
method.
(g) Neither the Company nor any if its subsidiaries has been a party
to any deferred intercompany transaction pursuant to which it realized but did
not recognize a gain, and no excess loss account exists with respect to the
shares of stock of any member of the federal consolidated income tax group of
which the Company is the common parent.
(h) Neither the Company nor any of its subsidiaries has been a party
to any "closing agreement" as described in Section 7121 of the Code (or any
corresponding provision of state or local income Tax law).
(i) During the past five years, neither the Company nor any of its
subsidiaries has been party to any transaction, either as a distributing
corporation or controlled corporation, that has been reported to qualify for
tax-free treatment under Section 355 of the Code.
(j) Neither the Company nor any of its subsidiaries has a permanent
establishment in any foreign country.
(k) Neither the Company nor any of its subsidiaries has made any
payments, nor is or will become obligated to make any payments, that will be
non-deductible under Section 280G of the Code (or any corresponding provision of
state, local, or foreign income Tax law).
(l) Neither the Company nor any of its subsidiaries has filed a
consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
such term is defined in Section 341(f)(4) of the Code) owned by the Company or
any of its subsidiaries.
25
(m) Neither the Company nor any of its subsidiaries (i) has been
a member of a group filing consolidated returns for federal income Tax purposes
(except for the group of which the Company is the common parent), (ii) has any
liability for the Taxes of any person (other than the Company and its
subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign Law), as a transferor or successor, by
contract or otherwise, or (iii) is a party to, bound by, or has any continuing
obligation under any Tax sharing, Tax indemnity, or any other agreement of a
similar nature.
(n) For purposes of this Agreement, the term "Tax" or "Taxes"
means all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, transfer, license,
payroll, withholding, capital stock and franchise taxes, imposed by the United
States or any state, local or foreign government or subdivision or agency
thereof, including any interest, penalties or additions thereto. For purposes of
this Agreement, the term "Tax Return" means any report, return or other
information or document required to be supplied to a taxing authority in
connection with Taxes.
(o) The Company has delivered to Parent true and complete copies
of (i) all Federal income Tax Returns of the Company and its subsidiaries for
the preceding three taxable years and (ii) any audit report issued within the
last three years (or otherwise with respect to any audit or proceeding in
progress) relating to Federal income taxes of the Company or any subsidiary.
Section 4.15 Absence of Certain Changes. Except as disclosed in the SEC
--------------------------
Reports filed prior to the date of this Agreement or as set forth in Section
4.15 of the Company Disclosure Schedule and except for the transactions
expressly contemplated by this Agreement, since December 31, 2000 (i) there has
not been any Material Adverse Effect on the Company; (ii) the businesses of the
Company and each of its subsidiaries have been conducted only in the ordinary
course and in a manner consistent with past practice; and (iii) neither the
Company nor any of its subsidiaries has incurred any material liabilities
(direct, contingent or otherwise) or engaged in any material transaction or
entered into any material agreement or commitments outside the ordinary course
of business, other than in connection with the contemplated sale or disposition
of the Excluded Business in accordance with the terms hereof and other than the
shut-down of the NAS Business.
Section 4.16 Labor Matters.
-------------
(a) No employees of the Company or of any of its subsidiaries are
represented by any labor union or any collective bargaining organization. No
labor organization or group of employees of the Company or any of its
subsidiaries has made a pending demand for recognition or certification, and
there are no representation or certification proceedings or petitions seeking a
representation proceeding presently pending or, to the knowledge of the Company,
threatened to be brought or filed, with the National Labor Relations Board or
any other labor relations tribunal or authority. To the Company's knowledge, as
of the date hereof, no facts or event exists that is likely to give rise to a
violation of Section 4.16(a) on or before the Effective Time.
(b) With respect to employees of and services providers to the
Company:
26
(i) The Company complies and has complied
materially with all employment agreements and all applicable
domestic and foreign Laws respecting employment and employment
practices, terms and conditions of employment and wages and
hours, including without limitation any such employment
agreements or Laws respecting employment discrimination, workers'
compensation, family and medical leave, the Immigration Reform
and Control Act, and occupational safety and health requirements,
and no claims or investigations are pending or, to the Company's
knowledge, threatened with respect to such Laws, either by
private individuals or by governmental agencies; all employees of
the Company and each of the subsidiaries are at will except as
set forth in Section 4.16(b) of the Company Disclosure Schedule;
and all employees have signed confidentiality/non-disclosure
agreements;
(ii) The Company is not, nor has it ever been,
engaged in any unfair labor practice. There is not now, nor
within the past three years has there been, any unfair labor
practice complaint against the Company pending or, to the
Company's knowledge, threatened, before the National Labor
Relations Board or any other comparable foreign or domestic
authority or any workers' council;
(iii) As of the date of this Agreement, no
material grievance or arbitration proceeding arising out of or
under collective bargaining agreements or employment
relationships (involving more than one employee) is pending, and
no claims therefor exist or have, to the Company's knowledge,
been threatened; no labor strike, lock-out, slowdown, or work
stoppage is pending or, to the Company's knowledge, threatened,
against or directly affecting the Company; and, to the Company's
knowledge as of the date hereof, no fact or event exists that is
likely to give rise to a violation of Section 4.16(b)(iii) on or
before the Effective Time; and
(iv) All persons who are or were performing
services for the Company and are or were classified as
independent contractors do or did satisfy and have satisfied the
requirements of Law to be so classified, and the Company has
fully and accurately reported their compensation on IRS Forms
1099 when required to do so.
Section 4.17 Relationships with Customers, Suppliers, Distributors and
---------------------------------------------------------
Sales Representatives. Neither the Company nor any of its subsidiaries has
---------------------
received written notice that any customer, supplier, distributor or sales
representative intends to cancel, terminate or otherwise modify its relationship
with the Company or any subsidiary, which action would reasonably be expected to
have a Material Adverse Effect on the Company.
Section 4.18 Contracts. Section 4.18(a) of the Company Disclosure Schedule
---------
lists all written or oral Contracts to which the Company or any of its
subsidiaries is a party or by which any of them or any of their respective
properties, rights or assets are bound, and which fall within any of the
following categories (all of the Contracts required to be disclosed on Section
4.18(a) of the Company Disclosure Schedule are referred to as the "Material
Contracts"): (i) material Contracts not entered into in the ordinary course of
business including, without limitation, all
27
contracts in which the Company assumed or retained environmental liabilities in
connection with the sale of companies or properties, (ii) joint venture,
partnership and like agreements, (iii) Contracts containing covenants purporting
to limit the freedom of the Company or any of its affiliates to compete in any
line of business in any geographic area or to hire or solicit any individual or
group of individuals (which are set forth in Section 4.18(a)(iii) of the Company
Disclosure Schedule), (iv) Contracts which after the Effective Time would have
the effect of limiting the freedom of Parent or any of its affiliates (other
than the Company and its subsidiaries) to compete in any line of business in any
geographic area or to hire any individual or group of individuals (which are set
forth in Section 4.18(a)(iv) of the Company Disclosure Schedule), (v) Contracts
which contain minimum purchase conditions or requirements or other terms that
restrict or limit the purchasing relationships of the Company or any of its
subsidiaries, (vi) Contracts relating to any outstanding commitment for capital
expenditures in excess of $100,000, (vii) indentures, mortgages, promissory
notes, loan agreements, guarantees of amounts in excess of $100,000, letters of
credit or other agreements or instruments of the Company or any of its
subsidiaries or commitments for the borrowing or the lending of amounts in
excess of $100,000 by the Company or any of its subsidiaries or providing for
the creation of any material charge, security interest, encumbrance or Lien upon
any of the assets of the Company or any of its subsidiaries, (viii) Contracts
with or for the benefit of any affiliate of the Company (other than subsidiaries
of the Company), and (ix) all other Contracts, whether or not made in the
ordinary course of business, which are material to the Company or any of its
subsidiaries or to the conduct of their respective businesses, or the absence of
which would prevent or materially delay consummation of the Offer or the Merger
or otherwise prevent or materially delay the Company from performing its
obligations hereunder or would result in a Material Adverse Effect on the
Company.
(b) All of the Material Contracts are valid and binding
obligations of the Company or a subsidiary of the Company and, to the Company's
knowledge, the valid and binding obligation of each other party thereto,
enforceable in each case in accordance with their respective terms. Neither the
Company nor any of its subsidiaries nor, to the knowledge of the Company and
each of its subsidiaries, any other party thereto, is in violation of or in
default in respect of, nor has there occurred an event or condition which with
the passage of time or giving of notice (or both) could constitute a default
under, any such Contract, nor has the Company or any of its subsidiaries
received any notice or claim of any such default. None of the Material Contracts
with any affiliate of the Company are on terms less favorable to the Company or
its subsidiaries than those that would be obtained from unaffiliated third
parties. The Company has provided to Parent true and complete copies of all
written Material Contracts, and true and complete summaries of all oral Material
Contracts, including in each case all amendments thereto.
Section 4.19 Product Recalls. The Company is not aware of any pattern or
---------------
series of claims against the Company or any of its subsidiaries which reasonably
could be expected to result in a generalized product recall relating to products
sold by the Company or any of its subsidiaries, regardless of whether such
product recall is formal, informal, voluntary or involuntary.
Section 4.20 Interested Party Transactions. Except as set forth in Section
-----------------------------
4.20 of the Company Disclosure Schedule or disclosed in the SEC Reports, (i)
there are no existing, and since December 31, 2000 there has been no Contract,
transaction, indebtedness or other arrangement, or
28
any related series thereof, between the Company and any of its subsidiaries, on
the one hand, and any of the current or former directors, officers, stockholders
or other affiliates of the Company or of any of its subsidiaries, or any of
their respective affiliates or family members, on the other hand (except for
amounts due as normal salaries and bonuses and in reimbursement of ordinary
expenses), (ii) there are no transactions involving Company of a nature that
would be required to be described under Item 404 of Regulation S-K promulgated
under the Securities Act, and (iii) none of the officers or directors of the
Company or any of its subsidiaries has any material direct or indirect interest
in any material property or assets used in or pertaining to the business of the
Company or that of its subsidiaries, or in any supplier, distributor or customer
of the Company or any of its subsidiaries.
Section 4.21 Brokers. Except for the engagement of Financial Advisor, none
-------
of the Company, any of its subsidiaries, or any of their respective officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement. The Company has previously
delivered to Parent a copy of the Company's engagement letters with Financial
Advisor.
Section 4.22 Opinion of Financial Advisor. The Company Board has received
----------------------------
an oral or written opinion of Financial Advisor to the effect that, as of the
date hereof, the consideration to be received by the holders of Common Shares
(other than Parent or any of its affiliates) pursuant to the Offer and the
Merger, is fair to the Company's stockholders from a financial point of view.
Promptly following the date hereof, the Company will deliver to Parent a written
copy of such opinion.
Section 4.23 Property and Leases.
-------------------
(a) The Company and its subsidiaries have good, marketable and
valid title to, or a valid leasehold interest in, all of the real and personal
property owned by the Company or any of its subsidiaries or used or held for use
by any of them in connection with, or necessary for, their respective
businesses, free and clear of all Liens (collectively, the "Company Assets").
The Company Assets are all of the assets and properties necessary for the
Company and its subsidiaries to conduct their respective businesses as presently
conducted and as proposed to be conducted. All of the tangible Company Assets
have been maintained in a reasonably prudent manner, are in good operating
condition and repair, and no maintenance with respect thereto has been deferred
or delayed.
(b) Each material parcel of real property owned or leased by the
Company or any of its subsidiaries is neither subject to any decree or order by
any Governmental Entity to be sold nor is being condemned, expropriated or
otherwise taken by any public authority with or without payment of compensation
therefor, nor, to the knowledge of the Company, has any such condemnation,
expropriation or taking been proposed. There are no persons other than the
Company and its subsidiaries in possession of any of the real property owned or
leased by the Company or any of its subsidiaries, or any portion thereof, and,
to the Company"s knowledge, there are no Contracts granting to any person or
persons other than the Company and its subsidiaries the right of use or
occupancy of any portion of such real property. None of the
29
Company nor any of its Subsidiaries is obligated under or bound by any option,
right or first refusal, purchase Contract, or other Contract to sell or
otherwise dispose of any such real property or any other interest in any such
real property. To the Company's knowledge, there are no contractual or legal
restrictions that preclude or restrict the ability to use any real property
owned or leased by the Company or any of its subsidiaries for the purposes for
which it is currently being used, or material latent defects or material adverse
physical conditions affecting the real property, and improvements thereon, owned
or leased by the Company or any of its subsidiaries.
(c) Each lease and sublease covering any Company Assets is a
legal, valid and binding obligation of the Company and/or such subsidiary, as
applicable, and, to the Company's knowledge, of each other party thereto and is
enforceable, in accordance with its terms, against the Company and/or such
subsidiary, as applicable, and, to the Company's knowledge, against each other
party thereto, and such lease or sublease will continue to be valid, binding and
enforceable in accordance with its terms and in full force and effect
immediately following the consummation of the transactions contemplated hereby,
with no material alteration or acceleration or increase in fees or liabilities.
There is not under any such lease or sublease any material default by the
Company or any of its subsidiaries or, to the knowledge of the Company, by any
other person, or any condition, event or act which would constitute such a
material default.
Section 4.24 Insurance.
---------
The Company and its subsidiaries maintain policies of insurance on terms,
and in amounts, that are adequate for the conduct of their respective
businesses, in each case as such business is currently conducted and consistent
with customary practices and standards of companies engaged in businesses
similar to that of the Company and the subsidiaries, and with insurers
reasonably believed by the Company to be responsible. With respect to each
material insurance policy: (i) the policy is legal, valid, binding and
enforceable in accordance with its terms and, except for policies that have
expired under their terms in the ordinary course, is in full force and effect;
and (ii) neither the Company nor any of its subsidiaries is in material breach
or default (including any such breach or default with respect to the payment of
premiums or the giving of notice), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination or modification, under the policy.
Section 4.25 Rights Agreement.
----------------
The Company and the Company Board have authorized all necessary action to
amend the Rights Agreement (without redeeming the Rights) so that none of the
execution or delivery of this Agreement, the making of the Offer, the
acquisition of Common Shares pursuant to the Offer or the consummation of the
Merger will (i) cause any Rights issued pursuant to the Rights Agreement to
become exercisable or to separate from the stock certificates to which they are
attached, (ii) cause Parent, the Purchaser or any of their Affiliates or
Associates to be an Acquiring Person (as each such term is defined in the Rights
Agreement) or (iii) trigger other provisions of the Rights Agreement, including
giving rise to a Distribution Date or a Triggering Event (as each such term is
defined in the Rights Agreement), and such amendment shall be in full force and
effect from and after the date hereof. The Company has delivered to Parent a
copy of the executed certificate delivered to the Rights Agent pursuant to
Section 27 of the Rights Agreement.
30
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as follows:
Section 5.1 Organization and Qualification. Parent is a corporation duly
------------------------------
organized, validly existing and in good standing under the Laws of Delaware. The
Purchaser is a corporation duly organized, validly existing and in good standing
under the Laws of the State of Delaware. Each of Parent and Purchaser has the
requisite corporate power and authority to own, operate or lease its properties
and to carry on its business as it is now being conducted, and is duly qualified
or licensed to do business, and is in good standing, in each jurisdiction in
which the nature of its business or the properties owned, operated or leased by
it makes such qualification, licensing or good standing necessary, except where
the failure to have such power or authority, or the failure to be so qualified,
licensed or in good standing, would not have a Material Adverse Effect on
Parent. The term "Material Adverse Effect on Parent," as used in this Agreement,
means any change in or effect on the business, assets, liabilities, financial
condition or results of operations of Parent or any of its subsidiaries that,
individually or in the aggregate, would be materially adverse to Parent and its
subsidiaries taken as a whole.
Section 5.2 Authority Relative to this Agreement. Each of Parent and the
------------------------------------
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and the Purchaser and the
consummation by Parent and the Purchaser of the transactions contemplated hereby
have been duly and validly authorized and approved by the respective Boards of
Directors of Parent and the Purchaser and by Fluke Networks, Inc. as sole
stockholder of the Purchaser and no other corporate proceedings on the part of
Parent or the Purchaser are necessary to authorize or approve this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by each of Parent and the Purchaser and, assuming the due
and valid authorization, execution and delivery by the Company, constitutes a
valid and binding obligation of each of Parent and the Purchaser enforceable
against each of them in accordance with its terms.
Section 5.3 No Conflict; Required Filings and Consents.
------------------------------------------
(a) Assuming (i) the filings required under the HSR Act and any
domestic, foreign or supranational antitrust Laws are made and any waiting
periods thereunder that suspend the right to close the transactions contemplated
hereby have been terminated or have expired, (ii) the requirements of the
Exchange Act and any applicable state securities, "blue sky" or takeover Law are
met, and (iii) the filing of the certificate of merger and other appropriate
merger documents, if any, as required by the GCL, is made, none of the execution
and delivery of this Agreement by Parent or the Purchaser, the consummation by
Parent or the Purchaser of the transactions contemplated hereby or compliance by
Parent or the Purchaser with any of the provisions hereof will (i) conflict with
or violate the organizational documents of Parent or the Purchaser, (ii)
conflict with or violate in any material respect any statute, ordinance, rule,
regulation, order, judgment, decree, permit or license applicable to Parent or
the Purchaser, or by
31
which either of them or any of their respective properties or assets may be
bound or affected, or (iii) result in a Violation pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or the Purchaser is a party or by
which Parent or the Purchaser or any of their respective properties or assets
may be bound or affected, which would materially impair the ability of Parent or
the Purchaser to perform its obligations under this Agreement, or prevent or
materially delay the consummation of the transactions contemplated hereby.
(b) None of the execution and delivery of this Agreement by
Parent and the Purchaser, the consummation by Parent and the Purchaser of the
transactions contemplated hereby or compliance by Parent and the Purchaser with
any of the provisions hereof will require any Consent of any Governmental
Entity, except for (i) compliance with any applicable requirements of the
Exchange Act and any state securities "blue sky" or takeover Law, (ii) the
filing of a certificate of merger pursuant to the GCL, and (iii) compliance with
the HSR Act and any requirements of domestic, foreign or supranational antitrust
Laws.
Section 5.4 Information. None of the information supplied or to be
-----------
supplied by Parent and the Purchaser in writing specifically for inclusion in
(i) the Schedule 14D-9, (ii) the Proxy Statement or (iii) the Other Filings
will, at the respective times filed with the SEC or such other Governmental
Entity and, in addition, in the case of the Proxy Statement, at the date it or
any amendment or supplement is mailed to stockholders, at the time of the
Special Meeting and at the Effective Time, 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 made therein, in light of the
circumstances under which they were made, not misleading.
Section 5.5 Financing. Parent has possession of, or has available to it
---------
under existing lines of credit, sufficient funds to consummate the transactions
contemplated by this Agreement, and will cause the Purchaser to have sufficient
funds available to consummate the Offer and the Merger and the transactions
contemplated hereby.
ARTICLE SIX
COVENANTS
Section 6.1 Conduct of Business of the Company. Except as required by
----------------------------------
this Agreement or otherwise with the prior written consent of Parent, during the
period from May 21, 2001 to the Effective Time, the Company will, and will cause
each of its subsidiaries to, conduct its operations only in the ordinary and
usual course of business consistent with past practice and in compliance with
all Laws and Orders, will use its commercially reasonable efforts, and will
cause each of its subsidiaries to use its commercially reasonable efforts, to
preserve intact the business organization of the Company and each of its
subsidiaries, to keep available the services of its and their present officers
and key employees, and to preserve the goodwill of those having business
relationships with it, including, without limitation, maintaining satisfactory
relationships with suppliers, distributors, customers, licensors and others
having business relationships with the Company or any of its subsidiaries.
Without limiting the generality of the foregoing, and except as otherwise
required by this Agreement, the Company will not and will not permit any of its
subsidiaries to,
32
prior to the Effective Time, directly or indirectly, without the prior written
consent of Parent, which in the case of clauses (f), (i) and (j) will not be
unreasonably withheld:
(a) adopt any amendment to its certificate of incorporation or bylaws
or comparable organizational documents or the Rights Agreement (other than the
amendment contemplated by Section 4.25);
(b) sell, pledge or encumber any stock owned by it in any of its
subsidiaries, other than in connection with the sale of the Excluded Business in
accordance with the terms of the Sale Agreements;
(c) (i) issue, reissue, sell, pledge, dispose of, grant or encumber,
or authorize the issuance, reissuance, sale, pledge, disposal of, grant or
encumbrance of, (A) any shares of capital stock of any class of the Company or
any of its subsidiaries, or securities convertible into any such capital stock,
or any rights, warrants or options to acquire any such convertible securities or
capital stock, or any other ownership interest in the Company or any of its
subsidiaries, other than the issuance of Shares (and the related Rights), in
accordance with the terms of the instruments governing such issuance on the date
hereof, pursuant to the exercise of the Options outstanding on the date hereof
(or if a Triggering Event (as defined in the Rights Agreement) by a party other
than Parent or the Purchaser shall occur, pursuant to the exercise of Rights),
or (B) any other securities in respect of, in lieu of, or in substitution for,
Shares outstanding on the date hereof, or (ii) alter or make any other changes
in its capital structure;
(d) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in respect
of any class or series of its capital stock, other than between any of the
Company and any of its wholly owned subsidiaries;
(e) split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire, or propose to redeem or purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities;
(f) increase the compensation or fringe benefits payable or to become
payable to its directors, officers or employees (whether from the Company or any
of its subsidiaries), or pay or award any benefit not required by any existing
plan or arrangement to any officer, director or employee (including, without
limitation, the granting of stock options, stock appreciation rights, shares of
restricted stock or performance units pursuant to the Stock Plans or otherwise),
or grant any severance or termination pay to any officer, director or other
employee of the Company or any of its subsidiaries (other than as required by
existing agreements or policies described in the Company Disclosure Schedule),
or enter into any employment or severance agreement with, any director, officer
or other employee of the Company or any of its subsidiaries or establish, adopt,
enter into, amend or waive any performance or vesting criteria or accelerate
vesting, exercisability or funding under any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, savings,
welfare, deferred compensation, employment, termination, severance or other
employee benefit plan, agreement, trust, fund, policy or arrangement for the
benefit or welfare of any directors, officers or current or former employees of
the Company or its subsidiaries (any of the foregoing being an "Employee Benefit
Arrangement"), except, in each
33
case, to the extent required by applicable Law or required by the existing terms
of any such Employee Benefit Arrangement as in effect prior to January 1, 2001
and described in the Company Disclosure Schedule;
(g) acquire, mortgage, encumber, sell, lease, license or dispose of,
or pledge, encumber or permit the placement of any Lien on, any material assets
(including Intellectual Property) or securities, except pursuant to existing
Contracts or commitments which have been disclosed on Section 4.18(a) of the
Company Disclosure Schedule or for the lease, sale or purchase of goods in the
ordinary course of business consistent with past practice, or enter into any
commitment or transaction outside the ordinary course of business consistent
with past practice, other than the contemplated sale or other disposition of the
Excluded Business in accordance with the terms hereof and transactions between a
wholly owned subsidiary of the Company and the Company or another wholly owned
subsidiary of the Company;
(h) (i) incur, assume or pre-pay any long-term indebtedness or incur
or assume any short-term indebtedness, except that the Company and its
subsidiaries may incur, assume or pre-pay debt in the ordinary course of
business in an amount not to exceed $100,000 in the aggregate and for purposes
consistent with past practice under existing lines of credit, (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, (iii) pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
contingent or otherwise), except in the ordinary course of business consistent
with past practice and in accordance with their terms, (iv) make any loans,
advances or capital contributions to, or investments in, any other person,
except for loans, advances, capital contributions or investments between any
wholly owned subsidiary of the Company and the Company or another wholly owned
subsidiary of the Company, (v) authorize or make capital expenditures which are
in excess of $100,000 individually or $250,000 in the aggregate, (vi) accelerate
or delay collection of notes or accounts receivable in advance of or beyond
their regular due dates or the dates when the same would have been collected in
the ordinary course of business consistent with past practice, (vii) delay or
accelerate payment of any account payable beyond or in advance of its due date
or the date such liability would have been paid in the ordinary course of
business consistent with past practice, (viii) vary its inventory practices in
any material respect from its past practices, (ix) issue any debt securities, or
(x) grant any security interest in any of its assets or properties, except in
the ordinary course of business consistent with past practice;
(i) settle or compromise any Litigation, suit or claim or threatened
Litigation, suit or claim where the amount involved is greater than $100,000;
(j) other than in the ordinary course of business consistent with past
practice, (i) modify, amend or terminate any Contract (unless the amount
involved is less than $100,000), (ii) waive, release, relinquish or assign any
Contract (or any of its rights thereunder), right or claim, or (iii) cancel or
forgive any indebtedness owed to the Company or any of its subsidiaries;
(k) make any tax election that is not required by Law (other than
elections consistent with past practice) or settle or compromise any tax
liability;
34
(l) permit any insurance policy naming it as a beneficiary or a
loss payable payee to be canceled or terminated, except in the ordinary course
of business consistent with past practice;
(m) acquire (by merger, consolidation, acquisition of
stock or assets or otherwise) any corporation, partnership, business
organization, division or any other person or, except in the ordinary course of
business consistent with past practice, any assets;
(n) enter into any Contract other than in the ordinary course of
business consistent with past practice (and in any case, only if the amount or
value involved is less than $100,000, except that this $100,000 limitation shall
not apply with respect to Contracts entered into by or on behalf of the Company
in the ordinary course of business consistent with past practice with any of the
entities set forth on Section 6.1(n) of the Company Disclosure Schedule), other
than in connection with the contemplated sale or other disposition of the
Excluded Business in accordance with the terms hereof;
(o) except as may be required as a result of a change in Law or in
GAAP, make any change in its methods of accounting, including tax accounting
policies and procedures;
(p) fail to comply with any Law or the rules of any self-
regulatory authority, including without limitation any failure to make in a
timely manner any filings with the SEC required under the Securities Act or
Exchange Act or the rules and regulations promulgated thereunder;
(q) unless the Company Board has made the determinations set forth
in Section 6.9(a)(i) and (ii) with respect to a specific Superior Proposal in
accordance with the terms of Section 6.9(a), in which case this 6.1(q) shall not
apply to that specific Superior Proposal after such determination has been made,
waive, release or not enforce any standstill or confidentiality provisions of
any agreements with a third party; or
(r) agree in writing or otherwise to take any of the foregoing
actions prohibited under this Section 6.1, or take or agree to take any action
which would cause any representation or warranty in this Agreement to be or
become untrue or incorrect.
Section 6.2 Access to Information. From the date of this Agreement until
---------------------
the Effective Time, the Company will, and will cause its subsidiaries, and each
of their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, give Parent
and the Purchaser and their respective officers, employees, counsel, advisors
and representatives (collectively, the "Parent Representatives") full access,
during normal business hours, to the assets, properties, offices and other
facilities and to the books and records of the Company and its subsidiaries and
will cause the Company Representatives and the Company's subsidiaries to furnish
Parent, the Purchaser and the Parent Representatives with such financial and
operating data and such other information with respect to the business and
operations of the Company and its subsidiaries as Parent and the Purchaser may
from time to time reasonably request. The Company shall furnish promptly to
Parent and the Purchaser a copy of each report, schedule, registration statement
and other document filed by it or any of its subsidiaries during such period
pursuant to the requirements of federal or state securities Laws.
35
Parent and the Purchaser agree that any information furnished pursuant to this
Section 6.2 will be subject to the provisions of the letter agreement dated
February 25, 1999 by and between the Parent and the Company, as amended May 22,
2001 (the "Confidentiality Agreement").
Section 6.3 Efforts.
--------
(a) Subject to the terms and conditions provided herein, each of
the Company, Parent and the Purchaser shall, and the Company shall cause each of
its subsidiaries to, cooperate and use all reasonable efforts to make, or cause
to be made, all filings necessary or proper under applicable Laws and
regulations, and to take all other actions necessary or advisable to consummate
and make effective the transactions contemplated by this Agreement, including
but not limited to cooperation in the preparation and filing of the Offer
Documents, the Schedule 14D-9 and any actions or filings related thereto, the
Proxy Statement, and filings required under the HSR Act, or other foreign
filings and any amendments to any thereof, and cooperation in obtaining
approvals necessary from Government Entities to continue fully existing
operations. In addition, if at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent or the Purchaser or any of
their respective subsidiaries should be discovered by the Company or Parent, as
the case may be, which should be set forth in an amendment to the Offer
Documents or Schedule 14D-9, the discovering party will promptly inform the
other party of such event or circumstance. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
(b) Each of the parties will use its commercially reasonable
efforts to obtain as promptly as practicable all Consents of any Governmental
Entity or any other person required in connection with, and waivers of any
Violations that may be caused by, the consummation of the transactions
contemplated by the Offer and this Agreement, provided, however, that,
notwithstanding any other provision of this Agreement, the Company shall not,
without Parent's prior written consent, and Parent shall not be obligated to,
agree to divest, hold separate or otherwise materially restrict the use or
operation of any business or assets of Parent, Purchaser or the Company, which
divestiture, agreement to hold separate, or other restriction would, in the good
faith judgment of Parent, have a Material Adverse Effect on Parent or a Material
Adverse Effect on the Company, as the case may be.
(c) Without limiting the foregoing, within five business days
after the date of this Agreement, the Parent will make all necessary filings and
submissions under the HSR Act, and the Company will make all necessary filings
and submissions under the HSR Act as soon as practicable, but no later than the
date required by the HSR Act and rules promulgated thereunder. The Company and
Parent agree to comply with other requests for information from the Federal
Trade Commission and/or the Antitrust Division of the Department of Justice
("Antitrust Governmental Entities"), to the extent required by applicable Law.
The Company and Parent agree to share equally all filing fees associated with
filing of the Notification and Report Form. Except as may be restricted by
applicable Law, (a) the parties hereto shall cooperate with each other with
respect to the obtaining of information needed for the preparation of the
Notification and Report Forms required to be filed pursuant to the HSR Act by
the Company and Parent in
36
connection with the transactions contemplated hereby, and (b) the parties shall
use their reasonable efforts and shall cooperate in responding to any written or
oral requests from Antitrust Governmental Entities for additional information or
documentary evidence, and (c) the parties shall cooperate and shall provide
notice and opportunity to consult regarding all meetings with Antitrust
Governmental Entities, whether in person or telephonic, and regarding all
written communications with Antitrust Governmental Entities, in connection with
the transactions contemplated hereby. Company and the Parent will also cooperate
to make as soon as practicable all necessary filings and submissions required by
the antitrust or competition laws of any other jurisdiction.
(d) The Company shall give Parent the opportunity to participate
in the defense of any Litigation against the Company, any of its subsidiaries
and/or any of the Company's directors relating to any of the transactions
contemplated by this Agreement. In the event that a claim is asserted against
any of the parties hereto or any of their respective affiliates, relating to,
based in whole or in part on events or conditions occurring or existing in
connection with, or arising out of, any of the transactions contemplated by this
Agreement, each of the parties hereto agrees to fully cooperate with the other
parties hereto in the defense of any such claim at the expense of the party
against whom such claim is asserted.
Section 6.4 Public Announcements. During the term of this Agreement, the
--------------------
parties hereto shall use their commercially reasonable efforts to consult
promptly with each other prior to issuing any press release or otherwise making
any public statement with respect to the Offer, the Merger and the other
transactions contemplated hereby, provide to the other party for review a copy
of any such press release or statement, and not issue any such press release or
make any such public statement prior to such consultation and review, unless
required by applicable Law or any listing agreement with a securities exchange.
Section 6.5 Employee Benefit Arrangements.
-----------------------------
(a) Parent agrees that the Company will honor, and, from and after
the Effective Time, Parent will cause the Surviving Corporation to honor, in
accordance with their respective terms as in effect on the date hereof, the
employment, severance and bonus agreements and arrangements to which the Company
is a party which are set forth on Section 6.5 of the Company Disclosure Schedule
covering current and former directors, officers and employees, subject to any
amendment or termination that may be permitted by the terms thereof. Nothing in
this Agreement is intended to require Parent, the Surviving Corporation, or the
Company to maintain any particular benefit or compensation plan, program, or
arrangement, to require any of the foregoing to retain any person in employment,
or to change such person's status from "at-will" (except as an employment
agreement may otherwise provide). The provisions of Section 6.5 apply
exclusively to employees of the Company at its U.S. operations.
(b) Parent agrees that (i) for the period ending December 31,
2001 the Surviving Corporation shall continue the compensation and employee
benefit and welfare plans and programs of the Company, other than those
providing equity- based compensation, to the extent practicable as in effect on
the date hereof, and (ii) thereafter the Surviving Corporation shall provide
employees of the Company and its subsidiaries as a whole (A) compensation
(including
37
bonus and incentive awards) programs and plans and (B) employee benefit and
welfare plans, programs, contracts, agreements and policies (including insurance
and pension plans), fringe benefits and vacation policies which are
substantially the same as or not less favorable in the aggregate to such
employees than those generally in effect with respect to similarly situated
employees of Parent or, at Parent's election, those in effect before the
Effective Time at the Company, after giving effect to any regional differences.
Notwithstanding the forgoing, in no event shall severance benefits available to
employees of the Company or its subsidiaries through the first anniversary of
the Effective Time be less favorable than the severance benefits in effect as of
the date of this Agreement, as set forth on Section 6.5 of the Company
Disclosure Schedule.
(c) For all purposes under the employee benefit plans of Parent
and its affiliates providing benefits to each employee of the Company (a
"Company Employee") after the Effective Time, each Company Employee shall be
credited with his or her years of service with the Company and its affiliates
before the Effective Time, to the same extent as such Company Employee was
entitled, before the Effective Time, to credit for such service for purposes of
vesting, and eligibility under any similar Plans, except to the extent such
credit would result in a duplication of benefits and except for purposes of
accrual of benefits under defined benefit pension plans. In addition, and
without limiting the generality of the foregoing: (i) each Company Employee
shall be immediately eligible to participate, without any waiting time, in any
and all employee benefit plans sponsored by Parent and its affiliates for the
benefit of Company Employees (such plans, collectively, the "New Plans") to the
extent coverage under such New Plan replaces coverage under a comparable Plan in
which such Company Employee participated immediately before the Effective Time
(such plans, collectively, the "Old Plan"); and (ii) for purposes of each New
Plan providing medical, dental, pharmaceutical and/or vision benefits to any
Company Employee, Parent shall cause all pre-existing condition exclusions of
such New Plan to be waived for such employee and his or her covered dependents
to the extent not currently applicable to such persons.
Section 6.6 Indemnification.
----------------
(a) The certificate of incorporation and the bylaws of the
Surviving Corporation shall contain provisions with respect to indemnification
and exculpation from liability that are no less favorable than those provisions
set forth in the Company's certificate of incorporation and bylaws on the date
of this Agreement, and these provisions in the certificate of incorporation and
bylaws of the Surviving Corporation shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who on or prior to
the Effective Time were directors, officers, employees or agents of the Company
(the "Indemnified Parties"), unless such amendment, repeal or modification is
required by Law. Parent shall, during such period, guarantee the obligations of
the Surviving Corporation with respect to the indemnification provisions
contained in the Surviving Corporation's certificate of incorporation and
bylaws.
(b) Parent and the Surviving Corporation shall, from the
Effective Time until the fourth anniversary of the Effective Time or such
earlier date as may be mutually agreed upon by Parent, the Surviving
Corporation, and the applicable Indemnified Party, cause to be maintained in
effect, to the extent available, the policies of directors' and officers'
liability
38
insurance maintained by the Company and its subsidiaries as of the date hereof
(or other arrangements (including self-insurance) or policies that provide at
least the same coverage and amounts on terms that are not less advantageous to
the insured parties), true and complete copies of which have been delivered to
Parent, with respect to claims arising from facts or events that occurred on or
prior to the Effective Time. In lieu of the purchase of such insurance or
adoption of such other arrangements, self-insurance or other policies by Parent
or the Surviving Corporation, the Surviving Corporation may purchase a
three-year extended reporting period endorsement ("reporting tail coverage")
under the Company's directors' and liability insurance coverage. In no event
shall Parent or the Surviving Corporation be obligated to expend in order to
maintain or procure insurance coverage pursuant to this paragraph (b) any amount
per year in excess of 150% of the aggregate premiums paid by the Company and its
subsidiaries in the fiscal year ending December 31, 2000 for directors' and
officers' liability insurance, which amount has been disclosed to Parent.
(c) In the event Parent, the Surviving Corporation or any of
their successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 6.6.
(d) This Section 6.6 shall survive the consummation of the Merger
at the Effective Time, is intended to benefit the Indemnified Parties and their
respective heirs, executors and personal representatives, and shall be binding
on all successors and assigns of the Company, Parent and the Surviving
Corporation. This Section 6.6 shall not limit or otherwise adversely affect any
rights any Indemnified Party may have under any agreement with the Company or
any of its subsidiaries or the Company's or any such subsidiary's certificate of
incorporation or bylaws.
Section 6.7 Notification of Certain Matters. Parent and the Company
-------------------------------
shall promptly notify each other of (a) any circumstance or the occurrence or
non-occurrence of any fact or event which would be reasonably likely (i) to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time, (ii) to cause any covenant, condition or agreement under this
Agreement not to be complied with or satisfied, or (iii) to result in a Material
Adverse Effect on the Company, and (b) any failure of the Company, Parent or
Purchaser, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; provided,
however, that no such notification shall affect the representations or
warranties of any party, the conditions to the obligations of any party
hereunder, or the remedies of any party whether under applicable Law or
hereunder. Each of the Company, Parent and the Purchaser shall give prompt
notice to the other parties hereof of any notice or other communication from any
third party alleging that the Consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement.
Section 6.8 State Takeover Laws. Without limiting the foregoing, the
-------------------
Company and the Company Board shall (i) take all actions necessary to ensure
that no "fair price," "control share acquisition," "moratorium" or other
anti-takeover statute, or similar Law, is or becomes applicable
39
to this Agreement or any of the transactions contemplated hereby, and (ii) if
any such statute or Law is or becomes applicable to this Agreement or any of the
transactions contemplated hereby, take all actions necessary to ensure that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise to minimize the effect of such
statute or Law on the transactions contemplated hereby.
Section 6.9 No Solicitation.
---------------
(a) The Company shall, and shall direct its subsidiaries and other
affiliates and their respective officers, directors, employees, representatives
and agents to, immediately cease any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to any Acquisition
Transaction (as hereinafter defined). The Company agrees that, prior to the
Effective Time, it shall not, and shall not authorize or permit any of its
subsidiaries or any of its or its subsidiaries' directors, officers, employees,
agents or representatives, directly or indirectly, to solicit, initiate or
encourage, or furnish or disclose non-public information in furtherance of, any
inquiries or the making of any proposal with respect to any merger, liquidation,
recapitalization, consolidation or other business combination involving the
Company or its subsidiaries or acquisition of any capital stock or any material
portion of the assets of the Company or its subsidiaries, or any combination of
the foregoing (other than the Offer, the Merger and the sale or other
disposition of the Excluded Business, or the shut-down of the NAS Business
(excluding the Excluded Business), in each case in accordance with the terms
hereof) (an "Acquisition Transaction"), or negotiate, explore or otherwise
engage in substantive discussions with any person (other than the Purchaser,
Parent or their respective directors, officers, employees, agents and
representatives) with respect to any Acquisition Transaction or enter into any
agreement, arrangement or understanding requiring it to abandon, terminate or
fail to consummate the Merger or any other transactions contemplated by this
Agreement; provided that the Company may, prior to the purchase of Shares
pursuant to the Offer, furnish information to, and negotiate or otherwise engage
in substantive discussions with, any person who delivers a bona fide, written
proposal for an Acquisition Transaction if the Company Board determines in good
faith by a majority vote, after consultation with its outside legal counsel and
Financial Advisor or another nationally recognized investment banking firm, that
(i) such a transaction is reasonably likely to result in a transaction that is
superior in comparison to the Offer and the Merger and the terms of this
Agreement to the Company's stockholders from a financial point of view and to
the Company, taking into account the terms and conditions thereof, the
likelihood of consummation and the time required to complete such transaction (a
"Superior Proposal"), and (ii) failing to take such action would result in a
breach of the fiduciary duties of the Company Board under applicable Law, and
prior to furnishing non-public information to any such party, the Company shall
have entered into a confidentiality agreement containing terms at least as
favorable to the Company as those of the Confidentiality Agreement (provided
that such confidentiality agreement need not contain any standstill provisions).
The term "Acquisition Transaction" shall exclude the acquisition by any person,
in any single transaction or series of related transactions, of an aggregate
number of Shares which, immediately following such acquisition, will represent
no more than 5% of the issued and outstanding Shares (or securities convertible
or exchangeable into, or exercisable for Shares, whether upon the passage of
time or otherwise), to the extent such acquisition is not made for the purpose
of, or as part of a plan for, acquiring control of the Company and does not
involve disclosure of material, non-public information to the prospective
acquiror or purchaser.
40
(b) From and after the execution of this Agreement, the Company
shall promptly (and in any event no later than 12 hours after receipt of any
inquiry, proposal or other materials relating to an Acquisition Transaction) (A)
advise the Purchaser in writing of the receipt, directly or indirectly, of any
such inquiry, proposal or other materials, and of any discussions, negotiations
or proposals relating to an Acquisition Transaction (including without
limitation a Superior Proposal), (B) identify the offeror, and (C) provide
Parent or Purchaser copies of all material proposed written agreements,
arrangements, or understandings, including the forms of any material agreements
supplied by third parties, and all applicable financial statements and evidence
of any planned financing with respect to such Acquisition Transaction (and a
description of all material oral agreements with respect thereto). The Company
shall promptly advise Parent of all material developments relating to such
proposal, including the results of any discussions or negotiations with respect
thereto.
Section 6.10 FIRPTA Certificate.
------------------
Prior to the Expiration Date, the Company shall provide to Parent and
Purchaser (i) a properly executed certificate for purposes of satisfying the
obligations of Parent and Purchaser under Treasury Regulation Section
1.1445-2(c)(3), and (ii) a form of notice to the Internal Revenue Service in
accordance with the requirements of Treasury Regulation Section 1.897-2(h)(2),
along with written authorization for Parent to deliver such notice form to the
Internal Revenue Service on behalf of the Company.
Section 6.11 Rights Agreement.
----------------
The Company covenants and agrees that it will not (i) redeem the Rights,
(ii) amend the Rights Agreement or (iii) take any action which would allow any
Person (as defined in the Rights Agreement) other than Parent or the Purchaser
to acquire beneficial ownership of 15% or more of the Common Shares without
causing a Distribution Date or a Triggering Event (as each such term is defined
in the Rights Agreement) to occur, unless this Agreement has been terminated in
accordance with its terms. The Company Board shall not make a determination that
Parent, the Purchaser or any of their respective Affiliates or Associates is an
"Acquiring Person" for purposes of the Rights Agreement in respect of the
transactions contemplated by this Agreement.
Section 6.12 Parent Agreement Concerning Purchaser.
-------------------------------------
Parent agrees to cause the Purchaser to comply with its obligations under
this Agreement.
Section 6.13 Sale or Disposition of Excluded Business.
----------------------------------------
The Company represents that the Asset Purchase Agreement by and between
Microtest, Inc. and xStore, Inc. dated June 11, 2001, the Contract for sale and
transfer of shares and part shares by and among Logicraft Information Systems,
Inc., ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ in der Beek dated June 11, 2001, and the Agreement
between Microtest, Inc., Microtest Europe Limited, Microtest GmbH, Logicraft
Information Systems, Inc. and H + H Zentrum fur Rechnerkommunikation GmbH dated
June 11, 2001 (the "Sale Agreements") are the only agreements entered into by or
on behalf of the Company in connection with the sale of all or any portion of
the Company"s Network Appliances
41
and Storage (NAS) business (the "NAS Business"), and that the Sale Agreements
have been duly authorized, executed and entered into by the Company and, to the
knowledge of the Company, by the other parties thereto, and are in full force
and effect as of the date hereof. The Company shall not amend or modify or waive
any rights under any of the Sale Agreements, or take any actions with respect to
such transactions (unless expressly required by the terms of the applicable Sale
Agreement), without the prior written consent of Parent. The stock, assets and
liabilities which are the subject of the Sale Agreements are referred to
collectively as the "Excluded Business." The parties hereto agree that the NAS
Business will be shut down immediately following the execution of this
Agreement.
ARTICLE SEVEN
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions Applicable to All Parties. The respective
------------------------------------
obligations of Parent, the Purchaser and the Company to consummate the Merger
are subject to the satisfaction, at or before the Effective Time, of each of the
following conditions:
(a) Stockholder Approval. The stockholders of the Company shall
have duly approved the transactions contemplated by this Agreement in accordance
with the procedures set forth in the Company's certificate of incorporation and
bylaws, if required by applicable Law or by the rules and regulations of the
Nasdaq National Market.
(b) Purchase of Shares. The Purchaser shall have accepted for
payment and paid for Shares in an amount sufficient to meet the Minimum
Condition and otherwise pursuant to the Offer in accordance with the terms
hereof; provided, that this condition shall be deemed satisfied with respect to
the Merger if the Purchaser fails to accept for payment or pay for the Shares
pursuant to the Offer in violation of the terms of the Offer or of this
Agreement.
(c) Injunctions; Illegality. The consummation of the Merger shall
not be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any Governmental
Entity and there shall not have been any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger by any Governmental Entity which
prevents the consummation of the Merger or has the effect of making the
acquisition of Shares in the Merger illegal.
(d) Regulatory Approval. Any waiting period (and any extension
thereof) under the HSR Act or under any material applicable domestic or foreign
statutes or regulations that suspends the right to close the transactions
contemplated hereby and that is applicable to the Merger shall have expired or
terminated.
ARTICLE EIGHT
TERMINATION; AMENDMENTS; WAIVER
Section 8.1 Termination. This Agreement may be terminated and the Merger
-----------
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding
42
approval thereof by the stockholders of the Company (with any termination by
Parent also being an effective termination by the Purchaser):
(a) by the mutual written consent of Parent and the Company, by action
of their respective Boards of Directors;
(b) by Parent or the Company if Purchaser shall not have accepted for
payment and paid for the Shares pursuant to the Offer in accordance with the
terms hereof and thereof on or prior to September 30, 2001; provided, however,
that a party may not terminate this Agreement pursuant to this Section 8.1(b) if
such failure to accept for payment and pay for the Shares is due to such party's
material breach of this Agreement;
(c) by Parent or the Company if (1) the Offer is terminated or
withdrawn pursuant to its terms and the terms of this Agreement without any
Shares being purchased thereunder, or (2) the Merger shall not have been
consummated on or before November 30, 2001; provided, however, that a party may
not terminate this Agreement pursuant to this Section 8.1(c) if such party shall
have materially breached this Agreement;
(d) by Parent or the Company if any court of competent jurisdiction or
other Governmental Entity shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise prohibiting the
acceptance for payment of, or payment for, Shares pursuant to the Offer or the
Merger and such order, decree or ruling or other action shall have become final
and nonappealable, provided that the party seeking to terminate this Agreement
shall have used its commercially reasonable efforts to remove or lift such
order, decree or ruling;
(e) by the Company or Parent if, prior to the purchase of Shares
pursuant to the Offer, the Company Board shall have determined to recommend a
Superior Proposal to its stockholders and/or to enter into a Contract concerning
such Superior Proposal after making the determination required by Section
6.9(a); provided that the Company may not exercise its right to terminate under
this Section 8.1(e) (and may not enter into a Contract with respect to any
Superior Proposal) unless and until (i) the Company shall have provided the
Purchaser and Parent written notice at least five business days prior to such
termination that the Company Board has authorized and intends to effect the
termination of this Agreement pursuant to this Section 8.1(e), including copies
of all proposed Contracts, including the forms of any agreements supplied by
third parties, and all applicable financial statements and evidence of any
planned financing with respect to such Superior Proposal (and a description of
all material oral agreements with respect thereto), (ii) the Company Board shall
have determined, in good faith and after consultation with its outside legal
counsel and the Financial Advisor or another nationally recognized investment
banking firm, that, at the time of its determination to terminate this Agreement
and at the end of the five-business day period referred to in clause (i) above,
(A) the foregoing Acquisition Transaction constitutes a Superior Proposal, and
(B) failing to take such action would result in a breach of the fiduciary duties
of the Company Board under applicable Law, (iii) the Company shall otherwise be
in compliance with its obligations under Section 1.2, Section 6.9 and Section
6.11 hereof in all material respects, and (iv) (A) within one business day of
termination by Parent, or (B) prior to
43
such termination in the case of termination by the Company, the Company shall
have paid to Parent the Termination Fee and the Expense Fee described in Section
8.3(b);
(f) by Parent prior to the purchase of Shares pursuant to the
Offer, if the Company Board (or, with respect to (iii) below, the Company) (i)
shall have withheld, withdrawn or modified (including by amendment of the
Schedule 14D-9) in any manner adverse to the Purchaser or Parent its approval or
recommendation of the Offer, this Agreement or the Merger, (ii) shall have
approved or recommended an Acquisition Transaction, (iii) shall have breached
Section 6.9 in any material respect or Section 6.11 (provided that, to the
extent a breach of Section 6.9(b)(C) is cured within 72 hours after such breach,
such breach shall not be considered a breach of Section 6.9), or (iv) shall have
resolved to effect any of the foregoing;
(g) by Parent prior to the purchase of Shares pursuant to the
Offer if the Minimum Condition (as defined in Annex I) shall not have been
satisfied by the then current Expiration Date of the Offer and on or prior to
such Expiration Date an Acquisition Transaction shall have been publicly
announced or disclosed;
(h) by the Company, upon a material breach by Parent or Purchaser
of any material covenant or agreement set forth in this Agreement, or upon the
failure of any representation or warranty of Parent or Purchaser set forth in
this Agreement to be true and correct as if such representation or warranty were
made at the time of such determination (except as to any such representation or
warranty which speaks as of a specific date, which must be untrue or incorrect
as of such specific date); provided that to the extent that the representation
or warranty is not qualified by Material Adverse Effect or any other materiality
qualifier, no failure shall be deemed to have occurred so long as such failure,
taken together with all other such failures, does not have a Material Adverse
Effect on Parent, and; provided further, that no breach or failure shall be
deemed to have occurred for purposes of this Section 8.1(h) so long as such
breach or failure is satisfied or cured within 20 days after the Company
notifies Parent of such breach or failure; or
(i) by Parent, upon a material breach by the Company of any
material covenant or agreement set forth in this Agreement, or upon the failure
of any representation or warranty of the Company set forth in this Agreement to
be true and correct as if such representation or warranty were made at the time
of such determination (except as to any such representation or warranty which
speaks as of a specific date, which must be untrue or incorrect as of such
specific date); provided that to the extent that the representation or warranty
is not qualified by Material Adverse Effect or any other materiality qualifier,
no failure shall be deemed to have occurred so long as such failure, taken
together with all other such failures, does not have a Material Adverse Effect
on the Company, and; provided further, that no breach or failure shall be deemed
to have occurred for purposes of this Section 8.1(i) so long as such breach or
failure is satisfied or cured within 20 days after Parent or Purchaser notifies
the Company of such breach or failure.
Section 8.2 Effect of Termination. In the event of the termination of this
---------------------
Agreement pursuant to Section 8.1, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, other than the provisions of the last
sentence of Section 6.2 and the provisions of this Section 8.2 and Section
44
8.3, which shall survive any such termination; provided, that nothing contained
in this Section 8.2 shall relieve any party from liability for any material
breach of this Agreement.
Section 8.3 Fees and Expenses.
-----------------
(a) Whether or not the Merger is consummated, except as otherwise
specifically provided herein, all costs and expenses incurred in connection with
the Offer, this Agreement and the transactions contemplated by this Agreement
shall be paid by the party incurring such costs and expenses.
(b) In the event that this Agreement is terminated pursuant to
Section 8.1(e) or Section 8.1(f), or is terminated by the Company pursuant to
Section 8.1(b) or Section 8.1(c) at a time when Parent could terminate pursuant
to Section 8.1(f), then the Company shall promptly (and in any event within one
business day after such termination or, in the case of any such termination by
the Company, prior to such termination) pay Parent an amount equal to (i) a
termination fee of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars
(US$2,500,000) (the "Termination Fee"), provided that in no event shall more
than one Termination Fee be payable by the Company, plus (ii) Parent's aggregate
Expenses not exceeding Four Hundred Thousand United States Dollars (US$400,000)
(the "Expense Fee"). Parent's "Expenses" shall mean all documented out-of-pocket
fees and expenses incurred or paid by or on behalf of Parent or Purchaser in
connection with or in contemplation of the Merger or the consummation of any of
the transactions contemplated by this Agreement, including all fees and expenses
of counsel, investment banking firms, accountants, experts and consultants to
Parent and/or Purchaser.
(c) In the event that this Agreement is terminated pursuant to
Section 8.1(g) and within 12 months of the date of termination of this Agreement
a transaction constituting an Acquisition Transaction is consummated, the
Company shall, prior to or simultaneously with the consummation of such
transaction, pay Parent the Termination Fee and the Expense Fee; provided,
however, that in no event shall the Company be obligated to pay more than one
Termination Fee and Expense Fee pursuant to this Section 8.3. When used in this
Section 8.3(c), the term "Acquisition Transaction" shall exclude (1) the
acquisition by any person, in any single transaction or series of related
transactions, of an aggregate number of Shares which, immediately following such
acquisition, will represent no more than 20% of the issued and outstanding
Shares (or securities convertible or exchangeable into, or exercisable for
Shares, whether upon the passage of time or otherwise), to the extent such
acquisition is not made for the purpose of, or as part of a plan for, acquiring
control of the Company, and (2) the acquisition by the Company or any of its
subsidiaries, in a merger, asset purchase, stock purchase or similar
transaction, of any third party or business, provided that in the event that any
portion of the consideration paid for the acquisition of such third party or
business is in the form of capital stock or other securities, the 20% ownership
limit set forth in the foregoing clause (1) is satisfied.
(d) The prevailing party in any legal action undertaken to enforce
this Agreement or any provision hereof shall be entitled to recover from the
other party the costs and expenses (including attorneys' and expert witness
fees) incurred in connection with such action.
45
Section 8.4 Amendment. Subject to Section 1.3(c), this Agreement may be
---------
amended by the Company, Parent and the Purchaser at any time before or after any
approval of this Agreement by the stockholders of the Company but, after any
such approval, no amendment shall be made which decreases the Merger Price or
which adversely affects the rights of the Company's stockholders hereunder, in
each case without the approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of all the parties.
Section 8.5 Extension; Waiver. Subject to Section 1.3(c), at any time
-----------------
prior to the Effective Time, Parent and the Purchaser, on the one hand, and the
Company, on the other hand, may (i) extend the time for the performance of any
of the obligations or other acts of the other, (ii) waive any inaccuracies in
the representations and warranties contained herein of the other or in any
document, certificate or writing delivered pursuant hereto by the other or (iii)
waive compliance by the other with any of the agreements or conditions. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE NINE
MISCELLANEOUS
Section 9.1 Representations, Warranties and Covenants. The
-----------------------------------------
representations, warranties, covenants and agreements of each party hereto will
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any other party hereto, any person controlling any such
party or any of their officers, directors, representatives or agents whether
prior to or after the execution of this Agreement. The representations and
warranties in this Agreement will terminate at the Effective Time; provided,
however, that nothing herein shall limit or affect any covenant or agreement
that by its terms contemplates performance in part or in whole after the
Effective Time.
Section 9.2 Entire Agreement; Assignment.
----------------------------
(a) This Agreement (including without limitation the
Confidentiality Agreement and the other documents and the instruments referred
to herein) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder will be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party (except that Parent may assign its rights and the Purchaser may assign its
rights, interest and obligations to any direct or indirect subsidiary of Parent
without the consent of the Company), provided that no such assignment shall
relieve Parent of any liability for any breach of such assignee. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
46
Section 9.3 Validity. The invalidity or unenforceability of any provision
--------
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
Section 9.4 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or the Purchaser:
▇▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: Vice President -- Corporate Development
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
Microtest, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile:
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
One Arizona Center
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
provided that notice of any change of address shall be effective only upon
receipt thereof.
47
Section 9.5 Governing Law; Jurisdiction. This Agreement and the rights and
---------------------------
duties of the parties hereunder shall be governed by, and construed in
accordance with, the Law of the State of Delaware, regardless of the Laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Each of the parties hereto, (a) consents to submit itself to the personal
jurisdiction of any Delaware State Court or any Federal court of the United
States of America sitting in Delaware, and any appellate court from any thereof,
in the event any dispute arises out of this Agreement or any transaction
contemplated hereby, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(c) agrees that it will not bring any action relating to this Agreement or any
transaction contemplated hereby in any court other than a Delaware State Court
or Federal court of the United States of America sitting in Delaware, or an
appellate court from any thereof, and (d) waives any right to trial by jury with
respect to any action related to or arising out of this Agreement or any
transaction contemplated hereby.
Section 9.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 9.7 Parties in Interest Except with respect to Section 6.6 (which
-------------------
is intended to be for the benefit of the persons identified therein and may be
enforced by such persons), this Agreement shall be binding upon and inure solely
to the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
Section 9.8 Certain Definitions. As used in this Agreement:
-------------------
(a) the term "affiliate", as applied to any person, shall mean any
other person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise.
(b) the term "business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings; or, in the
case of determining a date when any payment is due, any day other than a
Saturday, Sunday or Federal holiday.
(c) the term "Contract" means any contract, plan, undertaking,
arrangement, understanding, agreement, agreement in principle,
franchise, permit, instrument, license, lease, note, mortgage or other binding
commitment, whether written or oral.
(d) the term "Court" means any court or arbitration tribunal of
the United States, any domestic state, or any foreign country, and any political
subdivision or agency thereof.
48
(e) the term "Fully Diluted Basis" means, as of any given time,
the number of Common Shares then outstanding, plus all Common Shares issuable
upon the conversion of all then outstanding convertible securities or upon the
exercise of all then outstanding options, warrants (including, without
limitation, the Options described on Section 4.2(c) of the Company Disclosure
Schedule) and rights.
(f) "indebtedness" shall mean, with respect to any person,
without duplication, (a) all obligations of such person for borrowed money, or
with respect to deposits or advances of any kind to such person, (b) all
obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such person upon which interest charges are
customarily paid, (d) all obligations of such person under conditional sale or
other title retention agreements relating to property purchased by such person,
(e) all obligations of such person issued or assumed as the deferred purchase
price of property or services (excluding obligations of such person to creditors
for raw materials, inventory, services and supplies incurred in the ordinary
course of such person's business), (f) all capitalized lease obligations of such
person, (g) all obligations of others secured by any Lien on property or assets
owned or acquired by such person, whether or not the obligations secured thereby
have been assumed, (h) all obligations of such person under interest rate or
currency swap transactions (valued at the termination value thereof), (i) all
letters of credit issued for the account of such person, (j) all obligations of
such person to purchase securities (or other property) which arises out of or in
connection with the sale of the same or substantially similar securities or
property, and (k) all guarantees and arrangements having the economic effect of
a guarantee by such person of any indebtedness of any other person.
(g) the term "knowledge" means (a) in the case an individual,
knowledge of a particular fact or other matter if (i) such individual is
actually aware of such fact or other matter, or (ii) a prudent individual could
be expected to discover or otherwise become aware of such fact or other matter
in the course of conducting a reasonable investigation concerning the existence
of such fact or other matter, and (b) in the case of a person (as defined
herein, other than an individual) such person will be deemed to have "knowledge"
of a particular fact or other matter if any individual who is serving, or has at
any time served, as a director, officer, partner, member, manager, executor, or
trustee of such person (or in any similar capacity) has, or at any time had,
knowledge (as contemplated by clause (i) above) of such fact or other matter.
(h) the term "Law" means all laws, orders, judgments, rules,
codes, requirements, variances, decrees, ordinances and regulations of any
Governmental Entity, including all decisions of Courts having the effect of law
in each such jurisdiction.
(i) the term "Lien" means any mortgage, deed of trust, security
interest, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or otherwise), or other security agreement, option, warrant,
attachment, right of first refusal, preemptive, put, call or other claim or
right, restriction on transfer (other than restrictions imposed by federal and
state securities Laws) or preferential arrangement of any kind or nature
whatsoever (including any restriction on the transfer of any assets, any
conditional sale or other title retention agreement, any financing lease
involving substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the Uniform Commercial Code or
comparable Law of any jurisdiction).
49
(j) the term "Litigation" means any claim, suit, action,
arbitration, cause of action, claim, complaint, criminal prosecution,
investigation, demand letter, or proceeding, whether at law or at equity, before
or by any Court or Governmental Entity, any arbitrator or other tribunal.
(k) the term "Order" means any judgment, order, writ, injunction,
ruling or decree of, or any settlement under the jurisdiction of, any Court or
Governmental Entity.
(l) the term "person" means an individual (or such individual's
estate), corporation, limited liability company, partnership, association, joint
venture, trust, Governmental Entity or any other organization, entity or group
(as defined in Section 13(d)(3) of the Exchange Act);
(m) the term "subsidiary" or "subsidiaries" means, with respect to
Parent, the Company or any other person, any corporation, partnership, joint
venture or other legal entity of which Parent, the Company or such other person,
as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, stock or other equity interests the
holders of which are generally entitled to more than 50% of the vote for the
election of the board of directors or other governing body of such corporation
or other legal entity.
Section 9.9 Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur 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 hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
Section 9.10 Interpretation. The defined terms used herein shall apply
--------------
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. All references herein to Articles, Sections and
Exhibits shall be deemed to be references to Articles and Sections of, and
Exhibits to, this Agreement unless the context shall otherwise require. All
Disclosure Schedules, Exhibits and Annexes attached hereto shall be deemed
incorporated herein as if set forth in full herein and, unless otherwise defined
therein, all terms used in any Exhibit or Annex shall have the meaning ascribed
to such term in this Agreement. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation." All
accounting terms not defined in this Agreement shall have the meanings
determined by GAAP. Whenever any payment hereunder is to be paid in "cash,"
payment shall be made in the legal tender of the United States and the method
for payment shall be by wire transfer of immediately available funds. The words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise expressly provided herein, any
Contract, instrument
50
or statute defined or referred to herein or in any Contract or instrument that
is referred to herein means such Contract, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of Contracts or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. This Agreement shall be deemed to have been
drafted by each party hereto and this Agreement shall not be construed against
any party as a principal draftsperson. Unless otherwise expressly provided,
wherever the consent of any person is required or permitted herein, such consent
may withheld in such person's sole discretion.
Section 9.11 Disclosure Schedules. The Company Disclosure Schedule shall
--------------------
be divided into sections corresponding to the sections and subsections of this
Agreement. Disclosure of any fact or item in any section or subsection of the
Company Disclosure Schedule shall not, should the existence of the fact or item
or its contents be relevant to any other Section of the Company Disclosure
Schedule, be deemed to be disclosed with respect to such other section or
subsection.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its respective officer thereunto duly authorized,
all as of the day and year first above written.
▇▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President -- Corporate Development
PHOENIX ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
MICROTEST, INC.
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
52
ANNEX I
Conditions to the Offer. Notwithstanding any other provisions of the
-----------------------
Offer, the Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c)
promulgated under the Exchange Act, pay for any tendered Shares and may, subject
to Article 1 of the Merger Agreement, terminate or, subject to Article 8 of the
Merger Agreement, amend, the Offer and/or delay the acceptance of Shares for
payment, if (i) there shall not be validly tendered and not properly withdrawn
prior to the Expiration Date for the Offer that number of Shares which, when
added to any Shares already owned by Parent or any of its subsidiaries,
represents at least a majority of the total number of Common Shares on a Fully
Diluted Basis on the date of purchase (not taking into account the Rights) (the
"Minimum Condition"), (ii) any applicable waiting period or approval under the
HSR Act or any applicable domestic or foreign statutes or regulations that
suspends the right to close the transactions contemplated by the Merger
Agreement shall not have expired or been terminated or obtained, (iii) any
Consent from any person or Governmental Entity shall not have been obtained on
or prior to the Expiration Date (except for those the failure of which to be
obtained would not reasonably be expected to have a Material Adverse Effect on
the Company), or (iv) at any time on or after the date of the Merger Agreement
and on or prior to the Expiration Date, any of the following events (each, an
"Event") shall occur:
(a) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted, enforced,
promulgated, amended, issued or deemed applicable to the Offer or the Merger, by
any legislative body, court, government or governmental, administrative or
regulatory authority or agency or any other Governmental Entity, domestic or
foreign, other than the application of the waiting period provisions of the HSR
Act to the Offer or to the Merger, that would reasonably be expected to,
directly or indirectly: (i) make illegal or otherwise prohibit consummation of
the Offer or the Merger, (ii) prohibit or materially limit the ownership or
operation by Parent or the Purchaser of all or any material portion of the
business or assets of the Company or any of its subsidiaries taken as a whole or
compel Parent or the Purchaser to dispose of or hold separately all or any
material portion of the business or assets of Parent or the Purchaser or the
Company or any of its subsidiaries taken as a whole, or seek to impose any
material limitation on the ability of Parent or the Purchaser to conduct its
business or own such assets, in any such case under this clause (ii), which
would reasonably be expected to have a Material Adverse Effect on Parent or a
Material Adverse Effect on the Company, as the case may be, (iii) impose
material limitations on the ability of Parent or the Purchaser effectively to
acquire, hold or exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned by the
Purchaser or Parent on all matters properly presented to the Company's
stockholders, or (iv) require divestiture by Parent or the Purchaser of any
Shares; or
(b) there shall be instituted or pending any action or proceeding by any
Governmental Entity seeking, or that would reasonably be expected to result in,
any of the consequences referred to in clauses (i) through (iv) of paragraph (a)
above or by any third party for which there is a substantial likelihood of
resulting in any of the consequences referred to in clauses (i) through (iv) of
paragraph (a) above; or
53
(c) any event or change shall have occurred in the business, assets,
liabilities, financial condition or results of operations of the Company or any
of its subsidiaries that has, or could reasonably be expected to have, a
Material Adverse Effect on the Company; or
(d) (i) the Company Board or any committee thereof shall have withheld
or withdrawn or shall have modified or amended in a manner adverse to Parent or
the Purchaser, the approval, adoption or recommendation, as the case may be, of
the Offer, the Merger or the Merger Agreement, or shall have approved or
recommended any Acquisition Transaction, (ii) any person shall have entered into
a Contract with the Company with respect to an Acquisition Transaction, or (iii)
the Company Board or any committee thereof shall have resolved to do or enter
into any of the foregoing; or
(e) the Company and the Purchaser and Parent shall have reached an
agreement that the Offer or the Merger Agreement be terminated, or the Merger
Agreement shall have been terminated in accordance with its terms; or
(f) any of the representations and warranties of the Company set forth
in the Merger Agreement, when read without any exception or qualification as to
materiality or Material Adverse Effect on the Company, shall not be true and
correct, as if such representations and warranties were made at the time of such
determination (except as to any such representation or warranty which speaks as
of a specific date, which must be untrue or incorrect as of such specific date)
except where the failure to be so true and correct would not, individually or in
the aggregate, reasonably be expected to (i) have a Material Adverse Effect on
the Company, (ii) prevent or materially delay the consummation of the Offer,
(iii) materially increase the cost of the Offer to the Purchaser, or (iv) have a
material adverse effect on the benefits to Parent of the transactions
contemplated by this Agreement; or
(g) the Company shall have failed to perform in any material respect or
to comply in any material respect with any of its material obligations,
covenants or agreements under the Merger Agreement required to be performed or
complied with prior to the time of such determination; or
(h) there shall have occurred, and continue to exist, (i) any general
suspension of, or limitation on prices for, trading in securities on the New
York Stock Exchange or on the over-the-counter stock market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ"), (ii) any decline of at least 25% in either the Dow ▇▇▇▇▇ Average of
Industrial Stocks or the Standard & Poor's 500 Index from the close of business
on the last trading day immediately preceding the date of the Merger Agreement
through the applicable Expiration Date, (iii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, or (iv) a commencement of a war, or commencement of armed hostilities
that has or is reasonably likely to have a Material Adverse Affect on the
Company, or a material limitation (whether or not mandatory) by any Governmental
Entity on the extension of credit by banks or other lending institutions; or
(i) any of the directors of the Company, and, to the extent requested by
Purchaser, any or all of the Company's subsidiaries, shall not have submitted a
letter of resignation
54
effective as of the Effective Time, or any such letter of resignation shall no
longer be in full force and effect.
The foregoing conditions (including those set forth in clauses (i),
(ii) and (iii) of the initial paragraph) are for the benefit of Parent and the
Purchaser and may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to any such conditions, and may be waived by Parent or
the Purchaser in whole or in part at any time and from time to time (provided
that no individual condition may be reasserted after it has been waived, and
provided further that, except for the conditions set forth in clause (ii) of the
initial paragraph, no condition may be waived after the Expiration Date) in each
case in the reasonable discretion of ▇▇▇▇▇▇▇ and the Purchaser and subject to
the terms of the Merger Agreement. The failure by Parent or the Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
All terms defined in the Agreement to which this Annex I is appended
will have the same meaning when used in this Annex I, except that the term
"Merger Agreement" shall be deemed to refer to the Agreement to which this Annex
I is appended.
55
