EXHIBIT 10.7
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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
ICS MERGER CORP.
AND
INTEGRATED CIRCUIT SYSTEMS, INC.
January 20, 1999
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TABLE OF CONTENTS
ARTICLE 1
THE MERGER.................................................................... 1
Section 1.1 The Merger...................................................... 1
Section 1.2 Closing and Effective Time...................................... 2
Section 1.3 Effects of the Merger........................................... 2
Section 1.4 Articles of Incorporation and By-Laws of the Surviving
Corporation..................................................... 2
Section 1.5 Directors....................................................... 2
Section 1.6 Officers........................................................ 2
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE COMPANY....................... 3
Section 2.1 Effect on Capital Stock.......................................... 3
(a) Merger Consideration............................................. 3
(b) Conversion of Shares............................................. 3
(c) Cancellation of Treasury Stock................................... 3
(d) Dissenting Shares................................................ 3
Section 2.2 Options; Stock Plans............................................. 4
Section 2.3 Payment for Common Shares........................................ 4
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................. 6
Section 3.1 Organization and Qualification; Subsidiaries..................... 6
Section 3.2 Capitalization; Subsidiaries..................................... 7
Section 3.3 Authority Relative to this Agreement............................. 7
Section 3.4 No Violation..................................................... 8
Section 3.5 SEC Reports and Financial Statements............................. 9
Section 3.6 Compliance with Applicable Laws.................................. 9
Section 3.7 Litigation....................................................... 10
Section 3.8 Information...................................................... 10
Section 3.9 Certain Approvals................................................ 10
Section 3.10 Employee Benefit Plans........................................... 10
Section 3.11 Taxes............................................................ 11
Section 3.12 Environmental Matters............................................ 12
Section 3.13 Absence of Certain Changes....................................... 14
Section 3.14 Brokers.......................................................... 15
Section 3.15 Opinion of Investment Banker..................................... 15
Section 3.16 Material Contracts............................................... 16
Section 3.17 Board Recommendation............................................. 16
Section 3.18 Required Company Vote............................................ 17
Section 3.19 Intellectual Property............................................ 17
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Section 3.20 Related Party Transactions....................................... 18
Section 3.21 State Takeover Statutes.......................................... 18
Section 3.22 Labor Relations and Employment................................... 18
Section 3.23 Year 2000........................................................ 19
Section 3.24 Real Estate...................................................... 19
(a) Owned Properties................................................. 19
(b) Leased Properties................................................ 20
(c) Real Property Disclosure......................................... 20
(d) No Proceedings................................................... 20
(e) Current Use...................................................... 20
(f) Condition and Operation of Improvements.......................... 21
(g) Permits.......................................................... 21
Section 3.25 Absence of Certain Changes or Events with Respect to the Company. 21
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ICS.......................................... 21
Section 4.1 Organization and Qualification................................... 21
Section 4.2 Authority Relative to this Agreement............................. 22
Section 4.3 No Violation..................................................... 22
Section 4.4 Information...................................................... 22
Section 4.5 Financing........................................................ 22
Section 4.6 Pennsylvania Law................................................. 23
Section 4.7 Beneficial Ownership of Shares................................... 23
Section 4.8 Brokers.......................................................... 23
Section 4.9 Formation of ICS; No Prior Activities............................ 23
Section 4.10 Litigation....................................................... 23
ARTICLE 5
COVENANTS...................................................................... 23
Section 5.1 Conduct of Business of the Company............................... 23
Section 5.2 Access to Information............................................ 25
Section 5.3 Efforts.......................................................... 25
Section 5.4 Title Insurance and Surveys...................................... 27
Section 5.5 Public Announcements............................................. 27
Section 5.6 Employee Benefit Arrangements.................................... 28
Section 5.7 Indemnification; Directors' and Officers' Insurance.............. 28
Section 5.8 Notification of Certain Matters.................................. 29
Section 5.9 State Takeover Laws.............................................. 29
Section 5.10 No Solicitation.................................................. 29
Section 5.11 Interim Liabilities.............................................. 31
Section 5.12 Reports.......................................................... 31
Section 5.13 Shareholders' Meeting............................................ 31
Section 5.14 Conveyance Taxes................................................. 32
Section 5.15 Delisting........................................................ 32
Section 5.16 Solvency Letters................................................. 32
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ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER..................................... 32
Section 6.1 Conditions...................................................... 32
(a) Shareholder Approval............................................ 32
(b) Solvency Letters................................................ 32
(c) Orders and Injunctions.......................................... 33
(d) Illegality...................................................... 33
(e) HSR Act......................................................... 33
Section 6.2 Conditions to Obligations of ICS................................ 33
(a) Representations and Warranties.................................. 33
(b) Performance of Obligations of the Company....................... 33
(c) Consents, Etc................................................... 33
(d) No Litigation................................................... 34
(e) Financing....................................................... 34
Section 6.3 Conditions to Obligation of the Company......................... 34
(a) Representations and Warranties.................................. 34
(b) Performance of Obligations of ICS............................... 34
ARTICLE 7
TERMINATION; AMENDMENTS; WAIVER.............................................. 35
Section 7.1 Termination..................................................... 35
Section 7.2 Effect of Termination........................................... 36
Section 7.3 Fees and Expenses............................................... 36
Section 7.4 Amendment....................................................... 37
Section 7.5 Extension; Waiver............................................... 37
ARTICLE 8
MISCELLANEOUS................................................................ 37
Section 8.1 Non-Survival of Representations and Warranties.................. 37
Section 8.2 Entire Agreement; Assignment.................................... 37
Section 8.3 Validity........................................................ 38
Section 8.4 Notices......................................................... 38
Section 8.5 Governing Law................................................... 39
Section 8.6 Descriptive Headings............................................ 39
Section 8.7 Counterparts.................................................... 39
Section 8.8 Parties in Interest............................................. 39
Section 8.9 Certain Definitions............................................. 39
Section 8.10 Specific Performance............................................ 40
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of January
20, 1999, by and between ICS Merger Corp., a Pennsylvania corporation ("ICS"),
and Integrated Circuit Systems, Inc., a Pennsylvania corporation (the
"Company").
WHEREAS, the respective Boards of Directors of ICS and the Company
have approved the merger of ICS with and into the Company, as set forth below
(the "Merger"), in accordance with the Business Corporation Law of the
Commonwealth of Pennsylvania (the "BCL") and upon the terms and subject to the
conditions set forth in this Agreement, holders of shares of common stock, no
par value, of the Company (the "Common Shares") issued and outstanding
immediately prior to the Effective Time (as defined below) will be entitled,
subject to the terms hereof and other than as set forth herein, the right to
receive cash in this Agreement or, in the case of certain specifically
designated holders of Common Shares, the right to receive shares of common stock
of the Surviving Corporation (as defined below) (the "Rollover Shares");
WHEREAS, the Board of Directors of the Company (the "Company Board")
has, in light of and subject to the terms and conditions set forth herein, (i)
determined that (A) the consideration to be paid for each Common Share (except
for Rollover Shares) in the Merger (as hereinafter defined) is fair to the
shareholders of the Company, and (B) the Merger is otherwise in the best
interests of the Company and its shareholders, and (ii) resolved to approve and
adopt this Agreement and the transactions contemplated hereby and to recommend
approval and adoption by the shareholders of the Company of this Agreement;
WHEREAS, the Merger requires the vote of a majority of the votes cast
by all of the issued and outstanding Common Shares entitled to vote for the
approval thereof (the "Company Shareholder Approval");
WHEREAS, ICS and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger, and also to
prescribe various conditions to the Merger; and
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, ICS and
the Company agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
satisfaction or waiver of the conditions hereof, and in accordance with the
applicable provisions of this Agreement and the BCL, at the Effective Time ICS
shall be merged with and into the Company. Following the Merger,
the separate corporate existence of ICS shall cease and the Company shall
continue as the surviving corporation (the "Surviving Corporation").
Section 1.2 Closing and Effective Time. The closing of the Merger
(the "Closing") will take place at 10:00 a.m., local time, on the fifth business
day after satisfaction or waiver of all of the conditions set forth in Article 4
of this Agreement (other than conditions that are to be satisfied at the
Closing, which shall be satisfied or waived at the Closing) or such other date
and time as ICS and the Company may agree upon (the "Closing Date"), at the
offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, New York, New York. Immediately following the
Closing the parties hereto shall cause the Merger to become effective by filing
Articles of Merger with the Department of State of the Commonwealth of
Pennsylvania in accordance with the relevant provisions of the BCL, and 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."
Section 1.3 Effects of the Merger. The Merger shall have the
effects set forth in the BCL. 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 ICS shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
ICS shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.4 Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) The Articles of Incorporation, as amended, of the
Company, as in effect immediately prior to the Effective Time and as further
amended to provide for the number and types of shares of capital stock
designated on the Rollover Schedule (as hereinafter defined), shall be the
Articles of Incorporation of the Surviving Corporation until thereafter amended
in accordance with the provisions thereof and hereof and applicable law.
(b) The By-Laws of the Company in effect at the Effective
Time shall be the By-Laws of the Surviving Corporation until amended, subject to
the provisions of Section 5.7 of this Agreement, in accordance with the
provisions thereof and applicable law.
Section 1.5 Directors. Subject to applicable law, the directors of
ICS immediately prior to the Effective Time shall be the initial directors 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 1.6 Officers. The officers of the Company 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.
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ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE COMPANY
Section 2.1 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Common Shares or any shares of capital stock of ICS:
(a) Merger Consideration. The Merger Consideration shall be
equal to $21.25 per share (the "Merger Consideration").
(b) Conversion of Shares.
(i) Each issued and outstanding Common Share (except
for (x) Dissenting Shares (as defined herein) and (y) those Common Shares held
by those holders of record listed in the Rollover Schedule, but only up to the
aggregate levels indicated in such Rollover Schedule (the "Rollover Shares"))
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive from ICS the Merger
Consideration without interest upon surrender of the certificate formerly
representing such Common Share in the manner provided in, and otherwise in
accordance with, Section 2.3 hereof. All such Common Shares, when so converted,
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any such
Common Shares shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration therefor upon the surrender of such
certificate in the manner provided in, and in accordance with, Section 2.3
hereof.
(ii) At the Effective Time, (i) each Rollover Share
and (ii) each share of common stock, par value $.01 per share, of ICS 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 such number and type of shares of the Surviving Corporation as
shall be designated on a schedule (the "Rollover Schedule") to be provided by
ICS to the Company and consented to in writing by each shareholder listed
thereon as to such shareholder's shares, prior to February 10, 1999.
(c) Cancellation of Treasury Stock. Each Common Share that
is owned by the Company or by any wholly owned subsidiary of the Company shall
automatically be canceled and retired and shall cease to exist, and no cash or
other consideration shall be delivered or deliverable in exchange therefor.
(d) Dissenting Shares. Common Shares issued and 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
payment of the fair value for such holder's Common Shares as determined by
appraisal for such Common Shares in accordance with the BCL prior to the
Effective Time ("Dissenting Shares") shall not be converted into, or be
exchangeable for, a right to receive the Merger Consideration, unless and until
such holder shall have failed to perfect or shall have withdrawn or otherwise
lost such holder's right to appraisal. If after
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the Effective Time such holder shall have failed to perfect or shall have
withdrawn or lost such holder's right to appraisal, such Common Shares shall be
treated as if they had been converted as of the Effective Time into a right to
receive the Merger Consideration. The Company shall give ICS prompt notice of
any demands received by the Company for appraisal of Common Shares, and ICS
shall have the right to participate in all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of ICS, make any payment with respect to, or settle or offer to settle,
any such demands.
Section 2.2 Options; Stock Plans. Immediately prior to the
Effective Time, each holder of a then-outstanding employee stock option, whether
or not fully exercisable, to purchase Common Shares (an "Option") granted under
the Company's 1991 and 1992 Stock Option Plan and 1997 Equity Compensation Plan
(the "Stock Plans") will be entitled to receive in settlement of such Option a
cash payment from the Company equal to the product of (i) the total number of
Common Shares previously subject to such Option and (ii) the excess of the
Merger Consideration over the exercise price per Common Share subject to such
Option, subject to any required withholding of taxes. If necessary or
appropriate, the Company will, upon the request of ICS, use reasonable efforts
to obtain the written acknowledgment of each employee holding an Option that the
payment of the amount of cash referred to above will satisfy in full the
Company's obligation to such employee pursuant to such Option and take such
other action as is necessary to effect the provisions of this Section 2.2. The
amounts payable pursuant to this Section 2.2 shall be paid as soon as reasonably
practicable following the Closing Date and shall be subject to and made net of
all applicable withholding taxes. The Company will solicit from each Retained
Employee, as such term is defined in that certain asset purchase agreement among
3COM Corporation, the Company and ICS Technologies, Inc., an agreement by each
such employee who owns an Option (as defined in such agreement) to accept, in
lieu of stock upon the exercise of the Option, the amount of cash such employee
would have received if they received the cash payments described in this Section
2.2 (the "Option Payment") which shall be a condition to any agreement by the
Company to pay such Option Payment in respect of such Options.
Section 2.3 Payment for Common Shares.
(a) Prior to the Effective Time, ICS and the Company shall
designate the Company's registrar and transfer agent or such other bank or trust
company as may be approved by ICS and the Company Board, to act as exchange
agent for the holders of Common Shares in connection with the Merger, pursuant
to an agreement providing for the matters set forth in this Section 2.3 and such
other matters as may be appropriate and the terms of which shall be reasonably
satisfactory to the Company and ICS (the "Exchange Agent"), to receive the funds
to which holders of Common Shares shall become entitled pursuant to Section
2.1(b) hereof. At the Effective Time, ICS shall deposit, or ICS shall otherwise
take all steps necessary to cause to be deposited, in trust with the Exchange
Agent in an account for the benefit of holders of Common Shares (the "Exchange
Fund") the aggregate Merger Consideration to which holders of Common Shares
shall be entitled at the Effective Time pursuant to Section 2.1(b) hereof.
(b) Promptly after the Effective Time, and in any event not
later than three business days following the Effective Time, ICS shall cause the
Exchange Agent to mail to each
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record holder of certificates (the "Certificates") that immediately prior to the
Effective Time represented Common 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 or an
Affidavit of Loss in Lieu of Lost Certificate (as defined below) to the Exchange
Agent and instructions for use in surrendering such Certificates and receiving
the Merger Consideration in respect thereof.
(c) In effecting the payment of the Merger Consideration in
respect of Common Shares represented by Certificates entitled to payment of the
Merger Consideration pursuant to Section 2.1(b) hereof, upon the surrender of
each such Certificate, together with a letter of transmittal duly executed, the
Exchange Agent shall promptly, and in any event not later than three business
days following receipt of such Certificates and letter of transmittal, pay the
holder of such Certificate the Merger Consideration multiplied by the number of
Common Shares represented by such Certificate, in consideration therefor. Upon
such payment such Certificate shall forthwith be canceled.
(d) Until surrendered in accordance with paragraph (c)
above, each such Certificate (other than Certificates representing Common Shares
held by ICS or any of its affiliates, in the treasury of the Company or by any
wholly owned subsidiary of the Company or Dissenting Shares or Rollover Shares)
shall represent solely the right to receive the aggregate Merger Consideration
relating thereto. No interest or dividends shall be paid or accrued on the
Merger Consideration. If the Merger Consideration (or any portion thereof) is to
be delivered to any person other than the person in whose name the Certificate
formerly representing Common Shares surrendered therefor is registered, it shall
be a condition to such right to receive such Merger Consideration that the
Certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the person surrendering such Common Shares shall pay
to the Exchange Agent any transfer or other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable.
(e) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
(who shall be the record owner of such Certificate) claiming such Certificate to
be lost, stolen or destroyed (an "Affidavit of Loss in Lieu of Lost
Certificate"), the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the Merger Consideration deliverable in respect
thereof, provided that the Person to whom the Merger Consideration is paid
shall, as a condition precedent to the payment thereof, give the Surviving
Corporation a bond in such sum as it may direct or otherwise indemnify the
Surviving Corporation in a manner satisfactory to it against any claim that may
be made against the Surviving Corporation with respect to the Certificate
claimed to have been lost, stolen or destroyed.
(f) No dividends or other distributions with respect to
Common Shares with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the Common Shares
represented thereby until the surrender of such Certificates or delivery of an
Affidavit of Loss in Lieu of Lost Certificate in accordance with this Section
2.3.
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(g) Promptly following the date which is 180 days after the
Effective Time, the Exchange 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 Exchange Agent's duties shall
terminate. Thereafter, each holder of a Certificate formerly representing a
Common 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 Consideration relating thereto,
without any interest or dividends thereon.
(h) After the Effective Time, there shall be no transfers
on the stock transfer books of the Surviving Corporation of any Common Shares
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates formerly representing Common Shares (other than the
Rollover Shares) are presented to the Surviving Corporation or the Exchange
Agent, they shall be surrendered and canceled in return for the payment of the
aggregate Merger Consideration relating thereto, as provided in this Article 2.
(i) None of ICS, the Company or Exchange Agent shall be
liable to any person in respect of any cash from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to seven
years after the Effective Time, any such shares, cash, dividends or
distributions in respect of such Certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to ICS as follows:
Section 3.1 Organization and Qualification; Subsidiaries. The
Company and each of its Subsidiaries (as hereinafter defined) is a corporation
duly organized, validly existing and in good standing under the laws of its
state or jurisdiction of incorporation and has all requisite corporate power and
corporate authority to own, lease and operate its properties and to carry on its
business as now being conducted and is in good standing as a foreign corporation
in each jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification and where failure to be in
good standing or to so qualify would have a Material Adverse Effect on the
Company. The term "Material Adverse Effect on the Company," as used in this
Agreement, means any effect, event, occurrence, change or state of facts that,
or aggregated with other effects, events, occurrences, changes or states of
facts, is, or is reasonably likely to be, materially adverse to (i) the assets,
liabilities, business, property, operations, condition as a whole (financial or
otherwise) of the Company and its Subsidiaries taken as a whole, or (ii) the
ability of the Company and its Subsidiaries to perform in all material respects
their obligations under this Agreement. The Company has heretofore made
available to ICS a complete and correct copy of its Articles of Incorporation,
as amended, and By-Laws. Set forth on Section 3.1 of the Disclosure Schedule is
a list of every corporation, limited liability company, partnership or other
business organization or entity of which the Company owns either directly or
through its Subsidiaries, (a)
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more than 50% of (i) the total combined voting power of all classes of voting
securities of such entity, (ii) the total combined equity interests therein, or
(iii) the capital or profit interests therein, in the case of a partnership; or
(b) or otherwise has the power to vote or direct the voting of sufficient
securities to elect a majority of the board of directors or similar governing
body of such entity (the "Subsidiaries").
Section 3.2 Capitalization; Subsidiaries. The authorized capital
stock of the Company consists of 50,000,000 Common Shares and 5,000,000 shares
of preferred stock, no par value ("Preferred Stock"). As of the close of
business on January 19, 1999, 12,298,425 Common Shares were issued and
outstanding (which includes certain treasury shares), all of which are entitled
to vote on this Agreement except for those shares held in treasury. The Company
has no shares of Preferred Stock issued and outstanding. As of January 18,
1999, except for (i) 2,396,646 Common Shares reserved for issuance pursuant to
outstanding Options and rights granted under the Stock Plans, there are not now,
and at the Effective Time there will not be, any existing options, warrants,
calls, subscriptions, or other rights, or other agreements or commitments,
obligating the Company to issue, transfer or sell any shares of capital stock of
the Company or any of its Subsidiaries. Section 3.2 of the Disclosure Schedule
sets forth the name of each holder of an outstanding Option under the Stock
Plans, and with respect to each Option held by any such holder, the grant date,
vesting schedule, exercise price and number of Common Shares for which such
Option is exercisable. All issued and outstanding Common Shares are, and all
Common shares which may be issued pursuant to the exercise of outstanding
Options will be, when issued in accordance with the respective terms thereof,
validly issued, fully paid, nonassessable and free of preemptive rights. All of
the outstanding shares of capital stock of each of the Company's Subsidiaries
have been validly issued and are fully paid and non-assessable and, except as
set forth on Section 3.2 of the Disclosure Schedule, are owned by either the
Company or another of its Subsidiaries free and clear of all liens, charges,
claims or encumbrances. There are no outstanding options, warrants, calls,
subscriptions, or other rights, or other agreements or commitments, obligating
any Subsidiary of the Company to issue, transfer or sell any shares of its
capital stock.
Section 3.3 Authority Relative to this Agreement.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and, except for the approval of
this Agreement by the shareholders of the Company, to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Company Board and no other corporate proceedings on
the part of the Company or on the part of the shareholders of the Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated, other than the approval of this Agreement by the holders of a
majority of the outstanding Common Shares of the Company. This Agreement has
been duly and validly executed and delivered by the Company, and, assuming this
agreement constitutes a valid and binding obligation of ICS, this Agreement
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the rights of creditors generally, general
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equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
(b) Except as set forth in Section 3.3 of the Disclosure
Schedule, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of consent, termination, purchase, cancellation
or acceleration of any obligation or to loss of any property, rights or benefits
under, result in the imposition of any additional obligation under, or result in
the creation of any Lien (as defined herein) upon any of the properties or
assets of the Company or any of its Subsidiaries under or constitute a "change
of control" under, require the consent from, or the giving of notice to, a third
party pursuant to (i) the organizational documents of the Company or any of its
Subsidiaries, (ii) any contract, instrument, permit, concession, franchise,
license, loan or credit agreement, note, bond, mortgage, indenture, lease or
other property agreement, partnership or joint venture agreement or other
legally binding agreement or obligation, whether oral or written (a "Contract"),
applicable to the Company or any of its Subsidiaries or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following paragraph, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries or their respective properties or assets, other than, in the
case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, Liens, adverse consequences resulting from such change of control or
where the failure to obtain such consents or provide such notices that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. For purposes of this Agreement, "Lien" shall mean, with respect to
any asset, any imperfection of title, lien, lease, pledge, encumbrance,
mortgage, claim, option, voting trust, preemptive right, attachment,
encroachment or other charge or security interest in or on such asset.
(c) Other than in connection with, or in compliance with,
the provisions of the BCL with respect to the transactions contemplated hereby,
the Securities Exchange Act of 1934 (the "Exchange Act"), the securities laws of
the various states and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), no authorization, consent or approval of, or filing
with, any Governmental Entity (as hereinafter defined) is necessary for the
consummation by the Company of the transactions contemplated by this Agreement
other than authorizations, consents and approvals the failure to obtain, or
filings the failure to make, which would not, in the aggregate, have a Material
Adverse Effect on the Company. As used in this Agreement, the term "Governmental
Entity" means 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.
Section 3.4 No Violation. Neither the execution or delivery of
this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will (i) constitute a breach or violation of
any provision of the Articles of Incorporation, as amended, or By-Laws of the
Company or (ii) except as set forth on Section 3.4 of the Disclosure Schedule,
constitute a breach, violation or default (or any event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance
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required by, or permit a third party to terminate or accelerate vesting or
repurchase rights, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its Subsidiaries, or any other
detriment under, any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument to which the Company or any of its
Subsidiaries is a party or by which they or any of their respective properties
or assets are bound, other than breaches, violations, defaults, terminations,
accelerations or creation of Liens which, in the aggregate, would not have a
Material Adverse Effect on the Company.
Section 3.5 SEC Reports and Financial Statements. Since January 1,
1995, the Company has filed all forms, reports and documents ("SEC Reports")
with the SEC required to be filed by it pursuant to the federal securities laws
and the SEC rules and regulations thereunder. Copies of all such SEC Reports
have been made available to ICS by the Company or are publicly available on
▇▇▇▇▇. None of such SEC Reports (as of their respective filing dates) contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading except as subsequently disclosed. The audited and unaudited
consolidated financial statements of the Company included in the SEC Reports
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as otherwise stated in such financial
statements, including the related notes) and fairly present the financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the results of their operations and changes in financial position
for the periods then ended, subject, in the case of the unaudited financial
statements, to year-end audit adjustments. Except as set forth in the SEC
Reports and except as disclosed in Section 3.5 of the Disclosure Schedule, at
the date of the most recent audited financial statements of the Company included
in the SEC Reports, neither the Company nor any of its Subsidiaries had, and
since such date neither the Company nor any of such Subsidiaries has incurred,
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which, individually or in the aggregate, would be
required to be disclosed in a balance sheet of the Company prepared in
accordance with generally accepted accounted principles except liabilities
incurred in the ordinary and usual course of business and consistent with past
practice, liabilities incurred in connection with the transactions contemplated
by this Agreement, and liabilities that would not reasonably be expected to have
a Material Adverse Effect with respect to the Company.
Section 3.6 Compliance with Applicable Laws. Except as set forth
on Section 3.6 of the Disclosure Schedule and except for matters relating to
Environmental Laws (which matters are covered in Section 3.12 hereof) or matters
relating to real estate (which matters are covered in Section 3.24 hereof), (i)
the Company and its Subsidiaries possess all permits, licenses, certifications
and other governmental or regulatory authorizations and approvals necessary to
enable the Company and its Subsidiaries to carry on their business as presently
conducted except for such failures to have such permits, licenses,
certifications or regulatory authorizations or approvals that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, and all such permits are valid, and in full force and effect and
there exists no default thereunder and (ii) the operations of the Company and
its Subsidiaries have been conducted in compliance with all laws, ordinances,
regulations, judgments and decrees of any Governmental Entity applicable to the
Company or such Subsidiary or by which it may be bound, except for possible
violations which
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would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
Section 3.7 Litigation. Section 3.7 of the Disclosure Schedule
sets forth any suit, claim, action, proceeding or investigation pending or, to
the knowledge of the Company, threatened, at law or in equity, or before any
Governmental Entity, against the Company or any of its Subsidiaries, none of
which, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company or would reasonably be expected to
prevent or materially delay the consummation of the transactions contemplated by
this Agreement. Except as disclosed in the SEC Reports filed prior to the date
of this Agreement, neither the Company nor any of its Subsidiaries is subject to
any outstanding order, writ, injunction or decree which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on the
Company or could prevent or materially delay the consummation of the
transactions contemplated hereby.
Section 3.8 Information. None of the information supplied by the
Company in writing specifically for inclusion or incorporation by reference in
(i) the Proxy Statement (as hereinafter defined) or (ii) any other document to
be filed with the SEC or any other Governmental Entity in connection with the
transactions contemplated by this Agreement (the "Other Filings") will, at the
respective times filed with the SEC or 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 shareholders, at the time of the Special Meeting (as
hereinafter defined) 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. Notwithstanding the
foregoing, no representation is made by the Company with respect to (i) any
forward-looking information which may have been supplied by the Company, or (ii)
statements made in any of the foregoing documents based upon information
supplied by ICS.
Section 3.9 Certain Approvals. The Company Board has taken any and
all necessary and appropriate action to approve the Merger and the transactions
contemplated by this Agreement, including for the purposes of Sections
2538(b)(1) and 2555(1) of the BCL.
Section 3.10 Employee Benefit Plans.
(a) Section 3.10(a) of the Disclosure Schedule includes a
true and complete list of all material employee benefit plans and programs
providing benefits to any employee or former employee of the Company and its
Subsidiaries 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 Plan, the Company has made
available to ICS a true, correct and complete copy of: (i) all plan documents,
benefit schedules, trust agreements, and
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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 United States Internal Revenue Service (the
"IRS"), if any.
(c) The Company and each of its Subsidiaries has complied,
and is now in compliance, in all material respects with all provisions of ERISA,
the Internal Revenue Code of 1986, as amended, including the Treasury
Regulations thereunder (the "Code") and all laws and regulations applicable to
the Plans. With respect to each Plan that is intended to be a "qualified plan"
within the meaning of Section 401(a) of the Code ("Qualified Plans"),(i) such
Plan is a Qualified Plan within the meaning of Section 401(a) of the Code, (ii)
such Qualified Plans are within the remedial amendment period and (iii) the
Company will submit such Qualified Plans to the IRS for a favorable
determination letter within the remedial amendment period.
(d) 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) Except as set forth on Section 3.10(e) of the
Disclosure Schedule, no Plan is subject to Title IV or Section 302 of ERISA or
Section 412 or 4971 of the Code. Without limiting the generality of the
foregoing, 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").
(f) There does not now exist, nor do any circumstances
exist that could result in, any material 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. 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 is a member of the same
"controlled group" as the Company or any of its Subsidiaries, pursuant to
Section 4001(a)(14) of ERISA.
-11-
Section 3.11 Taxes.
(a) The Company and each of its Subsidiaries has timely
filed all federal, state, local and foreign income Tax Returns (as hereinafter
defined) required to be filed by it in all jurisdictions in which it is required
to do so, and all other material Tax Returns required to be filed by it, and
such Tax Returns are true and complete in all material respects, and the Company
and each of its Subsidiaries has paid or caused to be paid all Taxes (as
hereinafter defined) shown due on such Tax Returns and has made adequate
provision in the Company's financial statements for payment of all Taxes that
are not payable as of the date hereof or have not been paid, in respect of all
taxable periods or portions thereof ending on or before the date hereof, except
where the failure to so file or pay or make adequate provision would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
All Tax Returns for the Company in respect of all years not barred by the
statute of limitations have heretofore been made available by the Company to ICS
and are listed in Section 3.11 of the Disclosure Schedule. There are no
outstanding Agreements, waivers or requests for waivers extending the statutory
period of limitation applicable to any Tax Return of the Company or any of its
Subsidiaries. Except as set forth on Section 3.11 of the Disclosure Schedule,
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) is a party to or has any
liability pursuant to a Tax sharing or Tax indemnity agreement or any other
agreement of a similar nature that remains in effect or (iii) has any liability
for the Taxes of any person (other than any of the Company or its Subsidiaries)
under Treas. Reg. (S) 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise. The
Company will attach to its June 27, 1998, Tax Return the statement required
under Treasury Regulation Section 1.1502-20(c)(3) related to the disposition of
its shares in Voyetra Technologies, Inc. Except as set forth in Section 3.11 of
the Disclosure Schedule, no claim has ever been made by a taxing authority in a
jurisdiction where the Company or any of its Subsidiaries does not file Tax
Returns that such person is or may be subject to taxation by such jurisdiction.
None of the Company or its Subsidiaries will be required to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date as a result of any (i)
change in method of accounting for a taxable period ending on or prior to the
Closing Date under Code (S) 481(c) (or any corresponding or similar provision of
state, local or foreign income Tax law), (ii) "closing agreement" as described
in Code (S) 7121 (or any corresponding or similar provision of state, local or
foreign income Tax law) or (iii) deferred intercompany gain or any excess loss
account described in Treasury Regulations under Code Section 1502. None of the
Company or its Subsidiaries is a party to any agreement, contract, arrangement
or plan that has resulted or would result, separately or in the aggregate, in
the payment of any "excess parachute payment" within the meaning of Code (S)
280G (or any corresponding provision of state, local or foreign income Tax law).
(b) For purposes of this Agreement, the term "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
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term "Tax Return" means any report, return or other information or document
required to be supplied to a taxing authority in connection with Taxes.
Section 3.12 Environmental Matters.
Except as set forth on Section 3.12 of the Disclosure Schedule and
except for such matters that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect:
(a) with respect to the Business, the Company and its
Subsidiaries have complied and are in compliance with all Environmental and
Safety Requirements;
(b) without limiting the generality of the foregoing, the
Company and its Subsidiaries have obtained and complied with, and are in
compliance with, all permits, licenses and other authorizations that may be
required pursuant to Environmental and Safety Requirements for the occupation of
their facilities and the operation of the Business and all such permits,
licenses and authorizations may be relied upon for the lawful operation of the
Business and such facilities on and after the Closing without transfer,
reissuance or other governmental action;
(c) neither the Company nor any Subsidiary has received
any written or oral notice, report or other information regarding any actual or
alleged violation of Environmental and Safety Requirements, or any liabilities
or potential liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective obligations,
relating to the Business or its past or current facilities and arising under
Environmental and Safety Requirements;
(d) none of the following exists at any property or
facility owned or operated by the Company or any Subsidiary in connection with
the Business: (i) underground storage tanks; (ii) asbestos-containing material
in any form or condition; (iii) materials or equipment containing
polychlorinated biphenyls; or (iv) landfills, surface impoundments, or disposal
areas;
(e) with respect to the Business, neither the Company nor
any Subsidiary has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to liabilities,
including any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, or any
investigative, corrective or remedial obligations, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA") or the Solid Waste Disposal Act, as amended ("SWDA") or any other
Environmental and Safety Requirements;
(f) no facts, events or conditions relating to the past or
present facilities, properties or operations of the Company, any Subsidiary, or
any of their respective affiliates or predecessors the Business will prevent,
hinder or limit continued compliance by the Business with
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Environmental and Safety Requirements, give rise to any investigatory, remedial
or corrective obligations pursuant to Environmental and Safety Requirements, or
give rise to any other liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental and Safety Requirements,
including without limitation any relating to onsite or offsite releases or
threatened releases of hazardous materials, substances or wastes, personal
injury, property damage or natural resources damage;
(g) neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any obligations
for site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called "transaction-
triggered" or "responsible property transfer" Environmental and Safety
Requirements;
(h) with respect to the Business, neither the Company nor
any Subsidiary has, either expressly or by operation of law, assumed or
undertaken any liability, including without limitation any obligation for
corrective or remedial action, of any other person relating to Environmental and
Safety Requirements; and
(i) for purposes of this Agreement, "Environmental and
Safety Requirements" shall mean all federal, state, local and foreign statutes,
regulations, ordinances and similar provisions having the force or effect of
law, all judicial and administrative orders and determinations, all contractual
obligations and all common law concerning public health and safety, worker
health and safety, and pollution or protection of the environment, including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, as such of the foregoing are enacted or in
effect, prior to, on, or after the Closing Date.
Section 3.13 Absence of Certain Changes. Except as set forth in
Section 3.13 of the Disclosure Schedule, or except as disclosed in the SEC
Reports, from June 27, 1998, through the date of this Agreement the Company (a)
has conducted its business only in the ordinary course consistent with past
practice and (b) has not:
(i) incurred any indebtedness for borrowed money, except
borrowings from banks (or other financial institutions) necessary to meet
ordinary course working capital requirements and to finance ordinary course
capital expenditures;
(ii) mortgaged, pledged or subjected to any Lien, any asset
or related group of assets having a net book value in excess of $500,000;
(iii) sold, leased, assigned or transferred any tangible
asset or related group of assets having a net book value in excess of
$500,000 except for the sale of inventory and obsolete or used machinery
and equipment in the ordinary course of business consistent with past
practice;
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(iv) sold, leased, assigned or transferred any interest
in real estate having a net book value in excess of $500,000;
(v) sold, licensed, assigned or transferred any patents,
trademarks, trade names, copyrights, trade secrets or other intangible
assets having a fair market value in excess of $500,000 individually or in
the aggregate;
(vi) waived or relinquished any right or claim or related
group of rights or claims except any such item which the Company believes
has a fair value of less than $500,000 individually or in the aggregate;
(vii) (x) issued or sold any of its Common Shares or other
equity securities or any warrants, options or other rights to acquire its
Common Shares or other securities of the Company except for the issuance of
Common Shares upon exercise of Options outstanding as of June 27, 1998, or
(y) purchased or redeemed or agreed to purchase or redeem any Common Shares
or other equity securities;
(viii) made or entered into binding commitment for any
capital expenditures or related group of capital expenditures in excess of
$2,500,000;
(ix) modified or amended in any material manner or
terminated any Material Contract (as hereinafter defined) other than the
termination of any such contract by its terms;
(x) granted any increase in the base compensation of, or
made any other material change in the employments terms for, any of its
directors, officers, and employees other than normal periodic increases or
changes reflecting or based upon changed responsibilities or duties made in
the ordinary course of business consistent with past practice or changes
made pursuant to any collective bargaining agreements or existing
contracts;
(xi) adopted, modified, or terminated any bonus, profit-
sharing, incentive, severance or other plan or contract for the benefit of
any of its directors, officers, and employees, other than for changes which
do not materially increase the aggregate cost of such plan or contract or
which are required by law or a collective bargaining agreement; or
(xii) declared or paid any dividend or other distribution
with respect to the Common Shares.
Section 3.14 Brokers. Except as set forth on Section 3.14 of the
Disclosure Schedule and except for the engagement of the Investment Banker (as
defined in Section 3.15 hereof), 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.
-15-
Section 3.15 Opinion of Investment Banker. The Company has
received the written opinion of Pennsylvania Merchant Group (the "Investment
Banker") to the effect that, as of the date hereof and subject to certain
matters stated in such opinion, the consideration to be received by the holders
of Common Shares pursuant to the Merger is fair to the Company's shareholders
from a financial point of view.
Section 3.16 Material Contracts. Except as set forth on Section
3.16 of the Disclosure Schedule, neither the Company nor any of its Subsidiaries
is a party to any: (i) collective bargaining agreement or contract with any
labor union; (ii) bonus, pension, profit sharing, retirement or other form of
deferred compensation plan; (iii) stock purchase, stock option, stock
appreciation or similar plan; (iv) contract for the employment of any officer,
individual employee or other person on a full-time or consulting basis involving
an annual compensation commitment by the Company or a Subsidiary in excess of
$200,000; (v) agreement or indenture relating to the borrowing of money in
excess of $1,000,000 or to mortgaging, pledging or otherwise placing a Lien
(other than a Permitted Lien (as defined herein)) on any material portion of the
Company's assets; (vi) guaranty of any obligation for borrowed money in excess
of $1,000,000; (vii) lease or agreement under which it is lessee of, or holds or
operates any personal property owned by any other party, for which the annual
rental exceeds $250,000, (viii) contract or group of related contracts with the
same party for the purchase of inventories, supplies or services, under which
the undelivered balance of such inventories, supplies or services has a selling
price in excess of $1,000,000; (ix) contract or group of related contracts with
the same party for the sale of products or services under which the undelivered
balance of such products or services has a sales price in excess of $1,000,000;
(x) agreement pertaining to Intellectual Property (as hereinafter defined)
including, license agreements or similar arrangements; or (xi) contract which
prohibits or materially limits the Company or a Subsidiary in any material
respect from freely engaging in business in the United States or anywhere else
in the world (all such contracts and agreements, "Material Contracts"). The
Company has provided or made available to ICS (i) true and complete copies of
all written Material Contracts, or (ii) with respect to such Material Contracts
that have not been reduced to writing, a written description thereof, each of
which is listed on Section 3.16 of the Disclosure Schedule. Neither the Company
nor any of its Subsidiaries is, or has received any notice or has any knowledge
that any other party is, in default in any respect under any such Material
Contract, except for those defaults which would not reasonably be likely, either
individually or in the aggregate, to have a Material Adverse Effect with respect
to the Company; and there has not occurred any event that, with the lapse of
time or the giving of notice or both, would constitute such a material default.
For purposes of this Agreement, "Permitted Liens" shall mean (i) Liens for Taxes
(other than those pursuant to Section 412 of the Code) or governmental
assessments, charges or claims, the payment of which is not yet due, or for
Taxes, the validity of which are being contested in good faith by appropriate
proceedings; (ii) statutory Liens incurred in the ordinary course of business
for sums not yet due or being contested in good faith; (iii) Liens relating to
deposits made in the ordinary course of business; and (iv) Liens which do not
individually or in the aggregate materially interfere with or materially impair
the conduct of the Business as it is currently being conducted, or the value,
marketability, use or ownership of the asset to which it attaches.
Section 3.17 Board Recommendation. The Company Board, at a meeting
duly called and held, has (a) determined that this Agreement and the
transactions contemplated hereby,
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taken together, are advisable and in the best interests of the Company and its
shareholders, and (b) subject to the other provisions hereof, resolved to
recommend that the holders of the Common Shares approve this Agreement and the
transactions contemplated hereby, including the Merger.
Section 3.18 Required Company Vote. The Company Shareholder
Approval, being the affirmative vote of a majority of the votes cast by Common
Shares entitled to vote, is the only vote of the holders of any class or series
of the Company's securities necessary to approve this Agreement, the Merger and
the other transactions contemplated hereby.
Section 3.19 Intellectual Property.
(a) Section 3.19 of the Disclosure Schedule contains a
complete and accurate list of all (i) patented or registered Intellectual
Property owned or filed by the Company or any Subsidiary, (ii) pending patent
applications and applications for registration of other Intellectual Property
filed by or on behalf of the Company or any Subsidiary, (iii) material
unregistered trade names, corporate names, or Internet domain names owned or
used by the Company or any Subsidiary, (iv) material unregistered trademarks,
service marks, copyrights and mask works owned or used by the Company or any
Subsidiary, (v) all computer software owned and/or used by the Company or any of
its Subsidiaries (other than mass-marketed software with a license fee of less
than $10,000) that is material to the Business, and (vi) all material licenses
or similar agreements or arrangements pertaining to Intellectual Property to
which the Company or its Subsidiaries is a party, either as licensee or
licensor.
(b) Except as set forth on Section 3.19 of the Disclosure
Schedule, (i) the Company or one of its Subsidiaries owns all right, title and
interest to, or has a valid and enforceable license to use, all Intellectual
Property necessary for the operation of the businesses of the Company and its
Subsidiaries as presently conducted and free and clear of all Liens or other
encumbrances or restrictions; (ii) no claim by any other Person contesting the
validity, enforceability, use or ownership of any of the Intellectual Property
owned or used by the Company or any of its Subsidiaries (the "Company
Intellectual Property") has been made, is currently outstanding or, to the
knowledge of the Company, is threatened (including, without limitation, any
demand or request that the Company or its Subsidiaries license any rights from a
third Person); (iii) neither the Company nor its Subsidiaries have received any
notices of, nor are aware of any facts which indicate a likelihood of, any
infringement or misappropriation by, or conflict with, any third Person with
respect to the Company Intellectual Property that would reasonably be expected
to have a Material Adverse Effect; (iv) to the knowledge of the Company, neither
the Company nor its Subsidiaries have infringed, misappropriated, or otherwise
conflicted with any Intellectual Property or other rights of any third Persons
and neither the Company nor its Subsidiaries is aware of any infringement,
misappropriation or conflict which will occur as a result of the continued
operation of the business of the Company or its Subsidiaries as currently
conducted; (v) no loss or expiration of any of the material Company Intellectual
Property is threatened, pending or reasonably foreseeable; (vi) the transactions
contemplated by this Agreement will have no Material Adverse Effect on the
right, title and interest in and to the Company Intellectual Property; and (vii)
the Company and its Subsidiaries have taken all necessary and desirable action
to maintain and protect the Company Intellectual Property and will
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continue to maintain and protect the Company Intellectual Property to ensure
that there is no affect on any of the Company Intellectual Property that would
have a Material Adverse Effect.
Section 3.20 Related Party Transactions. Except as set forth in
Section 3.20 of the Disclosure Schedule hereto, no director, officer, partner,
"affiliate" or "associate" (as such terms are defined in Rule 12b-2 under the
Exchange Act) of the Company or any of its Subsidiaries (or, with respect to
clause (i) of this sentence, to the knowledge of the Company, its employees) (i)
has borrowed any monies from or has outstanding any indebtedness or other
similar obligations to the Company or any of its Subsidiaries; (ii) owns any
direct or indirect interest of any kind in, or is a director, officer, employee,
partner, affiliate or associate of, or consultant or lender to, or borrower
from, or has the right to participate in the management, operations or profits
of, any person or entity which is (1) a competitor, supplier, customer,
distributor, lessor, tenant, creditor or debtor of the Company or any of its
Subsidiaries, (2) engaged in a business related to the business of the Company
or any of its Subsidiaries, (3) participating in any transaction to which the
Company or any of its Subsidiaries is a party or (iii) otherwise a party to any
contract, arrangement or understanding with the Company or any of its
Subsidiaries.
Section 3.21 State Takeover Statutes. The Company Board has taken
such action so that no statute, takeover statute or similar statute or
regulation of the Commonwealth of Pennsylvania, to the knowledge of the Company,
any other state, prevents the consummation of the Merger, or any of the other
transactions contemplated hereby on the terms and subject to the conditions of
this Agreement. Except as set forth in Section 3.21 of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries has any rights plan, preferred
stock or similar arrangement that causes any statute, takeover statute or
similar statute or regulation of the Commonwealth of Pennsylvania, to the
knowledge of the Company, any other state that prevents the consummation of the
transactions contemplated hereby on the terms and subject to the conditions of
this Agreement.
Section 3.22 Labor Relations and Employment.
(a) Except as set forth on Section 3.22(a) of the
Disclosure Schedule and except for matters which would not (other than in the
case of clause (iii) or (iv) of this sentence) be reasonably likely to result in
a Material Adverse Effect, (i) there is no labor strike, dispute, slowdown,
stoppage or lockout actually pending, or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries, and during the past
three years there has not been any such action; (ii) to the knowledge of the
Company, no union claims to represent the employees of the Company or any of its
Subsidiaries; (iii) neither the Company nor any of its Subsidiaries is a party
to or bound by any collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with any labor organization
or employee association applicable to employees of the Company or any of its
Subsidiaries; (iv) none of the employees of the Company or any of its
Subsidiaries is represented by any labor organization and the Company does not
have any knowledge of any current union organizing activities among the
employees of the Company or any of its Subsidiaries, nor does any question
concerning representation exist concerning such employees; (v) the Company and
its Subsidiaries are, and have at all times been, in material compliance with
all applicable laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and are not
-18-
engaged in any unfair labor practices as defined in the National Labor Relations
Act or other applicable law, ordinance or regulation; (vi) there is no unfair
labor practice charge or complaint against the Company or any of its
Subsidiaries pending or, to the knowledge of the Company, threatened before the
National Labor Relations Board or any similar state or foreign agency; (vii)
there is no grievance arising out of any collective bargaining agreement or
other grievance procedure; (viii) no charges with respect to or relating to the
Company or any of its Subsidiaries are pending before the Equal Employment
Opportunity Commission or any other agency responsible for the prevention of
unlawful employment practices; (ix) neither the Company nor any of its
Subsidiaries has received notice of the intent of any federal, state, local or
foreign agency responsible for the enforcement of labor or employment laws to
conduct an investigation with respect to or relating to the Company or any of
its Subsidiaries and no such investigation is in progress; and (x) there are no
complaints, lawsuits or other proceedings pending or to the knowledge of the
Company threatened in any forum by or on behalf of any present or former
employee of the Company or any of its Subsidiaries alleging breach of any
express or implied contract of employment, any law or regulation governing
employment or the termination thereof or other discriminatory, wrongful or
tortious conduct in connection with the employment relationship.
(b) To the knowledge of the Company, since the enactment
of the Worker Adjustment and Retraining Notification ("WARN") Act, there has not
been (i) a "plant closing" (as defined in the WARN Act) affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of the Company or any of its Subsidiaries; or (ii) a
"mass layoff" (as defined in the WARN Act) affecting any site of employment or
facility of the Company or any of its Subsidiaries; nor has the Company or any
of its Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law. Except as set forth in Section 3.22(b) of the
Disclosure Schedule, to the best knowledge of the Company, none of the employees
of the Company or any of its Subsidiaries has suffered an "employment loss" (as
defined in the WARN Act) since three months prior to the date of this Agreement.
Section 3.23 Year 2000. The Company and each of its Subsidiaries
have conducted a thorough inventory and assessment of the hardware, software and
embedded microcontrollers in noncomputer equipment (collectively, the "Computer
Systems") used by the Company and its Subsidiaries in its business, in order to
determine which parts of the Computer Systems are not Year 2000 Compliant (as
defined below) and to estimate the cost of rendering such Computer Systems Year
2000 Compliant prior to January 1, 2000 or such earlier date on which the
Computer Systems may shut down or may produce incorrect calculations or
otherwise malfunction without becoming totally inoperable. Based on the above
inventory and assessment, the estimated total cost of rendering the Computer
Systems Year 2000 Compliant is $200,000, which expenditure has been included in
the budget adopted by the Company. For purposes of this Agreement, "Year 2000
Compliant" means that all of the Computer Systems will correctly differentiate
between years in different centuries that end in the same two digits, and will
accurately process date/time data (including but not limited to calculating,
comparing and sequencing) from, into and between the twentieth and twenty-first
centuries, including leap year calculations.
-19-
Section 3.24 Real Estate.
(a) Owned Properties. Section 3.24 of the Disclosure
Schedule sets forth a list of all owned real property (the "Owned Real
Property") used by the company in the operation of the Company's business. With
respect to each such parcel of Owned Real Property: (i) such parcel is free and
clear of all encumbrances (except for Permitted Liens); (ii) except as disclosed
in Section 3.24 of the Disclosure Schedule, there are no leases, subleases,
licenses, concessions, or other agreements, written or oral, granting to any
person the right of use or occupancy of any portion of such parcel; and (iii)
there are no outstanding actions or rights of first refusal to purchase such
parcel.
(b) Leased Properties. Section 3.24 of the Disclosure
Schedule sets forth a list of all of the leases and subleases ("Leases") and
each leased and subleased parcel of real property in which the company has a
leasehold and subleasehold interest (the "Leased Real Property"). Each of the
Leases are in full force and effect, and the Company holds a valid and existing
leasehold or subleasehold interest under each of the Leases described in
Schedule 3.24. With respect to each Lease set forth on Section 3.24 of the
Disclosure Schedule: (i) the Lease is legal, valid, binding, enforceable and in
full force and effect; (ii) the Lease will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the
Closing; (iii) neither the Company, nor, to the Knowledge of the Company, any
other party to the Lease, is in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute such a breach or default
by the Company or permit termination, modification or acceleration under the
Lease by any other party thereto; (iv) the Company has not, and, to the
Knowledge of the Company, no third party has repudiated any provision of the
Lease; (v) there are no disputes, oral agreements, or forbearance programs in
effect as to the Lease; (vi) the Lease has not been modified in any respect,
except to the extent that such modifications are disclosed by the documents
delivered to ICS; (vii) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the Lease (except for
Permitted Liens); and (viii) the Lease is fully assignable to ICS without the
necessity of any consent or the Company shall obtain all necessary consents
prior to the Closing.
(c) Real Property Disclosure. Except as disclosed on
Section 3.24 of the Disclosure Schedule, there is no Real Property leased or
owned by the Company used in the Company's business. The Owned Real Property and
Leased Real Property is referred to collectively herein as the "Real Property."
(d) No Proceedings. There are no proceedings in eminent
domain or other similar proceedings pending or, to the knowledge of the Company,
threatened, affecting any portion of the Real Property (except for Permitted
Liens). There exists no writ, injunction, decree, order or judgment outstanding,
nor any litigation, pending or threatened, relating to the ownership, lease,
use, occupancy or operation by any person of the Real Property (except for
Permitted Liens).
(e) Current Use. The current use of the Owned Real
Property does not violate in any material respect any instrument of record or
agreement affecting such Owned Real Property. There is no violation of any
covenant, condition, restriction, easement, agreement or order of any
-20-
governmental authority having jurisdiction over any of the Owned Real Property
that affects such real property or the use or occupancy thereof (except for
Permitted Liens). No damage or destruction has occurred with respect to any of
the Owned Real Property that, individually or in the aggregate, has had or
resulted in, or will have or result in, a Material Adverse Effect on the
Company.
(f) Condition and Operation of Improvements. All
buildings and other improvements included within the Real Property (the
"Improvements") are in good condition and repair and adequate to operate such
facilities as currently used, and, to the best of the Company's knowledge and
belief, there are no facts or conditions affecting any of the Improvements which
would, individually or in the aggregate, interfere in any significant respect
with the use, occupancy or operation thereof which would reasonably be expected
to have a Material Adverse Effect on the Company as currently used, occupied or
operated or intended to be used, occupied or operated. No Improvement or portion
thereof is dependent for its access, operation or utility on any land, building
or other improvement not included in the Real Property.
(g) Permits. All required or appropriate certificates of
occupancy, permits, licenses, franchises, approvals and authorizations
(collectively, the "Real Property Permits") of all governmental authorities
having jurisdiction over the Real Property, the absence of which could have a
Material Adverse Effect on the Company, have been issued to the Company to
enable the Real Property to be lawfully occupied and used for all of the
purposes for which it is currently occupied and used have been lawfully issued
and are, as of the date hereof, in full force and effect. The Company has
delivered complete and correct copies of the Real Property Permits to ICS. The
Company has not received or been informed by a third party of the receipt by it
of any notice which could have a Material Adverse Effect on the Company from any
governmental authority having jurisdiction over the Real Property threatening a
suspension, revocation, modification or cancellation of any Real Property Permit
and, to the best knowledge of the Company, there is no basis for the issuance of
any such notice or the taking of any such action.
Section 3.25 Absence of Certain Changes or Events with Respect to
the Company. Except as set forth in Section 3.13 of the Disclosure Schedule,
since June 27, 1998, the Company has not (a) suffered a Material Adverse Effect
or (b) materially changed the Company's accounting principles, practices,
articles or methods, except as required by generally accepted accounting
principles or applicable law.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ICS
ICS represents and warrants to the Company as follows:
Section 4.1 Organization and Qualification. ICS is a corporation
duly organized, validly existing and in good standing under the laws of its
state or jurisdiction of incorporation and is in good standing as a foreign
corporation in each other jurisdiction where the properties owned, leased or
operated, or the business conducted, by it require such qualification and where
failure to be in good standing or to so qualify would have a Material Adverse
Effect on ICS. The term "Material Adverse Effect on ICS", as used in this
Agreement, means any change in or effect on the
-21-
business, financial condition, results of operations or reasonably foreseeable
prospects of ICS or any of its Subsidiaries that would be materially adverse to
ICS.
Section 4.2 Authority Relative to this Agreement.
(a) ICS has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of ICS and no other corporate proceedings on the part of ICS
are necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
ICS and, assuming this Agreement constitutes a valid and binding obligation of
the Company, this Agreement constitutes a valid and binding agreement of ICS,
enforceable against ICS in accordance with its terms.
(b) Other than in connection with, or in compliance with,
the provisions of the BCL, the Exchange Act, the securities laws of the various
states and the HSR Act, no authorization, consent or approval of, or filing
with, any Governmental Entity is necessary for the consummation by ICS of the
transactions contemplated by this Agreement other than authorizations, consents
and approvals the failure to obtain, or filings the failure to make, which would
not, in the aggregate, have a Material Adverse Effect on ICS.
Section 4.3 No Violation. Neither the execution or delivery of
this Agreement by ICS nor the consummation by ICS of the transactions
contemplated hereby will (i) constitute a breach or violation of any provision
of the Articles of Incorporation, as amended, or By-Laws of ICS or (ii)
constitute a breach, violation or default (or any event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in the
creation of any Lien upon any of the properties or assets of ICS under, any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument to which ICS is a party or by which it or any of its properties
or assets are bound, other than breaches, violations, defaults, terminations,
accelerations or creation of Liens which, in the aggregate would not have a
Material Adverse Effect on ICS.
Section 4.4 Information. None of the information supplied by ICS
in writing (other than projections of future financial performance) specifically
for inclusion or incorporation by reference in (i) the Proxy Statement or (ii)
the Other Filings will, at the respective times filed with the SEC or 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 shareholders, 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. Notwithstanding the
foregoing, no representation is made by ICS with respect to statements made in
any of the foregoing documents based upon information supplied by the Company.
-22-
Section 4.5 Financing. Section 6.2(e) of the Disclosure Schedule
sets forth true and complete copies of written documentation from third parties
which provides for financing in amounts sufficient to consummate the
transactions contemplated hereby as contemplated by Section 6.2(e) hereof. The
commitment fees set forth in such financing documents which are due and payable
have been paid.
Section 4.6 Pennsylvania Law. ICS was not immediately prior to the
execution of this Agreement, an "interested stockholder" within the meaning of
Sections 2538 and 2553 of the BCL.
Section 4.7 Beneficial Ownership of Shares. As of the date hereof,
ICS does not "beneficially own" (as defined in Rule 13d-3 under the Exchange
Act) more than 1% of the outstanding shares of Common Shares or any securities
convertible into, or exchangeable for, Common Shares. ICS will not buy
additional Common Shares between the date of this Agreement and the Closing.
Section 4.8 Brokers. Except as set forth on Schedule 4.8 of the
Disclosure Schedule, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of ICS, that is or will be payable by the Company or any of its
Subsidiaries. No fee is due to any such person if the transactions contemplated
hereby are not consummated.
Section 4.9 Formation of ICS; No Prior Activities. ICS was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement. As of the date hereof and the Effective Time, except for (a)
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement, and (b) this
Agreement and any other agreements or arrangements contemplated by this
Agreement or in furtherance of the transactions contemplated hereby, ICS has not
incurred, directly or indirectly, through any subsidiary or affiliate, any
obligations or liabilities, owned any assets or engaged in any business
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any Person.
Section 4.10 Litigation. There is no suit, claim, action,
proceeding or investigation pending or, to the knowledge of ICS, threatened, at
law or in equity, or before any Governmental Entity, against ICS, which could
prevent or materially delay the consummation of the transactions contemplated by
this Agreement.
ARTICLE 5
COVENANTS
Section 5.1 Conduct of Business of the Company. Except as
contemplated by this Agreement or as expressly agreed to in writing by ICS,
during the period from the date of this Agreement to the Effective Time, the
Company will, and will cause each of its Subsidiaries to, conduct its operations
according to its ordinary and usual course of business and consistent with past
-23-
practice and use its and their respective commercially reasonable efforts to
preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, advertisers,
distributors and others having business dealings with them and to preserve
goodwill. Without limiting the generality of the foregoing, and except as (x)
otherwise expressly provided in this Agreement, (y) required by law, or (z) set
forth on Section 5.1 of the Disclosure Schedule, prior to the Effective Time,
the Company will not, and will cause its Subsidiaries not to, without the
consent of ICS (which consent shall not be unreasonably withheld):
(a) except with respect to annual bonuses made in the
ordinary course of business consistent with past practice, adopt or amend
in any material respect any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, pension, retirement,
employment or other employee benefit agreement, trust, plan or other
arrangement for the benefit or welfare of any director, officer or employee
of the Company or any of its Subsidiaries or increase in any manner the
compensation or fringe benefits of any director, officer or employee of the
Company or any of its Subsidiaries or pay any benefit not required by any
existing agreement or place any assets in any trust for the benefit of any
director, officer or employee of the Company or any of its Subsidiaries (in
each case, except with respect to employees and directors in the ordinary
course of business consistent with past practice);
(b) incur any indebtedness for borrowed money;
(c) expend funds for capital expenditures in excess of
$1,000,000;
(d) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets
other than immaterial properties or assets (or immaterial portions of
properties or assets), except in the ordinary course of business consistent
with past practice;
(e) (x) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock (except (A)
for dividends paid by Subsidiaries to the Company with respect to capital
stock), (y) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock or (z) purchase, redeem
or otherwise acquire any shares of capital stock of the Company or any of
its Subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(f) authorize for issuance, issue, deliver, sell or agree or
commit to issue, sell, grant or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise), pledge, dispose of or otherwise encumber any shares
of its capital stock or the capital stock of any of its Subsidiaries, any
other voting securities or any securities convertible into, or any rights,
warrants, calls, commitments or options to acquire, any such shares, voting
securities or convertible
-24-
securities or any other securities or equity equivalents (including without
limitation stock appreciation rights) (other than issuances upon exercise
of Options or pursuant to the Stock Plans);
(g) amend its Articles of Incorporation, as amended, By-Laws
or equivalent organizational documents or alter through merger,
liquidation, reorganization, restructuring or in any other fashion the
corporate structure or ownership of any Subsidiary of the Company;
(h) make or agree to make any acquisition of assets which is
material to the Company and its Subsidiaries, taken as a whole, except for
(x) purchases of inventory in the ordinary course of business or (y)
pursuant to purchase orders entered into in the ordinary course of business
which do not call for payments in excess of $2,500,000 per annum;
(i) settle or compromise any shareholder derivative suits
arising out of the transactions contemplated hereby or any other litigation
(whether or not commenced prior to the date of this Agreement) or settle,
pay or compromise any claims not required to be paid; provided, however,
that the Company may settle, pay and compromise claims in an aggregate
amount not in excess of $1,000,000 in consultation and cooperation with
ICS; or
(j) take any action which is not set forth on Section 3.13
of the Disclosure Schedule, if taken after June 27, 1998, but prior to the
date hereof, that would have caused the representations and warranties
contained in Section 3.13 hereof to be untrue.
Section 5.2 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, agents or other
representatives (including, without limitation, any investment banker, attorney
or accountant retained by the Company or its Subsidiaries) (the "Company
Representatives") to, give ICS and their respective officers, employees, agents
or other representatives (including, without limitation, any investment banker,
attorney or accountant retained by ICS) (the "ICS Representatives") and
representatives of financing sources identified by ICS reasonable access, upon
reasonable notice and during normal business hours, to the 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
ICS and the ICS Representatives and representatives of financing sources
identified by ICS with such financial and operating data and such other
information with respect to the business and operations of the Company and its
Subsidiaries as ICS and representatives of financing sources identified by ICS
may from time to time reasonably request. ICS agrees that any information
furnished pursuant to this Section 5.2 will be subject to the provisions of the
letter agreement dated May 15, 1998, between ▇▇▇▇ Capital, Inc. and the Company
(the "Confidentiality Agreement").
-25-
Section 5.3 Efforts.
(a) Each of the Company and ICS shall, and the Company shall
cause each of its Subsidiaries to, use commercially reasonable efforts to take
all action to do all things necessary to consummate and make effective the
transactions contemplated by this Agreement (including the satisfaction, but not
waiver, of the closing conditions set forth in Article 6). In furtherance and
not in limitation of the foregoing, each of the Company and ICS shall, and the
Company shall cause each of its Subsidiaries to, make all necessary filings with
Governmental Entities as promptly as practicable in order to facilitate prompt
consummation of the transactions contemplated by this Agreement. In addition,
each of ICS and the Company will use its commercially reasonable efforts
(including, without limitation, payment of any required fees) and will cooperate
fully with each other to (i) comply as promptly as practicable with all
governmental requirements applicable to the transactions contemplated by this
Agreement, including the making of all filings necessary or proper under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, but not limited to, the
Proxy Statement or other foreign filings and any amendments to any thereof and
(ii) obtain promptly all consents, waivers, approvals, authorizations or permits
of, or registrations or filings with or notifications to (any of the foregoing
being a "Consent"), any Governmental Entity necessary for the consummation of
the transactions contemplated by this Agreement (except for such Consents the
failure of which to obtain would not prevent or materially delay the
consummation of the Merger). Subject to the Confidentiality Agreement, ICS and
the Company shall furnish to one and other such necessary information and
reasonable assistance as ICS or the Company may reasonably request in connection
with the foregoing.
(b) Without limiting Section 5.3(a) hereof, ICS and the Company
shall each (i) promptly make or cause to be made the filings required of such
party under the HSR Act with respect to the Merger; (ii) use its best efforts to
avoid the entry of, or to have vacated or terminated, any decree, order, or
judgment that would restrain, prevent or delay the consummation of the Merger,
including without limitation defending through litigation on the merits any
claim asserted in any court by any third party; and (iii) take any and all steps
which, in such party's judgment, are commercially reasonable to avoid or
eliminate each and every impediment under any antitrust, competition, or trade
regulation law that may be asserted by any Governmental Entity with respect to
the Merger so as to enable con summation thereof to occur as soon as reasonably
possible. Each party hereto shall promptly notify the other parties of any
communication to that party from any Governmental Entity and permit the other
parties to review in advance any proposed communication to any Governmental
Entity. ICS and the Company shall not (and shall cause their respective
affiliates and representatives not to) agree to participate in any meeting with
any Governmental Entity in respect of any filings, investigation or other
inquiry unless it consults with the other party in advance and, to the extent
permitted by such Governmental Entity, gives the other party the opportunity to
attend and participate thereat. Subject to the Confidentiality Agreement, each
of the parties hereto will coordinate and cooperate fully with the other parties
hereto in exchanging such information and providing such assistance as such
other parties may reasonably request in connection with the foregoing and in
seeking early termination of any applicable waiting periods under the HSR Act or
in connection with other Consents. Each of the Company and ICS agrees to respond
promptly to and comply fully with any request for additional information or
-26-
documents under the HSR Act. Subject to the Confidentiality Agreement, the
Company will provide ICS, and ICS will provide the Company, with copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between such party or any of its representatives, on the one
hand, and any Governmental Entity or members of its staff, on the other hand,
with respect to this Agreement and the transactions contemplated hereby.
(c) ICS shall use commercially reasonable efforts to cause the
financing necessary for satisfaction of the condition in Section 6.2(e) hereof
to be obtained on the terms set forth in the commitment letters attached to
Section 6.2(e) of the Disclosure Schedule; provided, however, that ICS shall be
entitled to (i) enter into commitments for equity and debt financing with other
nationally recognized financial institutions, which commitments will have
substantially the same terms as those set forth in the commitment letters and
which commitments may be substituted for such commitment letters and (ii) modify
the capital structure set forth in such commitment letters so long as (A) the
total committed common equity equals at least $50 million (including Rollover
Shares), (B) the Merger Consideration paid to all shareholders of the Company is
no less than otherwise would have been paid in accordance with this Agreement
and (C) such modified financing is no less certain than that set forth in such
commitment letter.
(d) The Company agrees to provide, and will cause its
Subsidiaries and its and their respective officers, employees and advisors to
provide, all reasonable cooperation in connection with the arrangement of any
financing in respect of the transactions contemplated by this Agreement,
including, without limitation, (i) participation in meetings, due diligence
sessions and road shows, (ii) assisting the preparation of offering memoranda,
private placement memoranda, prospectuses and similar documents, and (iii) the
execution and delivery of any commitment letters, underwriting or placement
agreements, pledge and security documents, other definitive financing documents,
or other requested certificates or documents as may be requested by ICS;
provided that the form and substance of any of the material documents referred
to in clause (ii), and the terms and conditions of any of the material
agreements and other documents referred to in clause (iii), shall be
substantially consistent with the terms and conditions of the financing required
to satisfy the condition set forth in Section 6.2(e) hereof; and provided,
further, that no such person or entity will be required to incur any costs or
expenses in connection with this Section 5.3(d) or to execute or deliver any of
the agreements or other documents referred to in clause (iii) unless ▇▇▇▇
Capital, Inc. and Bear, ▇▇▇▇▇▇▇ & Co., Inc. shall have agreed to indemnify such
person or entity against all costs and expenses arising in connection with this
Section 5.3(d) and any liability arising under such agreements or other
documents in the event the transactions contemplated by this Agreement are not
consummated.
Section 5.4 Title Insurance and Surveys. In the event that the
Company has not consummated the transactions related to the sale/leaseback of
the Valley Forge facility by the Closing, the Company shall use its reasonable
efforts to assist ICS in obtaining: (1) a title insurance policy of the Valley
Forge facility together with all affidavits, undertakings, endorsements and
other title clearance documents necessary to issue such title policy to ICS and
its lender and (2) an ALTA Survey certified to ICS, its lender and any other
party reasonably requested by ICS.
-27-
Section 5.5 Public Announcements. The Company, on the one hand,
and ICS, on the other hand, agree to consult promptly with each other prior to
issuing any material press release or announcement or otherwise making any
material public statement with respect to the Merger and the other transactions
contemplated hereby, agree to provide to the other party for review a copy of
any such press release or statement, and shall 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
or the Nasdaq Stock Market, Inc.
Section 5.6 Employee Benefit Arrangements.
(a) The Company will honor, and, from and after the Effective
Time, the Surviving Corporation will 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.
(b) The Company agrees that for a period of one year following
the Effective Time, the Surviving Corporation shall continue the (i)
compensation (including bonus and incentive awards) programs and plans and (ii)
employee benefit and welfare plans, programs, contracts, agreements and policies
(including insurance and pension plans), fringe benefits and vacation policies
which are currently provided by the Company; provided that notwithstanding
anything in this Agreement to the contrary the Surviving Corporation shall not
be required to maintain any individual plan or program so long as the benefit
plan and agreements maintained by the Surviving Corporation are, in the
aggregate, not materially less favorable than those provided by the Company
immediately prior to the date of this Agreement; and, provided, further, that
nothing in this sentence shall be deemed to limit or otherwise affect the right
of the Surviving Corporation to terminate employment or change the place of
work, responsibilities, status or designation of any employee or group of
employees as the Surviving Corporation may determine in the exercise of its
business judgment and in compliance with applicable laws.
Section 5.7 Indemnification; Directors' and Officers' Insurance.
(a) The Company and, from and after the Effective Time, the
Surviving Corporation, shall indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of the Company and its
Subsidiaries (the "Indemnified Parties") against all judgments, fines, losses,
claims, damages, costs or expenses (including reasonable attorneys' fees) or
liabilities arising out of or related to matters, actions or omissions or
alleged actions or omissions occurring at or prior to the Effective Time whether
asserted or claimed prior to or after the Effective Time (i) to the full extent
permitted by Pennsylvania law or, if the protections afforded thereby to an
Indemnified Person are greater, (ii) to the same extent and on the same terms
and conditions (including with respect to advancement of expenses) provided for
in the Company's Articles of Incorporation, as amended, and By-Laws and
agreements in effect at the date hereof (to the extent consistent with
applicable law), which provisions will survive the Merger and continue in full
force and effect after the Effective Time. Without limiting the foregoing, (i)
ICS shall, and shall cause the Surviving Corporation to, periodically advance
expenses (including attorney's fees) as incurred by an Indemnified Person with
respect to the foregoing to the full extent permitted under applicable law,
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and (ii) any determination required to be made with respect to whether an
Indemnified Party shall be entitled to indemnification shall, if requested by
such Indemnified Party, be made by independent legal counsel selected by the
Surviving Corporation and reasonably satisfactory to such Indemnified Party.
(b) ICS agrees that the Company, and, from and after the
Effective Time, the Surviving Corporation, shall cause to be maintained in
effect for not less than six years from the Effective Time the current policies
of the directors' and officers' liability insurance maintained by the Company;
provided that the Surviving Corporation may substitute therefor other policies
of at least the same coverage amounts and which contain terms and conditions not
less advantageous to the beneficiaries of the current policies and, provided
further, that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring on or prior to the Effective Time;
and provided further, that the Surviving Corporation shall not be required to
pay an annual premium in excess of 200% of the last annual premium paid by the
Company prior to the date hereof and if the Surviving Corporation is unable to
obtain the insurance required by this Section 5.7(b) it shall obtain as much
comparable insurance as possible for an annual premium equal to such maximum
amount.
(c) This Section 5.7 shall survive the consummation of the Merger
at the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of ICS and the Surviving Corporation, and shall be enforceable by the
Indemnified Parties.
Section 5.8 Notification of Certain Matters. ICS and the Company
shall promptly notify each other of (i) the occurrence or non-occurrence of any
fact or event which would be reasonably likely (A) 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 or (B)
to cause any covenant, condition or agreement under this Agreement not to be
complied with or satisfied and (ii) any failure of the Company, or ICS, 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 or the
conditions to the obligations of any party hereunder. Each of the Company and
ICS 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 5.9 State Takeover Laws. The Company shall, upon the
request of ICS, take all reasonable steps to assist in any challenge by ICS to
the validity or applicability to the transactions contemplated by this
Agreement, including the Merger, of any state takeover law.
Section 5.10 No Solicitation.
(a) From and after the date hereof until the termination of this
Agreement, the Company and its affiliates shall not, and shall instruct the
Company Representatives not to:
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(i) directly or indirectly solicit, initiate, or encourage
(including by way of furnishing nonpublic information or assistance), or
take any other action to facilitate, any inquiries or proposals from any
person that constitute, or may reasonably be expected to lead to, an
acquisition, purchase, merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction
involving any material portion of the assets or any securities of, any
merger, consolidation or business combination with, or any public
announcement of a proposal, plan, or intention to do any of the foregoing
by, the Company or any of its Subsidiaries (such transactions being
referred to herein as "Acquisition Proposals"); except that none of the
foregoing restrictions shall apply with respect to persons to whom the
Company or a Company Representative has already provided, within the three
months prior to the date of this Agreement, non-public written information
about the Company to facilitate an Acquisition Proposal;
(ii) enter into, maintain, or continue discussions or
negotiations with any person in furtherance of such inquiries or to obtain
an Acquisition Proposal; except that none of the foregoing restrictions
shall apply with respect to persons to whom the Company or a Company
Representative has already provided, within the three months prior to the
date of this Agreement, non-public written information about the Company to
facilitate an Acquisition Proposal;
(iii) agree to or endorse any Acquisition Proposal;
(iv) enter into any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the Merger or any
other transaction contemplated by this Agreement, or
(v) authorize or permit the Company Representatives to
take any such action except to the extent that such action may be taken
under clause (i) or (ii) of this Section 5.10(a);
provided, however, that prior to the approval of the Merger by
the shareholders of the Company nothing in this Agreement shall prohibit the
Company Board or a special committee of the Company Board (the "Special
Committee") from (A) furnishing information to, and engaging in discussions or
negotiations with, any person or entity that makes an unsolicited written, bona
fide proposal to acquire the Company and/or its Subsidiaries pursuant to a
merger, consolidation, share exchange, tender offer or other similar
transaction, but only to the extent that the Company Board or the Special
Committee determines in good faith by a majority vote, based upon advice from
independent legal counsel (who may be the Company's regularly engaged outside
legal counsel), a description of which is provided to ICS, that failure to
furnish such information or engage in such discussions or negotiations with such
person or entity would be reasonably likely to constitute a breach of the
fiduciary duties to shareholders of the Company Board or the Special Committee
under applicable law (assuming for such purpose that fiduciary duties are owed
only to shareholders), and such a proposal is, in the opinion of the Investment
Banks more favorable to the Company and the shareholders of the Company from a
financial point of view then than the transactions contemplated by this
Agreement (including any adjustment to the terms and
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conditions of such transactions proposed by ICS in response to such Acquisition
Proposal) (any such Acquisition Proposal satisfying such criteria, a "Higher
Offer"), provided that, prior to accepting the Higher Offer, the Company Board
notifies ICS of its intentions and obtains an executed confidentiality agreement
from the appropriate parties substantially similar to the Confidentiality
Agreement, (B) failing to make or withdrawing or modifying its recommendation
referred to in Section 5.13 hereof if the Company Board, after consultation with
independent legal counsel (who may be the Company's regularly engaged outside
legal counsel), determines in good faith that such action is consistent with the
Company Board's fiduciary duties to shareholders under applicable law, provided
that ICS is given five days' prior written notice of its intentions to do so,
and (C) disclosing to the Company's shareholders a position contemplated by
Rules 14d-9 and 14e-2 promulgated under the Exchange Act with respect to any
tender offer, or taking any other legally required action (including, without
limitation, the making of public disclosure as may be necessary or advisable
under applicable securities laws); and, provided further, that the Company
Board's or the Special Committee's exercise of its rights under clause (A), (B)
or (C) above shall not constitute a breach by the Company of this Agreement.
(b) The Company will promptly notify ICS of the receipt of any
Acquisition Proposal, the terms and conditions of such proposal and, if not
prohibited by the terms of such proposal, the identity of the person making it.
The Company will have no obligation to notify ICS of any change to or
modification of such Acquisition Proposal or the terms and conditions thereof,
but shall provide ICS with a reasonable opportunity to increase the Merger
Consideration in response to such Acquisition Proposal.
Section 5.11 Interim Liabilities. The Surviving Corporation will
pay, consistent with past practice, all liabilities, including all accounts
payable and other expenses, which arise in the ordinary course of business prior
to the Closing Date.
Section 5.12 Reports. The Company shall provide ICS with monthly
financial statements, broken out by business segment, no later than the fifth
business day following the end of each calendar month following the date of this
Agreement until the Effective Date.
Section 5.13 Shareholders' Meeting.
(a) The Company, acting through the Company Board, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "Special Meeting") as soon as practicable
following the execution of this Agreement 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 reasonable efforts (A) to
obtain and furnish the information required to be included by the SEC in a
definitive proxy statement (the "Proxy Statement") and, after consultation
with ICS, to respond promptly to any comments made by the SEC with respect
to the preliminary proxy statement and cause the Proxy Statement to
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be mailed to its shareholders and (B) to obtain the necessary approvals of
the Merger and this Agreement by its shareholders; and
(iii) subject to the fiduciary duties of the Company Board,
include in the Proxy Statement the recommendation of the Company Board that
shareholders of the Company vote in favor of the approval of this
Agreement.
(b) The Company covenants that the Proxy Statement 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 shareholders, 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
ICS in writing for inclusion in the Proxy Statement. Each of the Company, on the
one hand, and ICS, on the other hand, agree promptly to correct any information
provided by either of them for use in the Proxy Statement 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 Proxy Statement 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 laws.
Section 5.14 Conveyance Taxes. ICS and the Company shall cooperate
in the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value-added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees or any similar taxes which become payable
by the Company or any of its Subsidiaries in connection with the transactions
contemplated by this Agreement that are required or permitted to be filed on or
before the Effective Time.
Section 5.15 Delisting. Each of the parties agrees to cooperate
with each other in taking, or causing to be taken, all actions necessary to
delist the Common Shares from NASDAQ and to terminate registration under the
Exchange Act, provided that such delisting and termination shall not be
effective until after the Effective Time of the Merger.
Section 5.16 Solvency Letters. The Company Board or Special
Committee shall engage an independent appraisal firm to deliver a letter
addressed to the Company Board, as to the solvency of the Company and its
Subsidiaries on a consolidated basis after giving effect to the transactions
contemplated by this Agreement, including all financings contemplated hereby.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1 Conditions. The respective obligations of ICS and the
Company to consummate the Merger are subject to the satisfaction, at or before
the Effective Time, of each of the following conditions:
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(a) Shareholder Approval. The shareholders of the Company shall
have duly approved the transactions contemplated by this Agreement (the
"Shareholder Approval"), if required by applicable law.
(b) Solvency Letters. The Company shall have received a solvency
letter, in form and substance and from an independent evaluation firm reasonably
satisfactory to it, as to the solvency of the Company and its Subsidiaries on a
consolidated basis after giving effect to the transactions contemplated by this
Agreement, including all financings contemplated hereby.
(c) Orders and Injunctions. No order shall have been entered in
any action or proceeding before any United States federal or state court or
governmental agency or other United States regulatory or administrative agency
or commission (an "Order"), and no preliminary or permanent injunction by a
United States court of competent jurisdiction shall have been issued and remain
in effect (an "Injunction"), which, in either case, would have the effect of (i)
preventing consummation of the Merger, or (ii) imposing material limitations on
the ability of ICS effectively to acquire or hold the business of the Company
and its Subsidiaries taken as a whole; provided, however, that in order to
invoke this condition, ICS shall have used in its judgment, its commercially
reasonable efforts to prevent such Order or Injunction or ameliorate the effects
thereof.
(d) Illegality. There shall not have been any United States
federal or state statute, rule or regulation enacted or promulgated after the
date of this Agreement that could in the reasonable judgment of ICS result in
any of the material adverse consequences referred to in paragraph (c) above.
(e) HSR Act. Any waiting period (and any extension thereof) under
the HSR Act applicable to the Merger shall have expired or terminated.
Section 6.2 Conditions to Obligations of ICS. The obligations of
ICS to effect the Merger are further subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in the aggregate in all material respects, as of the date of this Agreement and
as of the Closing Date as though made on and as of the Closing Date. For
purposes of determining whether any representation or warranty is true and
correct, any requirement that a fact or event be or not be material or have or
not have a Material Adverse Effect on the Company (a "Materiality Qualifier")
shall be ignored. The condition in the first sentence of this Section 6.2(a)
shall be deemed satisfied only if the failure of the representations and
warranties of the Company to be true and correct in the aggregate (determined
without giving effect to any Materiality Qualifier) does not constitute a
Material Adverse Effect on the Company. ICS shall have received a certificate
signed on behalf of the Company by the Chairman of the Board and the chief
financial officer of the Company to the effect set forth in this paragraph.
(b) Performance of Obligations of the Company. The Company shall
have performed the obligations required to be performed by it under this
Agreement in all material respects at or prior to the Closing Date, except for
such failures to perform as have not had or would
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not, individually or in the aggregate, have a Material Adverse Effect with
respect to the Company or materially adversely affect the ability of the Company
to consummate the transactions contemplated hereby.
(c) Consents, Etc. ICS shall have received evidence, in form and
substance reasonably satisfactory to it, that all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties set forth in Section 3.3 of the Disclosure Schedule
shall have been obtained.
(d) No Litigation. There shall not be pending by any Governmental
Entity any suit, action or proceeding (or by any other person any suit, action
or proceeding which has a reasonable likelihood of success), (i) challenging or
seeking to restrain or prohibit the consummation of the Merger or any of the
other transactions contemplated by this Agreement or seeking to obtain from ICS
or any of their affiliates any damages that are material to any such party (ii)
seeking to prohibit or limit the ownership or operation by the Company or any of
its Subsidiaries of any material portion of the business or assets of the
Company or any of its Subsidiaries, to dispose of or hold separate any material
portion of the business or assets of the Company or any of its Subsidiaries, as
a result of the Merger or any of the other transactions contemplated by this
Agreement or (iii) seeking to impose limitations on the ability of ICS (or any
shareholder of ICS), to acquire or hold, or exercise full rights of ownership
of, any Common Shares, including, without limitation, the right to vote Common
Shares on all matters properly presented to the shareholders of the Company.
(e) Financing. The Company shall have received the proceeds of
financing pursuant to the commitment letters set forth on Section 6.2(e) of the
Disclosure Schedule on terms and conditions set forth therein (or, as modified
in accordance with Section 5.3(c) hereof) and on such other terms and conditions
consistent therewith, or involving such other financing sources, as are
reasonably satisfactory to ICS in its sole discretion, in amounts sufficient to
consummate the transactions contemplated by this Agreement, including, without
limitation: (i) to pay, with respect to all Common Shares in the Merger, the
Merger Consideration pursuant to Section 2.1(b) hereof; (ii) to refinance the
outstanding indebtedness of the Company; (iii) to pay any fees and expenses in
connection with the transactions contemplated by this Agreement or the financing
thereof; and (iv) to provide for the working capital needs of the Company
following the Merger, including, without limitation, if applicable, letters of
credit.
Section 6.3 Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
following conditions:
(a) Representations and Warranties. The representations and
warranties of ICS set forth in this Agreement shall be true and correct in all
respects, in each case as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date. The Company shall have
received certificates signed on behalf of ICS, respectively, by an authorized
officer of ICS, respectively, to the effect set forth in this paragraph.
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(b) Performance of Obligations of ICS. ICS shall have performed
the obligations required to be performed by it under this Agreement at or prior
to the Closing Date (except for such failures to perform as have not had or
could not reasonably be expected, either individually or in the aggregate, to
have a Material Adverse Effect with respect to ICS or adversely affect the
ability of ICS to consummate the transactions herein contemplated or perform its
obligations hereunder).
ARTICLE 7
TERMINATION; AMENDMENTS; WAIVER
Section 7.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the shareholders of the Company:
(a) by the mutual written consent of ICS and the Company, by
action of their respective Boards of Directors;
(b) by ICS or the Company if the Merger shall not have been
consummated on or before May 31, 1999; provided, however, that neither ICS
nor the Company may terminate this Agreement pursuant to this Section
7.1(b) if such party shall have materially breached this Agreement;
(c) by ICS or the Company if any court of competent jurisdiction
in the United States or other United States Governmental Entity has issued
an order, decree or ruling or taken any other action restraining, enjoining
or otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and nonappealable; provided, however, that
the party seeking to terminate this Agreement shall have used its
commercially reasonable efforts to remove or lift such order, decree,
ruling or other action;
(d) by the Company if, prior to the Effective Time, any person
has made a bona fide proposal relating to an Acquisition Transaction, or
has commenced a tender or exchange offer for the Common Shares, and the
Company Board or Special Committee determines in good faith (i) after
consultation with its financial advisors, that such transaction constitutes
a Higher Offer and (ii) after consultation with counsel, that failure to
approve such proposal and terminate this Agreement could reasonably be
expected to result in a breach of fiduciary duties to shareholders
(assuming for such purpose that fiduciary duties are owed only to
shareholders), as they would exist in the absence of any limitations in
this Agreement, of the Company Board to the Company's shareholders;
provided, however, that, notwithstanding anything in this Agreement to the
contrary, the termination of this Agreement by the Company in compliance
with this Section 7.1(d) shall not be deemed to violate any other
obligations of the Company under this Agreement, and, provided further,
that the Company shall have notified ICS of its intent to terminate prior
to the effective date of such termination;
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(e) by ICS, if the Company Board shall have (i) failed to
recommend to the shareholders of the Company that they give the Shareholder
Approval, (ii) withdrawn or modified in a manner adverse to ICS its
approval or recommendation of this Agreement or the Merger, (iii) shall
have approved or recommended an Acquisition Transaction, (iv) shall have
resolved to effect any of the foregoing or (v) shall have otherwise taken
steps to materially impede the Shareholder Approval; or
(f) by either ICS or the Company, if the Shareholder Approval
shall not have been obtained by reason of the failure to obtain the
required vote upon a vote held at a duly held meeting of shareholders or at
any adjournment or postponement thereof.
Section 7.2 Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 7.1 hereof, this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
or its directors, officers or shareholders, other than the provisions of the
last sentence of Section 5.2 hereof and the provisions of this Section 7.2 and
Section 7.3 hereof, which shall survive any such termination. Nothing contained
in this Section 7.2 shall relieve any party from liability for any breach of any
covenant of this Agreement or any breach of warranty or misrepresentation.
Section 7.3 Fees and Expenses.
(a) In the event that this Agreement is terminated for any reason
other than (i) on account of any of the conditions set forth in Section 6.1(c),
6.1(d), 6.1(e), 6.2(d), 6.3(a) or 6.3(b) hereof not being satisfied, (ii)
primarily as a result of material adverse changes in the economy or industry
occurring after the date hereof, or (iii) solely on account of ICS's failure to
obtain the financing described in Section 6.2(e) hereof, the Company shall
promptly reimburse ICS for all out-of-pocket expenses and fees (including,
without limitation, fees payable to all banks, investment banking firms and
other financial institutions, and their respective agents and counsel, and all
out-of-pocket fees and expenses, including bank commitment fees and expenses,
attorneys' and accountants' fees, and costs associated with financial printers,
experts and consultants to ICS and its affiliates, collectively referred to as
"Costs"), whether incurred prior to, on or after the date hereof, in connection
with the Merger and the consummation of all transactions contemplated by this
Agreement, and the financing thereof up to $3 million. Except as otherwise
specifically provided for herein, whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
(b) In the event that this Agreement is terminated (i) pursuant
to Sections 7.1(d) or 7.1(f) hereof or by ICS pursuant to Section 7.1(b) hereof
based upon a material breach of this Agreement by the Company or by ICS pursuant
to Section 7.1(e) hereof, and (ii) within 12 months after the date of
termination the Company enters into a legally binding acquisition agreement for
a Business Combination (as defined herein) or a Business Combination is
consummated, the Company will, within three business days following the
consummation of such a Business Combination, pay to ICS in cash by wire transfer
in immediately available funds to an account designated by ICS a payment in an
amount equal to $6 million (the "Termination Fee"),
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provided that in no event shall more than one Termination Fee be payable by the
Company. For purposes of this Section 7.3, the term "Business Combination" means
(i) a merger, consolidation, share exchange, business combination or similar
transaction involving the Company as a result of which the shareholders of the
Company prior to such transaction in the aggregate cease to own at least a
majority of the voting securities of the entity surviving or resulting from such
transaction (or ultimate parent entity thereof), (ii) a sale, lease, exchange,
transfer or other disposition of more than 50% of the assets of the Company and
its Subsidiaries, taken as a whole, in a single transaction or a series of
related transactions, or (iii) the acquisition, by a person (other than ICS or
any affiliate thereof) or group (as such term is defined under Section 13(d) of
the Exchange Act and the rules and regulation thereunder) of beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of more than 25% of
the Common Shares whether by tender or exchange offer or otherwise.
(c) 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.
Section 7.4 Amendment. This Agreement may be amended by the
Company and ICS at any time before or after any approval of this Agreement by
the shareholders of the Company but, after any such approval, no amendment shall
be made which decreases the Merger Consideration or which the Company Board or
Special Committee determines adversely affects the rights of the Company's
shareholders hereunder without the approval of such shareholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of all the parties.
Section 7.5 Extension; Waiver. At any time prior to the Effective
Time, ICS, 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 8
MISCELLANEOUS
Section 8.1 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time.
Section 8.2 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the instruments
referred to herein) and the Confidentiality Agreement 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.
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(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 ICS may assign its rights, interest and obligations to any
affiliate or Subsidiary of ICS without the consent of the Company, provided that
no such assignment shall relieve ICS of any liability for any breach by 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.
Section 8.3 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 8.4 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 telecopier to
the respective parties as follows:
If to ICS: ▇▇▇▇ Capital, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company: Integrated Circuit Systems, Inc.
23435 Boulevard of the Generals
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman
Telecopier:
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
3000 Two ▇▇▇▇▇ Square
▇▇/▇▇/ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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and: ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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.
Section 8.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
Section 8.6 Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
Section 8.7 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 8.8 Parties in Interest. Except with respect to Sections
2.2, 5.5 and 5.6 hereof (which are 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 8.9 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; and
(b) "Business" shall mean the businesses of the Company and its
Subsidiaries as currently conducted.
(c) "Intellectual Property" means (i) all patents, patent
applications and patent disclosures; all inventions (whether or not patentable
and whether or not reduced to practice); (ii) all trademarks, service marks,
trade names, logos, slogans, corporate names and Internet domain names, and all
the goodwill associated with each of the foregoing; (iii) all mask works and
-39-
registrations and applications for registry thereof; (iv) all registered and
unregistered statutory and common law copyrights; (v) all registrations,
applications and renewals for any of the foregoing; and (vi) all trade secrets,
confidential information, ideas, formulae, compositions, know-how, manufacturing
and production processes and techniques, research information, drawings,
specifications, designs, plans, improvements, proposals, technical and computer
data, documentation and software, financial business and marketing plans,
customer and supplier lists and related information and marketing materials and
all other proprietary rights.
(d) the term "Person" or "person" shall include individuals,
corporations, partnerships, trusts, other entities and groups (which term shall
include a "group" as such term is defined in Section 13(d)(3) of the Exchange
Act).
(e) "Knowledge of the Company" or words of similar import means
the actual knowledge of the following members of the Company's senior management
(including members of management holding Rollover Shares): ▇▇▇▇ ▇. ▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
Section 8.10 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.
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[SIGNATURE PAGE FOLLOWS]
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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.
INTEGRATED CIRCUIT SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman of the Board
ICS MERGER CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
-41-
AMENDMENT No.1 TO AGREEMENT AND PLAN OF MERGER
----------------------------------------------
AMENDMENT No. 1 (this "Amendment"), dated February 16, 1999, by and
among Integrated Circuit Systems, Inc. , a Pennsylvania corporation (the
"Company"), and ICS Merger Corp., a Pennsylvania corporation ("ICS"). All
capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Merger Agreement (as defined
below).
W I T N E S S E T H :
-------------------
WHEREAS, the Company and ICS are parties to a certain Agreement and
Plan of Merger dated January 20, 1999 (the "Merger Agreement"); and
WHEREAS, the parties hereto wish to amend the Merger Agreement as
herein provided;
NOW, THEREFORE, it is agreed:
1. Section 1.1 of the Merger Agreement is hereby amended to insert
in the first sentence the words "(including Section 1906 thereof, which shall
be applicable to the transactions contemplated hereby,)" after the words "this
Agreement and the BCL" and before the words "at the Effective Time".
2. Section 2.1(b)(ii) of the Merger Agreement is hereby amended to
delete the date "February 10, 1999" from the end of that Section and to insert
the date "March 3, 1999" in lieu thereof.
3. Section 2.2 of the Merger Agreement is hereby deleted in its
entirety and the following new Section 2.2 shall be inserted in lieu thereof.
"Section 2.2 Options; Stock Plans. Immediately prior to the
Effective Time, each holder of a then-outstanding employee stock
option, whether or not fully exercisable, to purchase Common
Shares (an "Option") granted under the Company's 1992 Stock
Option Plan and 1997 Equity Compensation Plan (the "Stock Plans")
and all other outstanding options, in each case as reflected in
Section 3.2 of the Disclosure Schedule, will be entitled to
receive in settlement of such Option (a) a cash payment from the
Company equal to the product of (i) the total number of Common
Shares previously subject to such Option and (ii) the excess of
the Merger Consideration over the exercise price per Common Share
subject to such
Option, subject to any required withholding of taxes (the
"Option Spread"), (b) new stock options ("New Options") in the
Company pursuant to new stock option agreements between the
Company, ICS and certain members of Management or (c) some
combination of (a) and (b) above. The Company will, upon the
request of ICS, use reasonable efforts to obtain the written
acknowledgment of each employee holding an Option that the
payment of the amount of cash or New Options referred to above
will satisfy in full the Company's obligation to such employee
pursuant to such Option and take such other action as is
necessary to effect the provisions of this Section 2.2. The
amounts payable pursuant to this Section 2.2 shall be paid as
soon as reasonably practicable following the Closing Date and
shall be subject to and made net of all applicable withholding
taxes. The Company will solicit from each Retained Employee, as
such term is defined in that certain asset purchase agreement
among 3COM Corporation, the Company and ICS Technologies, Inc.,
an agreement by each such employee who owns an Option (as
defined in such agreement) to accept, in lieu of stock upon the
exercise of the Option, the amount of cash such employee would
have received if they received the cash payments described in
this Section 2.2 (the "Option Payment") which shall be a
condition to any agreement by the Company to pay such Option
Payment in respect of such Options."
4. Section 3.2 of the Merger Agreement is hereby amended to delete
the second full sentence and the following new sentence shall be inserted in
lieu thereof.
"As of the close of business on January 19, 1999, 12,106,225
Common Shares were issued and outstanding, all of which are
entitled to vote on this Agreement."
5. Section 3.2 of the Merger Agreement is hereby amended to delete
the fourth full sentence and the following new sentence shall be inserted in
lieu thereof.
"As of January 19, 1999, except for (i) 2,356,709 Common Shares
reserved for issuance pursuant to outstanding Options, there are
no existing options, warrants, calls, subscriptions, or other
rights, or other agreements or commitments, obligating the
Company to issue, transfer or sell any shares of capital stock of
the Company or any of its Subsidiaries."
6. Section 3.25 of the Merger Agreement is hereby amended to delete
the first clause that reads "Except as set forth in Section 3.13 of the
Disclosure Schedule," and the following new clause shall be inserted in lieu
thereof.
"Except with respect to any matter set forth in Section 3.7, 3.13
or 3.22(a) of the Disclosure Schedule,"
-2-
7. Section 5.2 of the Merger Agreement is hereby deleted in its
entirety and the following new Section 5.2 shall be inserted in lieu thereof.
"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, agents or other
representatives (including, without limitation, any investment
banker, attorney or accountant retained by the Company or its
Subsidiaries) (the "Company Representatives"), to give ICS and
their respective officers, employees, agents or other
representatives (including, without limitation, any investment
banker, attorney or accountant retained by ICS) (the "ICS
Representatives") and representatives of financing sources
identified by ICS who do not compete with the Company in the
integrated circuit industry ("Financing Sources"), so long as
such ICS Representatives and representatives of Financing Sources
agree in writing (with the Company as a party or expressly set
forth as a third party beneficiary to such agreement) to maintain
the confidentiality of any non-public confidential information
about the Company and its Subsidiaries in a manner consistent
with market practice for acquisition financing transactions,
reasonable access, upon reasonable notice and during normal
business hours, to the 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 ICS and the ICS Representatives and Financing Sources
identified by ICS with such financial and operating data and such
other information with respect to the business and operations of
the Company and its Subsidiaries as ICS and representatives of
Financing Sources may from time to time reasonably request.
In addition, the Company agrees that so long as the Financing
Sources and the representatives agree in writing (with the
Company as a party or expressly set forth as a third party
beneficiary to such agreement) to maintain the confidentiality of
any non-public confidential information about the Company and its
Subsidiaries in a manner consistent with market practice for
acquisition financing transactions, ICS and the ICS
Representatives may directly furnish financial and operating data
and such other information about the Company and its Subsidiaries
as they reasonably deem necessary, to representatives of
Financing Sources or any ICS Representative. ICS agrees that it
will receive and hold any information furnished pursuant to this
Section 5.2 subject to the provisions of the letter agreement
dated May 13, 1998, between Bear ▇▇▇▇▇▇▇ Merchant Fund Corp. and
the Company and the letter agreement dated May 15, 1998, between
▇▇▇▇ Capital Inc. and the Company (the "Confidentiality
Agreements")."
-3-
8. Section 5.10 of the Merger Agreement is hereby amended to delete
the words "Investment Banks" from the proviso after the words "in the opinion
of" and before the words "more favorable to the Company" and to insert the words
"Investment Banker" in its place .
9. Section 5.10 of the Merger Agreement is hereby amended to delete
the word "then" from the proviso after the words "from a financial point of
view" and before the words "than the transactions contemplated by this
Agreement."
10. Section 6.2(d) of the Merger Agreement is hereby amended to add
the following new clause to the beginning of the first sentence of Section
6.2(d).
"Except as set forth in Section 3.7 or 3.22(a) of the Disclosure
Schedule,"
11. Sections 7.1(b) of the Merger Agreement is hereby deleted in its
entirety and the following new Section 7.1(b) shall be inserted in lieu thereof.
"(b) by ICS or the Company if the Merger shall not have been
consummated on or before June 30, 1999; provided, however, that
neither ICS nor the Company may terminate this Agreement pursuant
to this Section 7.1(b) if such party shall have materially
breached this Agreement."
12. Section 7.1(d) of the Merger Agreement is hereby amended to
delete the word "Transaction" from the second line and to insert the word
"Proposal" in its place.
13. Section 7.1(d) of the Merger Agreement is hereby amended to
delete subsection (ii) up to the proviso and the following new clause
7.1(d)(ii) shall be inserted before the proviso in lieu thereof.
"(ii) after consultation with counsel, that failure to approve
such proposal and terminate this Agreement could reasonably be
expected to result in a breach of the Company's Board's fiduciary
duties to shareholders (assuming for such purpose that fiduciary
duties are owed only to shareholders), as they would exist in the
absence of any limitations in this Agreement;"
14. Section 7.1(e)(iii) of the Merger Agreement is hereby amended to
delete the word "Transaction" and to insert the word "Proposal" in its place.
15. Section 3.2 of the Disclosure Schedule of the Merger Agreement is
hereby amended to delete the following clause from the end of the sentence
referring to the Incentive Stock Option to purchase 112,000 shares granted to
▇. ▇▇▇▇▇▇▇:
-4-
", and providing for accelerated vesting in the event the fair
market value of the common stock exceeds $20 for ten consecutive
trading days, subject to certain limitations"
16. The Company's grant of an option on February 2, 1999 to each of
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇, the Company's three non-employee
directors, to purchase 8,000 shares of the Company's Common Stock at a per
share price of $18.375 pursuant to the non-discretionary annual grant provision
of the Company's 1997 Equity Compensation Plan shall be deemed to be included on
the appropriate Optionee Statements attached to Section 3.2 of the Disclosure
Schedule of the Merger Agreement effective as of the date of the Merger
Agreement.
17. Section 3.13 of the Disclosure Schedule of the Merger Agreement
is hereby amended to include the following effective as of the date of the
Merger Agreement:
"Any resignation by any person who was an Executive Officer of
the Company as of January 19, 1999, and is no longer an Executive
Officer of the Company as of February 16, 1999."
18. Section 5.1 of the Disclosure Schedule of the Merger Agreement is
hereby amended to include the following effective as of the date of the Merger
Agreement:
"4. The Company's 1997 Equity Compensation Plan provides for the
non-discretionary annual grant of an option on February 2, 1999
to each of the Company's three Independent Directors to purchase
8,000 shares of the Company's Common Stock at the Fair Market
Value on the date of the grant."
19. ICS agrees that it will cause item (ix) of Exhibit C to the
Senior Secured Credit Facilities and Mezzanine Facility Loan Commitment Letter
dated January 18, 1999 from Credit Suisse First Boston ("Loan Commitment
Letter") to be amended to read in its entirety as follows:
"(ix) the Closing Date shall occur on or before June 30, 1999."
20. ICS further agrees that it will cause item (ii) of Exhibit C to
the Loan Commitment Letter to be amended by inserting at the end of that section
the following:
"; provided, however, that the failure of the Merger and related
transactions to be eligible for recapitalization accounting shall
not be considered a failure to satisfy any of the conditions to
the commitments of CSFB stated herein;"
-5-
21. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Merger
Agreement.
22. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
23. This Amendment and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the laws of the
Commonwealth of Pennsylvania.
24. From and after the date hereof, except as the context otherwise
requires, all references in the Merger Agreement to the Merger Agreement shall
be deemed to be references to the Merger Agreement as modified hereby.
-6-
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 1 to be duly executed and delivered as of the date first above
written.
INTEGRATED CIRCUIT SYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇
Title: Senior Vice President,
Chief Operating Officer
and
Chief Financial Officer
ICS MERGER CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
-7-
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
INTEGRATED CIRCUIT SYSTEMS, INC.
ARTICLE ONE
-----------
The name of the corporation is Integrated Circuit Systems, Inc.
ARTICLE TWO
-----------
The address of the corporation's registered office in the State of
Pennsylvania is 2435 Boulevard of the Generals, City of Valley Forge, County of
▇▇▇▇▇▇▇▇▇▇, State of Pennsylvania; and its registered agent at such address is
▇▇▇▇ ▇. ▇▇▇.
ARTICLE THREE
-------------
The corporation is incorporated under the Business Corporation Law approved
the 5th day of May, 1933, P.L. 364. The nature of the business or purposes to be
conducted or promoted is to engage in any lawful act or activity for which
corporations may be organized under the Pennsylvania Business Corporation Law of
1988, as amended.
ARTICLE FOUR
------------
A. AUTHORIZED SHARES
-----------------
The total number of shares of capital stock which the Corporation has
authority to issue is 36,500,000 shares, consisting of:
(i) 27,000,000 shares of Class A Common Stock, par value $0.01 per share
("Class A Common");
--------------
(i) 7,000,000 shares of Class B Common Stock, par value 0.01 per share
(Class B Common"); and
--------------
(ii) 3,000,000 shares of Class L Common Stock, par value $0.01 per share
("Class L Common").
--------------
The Class A Common, Class B Common and Class L Common, and any other common
stock issued hereafter, are referred to collectively as the "Common Shares."
-------------
The Common Shares shall have the rights, preferences and limitations set forth
below. Capitalized terms used but not otherwise defined in Part A or Part B of
this Article IV are defined in Part C.
B. COMMON SHARES
-------------
Except as otherwise provided in this Part B or as otherwise required by
applicable law, all Common Shares shall be identical in all respects and shall
entitle the holders thereof to the same rights and privileges, subject to the
same qualifications, limitations and restrictions.
Section 1. Voting Rights. Except as otherwise required by applicable
-------------
law, all holders of Class A Common shall be entitled to one vote per share on
all matters to be voted on by the Corporation's stockholders; provided that,
-------- ----
except as otherwise required by applicable law, the holders of Class A Common
shall not in any respect have cumulative voting rights. Except as otherwise
required by applicable law, all holders of Class B Common and Class L Common
shall have no right to vote on any matters to be voted on by the Corporation's
stockholders.
Section 2. Distributions. At the time of each Distribution, such
-------------
Distribution shall be made to the holders of Common Shares in the following
priority:
2A. The holders of Class L Common, as a separate class, shall be entitled
to receive all or a portion of such Distribution (ratably among such holders
based upon the aggregate Unpaid Yield on Class L Common held by each such holder
as of the time of such Distribution) equal to the aggregate Unpaid Yield on the
outstanding shares of Class L Common as of the time of such Distribution, and no
Distribution or any portion thereof shall be made under paragraph 2B or 2C below
until the entire amount of the Unpaid Yield on the outstanding shares of Class L
Common as of the time of such Distribution has been paid in full. The
Distributions made pursuant to this paragraph 2A to holders of Class L Common
shall constitute a payment of Yield on Class L Common.
2B. After the required amount of a Distribution has been made in full
pursuant to paragraph 2A above, the holders of Class L Common, as a separate
class, shall be entitled to receive all or a portion of such Distribution
(ratably among such holders based upon the aggregate Unreturned Cost of shares
of Class L Common held by each such holder as of the time of such Distribution)
equal to the aggregate Unreturned Cost of the outstanding shares of Class L
Common as of the time of such Distribution, and no Distribution or any portion
thereof shall be made under paragraph 2C below until the entire amount of the
Unreturned Cost of the outstanding shares of Class L Common as of the time of
such Distribution has been paid in full. The Distributions made pursuant to this
paragraph 2B to holders of Class L Common shall constitute a payment of Cost of
Class L Common.
2
2C. After the required amount of a Distribution has been made pursuant to
paragraphs 2A and 2B above, holders of Common Shares, as a group, shall be
entitled to receive the remaining portion of such Distribution (ratably among
such holders based upon the number of Common Shares held by each such holder as
of the time of such Distribution).
Section 3. Stock Splits and Stock Dividends. The Corporation shall not
--------------------------------
in any manner subdivide (by stock split, stock dividend or otherwise) or combine
(by stock split, stock dividend or otherwise) the outstanding Common Shares of
one class unless the outstanding Common Shares of all the other classes shall be
proportionately subdivided or combined, respectively. All such subdivisions and
combinations shall be payable only in Class L Common to the holders of Class L
Common, in Class B Common to the holders of Class B Common and in Class A Common
to the holders of Class A Common. In no event shall a stock split or stock
dividend constitute a payment of Yield or a return of Cost.
Section 4. Conversion of Class A Common and Class B Common.
-----------------------------------------------
4A. Each holder of an outstanding share of Class A Common may convert such
share of Class A Common into a share of Class B Common at any time. Each holder
of an outstanding share of Class B Common may convert such share of Class B
Common into a share of Class A Common at any time so long as after giving effect
to the conversion such holder and such holder's Affiliates, collectively, do not
directly or indirectly own more than 49.9% of the outstanding shares of Class A
Common.
4B. If a conversion of Class A Common or Class B Common is to be made in
connection with an Initial Public Offering or other transaction, the conversion
may, at the election of the holder thereof, be conditioned upon the consummation
of such transaction, in which case such conversion shall not be deemed to be
effective until such transaction has been consummated.
4C. As soon as possible after a conversion has been effected, the
Corporation shall deliver to the converting holder a certificate or certificates
representing the number of shares of Class A Common issuable by reason of such
conversion in such name or names and such denomination or denominations as the
converting holder has specified.
4D. The issuance of certificates for shares of Class A Common or Class B
Common upon conversion of Class A Common or Class B Common, as the case may be,
shall be made without charge to the holders of such Common Stock for any
issuance tax in respect thereof or other cost incurred by the Corporation in
connection with such conversion and the related issuance of shares of Common
Stock. Upon conversion of each share of Common Stock, the Corporation shall
take all such actions as are necessary in order to insure that the Class A
Common or Class B Common issuable with respect to such conversion shall be
validly issued, fully paid and nonassessable, free and clear of all taxes,
liens, charges and encumbrances with respect to the issuance thereof.
3
4E. The Corporation shall not close its books against the transfer of
Class A Common or of Class B Common issued or issuable upon conversion in any
manner which interferes with the timely conversion of such Common Stock. The
Corporation shall assist and cooperate with any holder of shares required to
make any governmental filings or obtain any governmental approval prior to or in
connection with any conversion of shares hereunder (including, without
limitation, making any filings required to be made by the Corporation).
4F. The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Class A Common and Class B Common, solely
for the purpose of issuance upon the conversion of the Class A Common or Class B
Common, such number of shares of Class A Common or Class B Common, issuable upon
the conversion of all outstanding Class A Common or Class B Common, as the case
may be. All shares of Class A Common and Class B Common which are so issuable
shall, when issued, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges. The Corporation shall take all such
actions as may be necessary to assure that all such shares of Class A Common and
Class B Common may be so issued without violations of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Class A Common or Class B Common may be listed (except for
official notice of issuance which shall be immediately delivered by the
Corporation upon each such issuance). The Corporation shall not take any action
which would cause the number of authorized but unissued shares of Class A Common
or Class B Common to be less than the number of such shares required to be
reserved hereunder for issuance upon conversion of the Class A Common or Class B
Common, as the case may be.
Section 5. Conversion of Class L Common upon Initial Public Offering.
---------------------------------------------------------
5A. Upon the consummation of the Corporation's Initial Public Offering,
each outstanding share of Class L Common shall, without any action by the holder
thereof, automatically convert into a number of shares of Class A Common equal
to the sum of (x) one and (y) the result of (A) the Unreturned Cost plus Unpaid
Yield of such share of Class L Common divided by (B) the price per share of the
Class A Common in the Initial Public Offering (in each case before giving effect
to any stock split declared in connection with such Initial Public Offering).
5B. As soon as possible after a conversion has been effected, the
Corporation shall deliver to the converting holder a certificate or certificates
representing the number of shares of Class A Common issuable by reason of such
conversion in such name or names and such denomination or denominations as the
converting holder has specified.
5C. The issuance of certificates for shares of Class A Common upon
conversion of Class L Common shall be made without charge to the holders of such
Class L Common for any issuance tax in respect thereof or other cost incurred by
the Corporation in connection with such conversion and the related issuance of
shares of Class A Common. Upon conversion of each
4
share of Class L Common, the Corporation shall take all such actions as are
necessary in order to insure that the Class A Common issuable with respect to
such conversion shall be validly issued, fully paid and nonassessable, free and
clear of all taxes, liens, charges and encumbrances with respect to the issuance
thereof.
5D. The Corporation shall not close its books against the transfer of
Class L Common or of Class A Common issued or issuable upon conversion of Class
L Common in any manner which interferes with the timely conversion of Class L
Common. The Corporation shall assist and cooperate with any holder of shares
required to make any governmental filings or obtain any governmental approval
prior to or in connection with any conversion of shares hereunder (including,
without limitation, making any filings required to be made by the Corporation).
5E. The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Class A Common, solely for the purpose of
issuance upon the conversion of the Class L Common, such number of shares of
Class A Common issuable upon the conversion of all outstanding Class L Common.
All shares of Class A Common which are so issuable shall, when issued, be duly
and validly issued, fully paid and nonassessable and free from all taxes, liens
and charges. The Corporation shall take all such actions as may be necessary to
assure that all such shares of Class A Common may be so issued without
violations of any applicable law or governmental regulation or any requirements
of any domestic securities exchange upon which shares of Class A Common may be
listed (except for official notice of issuance which shall be immediately
delivered by the Corporation upon each such issuance). The Corporation shall
not take any action which would cause the number of authorized but unissued
shares of Class A Common to be less than the number of such shares required to
be reserved hereunder for issuance upon conversion of the Class L Common.
Section 6. Registration or Transfer. The Corporation shall keep at its
------------------------
principal office (or such other place as the Corporation reasonably designates)
a register for the registration of Common Shares. Upon the surrender of any
certificate representing shares of any class of Common Shares at such place, the
Corporation shall, at the request of the registered holder of such certificate,
execute and deliver a new certificate or certificates in exchange therefor
representing in the aggregate the number of shares of such class represented by
the surrendered certificate, and the Corporation forthwith shall cancel such
surrendered certificate. Each such new certificate will be registered in such
name and will represent such number of shares of such class as is requested by
the holder of the surrendered certificate and shall be substantially identical
in form to the surrendered certificate. The issuance of new certificates shall
be made without charge to the holders of the surrendered certificates for any
issuance tax in respect thereof or other cost incurred by the Corporation in
connection with such issuance.
Section 7. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Corporation (an affidavit of the registered holder will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing one or more shares of any class of Common Shares, and
in the case of any such loss, theft or destruction, upon receipt of
5
indemnity reasonably satisfactory to the Corporation (provided that if the
holder is a financial institution or other institutional investor, its own
agreement will be satisfactory), or, in the case of any such mutilation upon
surrender of such certificate, the Corporation shall (at its expense) execute
and deliver in lieu of such certificate a new certificate of like kind
representing the number of shares of such class represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate.
Section 8. Notices. All notices referred to herein shall be in
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writing, shall be delivered personally or by first class mail, postage prepaid,
and shall be deemed to have been given when so delivered or mailed to the
Corporation at its principal executive offices and to any stockholder at such
holder's address as it appears in the stock records of the Corporation (unless
otherwise specified in a written notice to the Corporation by such holder).
Section 9. Fractional Shares. In no event will holders of fractional
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shares be required to accept any consideration in exchange for such shares other
than consideration which all holders of Common Stock are required to accept.
Section 10. Amendment and Waiver. No amendment or waiver of any
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provision of this Article IV shall be effective without the prior written
consent of the holders of a majority of the then outstanding Common Shares
voting as a single class; provided that no amendment as to any terms or
provisions of, or for the benefit of, any class of Common Shares that adversely
affects the powers, preferences or special rights of such class of Common Shares
shall be effective without the prior consent of the holders of a majority of the
then outstanding shares of such affected class of Common Shares, voting as a
single class.
C. DEFINITIONS
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"Affiliate" means, when used with reference to a specified Person, any
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Person that directly or indirectly controls or is controlled by or is under
common control with the specified Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise). With respect to any Person who is an individual, "Affiliates" shall
also include, without limitation, any member of such individual's Family Group.
"Business Corporation Law of 1988" means the Business Corporation Law of
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1988 of the State of Pennsylvania, as amended from time to time.
"Common Stock" means, collectively, the Corporation's Class A Common Stock,
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Class B Common Stock and Class L Common Stock and any other class of capital
stock of the Corporation hereafter authorized which is not limited to a fixed
sum or percentage of par or
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stated value in respect to the rights of the holders thereof to participate in
dividends or in the distribution of assets upon any liquidation, dissolution or
winding up of the Corporation.
"Cost" of each share of Class L Common shall be equal to $18.00 per share
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(as proportionally adjusted for all stock splits, stock dividends and other
recapitalizations affecting the Class L Common).
"Distribution" means each distribution made by the Corporation to holders
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of Common Shares, whether in cash, property, or securities of the Corporation
and whether by dividend, liquidating distributions or otherwise; provided that
neither of the following shall be a Distribution: (a) any redemption or
repurchase by the Corporation of any Common Shares for any reason or (b) any
recapitalization or exchange of any Common Shares, or any subdivision (by stock
split, stock dividend or otherwise) or any combination (by stock split, stock
dividend or otherwise) of any outstanding Common Shares.
"Family Group" means a Person's spouse and descendants (whether natural or
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adopted) and any trust solely for the benefit of such Person and/or such
Person's spouse and/or descendants (natural or adopted) of a Person and any
corporation, limited liability company, partnership or other entity, the entity
holders of which solely include such Person, his or her spouse or descendants
(natural or adopted) or any trust for the benefit of such Person, his or her
spouse or descendants (natural or adopted).
"Initial Public Offering" means the initial offering by the Corporation of
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its capital stock or equity securities to the public pursuant to an effective
registration statement under the Securities Act of 1933, as then in effect, or
any comparable statement under any similar federal statute then in force;
provided that an Initial Public Offering shall not include an offering made in
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connection with a business acquisition or a combination of an employee benefit
plan.
"Person" means an individual, a partnership, a corporation, a limited
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liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Unpaid Yield" of any share of Class L Common means an amount equal to the
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excess, if any, of (a) the aggregate Yield accrued on such share, over (b) the
aggregate amount of Distributions made by the Corporation that constitute
payment of Yield on such share.
"Unreturned Cost" of any share of Class L Common means an amount equal to
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the excess, if any, of (a) the Cost of such share, over (b) the aggregate amount
of Distributions made by the Corporation that constitute a return of the Cost of
such share.
"Yield" means, with respect to each outstanding share of Class L Common for
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each calendar quarter, the amount accruing on such share each day during such
quarter at the rate of
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9% per annum of the sum of (a) such share's Unreturned Cost, plus (b) Unpaid
Yield thereon for all prior quarters. In calculating the amount of any
Distribution to be made to the Class L Common during a calendar quarter, the
portion of a Class L Common share's Yield for such portion of such quarter
elapsing before such Distribution is made shall be taken into account.
ARTICLE FIVE
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The corporation is to have perpetual existence.
ARTICLE SIX
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In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the corporation is expressly authorized to make, alter
or repeal the by-laws of the corporation.
ARTICLE SEVEN
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Meetings of stockholders may be held within or without the State of
Pennsylvania, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Pennsylvania at such place or
places as may be designated from time to time by the board of directors or in
the by-laws of the corporation. Election of directors need not be by written
ballot unless the by-laws of the corporation so provide.
ARTICLE EIGHT
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To the fullest extent permitted by the Business Corporation Law of the State
of Pennsylvania as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE EIGHT shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
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ARTICLE NINE
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The corporation expressly elects not to be governed by Section 2538 (Adoption
of Transactions with Interested Shareholders) and the provisions contained in
Subchapters E (Control Transactions), G (Control-Share Acquisitions), H
(Disgorgement by Certain Controlling Shareholders for Employees Terminated
Following Attempts to Acquire Control), I (Severance Compensation for Employees
Terminated Following Certain Control-Share Acquisitions) and J (Business
Combination Transactions - Labor Contracts) of Chapter 25 of the Business
Corporation Law of the State of Pennsylvania.
ARTICLE TEN
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The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation in the manner now or
hereafter prescribed herein and by the laws of the State of Pennsylvania, and
all rights conferred upon stockholders herein are granted subject to this
reservation.
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