EXHIBIT I
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AGREEMENT AND PLAN OF MERGER
dated as of June 21, 2000
among
▇▇▇▇-▇▇▇▇▇ CORPORATION
TEXAS INSTRUMENTS INCORPORATED
and
BURMA ACQUISITION CORP.
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TABLE OF CONTENTS
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Article I
THE MERGER
SECTION 1.1 The Merger........................................................................... 2
SECTION 1.2 Effective Time....................................................................... 2
SECTION 1.3 Closing of the Merger................................................................ 2
SECTION 1.4 Effects of the Merger................................................................ 2
SECTION 1.5 Certificate of Incorporation and Bylaws.............................................. 2
SECTION 1.6 Directors............................................................................ 3
SECTION 1.7 Officers............................................................................. 3
Article II
CONVERSION OF SECURITIES
SECTION 2.1 Conversion of Shares................................................................. 3
SECTION 2.2 Stock Options and 4 1/4% Notes....................................................... 4
SECTION 2.3 Exchange Fund........................................................................ 5
SECTION 2.4 Exchange Procedures.................................................................. 5
SECTION 2.5 Distributions with Respect to Unsurrendered Certificates............................. 6
SECTION 2.6 No Further Ownership Rights in Company Common Stock.................................. 6
SECTION 2.7 No Fractional Shares of Parent Common Stock.......................................... 6
SECTION 2.8 Termination of Exchange Fund......................................................... 7
SECTION 2.9 No Liability......................................................................... 7
SECTION 2.10 Investment of the Exchange Fund...................................................... 7
SECTION 2.11 Lost Certificates.................................................................... 7
SECTION 2.12 Withholding Rights................................................................... 7
SECTION 2.13 Stock Transfer Books................................................................. 8
Article III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Organization and Qualification; Subsidiaries......................................... 8
SECTION 3.2 Capitalization of the Company and Its Subsidiaries................................... 9
SECTION 3.3 Authority Relative to This Agreement................................................. 10
SECTION 3.4 SEC Reports; Financial Statements.................................................... 11
SECTION 3.5 No Undisclosed Liabilities........................................................... 11
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TABLE OF CONTNENTS
(continued)
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SECTION 3.6 Absence of Changes................................................................... 11
SECTION 3.7 Information Supplied................................................................. 13
SECTION 3.8 Consents and Approvals............................................................... 14
SECTION 3.9 No Default........................................................................... 14
SECTION 3.10 Real Property........................................................................ 15
SECTION 3.11 Litigation........................................................................... 17
SECTION 3.12 Compliance with Applicable Law; Permits.............................................. 17
SECTION 3.13 Employee Plans....................................................................... 17
SECTION 3.14 Labor Matters........................................................................ 20
SECTION 3.15 Environmental Matters................................................................ 21
SECTION 3.16 Tax Matters.......................................................................... 23
SECTION 3.17 Absence of Questionable Payments..................................................... 26
SECTION 3.18 Material Contracts................................................................... 26
SECTION 3.19 Subsidies............................................................................ 27
SECTION 3.20 Intellectual Property................................................................ 27
SECTION 3.21 Opinion of Financial Advisor......................................................... 29
SECTION 3.22 Brokers.............................................................................. 30
SECTION 3.23 Accounting Matters................................................................... 30
SECTION 3.24 Recalls.............................................................................. 30
SECTION 3.25 DGCL (S) 203......................................................................... 30
SECTION 3.26 Amendment to the Company Rights Agreement............................................ 30
Article IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 4.1 Organization......................................................................... 31
SECTION 4.2 Authority Relative to This Agreement................................................. 31
SECTION 4.3 SEC Reports; Financial Statements.................................................... 32
SECTION 4.4 Undisclosed Liabilities.............................................................. 32
SECTION 4.5 Capitalization of Parent............................................................. 32
SECTION 4.6 Information Supplied................................................................. 33
SECTION 4.7 Consents and Approvals; No Violations................................................ 33
SECTION 4.8 Litigation........................................................................... 34
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TABLE OF CONTENTS
(continued)
Page
SECTION 4.8 Litigation........................................................................... 34
SECTION 4.9 Compliance with Applicable Law....................................................... 34
SECTION 4.9 Compliance with Applicable Law....................................................... 34
SECTION 4.10 No Prior Activities.................................................................. 34
SECTION 4.11 Brokers.............................................................................. 34
SECTION 4.12 Accounting Matters................................................................... 34
Article V
COVENANTS RELATED TO CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business of the Company................................................... 34
SECTION 5.2 Conduct of Business of Parent........................................................ 38
SECTION 5.3 Access to Information................................................................ 38
Article VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Preparation of S-4 and the Proxy Statement........................................... 39
SECTION 6.2 Letter of Accountants................................................................ 39
SECTION 6.3 Meeting.............................................................................. 40
SECTION 6.4 Reasonable Best Efforts.............................................................. 40
SECTION 6.5 Acquisition Proposals................................................................ 41
SECTION 6.6 Public Announcements................................................................. 43
SECTION 6.7 Indemnification...................................................................... 43
SECTION 6.8 Notification of Certain Matters...................................................... 45
SECTION 6.9 Tax-Free Reorganization Treatment; Pooling of Interest Accounting.................... 45
SECTION 6.10 Employee Matters..................................................................... 45
SECTION 6.11 Company Affiliate Agreements......................................................... 46
SECTION 6.12 SEC and Other Filings................................................................ 47
SECTION 6.13 Fees and Expenses.................................................................... 47
SECTION 6.14 Obligations of Merger Sub............................................................ 47
SECTION 6.15 Listing of Stock..................................................................... 47
SECTION 6.16 Antitakeover Statutes................................................................ 47
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TABLE OF CONTENTS
(continued)
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Article VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions to Each Party's Obligations to Effect the Merger.......................... 47
SECTION 7.2 Conditions to the Obligations of Parent and Merger Sub............................... 48
SECTION 7.3 Conditions to the Obligations of the Company......................................... 49
Article VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination by Mutual Agreement...................................................... 50
SECTION 8.2 Termination by Either Parent or the Company.......................................... 50
SECTION 8.3 Termination by the Company........................................................... 51
SECTION 8.4 Termination by Parent................................................................ 51
SECTION 8.5 Effect of Termination and Abandonment................................................ 52
SECTION 8.6 Amendment............................................................................ 53
SECTION 8.7 Extension; Waiver.................................................................... 53
Article IX
MISCELLANEOUS
SECTION 9.1 Entire Agreement; Assignment......................................................... 53
SECTION 9.2 Nonsurvival of Representations and Warranties........................................ 54
SECTION 9.3 Notices.............................................................................. 54
SECTION 9.4 Governing Law........................................................................ 55
SECTION 9.5 Descriptive Headings................................................................. 55
SECTION 9.6 Parties in Interest.................................................................. 55
SECTION 9.7 Severability......................................................................... 55
SECTION 9.8 Specific Performance................................................................. 55
SECTION 9.9 Counterparts......................................................................... 56
SECTION 9.10 Interpretation....................................................................... 56
SECTION 9.11 Definitions.......................................................................... 57
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EXHIBITS
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Voting Agreement A
Company Affiliate Agreement B
Option Agreement C
Company Certificate D
Parent Certificate E
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GLOSSARY OF DEFINED TERMS
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Defined Terms Defined in Section
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4 1/4% Notes........................................................................................3.2(a)
Acquisition Proposal................................................................................6.5(a)
Antitrust Law.......................................................................................6.4(a)
Assumed Stock Option................................................................................2.2(a)
beneficial ownership...............................................................................9.11(a)
beneficially own...................................................................................9.11(a)
Benefit Plans...................................................................................3.13(a)(i)
Benefits Integration Date.............................................................................6.10
business day.......................................................................................9.11(b)
CERCLA..........................................................................................3.15(a)(i)
Certificate of Merger..................................................................................1.2
Certificates...........................................................................................2.4
Closing................................................................................................1.3
Closing Date ..........................................................................................1.3
Code..............................................................................................Recitals
Company...........................................................................................Preamble
Company Affiliate Agreements......................................................................Recitals
Company Balance Sheet..................................................................................3.4
Company Balance Sheet Date.............................................................................3.4
Company Board.......................................................................................3.3(b)
Company Common Stock................................................................................2.1(b)
Company Disclosure Schedule....................................................................Article III
Company Employees.....................................................................................6.10
Company Option Plans...................................................................................2.2
Company Permits.......................................................................................3.12
Company Requisite Vote..............................................................................3.3(b)
Company Rights Agreement..............................................................................3.26
Company SEC Reports....................................................................................3.4
Company Securities..................................................................................3.2(a)
Company Stock Option...................................................................................2.2
Company Stockholder Meeting............................................................................6.3
Confidentiality Agreement...........................................................................5.3(c)
DGCL...................................................................................................1.1
DOJ.................................................................................................6.4(b)
Effective Time.........................................................................................1.2
Employee Arrangements..........................................................................3.13(a)(ii)
Environmental Law...............................................................................3.15(a)(i)
ERISA...........................................................................................3.13(a)(i)
Exchange Act...........................................................................................3.4
Exchange Agent.........................................................................................2.3
Exchange Fund..........................................................................................2.3
Exchange Ratio......................................................................................2.1(b)
Exempt Acquired Person..............................................................................8.5(b)
Expenses..............................................................................................6.13
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FI Plan............................................................................................6.10(a)
Financial Advisor.....................................................................................3.21
FTC.................................................................................................6.4(b)
GAAP...................................................................................................3.4
Governmental Entity....................................................................................3.8
Hazardous Material.............................................................................3.15(a)(ii)
HSR Act................................................................................................3.8
Indemnified Party(ies)..............................................................................6.7(a)
Intellectual Property..............................................................................3.20(a)
IRS................................................................................................3.13(b)
know...............................................................................................9.11(c)
knowledge..........................................................................................9.11(c)
Law....................................................................................................3.9
Leased Facilities..................................................................................3.10(a)
Lien................................................................................................3.2(b)
Material Adverse Effect............................................................................9.11(d)
Material Contracts.................................................................................3.18(a)
Merger.................................................................................................1.1
Merger Consideration................................................................................2.1(b)
Merger Sub........................................................................................Preamble
NYSE................................................................................................2.7(b)
Option Agreement..................................................................................Recitals
Owned Facilities...................................................................................3.10(a)
Parent............................................................................................Preamble
Parent Balance Sheet...................................................................................4.3
Parent Balance Sheet Date..............................................................................4.3
Parent Board........................................................................................4.2(b)
Parent Common Stock...............................................................................Recitals
Parent Disclosure Schedule......................................................................Article IV
Parent Plan...........................................................................................6.10
Parent Rights Agreement...........................................................................Recitals
Parent SEC Reports.....................................................................................4.3
Parent Shares..........................................................................................4.5
person ............................................................................................9.11(e)
Product...............................................................................................3.24
Proxy Statement........................................................................................3.7
Real Property Lease................................................................................3.10(c)
Release.......................................................................................3.15(a)(iii)
Remedial Action................................................................................3.15(a)(iv)
Retirement Plan....................................................................................6.10(a)
Rights..........................................................................................3.26(a)(i)
S-4....................................................................................................3.7
SAR.................................................................................................2.2(d)
SEC.................................................................................................2.2(d)
Secretary..............................................................................................1.2
Securities Act.........................................................................................3.4
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Share(s)............................................................................................2.1(b)
subsidiary.........................................................................................9.11(f)
Superior Proposal...................................................................................6.5(a)
Surviving Corporation..................................................................................1.1
Tax(es)...............................................................................................3.16
Tax Return(s).........................................................................................3.16
Termination Date ...................................................................................8.2(a)
Voting Agreement..................................................................................Recitals
WARN...............................................................................................3.14(d)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 21, 2000, is among
▇▇▇▇-▇▇▇▇▇ Corporation, a Delaware corporation (the "Company"), Texas
Instruments Incorporated, a Delaware corporation ("Parent"), and Burma
Acquisition Corp., a Delaware corporation and a direct wholly owned subsidiary
of Parent ("Merger Sub"). Certain capitalized and non-capitalized terms used
herein are defined in Section 9.11.
RECITALS
WHEREAS, the boards of directors of the Company, Parent and Merger Sub each
have, in light of and subject to the terms and conditions set forth herein,
approved this Agreement and the transactions contemplated hereby, including the
Merger, and the boards of directors of the Company and Merger Sub have declared
the Merger advisable and fair to, and in the best interests of, their respective
stockholders;
WHEREAS, pursuant to the Merger, among other things, and subject to the
terms and conditions of this Agreement, all of the issued and outstanding shares
of stock of the Company shall be converted into shares of common stock, par
value $1.00 per share, of Parent (together with any associated rights to acquire
shares of Cumulative Preferred Stock of Parent pursuant to the Rights Agreement
dated as of June 18, 1998, as amended (the "Parent Rights Agreement"), between
Parent and ▇▇▇▇▇▇ Trust and Savings Bank, as Rights Agent) (collectively,
"Parent Common Stock");
WHEREAS, as an inducement to Parent and Merger Sub to enter into this
Agreement, certain stockholders of the Company have concurrently herewith
entered into (i) a voting agreement in the form attached hereto as Exhibit A
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("Voting Agreement") pursuant to which, among other things, such stockholders
have agreed to vote the shares of Company Common Stock (as hereinafter defined)
owned by them in favor of the Merger, subject to the terms of the Voting
Agreement, and (ii) Company Affiliate Agreements in the form attached hereto as
Exhibit B ("Company Affiliate Agreements") pursuant to which, among other
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things, such stockholders have agreed to refrain from selling shares of Company
Common Stock or Parent Common Stock during a specified period prior to and
following consummation of the Merger;
WHEREAS, as an inducement to Parent and Merger Sub to enter into this
Agreement, the Company has entered into a stock option agreement in the form
attached hereto as Exhibit C ("Option Agreement") pursuant to which the Company
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has granted to Parent an option to purchase from the Company, upon the terms and
conditions described in the Option Agreement, Shares (as hereinafter defined);
WHEREAS, for U.S. federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement shall be, and is hereby, adopted as a plan of reorganization for
purposes of Section 368(a) of the Code;
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a "pooling of interests"; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, the Company, Parent and Merger Sub hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. At the Effective Time and upon the terms and
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subject to the conditions of this Agreement and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"), Merger Sub shall be
merged with and into the Company (the "Merger"). Following the Merger, the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of Merger Sub shall cease.
SECTION 1.2 Effective Time. Subject to the provisions of this Agreement,
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Parent, Merger Sub and the Company shall cause the Merger to be consummated by
filing a Certificate of Merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware (the "Secretary") in such form as required by,
and executed in accordance with, the relevant provisions of the DGCL, as soon as
practicable on or after the Closing Date (as hereinafter defined). The Merger
shall become effective upon the filing of such Certificate of Merger with the
Secretary or at such later time as agreed in writing by Parent and the Company
and specified in the Certificate of Merger (the "Effective Time").
SECTION 1.3 Closing of the Merger. The closing of the Merger (the
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"Closing") will take place at a time and on a date to be specified by the
parties (the "Closing Date"), which shall be no later than the second business
day after satisfaction or waiver of the conditions set forth in Article VII
(other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions), at the
offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, or at such other time, date or place as agreed to in writing by the
parties hereto.
SECTION 1.4 Effects of the Merger. The Merger shall have the effects set
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forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all of the properties, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.5 Certificate of Incorporation and Bylaws. Effective
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immediately following the Merger, the certificate of incorporation of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the
certificate of incorporation of the Surviving Corporation
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until amended in accordance with applicable Law (as hereinafter defined);
provided, however, that at the Effective Time, Article I of the certificate of
incorporation of the Surviving Corporation shall be amended to read: "The name
of the corporation is ▇▇▇▇-▇▇▇▇▇ Corporation." Effective immediately following
the Merger, the bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the bylaws of the Surviving Corporation until amended
in accordance with applicable Law.
SECTION 1.6 Directors. The directors of Merger Sub immediately prior to
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the Effective Time shall be the initial directors of the Surviving Corporation
and shall hold office from the Effective Time in accordance with the charter and
bylaws of the Surviving Corporation until their successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal.
SECTION 1.7 Officers. The officers of Merger Sub immediately prior to the
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Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office from the Effective Time in accordance with the charter and
bylaws of the Surviving Corporation until their successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 Conversion of Shares.
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(a) At the Effective Time, each issued and outstanding share of the common
stock, par value $.01 per share, of Merger Sub shall, by virtue of the Merger
and without any action on the part of Parent, Merger Sub or the Company, be
converted into one fully paid and non-assessable share of common stock of the
Surviving Corporation.
(b) At the Effective Time, each share of common stock, par value $.01 per
share, of the Company, including the associated Rights (as hereinafter defined)
("Company Common Stock"), issued and outstanding immediately prior to the
Effective Time (individually, a "Share" and collectively, the "Shares") (other
than (i) Shares held by the Company and (ii) Shares held by Parent or Merger
Sub) shall, by virtue of the Merger and without any action on the part of
Parent, Merger Sub, the Company or any holder thereof, be converted into the
right to receive 1.3 shares of Parent Common Stock (referred to herein as the
"Exchange Ratio," and all such shares of Parent Common Stock issued pursuant to
this Section 2.1(b), together with any cash in lieu of fractional shares of
Parent Common Stock to be paid pursuant to Section 2.7, being referred to herein
as the "Merger Consideration").
(c) At the Effective Time each Share of Company Common Stock held by the
Company, Parent or Merger Sub shall be cancelled and extinguished without any
consideration therefor.
(d) The Exchange Ratio shall be adjusted to reflect appropriately the
effect of any stock split, stock dividend (including any dividend or
distribution of securities convertible into
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Parent Common Stock or Company Common Stock) reorganization, recapitalization,
reclassification or other like change with respect to Parent Common Stock or
Company Common Stock occurring on or after the date hereof and prior to the
Effective Time.
SECTION 2.2 Stock Options and 4 1/4% Notes.
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(a) As soon as practicable following the date of this Agreement, Parent
and the Company (or, if appropriate, any committee of the Board of Directors of
the Company administering the Company's stock option plans or arrangements
(collectively, the "Company Option Plans")) shall take such action, and the
Company shall obtain all such agreements and consents, if any, as may be
required to effect the following provisions of this Section 2.2. The
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outstanding purchase rights under the Company's Employee Stock Purchase Plan
shall be exercised and shares of the Company Common Stock acquired thereby shall
be issued prior to the Closing Date. As of the Effective Time each outstanding
option to purchase shares of Company Common Stock pursuant to the Company Option
Plans (a "Company Stock Option") shall, at Parent's election with respect to
each such option, either (i) be assumed by Parent and converted into an option
to purchase shares of Parent Common Stock or (ii) be replaced by a new
substitute option to purchase shares of Parent Common Stock granted under the
terms of Parent's stock option plan (in each case, an "Assumed Stock Option") as
follows:
(b) In the case of any Company Stock Option to which Section 421 of the
Code applies by reason of its qualification under Section 422 of the Code, (x)
the number of shares of Parent Common Stock subject to the Assumed Stock Option
shall be the product (truncated to the nearest whole share) of the number of
shares of Common Stock subject to the Company Stock Option multiplied by the
Exchange Ratio, and (y) the exercise price per share of Parent Common Stock
under the Assumed Stock Option shall be the quotient (rounded up to the nearest
$.01) of the exercise price per share of Company Common Stock under the Company
Stock Option immediately prior to the Effective Time divided by the Exchange
Ratio.
(c) In the case of any other Company Stock Option, (x) the number of
shares of Parent Common Stock subject to the Assumed Stock Option shall be the
product (rounded up to the nearest whole share) of the number of shares of
Company Common Stock subject to the Company Stock Option multiplied by the
Exchange Ratio, and (y) the exercise price per share under the Assumed Stock
Option shall be the quotient (truncated to the nearest $.01) of the exercise
price per share of Company Common Stock under the Company Stock Option
immediately prior to the Effective Time divided by the Exchange Ratio.
(d) Each Assumed Stock Option shall be subject to the same expiration date
and vesting provisions as were applicable to the relevant Company Stock Option
immediately prior to the Effective Time. Within 2 business days of the Effective
Time, Parent shall prepare and file with the Securities and Exchange Commission
(the "SEC") a registration statement on Form S-8 or other appropriate form with
respect to shares of Parent Common Stock subject to the Assumed Stock Options
and to maintain the effectiveness of such registration statement or registration
statements covering such Assumed Stock Options (and maintain the current status
of the prospectus or prospectuses contained therein) for so long as such Assumed
Stock Options remain outstanding. Parent shall take all corporate action
necessary to reserve for issuance a sufficient
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number of shares of Parent Common Stock for delivery upon exercise of the
options described above.
(e) In accordance with the terms of the indenture and registration rights
agreement relating to the Company's 4 1/4% Notes (as hereinafter defined), (i)
Parent and the Surviving Corporation shall execute and deliver a supplemental
indenture and such other documents as may be required by the related indenture,
(ii) Parent or the Surviving Corporation, as the case may be, shall prepare and
file with the SEC a registration statement, or amendment or supplement thereto,
on Form S-3 or other appropriate form to register the resale of the 4 1/4% Notes
and Parent Common Stock that will become issuable upon conversion thereof, and
maintain the effectiveness thereof, in accordance with the terms of the
registration rights agreement relating to the 4 1/4% Notes, and (iii) Parent
shall take all corporate action necessary to reserve for issuance pursuant to
such indenture and 4 1/4% Notes a sufficient number of shares of Parent Common
Stock for delivery upon conversion.
SECTION 2.3 Exchange Fund. Prior to the Effective Time, Parent shall
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appoint a commercial bank or trust company reasonably acceptable to the Company
to act as exchange agent hereunder for the purpose of exchanging Shares for the
Merger Consideration (the "Exchange Agent"). At or prior to the Effective Time,
Parent shall deposit with the Exchange Agent, in trust for the benefit of
holders of Shares, certificates representing the Parent Common Stock issuable
pursuant to Section 2.1 in exchange for outstanding Shares. Parent agrees to
make available to the Exchange Agent from time to time as needed, sufficient
cash amounts payable in lieu of fractional shares of Parent Common Stock
pursuant to Section 2.7 and any dividends and other distributions payable
pursuant to Section 2.5. Any cash and certificates of Parent Common Stock,
together with any dividends or distributions with respect thereto, deposited
with the Exchange Agent shall hereinafter be referred to as the "Exchange Fund."
SECTION 2.4 Exchange Procedures. Promptly after the Effective Time, the
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Surviving Corporation shall cause the Exchange Agent to mail to each holder of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") whose shares were converted
pursuant to Section 2.1(b) into Parent Common Stock (i) a letter of transmittal
which shall specify that delivery shall be effective, and risk of loss and title
to the Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent, and which letter shall be in customary form and have such other
provisions as Parent and the Company may reasonably specify; and (ii)
instructions for effecting the surrender of such Certificates in exchange for
the Merger Consideration. Upon surrender of a Certificate to the Exchange Agent
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor (A) a certificate or
certificates representing that number of shares of Parent Common Stock
representing, in the aggregate, the whole number of shares that such holder has
the right to receive pursuant to Section 2.1 and (B) a check in the amount equal
to the cash that such holder has the right to receive pursuant to the provisions
of this Article II, including cash in lieu of any dividends and other
distributions made in accordance with Section 2.5 and cash in lieu of fractional
shares pursuant to Section 2.7, and the Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or will accrue on any cash
payable pursuant to Section 2.5
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or Section 2.7. In the event of a transfer of ownership of Company Common Stock
which is not registered in the transfer records of the Company, certificates
evidencing, in the aggregate, the proper number of shares of Parent Common
Stock, a check in the proper amount of cash in lieu of any fractional shares of
Parent Common Stock pursuant to Section 2.7 and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.5, may be
issued with respect to such Shares to such a transferee if the Certificate
representing such Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and to evidence that any
applicable stock transfer Taxes have been paid.
SECTION 2.5 Distributions with Respect to Unsurrendered Certificates. No
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dividends or other distributions declared or made with respect to shares of
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock that such holder would be entitled to receive upon surrender of
such Certificate, and no cash payment in lieu of fractional shares of Parent
Common Stock shall be paid to any such holder pursuant to Section 2.7 until such
holder shall surrender such Certificate in accordance with Section 2.4. Subject
to the effect of applicable Laws, following surrender of any such Certificate,
there shall be paid to such holder of shares of Parent Common Stock issuable in
exchange therefor, without interest, (a) promptly after the time of such
surrender, the amount of any cash payable in lieu of fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.7 and the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Common Stock, and (b) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender, payable with
respect to such shares of Parent Common Stock.
SECTION 2.6 No Further Ownership Rights in Company Common Stock. All
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shares of Parent Common Stock issued and cash paid upon conversion of the Shares
in accordance with the terms of Article I and this Article II (including any
cash paid pursuant to Sections 2.5 and 2.7) shall be deemed to have been issued
or paid in full satisfaction of all rights under the DGCL pertaining to the
Shares.
SECTION 2.7 No Fractional Shares of Parent Common Stock.
-------------------------------------------
(a) No certificates or scrip of shares of Parent Common Stock representing
fractional shares of Parent Common Stock or book-entry credit of the same shall
be issued upon the surrender for exchange of Certificates and such fractional
share interests will not entitle the owner thereof to vote or to have any rights
of a stockholder of Parent or a holder of shares of Parent Common Stock.
(b) Notwithstanding any other provision of this Agreement, each holder of
Shares exchanged pursuant to the Merger who would otherwise have been entitled
to receive a fraction of a share of Parent Common Stock (after taking into
account all Certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to the product of (i) such
fractional part of a share of Parent Common Stock multiplied by (ii) the closing
price on the New York Stock Exchange ("NYSE") (as reported in the New York City
edition of the Wall
-▇-
▇▇▇▇▇▇ Journal or, if not reported thereby, another nationally recognized
source) for a share of Parent Common Stock on the date of the Effective Time. As
promptly as practicable after the determination of the aggregate amount of cash
to be paid to holders of fractional interests, the Exchange Agent shall notify
Parent and Parent shall cause the Surviving Corporation to deposit such amount
with the Exchange Agent and shall cause the Exchange Agent to forward payments
to such holders of fractional interests subject to and in accordance with the
terms hereof.
SECTION 2.8 Termination of Exchange Fund. Any portion of the Exchange
----------------------------
Fund which remains undistributed to the holders of Certificates for twelve
months after the Effective Time shall be delivered to the Surviving Corporation
or otherwise on the instruction of the Surviving Corporation, and any holders of
the Certificates who have not theretofore complied with this Article II shall
thereafter look only to the Surviving Corporation and Parent for the Merger
Consideration with respect to the Shares formerly represented thereby to which
such holders are entitled pursuant to Section 2.1 and Section 2.4, any cash in
lieu of fractional shares of Parent Common Stock to which such holders are
entitled pursuant to Section 2.7 and any dividends or distributions with respect
to shares of parent Common Stock to which such holders are entitled pursuant to
Section 2.5.
SECTION 2.9 No Liability. None of Parent, Merger Sub, the Company, the
------------
Surviving Corporation or the Exchange Agent, or any directors, officers,
employees or agents of each of the foregoing shall be liable to any person in
respect of any Parent Common Stock, any dividends or distributions with respect
thereto, any cash in lieu of fractional shares of Parent Common Stock or any
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Law.
SECTION 2.10 Investment of the Exchange Fund. The Exchange Agent shall
-------------------------------
invest any cash included in the Exchange Fund as directed by Parent on a daily
basis. Any interest and other income resulting from such investments promptly
shall be paid to Parent.
SECTION 2.11 Lost Certificates. If any Certificate shall have been lost,
-----------------
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if reasonably
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will deliver in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration with respect to the Shares
formerly represented thereby, any cash in lieu of fractional shares of Parent
Common Stock and unpaid dividends and distributions on shares of Parent Common
Stock deliverable in respect thereof, pursuant to this Agreement.
SECTION 2.12 Withholding Rights. Each of the Surviving Corporation, Parent
------------------
and the Exchange Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code and the rules and regulations promulgated
thereunder, or any applicable Law. To the extent that amounts are so withheld
by the Surviving Corporation, Parent or the Exchange Agent, as the case may be,
such withheld amounts shall be treated for all purposes of this Agreement as
having
-7-
been paid to the holder of the Shares in respect to which such deduction and
withholding was made by the Surviving Corporation, Parent or the Exchange Agent,
as the case may be.
SECTION 2.13 Stock Transfer Books. The stock transfer books of the Company
--------------------
shall be closed immediately upon the Effective Time and there shall be no
further registration of transfers of Shares thereafter on the records of the
Company. On or after the Effective Time, any Certificates presented to the
Exchange Agent or Parent for any reason shall be converted into the Merger
Consideration with respect to the Shares formerly represented thereby, any cash
in lieu of fractional shares of Parent Common Stock to which the holders thereof
are entitled pursuant to Section 2.7 and any dividends or other distributions to
which the holders thereof are entitled pursuant to Section 2.5 and the
Certificates so presented shall be cancelled.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the Company to
Parent prior to the execution of this Agreement (the "Company Disclosure
Schedule") or as set forth in the Company SEC Reports (as defined in Section
3.4) filed prior to the date hereof, the Company hereby represents and warrants
to each of Parent and Merger Sub as follows:
SECTION 3.1 Organization and Qualification; Subsidiaries.
--------------------------------------------
(a) The Company and each of its subsidiaries is, or will be as of the
Effective Time, a corporation or legal entity duly organized, validly existing
and in good standing under the applicable Laws of the jurisdiction of its
incorporation or organization and has all requisite corporate, partnership or
similar power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted.
(b) Exhibit 21 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999 sets forth a list of all subsidiaries of the
Company. Except as listed therein or in Section 3.1 of the Company Disclosure
Schedule, the Company does not own, directly or indirectly, beneficially or of
record, any shares of capital stock or other securities of any other entity or
any other investment in any other entity.
(c) The Company is, and each of its subsidiaries is or will be as of the
Effective Time, duly qualified or licensed and in good standing to do business
in each jurisdiction in which the property owned, leased, or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing is not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company and its subsidiaries taken
as a whole.
(d) The Company has heretofore delivered to Parent accurate and complete
copies of the certificate of incorporation and bylaws, as currently in effect,
of the Company. The Company will deliver to Parent accurate and complete copies
of the charter or certificate of incorporation and bylaws (or other similar
organizational and governing documents), as currently in effect, of each of its
subsidiaries.
-8-
SECTION 3.2 Capitalization of the Company and Its Subsidiaries.
--------------------------------------------------
(a) The authorized stock of the Company consists of: (i) 240,000,000
shares of Company Common Stock, of which 56,465,838 shares are issued and
outstanding as of the date hereof and 2,105,372 shares are held by the Company
in treasury, and (ii) 2,000,000 shares of Preferred Stock, par value $.01 per
share, of which 100,000 shares are designated as Series A Junior Participating
Preferred Stock, no shares of which are outstanding. All of the issued and
outstanding Shares have been validly issued, and are duly authorized, fully
paid, non-assessable and free of preemptive rights. As of the date hereof,
7,092,273 Shares are reserved for issuance and issuable upon or otherwise
deliverable in connection with the exercise of outstanding Company Stock Options
issued pursuant to the Company Option Plans and 4,326,757 Shares are reserved
for issuance upon conversion of the Company's 4 1/4% Convertible Subordinated
Notes due 2007 (the "4 1/4% Notes"). Except as set forth above and except for
the Option Agreement, the 4 1/4% Notes and the Company Rights Agreement (as
hereinafter defined), as of the date hereof, there are no outstanding (i)
shares of stock or other voting securities of the Company; (ii) securities of
the Company or any of its subsidiaries convertible into or exchangeable for
shares of stock or voting securities of the Company; (iii) options or other
rights to acquire from the Company or any of its subsidiaries, and no
obligations of the Company or any of its subsidiaries to issue, any stock,
voting securities, or securities convertible into or exchangeable for stock or
voting securities of the Company; or (iv) equity equivalents, interests in the
ownership or earnings of the Company, or other similar rights (including stock
appreciation rights) (collectively, "Company Securities"). Except for the
Option Agreement and the 4 1/4% Notes, there are no outstanding obligations of
the Company or any of its subsidiaries to repurchase, redeem or otherwise
acquire any Company Securities. There are no stockholder agreements, voting
trusts or other agreements or understandings to which the Company or any of its
subsidiaries is a party or to which it is bound relating to the voting of any
shares of capital stock of the Company (other than the Voting Agreement).
(b) All of the outstanding capital stock of the Company's subsidiaries is
owned by the Company, directly or indirectly, free and clear of any Lien or any
other limitation or restriction (including, any restriction on the right to vote
or sell the same) except as may be provided as a matter of Law. There are no
securities of the Company or its subsidiaries convertible into or exchangeable
for, no options or other rights to acquire from the Company or its subsidiaries,
and no other contract, understanding, arrangement, or obligation (whether or not
contingent) providing for the issuance or sale, directly or indirectly of, any
capital stock or other ownership interests in, or any other securities of, any
subsidiary of the Company. There are no outstanding contractual obligations of
the Company or its subsidiaries to repurchase, redeem, or otherwise acquire any
outstanding shares of capital stock or other ownership interests in any
subsidiary of the Company. None of the Company's subsidiaries owns any capital
stock of the Company. For purposes of this Agreement, "Lien" means, in respect
of any asset (including any security) any mortgage, lien, pledge, charge,
security interest, or encumbrance of any kind in respect of such asset.
-9-
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 the Option Agreement and to consummate the
transactions contemplated hereby. No other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby and thereby (other than, in respect of the
Merger and this Agreement, the Company Requisite Vote (as hereinafter defined)).
This Agreement and the Option Agreement have been duly and validly executed and
delivered by the Company and constitute valid, legal, and binding agreements of
the Company, enforceable against the Company in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
(b) As of the date hereof, the Board of Directors of the Company (the
"Company Board") has, by unanimous vote of those present (who constituted 100%
of the directors then in office), duly and validly authorized the execution and
delivery of this Agreement and the Option Agreement and approved the
consummation of the transactions contemplated hereby and thereby, taken all
corporate actions required to be taken by the Company Board for the consummation
of the transactions, including the Merger, contemplated hereby and has resolved
(i) this Agreement and the transactions contemplated hereby, including the
Merger, taken together, to be advisable and fair to, and in the best interests
of, the Company and its stockholders; and (ii) to recommend that the
stockholders of the Company approve and adopt this Agreement and approve the
Merger. The Company Board has directed that this Agreement be submitted to the
stockholders of the Company for their approval and adoption. The affirmative
approval of the holders of Shares representing a majority of the votes that may
be cast by the holders of all outstanding Shares (voting as a single class) as
of the record date for the Company (the "Company Requisite Vote") is the only
vote of the holders of any class or series of stock of the Company necessary to
approve and adopt this Agreement and approve the Merger. Holders of Shares do
not have dissenters' or appraisal rights in connection with the Merger.
SECTION 3.4 SEC Reports; Financial Statements. Since January 1, 1997, the
---------------------------------
Company has filed all forms, reports and documents with the SEC required to be
filed by it under the Securities Act of 1933, as amended (the "Securities Act"),
and the Securities Exchange Act of 1934, as amended (the "Exchange Act" and the
"Company SEC Reports", respectively), each of which complied in all material
respects with all applicable requirements of the Securities Act and the Exchange
Act, each as in effect on the dates such Company SEC Reports were filed. None
of the Company SEC Reports contained, when filed, any untrue statement of a
material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent amended prior to the date hereof by a
subsequently filed Company SEC Report. The consolidated financial statements of
the Company included in the Company SEC Reports complied as to form in all
material respects
-10-
with applicable accounting requirements and the published rules and regulations
of the SEC in respect thereof and fairly presented, in conformity with United
States generally accepted accounting principles applied on a consistent basis
during the periods involved ("GAAP") (except as may be indicated in the notes
thereto), the consolidated financial position of the Company and its
consolidated subsidiaries, in each case as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended (subject, in the case of the unaudited interim financial
statements, to the absence of footnote disclosure and to normal year-end
adjustments). For purposes of this Agreement, "Company Balance Sheet" means the
consolidated balance sheet of the Company as of April 1, 2000, as set forth in
the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended April
1, 2000, and "Company Balance Sheet Date" means April 1, 2000. Since the Company
Balance Sheet Date, there has not been any change, or any application or request
for any change, by the Company or any of its subsidiaries in accounting
principles, methods or policies for financial accounting or Tax purposes, other
than as a result of any changes under GAAP or other relevant accounting
principles or changes required by any applicable Tax rule or regulation.
SECTION 3.5 No Undisclosed Liabilities. There are no material liabilities
--------------------------
of the Company or any of its subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, which are
required to be reflected in its financial statements (or in the notes thereto)
in accordance with GAAP, other than: (a) liabilities disclosed, provided for or
reserved against in the Company Balance Sheet or in the notes thereto; (b)
liabilities arising in the ordinary course of business after the date of the
Company Balance Sheet; (c) liabilities disclosed in the Company SEC Reports
prior to the date hereof; and (d) liabilities arising under this Agreement and
(e) liabilities disclosed in the Company Disclosure Schedule.
SECTION 3.6 Absence of Changes. Except as contemplated by this Agreement
------------------
or as set forth in Section 3.6 of the Company Disclosure Schedule and except as
and to the extent publicly disclosed in the Company SEC Reports prior to the
date hereof, since the Company Balance Sheet Date, the Company and its
subsidiaries have conducted their business in the ordinary and usual course
consistent with past practice and there has not been:
(a) any event, occurrence or development which had or is reasonably
expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company and its subsidiaries taken as a whole;
(b) any declaration, setting aside or payment of any dividend or
other distribution in respect of any shares of capital stock of the Company
or (except to the Company or other subsidiaries) any subsidiary, any split,
combination or reclassification of any shares of capital stock of the
Company or any subsidiary, or any repurchase, redemption or other
acquisition by the Company or any of its subsidiaries of any Company or
subsidiary securities;
(c) any amendment or change to the certificate of incorporation or
bylaws of the Company or any amendment of any term of any outstanding
security of the Company
-11-
or any of its subsidiaries that would materially increase the obligations
of the Company or any such subsidiary under such security;
(d) (i) any incurrence or assumption by the Company or any subsidiary
of any indebtedness for borrowed money other than under existing credit
facilities (or any renewals, replacements or extensions that do not
increase the aggregate commitments thereunder) except (A) in the ordinary
and usual course of business consistent with past practice or (B) in
connection with any acquisition or capital expenditure permitted by Section
5.1, or (ii) any guarantee, endorsement, or other incurrence or assumption
of liability (whether directly, contingently or otherwise) by the Company
or any of its subsidiaries for the obligations of any other person (other
than any wholly owned subsidiary of the Company), other than in the
ordinary and usual course of business consistent with past practice;
(e) any creation or assumption by the Company or any of its subsidiaries
of any Lien on any material asset of the Company or any of its subsidiaries
other than in the ordinary and usual course of business consistent with
past practice;
(f) any making of any loan, advance or capital contribution to or
investment in any person by the Company or any of its subsidiaries other
than (i) any acquisition permitted by Section 5.1, (ii) loans, advances or
capital contributions to or investments in wholly owned subsidiaries of the
Company, (iii) loans or advances to employees of the Company or any of its
subsidiaries in the ordinary course of business consistent with past
practice or (iv) extensions of credit to customers in the ordinary course
of business consistent with past practice;
(g) any contract or agreement entered into by the Company or any of its
subsidiaries on or prior to the date hereof relating to any material
acquisition or disposition of any assets or business, other than contracts
or agreements in the ordinary and usual course of business consistent with
past practice and those contemplated by this Agreement;
(h) any modification, amendment, assignment, termination or
relinquishment by the Company or any of its subsidiaries of any contract,
license or other right (including any insurance policy naming it as a
beneficiary or a loss payable payee) that is reasonably expected to have a
Material Adverse Effect on the Company and its subsidiaries taken as a
whole;
(i) any material change in any method of accounting or accounting
principles or practice by the Company or any of its subsidiaries, except
for any such change required by reason of a change in GAAP;
(j) any (i) grant of any severance or termination pay to any director,
officer or employee of the Company or any of its subsidiaries exceeding the
amounts set forth in the Company's severance plans or agreements listed in
Sections 3.13(a) or 3.18 of the Company Disclosure Schedule; (ii) entering
into of any employment, deferred
-12-
compensation, severance, consulting, termination or other similar agreement
(or any amendment to any such existing agreement) with any director,
officer or employee of the Company or any of its subsidiaries whose annual
cash compensation exceeds $100,000; (iii) increase in benefits payable
under any existing severance or termination pay policies or employment
agreements; or (iv) increase in compensation, bonus or other benefits
payable to directors, officers or employees of the Company or any of its
subsidiaries other than, in the case of clause (iv) only, increases prior
to the date hereof in compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any of its subsidiaries
in the ordinary and usual course of business consistent with past practice
or merit increases in salaries of employees at regularly scheduled times in
customary amounts consistent with past practices;
(k) any change or amendment of the contracts, salaries, wages or other
compensation of any officer, director, employee, agent or other similar
representative of the Company or any of its subsidiaries whose annual cash
compensation exceeds $100,000 other than changes or amendments that do not
and will not result in increases of more than five percent in the salary,
wages or other compensation of any such person;
(l) any adoption, entering into, amendment, alteration or termination
of (partially or completely) any Benefit Plan or Employee Arrangement
except as contemplated by this Agreement or to the extent required by
applicable Law or GAAP;
(m) any entering into of any contract with an officer, director,
employee, agent or other similar representative of the Company or any of
its subsidiaries that is not terminable, without penalty or other
liability, upon not more than 60 calendar days' notice; or
(n) any (i) making or revoking of any material election relating to
Taxes, (ii) settlement or compromise of any material claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or controversy
relating to Taxes, or (iii) change to any material methods of reporting
income or deductions for federal income tax purposes.
SECTION 3.7 Information Supplied. None of the information supplied or to
--------------------
be supplied by the Company specifically for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of Parent Common Stock as required by
the terms of this Agreement pursuant to the Merger (the "S-4"), at the time the
S-4 is filed with the SEC and at the time it becomes effective under the
Securities Act, will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the proxy statement relating to the
Company Stockholder Meeting to be held in connection with the Merger (the "Proxy
Statement") will, at the date mailed to stockholders and at the time of the
Company Stockholder Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the Effective Time any
event in respect of the Company, its officers and directors or any of its
subsidiaries should occur which is required to be described in an
-13-
amendment of, or a supplement to, the S-4 or the Proxy Statement, the Company
shall promptly so advise Parent and such event shall be so described, and such
amendment or supplement (which Parent shall have a reasonable opportunity to
review) shall be promptly filed with the SEC and, as required by Law,
disseminated to the stockholders of the Company. The Proxy Statement, insofar as
it relates to the Company Stockholder Meeting, will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder. No representation is made under this Section 3.7 with
respect to any statements made or incorporated by reference in the S-4 or the
Proxy Statement based on information supplied by the Parent specifically for
inclusion or incorporation by reference therein.
SECTION 3.8 Consents and Approvals. Except for filings, permits,
----------------------
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, state securities or blue sky
Laws, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act") and any comparable requirements of foreign Governmental Entities (as
defined below), the filing and acceptance for record of the Certificate of
Merger as required by the DGCL, and such other filings, permits, consents and
approvals which, if not obtained or made, are not reasonably expected to have a
Material Adverse Effect on the Company and its subsidiaries taken as a whole, no
filing with or notice to, and no permit, authorization, consent or approval of,
any court or tribunal or administrative, governmental or regulatory body, agency
or authority, whether domestic or foreign (a "Governmental Entity") is necessary
for the execution and delivery by the Company of this Agreement or the Option
Agreement or the consummation by the Company of the transactions contemplated
hereby or thereby.
SECTION 3.9 No Default. Neither the Company nor any of its subsidiaries
----------
is in violation of any term of (i) its charter, certificate or articles of
incorporation or bylaws (or other similar organizational or governing
documents), (ii) any agreement or instrument related to indebtedness for
borrowed money or any other agreement to which it is a party or by which it is
bound, or (iii) any domestic or foreign law, order, writ, injunction, decree,
ordinance, award, stipulation, statute, judicial or administrative doctrine,
rule or regulation entered by a Governmental Entity ("Law") applicable to the
Company, its subsidiaries or any of their respective assets or properties, the
consequence of which violation is reasonably expected to (A) have, individually
or in the aggregate, a Material Adverse Effect on the Company and its
subsidiaries taken as a whole or (B) prevent or materially delay the performance
of this Agreement by the Company. The execution, delivery and performance of
this Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby will not (A) result in any violation of or
conflict with, constitute a default under (with or without due notice or lapse
of time or both), require any consent, waiver or notice under any term of, or
result in the reduction or loss of any benefit or the creation or acceleration
of any right or obligation (including any termination rights) under, (i) the
charter, certificate or articles of incorporation or bylaws (or other similar
organizational or governing documents) of the Company or any of its
subsidiaries, (ii) any material agreement, note, bond, mortgage, indenture,
contract, lease, Company Permit or other obligation or right to which the
Company or any of its subsidiaries is a party or by which any of the assets or
properties of the Company or any of its subsidiaries is bound, or (iii) any
applicable Law, except in the case of clause (ii) and (iii) where
-14-
any of the foregoing is not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company and its subsidiaries taken
as a whole, or (B) result in the creation of (or impose any obligation on the
Company or any of its subsidiaries to create) any Lien upon any of the material
assets or properties of the Company or any of its subsidiaries pursuant to any
such term.
SECTION 3.10 Real Property.
-------------
(a) The Company will provide Parent with the address, general use of, and
period of ownership or occupancy of all of the real property owned in fee by the
Company and its subsidiaries (the "Owned Facilities") and all of the real
property the Company and its subsidiaries use or occupy or have the right to use
or occupy, now or in the future, pursuant to any lease, sublease, or other
occupancy agreement (the "Leased Facilities"). No real property is owned,
leased or used by the Company or its current subsidiaries in the course of their
respective businesses other than the Owned Facilities and Leased Facilities.
(b) With respect to each Owned Facility and except as set forth on the
Company Balance Sheet or in the SEC Reports:
(i) the Company or its subsidiary has good and marketable title
to Owned Facilities free and clear of all Liens, except (x) Taxes and
general and special assessments not in default and payable without penalty
and interest, and (y) Liens, easements, covenants and other restrictions or
imperfections of title that do not materially impair the current use,
occupancy, or value in excess of any indebtedness secured by such Lien, or
the marketability of title of such Owned Facilities;
(ii) to the Company's knowledge, there are no pending or
threatened condemnation proceedings, lawsuits or administrative actions
relating to any Owned Facility or other matters affecting materially and
adversely the current use, occupancy or value thereof;
(iii) there are no leases, subleases, licenses, concessions or
other agreements, written or oral, granting to any party or parties (other
than wholly-owned subsidiaries of the Company) the right of use or
occupancy of any portion of any Owned Facility that materially adversely
affect the Company's use of the property;
(iv) there are no outstanding options or rights of first
refusal to purchase any Owned Facility, or any portion thereof or interest
therein;
(v) there are no parties (other than the Company or its
subsidiaries) in possession of any Owned Facility, other than tenants under
any leases to be provided to Parent who are in possession of space to which
they are entitled; and
(vi) all facilities located on Owned Facilities are now, and
will be at the time of Closing, in good operating condition and repair, and
structurally sound and free of known defects, with no material alterations
or repairs required thereto (other than
-15-
ordinary and routine maintenance and repairs) under applicable Laws,
Company Permits or insurance company requirements. To the Company's
knowledge, all such Owned Facilities have been operated and maintained in
all material respects in accordance with applicable Laws and Company
Permits. All such Owned Facilities are supplied with utilities and other
services, including gas, electricity, water, telephone, sanitary sewer and
storm sewer, all of which services are adequate for the uses to which such
Owned Facility is being put and are provided via public roads or via
permanent, irrevocable, appurtenant easements benefiting the parcel of real
property.
(c) With respect to each Leased Facility:
(i) the Company will make available to Parent a true, correct,
and complete copy of the lease, sublease or other occupancy agreement for
such Leased Facility (and all modifications, amendments, and supplements
thereto and all side letters to which Company or any of its subsidiaries is
a party affecting the obligations of any party thereunder) (each such
agreement is referred to herein as a "Real Property Lease");
(ii) to the Company's knowledge, the Company or its subsidiary
has a good and valid leasehold interest in such Leased Facility free and
clear of all Liens, except (x) Taxes and general and special assessments
not in default and payable without penalty and interest, and (y) easements,
covenants and other restrictions that do not materially impair the current
use, occupancy or value, or the marketability of the Company's or its
subsidiary's interest in such real property;
(iii) to the Company's knowledge, each Real Property Lease
constitutes the valid and legally binding obligation of the parties
thereto, enforceable in accordance with its terms, and is in full force and
effect;
(iv) all rent and other sums and charges payable by the Company
or its subsidiary as tenant under the Real Property Lease covering the
Leased Facility are current, no termination event or condition or uncured
default on the part of the tenant or, to the Company's knowledge, the
landlord, exists under any Real Property Lease. No party to such Real
Property Lease has given written notice to the Company or its subsidiary or
made a claim in writing against the Company or its subsidiary in respect of
any breach or default thereunder;
(v) neither the Company nor its subsidiary has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered its
leasehold interest in the Leased Facility; and
(vi) the Company's Leased Facilities located in Atsugi, Japan
are now, and will be at the time of Closing, in good operating condition
and repair, and structurally sound and free of known defects, with no
material alterations or repairs required thereto (other than ordinary and
routine maintenance and repairs) under applicable Laws, Company Permits or
insurance company requirements. To the Company's knowledge,
-16-
all such Atsugi, Japan leased facilities have been operated and maintained
in all material respects in accordance with applicable Laws and Company
Permits. All such facilities are supplied with utilities and other
services, including gas, electricity, water, telephone, sanitary sewer, and
storm sewer, all of which services are adequate for the uses to which such
facilities are being put.
SECTION 3.11 Litigation. Except as disclosed in Section 3.11 of the
----------
Company Disclosure Schedule, there is no other suit, claim, action, proceeding
or, to the Company's knowledge, investigation, pending or, to the Company's
knowledge, threatened which is reasonably expected to have, individually and in
the aggregate, a Material Adverse Effect on the Company and its subsidiaries
taken as a whole. Except as disclosed in Section 3.11 of the Company Disclosure
Schedule, none of the Company or its subsidiaries is subject to any outstanding
order, writ, injunction or decree which is reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company and
its subsidiaries taken as a whole. To the Company's knowledge, there is no
action, suit, proceeding or investigation pending or threatened against any
current or former officer, director, employee or agent of the Company or any of
its subsidiaries (in his or her capacity as such) which is reasonably expected
to give rise to a claim for contribution or indemnification against the Company
or any of its subsidiaries. Notwithstanding the foregoing, any shareholder
litigation or litigation by any Governmental Entity, in each case brought or
threatened against the Company or any officer, director, employee or agent of
the Company in any respect of this Agreement or the transactions contemplated
hereby, shall not be deemed to have a Material Adverse Effect on the Company and
its subsidiaries taken as a whole.
SECTION 3.12 Compliance with Applicable Law; Permits. The Company and its
---------------------------------------
subsidiaries hold all permits, licenses, variances, exemptions, orders, and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which are not
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company and its subsidiaries taken as a whole. The
Company and its subsidiaries are in compliance with the terms of the Company
Permits, except where the failure to comply is not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company and
its subsidiaries taken as a whole. The businesses and operations of the Company
and its subsidiaries comply in all respects with all Laws applicable to the
Company or its subsidiaries, except where the failure to so comply is not
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company and its subsidiaries taken as a whole.
SECTION 3.13 Employee Plans
--------------
(a) Section 3.13(a) of the Company Disclosure Schedule sets forth a true,
correct, and complete list of:
(i) all material "employee benefit plans," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), under which the Company or any of its subsidiaries has any
obligation or liability, contingent or
-17-
otherwise, including, but not limited to, (i) all severance plans or
arrangements other than any such plan or arrangement (x) under which
severance benefits do not exceed two weeks' salary for each year of
employment or, in the case of employees whose annual cash compensation
exceeds $100,000, three months' salary, or (y) which is legally mandated by
applicable non-U.S. law; and (ii) all supplemental or U.S. non-qualified
retirement plans or arrangements which provide benefits to any employee
whose annual cash compensation exceeds $100,000 or benefits in excess of
$5,000 for each year of employment (the "Benefit Plans"); and
(ii) all employment, consulting, termination, severance or
individual compensation agreements (other than any such agreement which is
terminable within 90 days without liability or at any time without
liability exceeding two weeks' salary for each year of employment or, in
the case of employees whose annual cash compensation exceeds $100,000,
three months' salary, or is legally mandated by applicable non-U.S. law);
all stock award, stock option, stock purchase or other equity-based
(including phantom stock or stock appreciation rights) plans or
arrangements; all material bonus or other incentive compensation plans or
agreements (including, but not limited to, any such plan or agreement
covering any officer or employee whose annual cash compensation exceeds
$100,000); all material salary continuation or deferred compensation plans
or agreements (including, but not limited to, any such plan or agreement
covering any current or former officer or employee whose annual cash
compensation exceeds $100,000; in each case, as to which the Company or any
of its subsidiaries has any obligation or liability (contingent or
otherwise) (the "Employee Arrangements").
(b) A complete and correct copy of each Employee Arrangement, including
the forms of stock option grant agreements generally used to make grants under
the Company Option Plans, has been provided to Parent. In respect of each
Benefit Plan, a complete and correct copy of each of the following documents (if
applicable) has been or will be provided to Parent: (i) the most recent plan and
related trust documents, and all amendments thereto; (ii) the most recent
summary plan description, and all related summaries of material modifications
thereto; (iii) the most recent Form 5500 (including, schedules and attachments);
(iv) the most recent Internal Revenue Service ("IRS") determination letter; and
(v) the most recent actuarial reports (including for purposes of Financial
Accounting Standards Board report nos. 87, 106 and 112).
(c) Except as disclosed in Section 3.13(c) of the Company Disclosure
Schedule, none of the Benefit Plans or Employee Arrangements is subject to Title
IV of ERISA, constitutes a defined benefit retirement plan or is a multi-
employer plan described in Section 3(37) of ERISA, and the Company and its
subsidiaries do not have any material obligation or liability (contingent or
otherwise) in respect of any such plans. The Company and its subsidiaries are
not members of a group of trades or businesses (other than that consisting of
the Company and its subsidiaries) under common control or treated as a single
employer pursuant to Section 414 of the Code.
(d) The Benefit Plans and their related trusts intended to qualify under
Sections 401 and 501(a) of the Code, respectively, have received a favorable
determination letter from the IRS and the Company has no knowledge that any
event has occurred since the date of such letter that could cause the IRS to
revoke such determination. Any voluntary employee benefit association
-18-
which provides benefits to current or former employees of the Company and its
subsidiaries, or their beneficiaries, is and has been qualified under Section
501(c)(9) of the Code.
(e) In all material respects, all contributions or other payments required
to have been made by the Company and its subsidiaries to or under any Benefit
Plan or Employee Arrangement by applicable Law or the terms of such Benefit Plan
or Employee Arrangement (or any agreement relating thereto) have been timely and
properly made or have been accrued in the Company's financial statements.
(f) The Benefit Plans and Employee Arrangements have been maintained and
administered in accordance with their terms and applicable Laws and no
individual who has performed services for the Company or any of its subsidiaries
has been improperly excluded from participation in any Benefit Plan or Employee
Arrangement, except where the failure to so maintain and administer such Benefit
Plans or the exclusion of any such individuals is not reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect on the Company
and its subsidiaries taken as a whole.
(g) There are no pending or, to the Company's knowledge, threatened
actions, claims, or proceedings against or relating to any Benefit Plan or
Employee Arrangement (other than routine benefit claims by persons claiming
benefits thereunder), and, to the knowledge of the Company, there are no facts
or circumstances which could form a reasonable basis for any of the foregoing,
except for such actions, claims or proceedings which are not reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect on the
Company and its subsidiaries taken as a whole.
(h) The Company and its subsidiaries do not have any material obligation or
liability (contingent or otherwise) to provide post-retirement life insurance or
health benefits coverage for current or former officers, directors, or employees
of the Company or any of its subsidiaries except (i) as may be required under
Part 6 of Title I of ERISA at the sole expense of the participant or the
participant's beneficiary, (ii) a medical expense reimbursement account plan
pursuant to Section 125 of the Code, or (iii) through the last day of the
calendar month in which the participant terminates employment with the Company
or any subsidiary of the Company.
(i) Except as set forth in Section 3.13(i) of the Company Disclosure
Schedule, none of the assets of any Benefit Plan is stock of the Company or any
of its affiliates, or property leased to or jointly owned by the Company or any
of its affiliates.
(j) Except as disclosed in Section 3.13(j) of the Company Disclosure
Schedule or in connection with equity compensation, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment becoming due to any employee (current,
former, or retired) of the Company or any of its subsidiaries, (ii) increase any
benefits under any Benefit Plan or Employee Arrangement (determined without
regard to the "materiality" limits set forth in the definitions of such terms),
or (iii) result in the acceleration of the time of payment of, vesting of, or
other rights in respect of any such benefits.
-19-
(k) Except as disclosed in Section 3.13(k) of the Company Disclosure
Schedule, each of the Benefit Plans covering employees outside of the United
States is funded in all material respects through adequate reserves on the
financial statements of the Company or its subsidiaries, insurance contracts,
annuity contracts, trust funds or similar arrangements. The benefits and
compensation under the Benefit Plans and Employee Arrangements covering
employees outside of the United States are no more than customary and reasonable
for the country in which such employees work and the industry in which the
Company and its subsidiaries conduct their business.
(l) The aggregate number of shares of Company Common Stock purchasable
under all outstanding purchase rights under the ▇▇▇▇-▇▇▇▇▇ Employee Stock
Purchase Plan does not exceed the maximum number of shares remaining available
for issuance under such plan. The aggregate amount of the current payroll
deductions for a payroll period under the ▇▇▇▇-▇▇▇▇▇ Employee Stock Purchase
Plan is set forth in Section 3.13(l) of the Company Disclosure Schedule.
SECTION 3.14 Labor Matters.
-------------
(a) The Company and its subsidiaries are not parties to any labor or
collective bargaining agreement, and no employees of the Company or any of its
subsidiaries are represented by any labor organization. There are no
representation or certification proceedings, or petitions seeking a
representation proceeding, pending or, to the Company's knowledge, threatened in
writing to be brought or filed with the National Labor Relations Board or any
other labor relations tribunal or authority. Within the last twelve months, to
the Company's knowledge, there have been no organizing activities involving the
Company or any of its subsidiaries in respect of any group of employees of the
Company or any of its subsidiaries.
(b) There are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material grievances or other material labor disputes pending or
threatened in writing against or involving the Company or any of its
subsidiaries. There are no unfair labor practice charges, grievances or
complaints pending or, to the Company's knowledge, threatened in writing by or
on behalf of any employee or group of employees of the Company or any of its
subsidiaries which, if individually or collectively resolved against the Company
or any of its subsidiaries, would reasonably be expected to have a Material
Adverse Effect on the Company and its subsidiaries taken as a whole.
(c) There are no complaints, charges or claims against the Company or any
of its subsidiaries pending or, to the Company's knowledge, threatened to be
brought or filed with any Governmental Entity or arbitrator based on, arising
out of, in connection with, or otherwise relating to the employment or
termination of employment of any individual by the Company or any of its
subsidiaries which, if individually or collectively resolved against the Company
or any of its subsidiaries, would reasonably be expected to have a Material
Adverse Effect on the Company and its subsidiaries taken as a whole, and, to the
knowledge of the Company, there are no facts or circumstances which could form a
reasonable basis for any of the foregoing.
-20-
(d) There has been no "mass layoff" or "plant closing" as defined by the
Worker Adjustment and Retraining Notification Act, as amended ("WARN"), in
respect of the Company or any of its subsidiaries within the six months prior to
the Effective Time.
(e) All employees of the Company and its subsidiaries possess all
applicable passports, visas, permits and other authorizations required by all
applicable immigration or similar Laws to be employed by and to perform services
for and on behalf of the Company and its subsidiaries, except where the failure
to possess such passports, visas, permits or other authorizations would not,
individually or in the aggregate, reasonably be expected to materially affect
the conduct of business by the Company or its subsidiaries. The Company and its
subsidiaries, and their employees, have complied in all material respects with
all applicable immigration and similar Laws.
SECTION 3.15 Environmental Matters.
---------------------
(a) For purposes of this Agreement:
(i) "Environmental Law" means all federal, state, local or
foreign Law, or other legal requirement regulating or prohibiting Releases
of Hazardous Materials into the indoor or outdoor environment, or
pertaining to the protection of natural resources or wildlife, the
environment or public and employee health and safety or pollution or the
exposure to Hazardous Materials, including the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA") (42 U.S.C. Section
9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
Section 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251
et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 7401 et seq.), the Atomic Energy
Act (42 U.S.C. Section 2014 et seq.), the Federal Insecticide, Fungicide,
and Rodenticide Act (7 U.S.C. Section 136 et seq.), the Communications Act
(47 U.S.C. Section 151 et seq.), and the Occupational Safety and Health Act
(29 U.S.C. Section 651 et seq.) ("OSHA"), as such laws or other legal
requirements have been and may be amended or supplemented through the
Closing Date;
(ii) "Hazardous Material" means any substance, material or waste
which is regulated pursuant to any applicable Environmental Law as a
"hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste," "contaminant," "toxic
waste," "toxic substance," "source material," "special nuclear material,"
"byproduct material," "high-level radioactive waste," "low-level
radioactive waste," "spent nuclear material" or "radio frequency" and
includes petroleum, petroleum products and petroleum by-products and waste;
(iii) "Release" means any release, spill, emission, leaking,
pumping, dumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment, or into or
out of any property currently or formerly owned, operated or leased by the
applicable party or its subsidiaries; and
-21-
(iv) "Remedial Action" means all actions, including any capital
expenditures, required by a Governmental Entity or required under or taken
pursuant to any Environmental Law, or voluntarily undertaken to (A) clean
up, remove, treat, remediate or address any Hazardous Materials in the
indoor or outdoor environment; (B) prevent the Release or threat of
Release, or minimize the further Release of any Hazardous Material so it
does not endanger or threaten to endanger the public or employee health or
welfare or the indoor or outdoor environment; (C) perform pre-remedial
studies and investigations or post-remedial monitoring and care pertaining
or relating to a Release.
(b) Except as set forth in Section 3.15 of the Company Disclosure
Schedule:
(i) The operations of the Company and its subsidiaries are in
material compliance with all Environmental Laws, and the Company is not
aware of any facts, circumstances or conditions which, without significant
capital expenditures, would prevent material compliance in the future;
(ii) To the Company's knowledge, the Company and its
subsidiaries have obtained all Company Permits, required under applicable
Environmental Laws for the continued operations of their respective
businesses; the Company and its subsidiaries have made all material
filings, reports and notices required under any Environmental Law for the
past and future operations of their respective businesses;
(iii) The Company and its subsidiaries are not subject to any
outstanding written orders or material contracts or agreements with any
Governmental Entity or other person respecting (A) Environmental Laws, (B)
any Remedial Action, (C) any Release or threatened Release of a Hazardous
Material, or (D) an assumption of responsibility for environmental claims
of another person or entity;
(iv) The Company and its subsidiaries have not received any
written communication alleging, in respect of any such party, the material
violation of or liability (real or potential) under any Environmental Law;
or requesting, with respect to any such party, information with respect to
an investigation pursuant to CERCLA, or any foreign or state counterpart
thereto, or any other Environmental Law;
(v) To the Company's knowledge, neither the Company nor any of
its subsidiaries has any material contingent liability in connection with
any Remedial Action or the Release of any Hazardous Material (whether on-
site or off-site) or employee or third party exposure to Hazardous
Materials;
(vi) To the Company's knowledge, the operations of the Company
and its subsidiaries involving the generation, transportation, treatment,
storage or disposal of Hazardous Materials are in material compliance with
applicable Environmental Laws and, to the Company's knowledge, there has
been no disposal by the Company or its subsidiaries of any Hazardous
Materials on or in any site listed or formally proposed to be listed on the
National Priorities List promulgated pursuant to CERCLA or any foreign or
state remedial priority list promulgated or maintained pursuant to
comparable foreign
-22-
or state law, except where such disposal would not reasonably be expected
to create a material adverse liability for the Company;
(vii) To the Company's knowledge, there is not now nor has there
been in the past, on, in or at any Owned Facility, Leased Facility, Former
Facility (defined as all of the real property formerly owned, leased or
used, other than those used solely for office or administrative purposes,
by the Company or any of its current or former subsidiaries or corporate
predecessors in interest at any time in the past), or any other facility
for which the Company or its subsidiaries has assumed responsibility for
environmental claims, any of the following: (A) any underground storage
tanks; (B) landfills, dumps or surface impoundments; (C) any planned,
ongoing or completed Remedial Action; (D) any asbestos-containing
materials; or (E) any polychlorinated biphenyls;
(viii) There is not now, nor to the Company's knowledge, has
there been in the past, on, in or at any Owned Facility, Leased Facility,
Former Facility, or any other facility for which the Company or its
subsidiaries has assumed responsibility for environmental claims, any site
on or nominated for the National Priority List promulgated pursuant to
CERCLA or any foreign or state remedial priority list promulgated or
published pursuant to any comparable foreign or state law; and
(ix) No judicial or administrative proceedings are pending or,
to the Company's knowledge, threatened against the Company or its
subsidiaries alleging the material violation of or seeking to impose
material liability pursuant to any Environmental Law and, to the Company's
knowledge, there are no investigations pending or threatened against the
Company or any of its subsidiaries under Environmental Laws.
(c) The Company will make available to Parent copies of all material
environmentally related assessments, audits, investigations, or similar reports
(and, upon reasonable specific request, sampling reports) in its possession or
control and which were prepared in the last five years (and, upon reasonable
specific request, earlier information) relating to the Company or its
subsidiaries or any real property currently or formerly owned, operated or
leased by or for the Company or its subsidiaries, including any Owned Facility,
Leased Facility, or Former Facility.
SECTION 3.16 Tax Matters.
-----------
(a) Each of the Company and its subsidiaries has timely filed (or has had
timely filed) all Tax Returns required to be filed by it (or on its behalf).
All such Tax Returns are complete and correct in all material respects. The
Company and its subsidiaries have paid all Taxes due for the periods covered by
such Tax Returns. The most recent Company SEC Reports reflect an adequate
reserve for all Taxes payable by the Company and its subsidiaries for all
Taxable periods and portions thereof through the date of such Company SEC
Reports. The Company has previously delivered (or, in the case of foreign Tax
Returns and audit reports, will deliver) to
-23-
Parent copies of (i) all federal, state, local and foreign income and franchise
Tax Returns filed by the Company and its subsidiaries relating to any taxable
periods of the Company or any of its subsidiaries that remains subject to audit
under applicable statutes of limitations; and (ii) any audit report issued
within the last three years (or otherwise in respect of any audit or
investigation in progress) relating to Taxes due from or in respect of the
Company or its subsidiaries.
(b) No material deficiencies for any Taxes have been proposed, asserted,
or assessed against the Company or its subsidiaries that have not been fully
paid or adequately provided for in the appropriate financial statements of the
Company, no requests for waivers of the time to assess any Taxes are pending,
and no power of attorney in respect of any Taxes has been executed or filed with
any taxing authority. No material issues relating to Taxes have been raised by
the relevant taxing authority during any presently pending audit or examination.
All income and franchise Tax Returns filed by or on behalf of the Company and
its subsidiaries for the taxable years ended on or prior to December 31, 1997
have been reviewed by the relevant taxing authority or the statute of
limitations with respect to such Tax Returns has expired.
(c) No material Liens for Taxes exist in respect of any assets or
properties of the Company or its subsidiaries, except for statutory Liens for
Taxes not yet due.
(d) Neither the Company nor any of its subsidiaries is a party to or is
bound by any Tax sharing agreement, Tax indemnity obligation, or similar
agreement, arrangement, or practice in respect of Taxes (whether or not written)
(including any advance pricing agreement, closing agreement, or other agreement
relating to Taxes with any taxing authority).
(e) Neither the Company nor any of its subsidiaries (i) has ever been a
member of an affiliated group within the meaning of Section 1504(a) of the Code
(or any similar or analogous group defined under a similar or analogous state,
local or foreign Law) other than an affiliated group the common parent of which
is the Company, or (ii) has any liability under Treasury Regulation Section
1.1502-6 (or any predecessor or successor thereof or analogous or similar
provision under state, local or foreign Law), as a transferee or successor, by
contract or otherwise for Taxes of any affiliated group of which the Company is
not the common parent.
(f) Neither the Company nor any of its subsidiaries has taken or agreed to
take any action that would prevent the Merger from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code.
(g) Except as set forth in Section 3.16(g) of the Company Disclosure
Schedule, there are no employment, severance, or termination agreements or other
compensation arrangements currently in effect which provide for the payment of
any amount (whether in cash or property or the vesting of property) as a result
of any of the transactions contemplated by this Agreement that individually or
collectively (either alone or upon the occurrence of any additional or
subsequent event), could give rise to a payment which is nondeductible by reason
of Section 280G of the Code.
-24-
(h) The Company and its subsidiaries have complied in all material respects
with all Laws applicable to the payment and withholding of Taxes and have duly
and timely withheld from employee salaries, wages and other compensation and
have paid over to the appropriate taxing authority all amounts required to be so
withheld and paid over for all periods under all applicable Laws.
(i) No federal, state, local, or foreign audits or other administrative
proceedings or court proceedings are presently pending in respect of any Taxes
or Tax Returns of the Company or its subsidiaries and neither the Company nor
its subsidiaries have received a written notice of any pending audit or
proceeding.
(j) Except as set forth in Section 3.16(i) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has agreed to or is
required to make any adjustment under Section 481(a) of the Code or any similar
provision of state, local or foreign Law by reason of a change in accounting
method initiated by the Company or its subsidiaries or has any knowledge that a
taxing authority has proposed any such adjustment or change in accounting
method, or has any application pending with any taxing authority requesting
permission for any changes in accounting methods that relate to the business or
operations of the Company or its subsidiaries.
(k) Except as set forth in Section 3.16(k) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any
contract, agreement, or other arrangement which could result in the payment of
amounts that could be nondeductible by reason of Section 162(m) of the Code,
provided that no representation or warranty is made as to performance-based or
equity-based compensation.
(l) Neither the Company nor any of its subsidiaries has received any
private letter rulings from the IRS or comparable rulings from other taxing
authorities.
(m) Neither the Company nor any of its subsidiaries has constituted either
a "distributing corporation" or a "controlled corporation" (within the meaning
of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code (i) in the two years prior to
the date of this Agreement or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
(n) Neither the Company nor any of its subsidiaries (i) engaged in any
"intercompany transactions" in respect of which gain was and continues to be
deferred pursuant to Treasury Regulation Section 1.1502-13 or any predecessor or
successor thereof or analogous or similar provision under state, local or
foreign Law; or (ii) has "excess loss accounts" in respect of the stock of any
subsidiary pursuant to Treasury Regulation Section 1.1502-19, or any predecessor
or successor thereof or analogous or similar provision under state, local or
foreign Law.
For purposes of this Agreement, "Tax" or "Taxes" means all federal, state,
local or foreign Taxes, charges, fees, imposts, duties, levies, gaming or other
assessments, including, all net income, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise,
-25-
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation, property,
and estimated Taxes, customs duties, fees, assessments and charges of any kind
whatsoever, together with any interest and any penalties, fines, additions to
Tax or additional amounts imposed by any taxing authority (domestic or foreign)
and shall include any transferee liability in respect of Taxes, any liability in
respect of Taxes imposed by contract, Tax sharing agreement, Tax indemnity
agreement or any similar agreement. "Tax Returns" means any report, return,
document, declaration, or any other information or filing required to be
supplied to any taxing authority or jurisdiction (domestic or foreign) in
respect of Taxes, including, information returns, any document in respect of or
accompanying payments or estimated Taxes, or in respect of or accompanying
requests for the extension of time in which to file any such report, return
document, declaration, or other information, including amendments thereof and
attachments thereto.
SECTION 3.17 Absence of Questionable Payments. To the Company's knowledge,
--------------------------------
neither the Company nor any of its subsidiaries nor any director, officer,
agent, employee or other person acting on behalf of the Company or any of its
subsidiaries, has used any corporate or other funds for unlawful contributions,
payments, gifts or entertainment, or made any unlawful expenditures relating to
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds in violation of the Foreign Corrupt
Practices Act of 1977, as amended, or any other domestic or foreign Law. To the
Company's knowledge, neither the Company nor any of its subsidiaries nor any
director, officer, agent, employee or other person acting on behalf of the
Company or any of its subsidiaries has accepted or received any unlawful
contributions, payments, gifts or expenditures.
SECTION 3.18 Material Contracts.
------------------
(a) The Company has heretofore made available to Parent true, correct and
complete copies of all written contracts and agreements (and all amendments,
modifications and supplements thereto and all side letters to which the Company
or any of its subsidiaries is a party affecting the obligations of any party
thereunder) to which the Company or any of its subsidiaries is a party or by
which any of its assets or properties are bound that are material to the
business, assets or properties of the Company and its subsidiaries taken as a
whole, including, to the extent any of the following are, individually or in the
aggregate, material to the business, assets or properties of the Company and its
subsidiaries taken as a whole, all: (i) employment, severance, product design
or development, personal services, consulting, non-competition or
indemnification contracts (including, any contract to which the Company or any
of its subsidiaries is a party involving employees of the Company), but
excluding normal indemnification provisions under license or sale contracts;
(ii) licensing, merchandising or distribution agreements involving the payment
of more than $5,000,000 per year; (iii) contracts granting a right of first
refusal or first negotiation involving in excess of $5,000,000; (iv) partnership
or joint venture agreements; (v) agreements for the acquisition, sale or lease
of material assets or properties of the Company (by merger, purchase or sale of
assets or stock or otherwise) entered into since January 1, 1999; (vi) contracts
or agreements with any Governmental Entity involving the payment of more than
$2,000,000 per year; (vii) loan or credit agreements, mortgages, indentures or
other agreements or instruments evidencing
-26-
indebtedness for borrowed money by the Company or any of its subsidiaries or any
such agreement pursuant to which indebtedness for borrowed money may be
incurred, in each case involving in excess of $2,000,000; (viii) agreements that
purport to limit, curtail or restrict the ability of the Company or any of its
subsidiaries to compete in any geographic area or line of business; (ix)
foundry, wafer manufacturing or fabricating agreements; (x) assembly
(packaging), testing, or supply agreements, in each case, involving in excess of
$3,000,000; and (xi) commitments and agreements to enter into any of the
foregoing (collectively, together with any such contracts entered into in
accordance with Section 5.1, the "Material Contracts"). Section 3.18 of the
Company Disclosure Schedule sets forth a list of all Material Contracts.
(b) To the Company's knowledge, each of the Material Contracts constitutes
the valid and legally binding obligation of the Company or its subsidiaries,
enforceable in accordance with its terms, and is in full force and effect.
There is no material default under any Material Contract either by the Company
(or its subsidiaries) or, to the Company's knowledge, by any other party
thereto, and no event has occurred that with the giving of notice, the lapse of
time, or both would constitute a default thereunder by the Company (or its
subsidiaries) or, to the Company's knowledge, any other party. As of the date
hereof, no foundry has notified the Company in writing that it intends to
terminate or fail to extend its contract with the Company within one year of the
date of the Agreement, except for any such termination or failure as would not
have a Material Adverse Effect on the Company and its subsidiaries taken as a
whole.
(c) No party to any such Material Contract has given notice to the Company
of or made a claim against the Company in respect of any material breach or
default thereunder.
SECTION 3.19 Subsidies. Section 3.19 of the Company Disclosure Schedule
---------
sets forth a list of all material grants, subsidies and similar arrangements
directly or indirectly between or among the Company or any of its subsidiaries,
on the one hand, and any domestic or foreign Governmental Entity or any other
person, on the other hand. Except as set forth on Section 3.19 of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries has
requested, sought, applied for or entered into any material grant, subsidy or
similar arrangement directly or indirectly from or with any domestic or foreign
Governmental Entity or any other person.
SECTION 3.20 Intellectual Property.
---------------------
(a) As used herein, the term "Intellectual Property" means domestic and
foreign letters patent, patents, patent applications, patent licenses, know-how
licenses, trademark registrations and applications, service ▇▇▇▇ registrations
and applications and copyright registrations and applications, databases,
software licenses, trade names, trade secrets, technical knowledge, know-how,
confidential information, customer lists, proprietary processes, techniques,
formulae, "semiconductor chip product" and "mask works" (as such terms are
defined in 17 U.S.C. 901), and related ownership, use and other rights
(including rights of renewal and rights to ▇▇▇ for past, present and future
infringements or misappropriations thereof).
-27-
(b) To the Company's knowledge, and except as are not reasonably expected
to have a Material Adverse Effect on the Company and its subsidiaries taken as a
whole: (i) each item of Intellectual Property is in compliance with applicable
legal requirements relating to the enforceability or maintenance of such item
(including payment of filing, examination and maintenance fees and proofs of
working or use, as applicable) other than any requirement that if, not
satisfied, would not result in a revocation or otherwise materially affect the
enforceability of the item of Intellectual Property in question, and the Company
has taken reasonable steps to protect such Intellectual Property; (ii) the
Company and its subsidiaries own or have the right to use, free and clear of all
Liens, all Intellectual Property necessary for the operation of the businesses
of the Company and its subsidiaries as presently conducted and as presently
proposed to be conducted; (iii) each material item of Intellectual Property
owned or used by the Company and its subsidiaries immediately prior to the
Effective Time will be owned or available for use by Parent and the Surviving
Corporation immediately subsequent to the Effective Time; (iv) the Company and
its subsidiaries have taken all action deemed by the Company or the relevant
subsidiary to be necessary or reasonable, but in no event less than all
commercially reasonable action, to protect and preserve the confidentiality of
all technical Intellectual Property not otherwise protected by patents, patent
applications or copyrights; (v) the Company has had and continues to have a
requirement that all employees of the Company and its subsidiaries must execute
a non-disclosure agreement which includes an agreement to assign to the Company
or its subsidiaries all rights to Intellectual Property originated or invented
by such employee relating to the business of the Company and its subsidiaries;
and (vi) no trade secret or confidential know-how material to the business of
the Company or any of its subsidiaries as currently operated has been disclosed
or authorized to be disclosed to any third party, other than pursuant to a non-
disclosure agreement that protects the Company's or such subsidiary's
proprietary interests in and to such trade secrets and confidential know-how.
(c) Except as set forth in Section 3.20(c) of the Company Disclosure
Schedule, to the Company's knowledge, neither the Company nor any of its
subsidiaries has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property rights of third parties, and
neither the Company nor any of its subsidiaries has received any charge,
complaint, claim or notice alleging any such interference, infringement,
misappropriation or violation that remains unresolved and, if decided adversely
to the Company, would be reasonably likely to have a Material Adverse Effect on
the Company and subsidiaries taken as a whole. No third party has, to the
Company's knowledge, interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property rights of the
Company or its subsidiaries, except where such actions are not reasonably
expected to have a Material Adverse Effect on the Company and its subsidiaries
taken as a whole.
(d) Section 3.20(d) of the Company Disclosure Schedule identifies each
material item of Intellectual Property that any third party owns and that the
Company or any of its subsidiaries uses pursuant to license, sublicense,
agreement or permission that either (i) if such license, sublicense, agreement
or permission were denied, would reasonably be expected to have a Material
Adverse Effect on the Company or its Subsidiaries taken as a whole, or (ii)
includes any unsatisfied obligation to pay any royalty amount or any obligation
to pay a royalty, whether fixed
-28-
or determined based on usage, following the Effective Date in excess of
$250,000. To the Company's knowledge, in respect of each such item of used
Intellectual Property:
(i) the license, sublicense, agreement or permission covering
the item is legal, valid, binding, enforceable and in full force and
effect;
(ii) the licenses, sublicenses, agreements or permissions will
in all material respects continue to be legal, valid, binding, enforceable
and in full force and effect on identical terms following the Effective
Time;
(iii) no party to the license, sublicense, agreement or
permission is in breach or default, and no event has occurred which with
notice or lapse of time would constitute a breach or default or permit
termination, modification or acceleration thereunder such as would have a
Material Adverse Effect on the Company and its subsidiaries taken as a
whole; and
(iv) no party to the license, sublicense, agreement or
permission has repudiated any provision thereof.
(e) Except as set forth in Section 3.20(e) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has granted (i) any
exclusive licenses (other than implied patent licenses in the ordinary course of
business) in any patents owned by the Company or any of its subsidiaries or (ii)
any exclusive licenses in any other Intellectual Property owned by the Company
or any of its subsidiaries to any third party.
(f) Except as may have been given in connection with patent licenses set
forth in Section 3.20(e) of the Company Disclosure Schedule or given in the
ordinary course of business within the scope of the Company's standard terms and
conditions of sale, neither the Company nor any of its subsidiaries has entered
into any material agreement to indemnify any other person against any charge of
infringement or misappropriation of any Intellectual Property.
(g) The execution, delivery and performance by the Company of this
Agreement, and the consummation of the transactions contemplated hereby, will
not (i) result in the loss or impairment of, or give rise to any right of any
third party to terminate or alter, any of the Company's or any of its
subsidiaries' rights to own any of its Intellectual Property except as are not
reasonably expected to have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole, nor (ii) require the consent of any Governmental
Entity or third party in respect of any such Intellectual Property that, if not
obtained, is reasonably expected to have a Material Adverse Effect on the
Company and its subsidiaries taken as a whole.
SECTION 3.21 Opinion of Financial Advisor. Broadview International LLC
----------------------------
(the "Financial Advisor") has delivered to the Company Board its opinion, dated
the date of this Agreement, to the effect that, as of such date, the Exchange
Ratio is fair to the stockholders of the Company from a financial point of view,
and such opinion has not been withdrawn or modified.
-29-
SECTION 3.22 Brokers. No broker, finder, investment banker or other person
-------
(other than the Financial Advisor, a true and correct copy of whose engagement
letter has been provided to Parent) is entitled to any brokerage, finder's or
other fee or commission or expense reimbursement in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of the Company or any of its affiliates.
SECTION 3.23 Accounting Matters. Neither the Company nor, to the Company's
------------------
knowledge, any of its affiliates, has taken or agreed to take any action or is
aware of any fact or circumstance that would prevent the Merger from qualifying
as a "pooling of interests" under APB 16 and the applicable SEC rules and
regulations.
SECTION 3.24 Recalls. Except as set forth on Section 3.24 of the Company
-------
Disclosure Schedule, (i) there has not been any recall made broadly to customers
since December 31, 1998 of any product designed, manufactured, shipped, sold or
otherwise introduced into the stream of commerce by or on behalf of the Company
or any of its past or present subsidiaries ("Product"), and (ii) to the
Company's knowledge, there are currently no material defects in design,
manufacturing, materials or workmanship which involve any Product that accounts
for a material portion of the Company's sales.
SECTION 3.25 DGCL (S) 203. The Company Board has taken all action required
------------
so that the restrictions contained in Section 203 of the DGCL applicable to a
"business combination" (as defined in DGCL (S) 203) will not apply to the
execution, delivery or performance of this Agreement, the Voting Agreement or
the Option Agreement or the consummation of the Merger. No other antitakeover
Laws of any state are applicable to this Agreement, the Voting Agreement, the
Option Agreement or the transactions contemplated hereby or thereby.
SECTION 3.26 Amendment to the Company Rights Agreement. The Company Board
-----------------------------------------
has taken all necessary action (including, any amendment thereof) under the
Amended and Restated Rights Agreement, dated as of August 9, 1999, between the
Company and ▇▇▇▇▇▇ Trust and Savings Bank, as Rights Agent (the "Company Rights
Agreement"), so that (a) none of the execution or delivery of this Agreement,
the Voting Agreements or the Option Agreement, the exchange of the shares of
Parent Common Stock for the Shares in accordance with Article II, or any other
transaction contemplated hereby or thereby will cause (i) the rights (the
"Rights") issued pursuant to the Company Rights Agreement to become exercisable
under the Company Rights Agreement, (ii) Parent or Merger Sub to be deemed an
"Acquiring Person" (as defined in the Company Rights Agreement), or (iii) the
"Shares Acquisition Date" or "Distribution Date" (as such terms are defined in
the Company Rights Agreement) to occur upon any such event; and (b) the
"Expiration Date" (as defined in the Company Rights Agreement) of the Rights
shall occur immediately prior to the Effective Time. Copies of such amendments
to the Company Rights Agreement have been previously made available to Parent.
-30-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Except as set forth in the disclosure schedule delivered by Parent to the
Company prior to the execution of this Agreement (the "Parent Disclosure
Schedule"), Parent and Merger Sub hereby represent and warrant to the Company as
follows:
SECTION 4.1 Organization.
------------
(a) Each of Parent and Merger Sub is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its businesses as now being
conducted.
(b) Each of Parent and Merger Sub is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing is not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent and its
subsidiaries taken as a whole.
(c) Parent has heretofore delivered to the Company accurate and complete
copies of the certificate of incorporation and bylaws of Parent and the charter
and bylaws of Merger Sub as currently in effect.
SECTION 4.2 Authority Relative to This Agreement.
------------------------------------
(a) Each of Parent and Merger Sub has all necessary corporate power and
authority to execute and deliver this Agreement and the Option Agreement and to
consummate the transactions contemplated hereby and thereby. No other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement and the Option Agreement or to consummate the transactions
contemplated hereby or thereby. This Agreement and the Option Agreement have
been duly and validly executed and delivered by each of Parent and Merger Sub
and constitute valid, legal and binding agreements of each of Parent and Merger
Sub, enforceable against each of Parent and Merger Sub in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar Laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(b) The Board of Directors of Parent (the "Parent Board"), the Board of
Directors of Merger Sub and Parent as the sole stockholder of Merger Sub have
duly and validly authorized the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and taken all corporate
actions required to be taken by such Boards of
-31-
Directors and Parent as the sole stockholder of Merger Sub for the consummation
of the transactions.
SECTION 4.3 SEC Reports; Financial Statements. Since January 1, 1997,
---------------------------------
Parent has filed all forms, reports and documents with the SEC required to be
filed by it under the Securities Act and the Exchange Act (the "Parent SEC
Reports"), each of which complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, each as in effect on
the dates such Parent SEC Reports were filed. None of the Parent SEC Reports
contained, when filed, any untrue statement of a material fact or omitted to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the extent
amended prior to the date hereof by a subsequently filed Parent SEC Report. The
consolidated financial statements of Parent included in the Parent SEC Reports
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC in respect
thereof and fairly presented, in conformity with GAAP on a consistent basis
(except as indicated in the notes thereto), the consolidated financial position
of Parent and its consolidated subsidiaries, in each case as of the dates
thereof and their consolidated results of operations and cash flows for the
periods then ended (subject, in the case of the unaudited interim financial
statements, to the absence of certain footnote disclosure and to normal year-end
adjustments). For purposes of this Agreement "Parent Balance Sheet" means the
consolidated balance sheet of Parent as of March 31, 2000, and "Parent Balance
Sheet Date" means March 31, 2000. Except as and to the extent disclosed in the
Parent SEC Reports, since the Parent Balance Sheet Date, there has not been any
event, occurrence or development which is reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Parent and
its subsidiaries taken as a whole.
SECTION 4.4 Undisclosed Liabilities. There are no material liabilities of
-----------------------
Parent or any of its subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, which are required
to be reflected in its financial statements (or in the notes thereto) in
accordance with GAAP, other than: (a) liabilities disclosed, provided for or
reserved against in the Parent Balance Sheet or in the notes thereto; (b)
liabilities arising in the ordinary course of business after the date of the
Parent Balance Sheet; (c) liabilities disclosed in the Parent SEC Reports prior
to the date hereof; and (d) liabilities under this Agreement.
SECTION 4.5 Capitalization of Parent. The authorized capital stock of
------------------------
Parent consists of: (i) 2,400,000,000 shares of Common Stock, par value $1.00
per share (the "Parent Shares"), of which 1,640,911,212 shares are issued and
outstanding and 807,643 shares are held by Parent in treasury as of June 16,
2000, and (ii) 10,000,000 shares of Preferred Stock, par value $25.00 per share,
no shares of which are outstanding as of June 16, 2000. All of the issued and
outstanding Parent Shares have been validly issued, and are duly authorized,
fully paid, non-assessable and free of preemptive rights. As of June 16, 2000,
157,185,046 Parent Shares were available for issuance under Parent's option
plans, of which approximately 135,293,284 were issuable upon or otherwise
deliverable in connection with the exercise of options outstanding on such date.
Except as set forth above and any additional Parent Shares issued between June
16, 2000 and June 21, 2000 in connection with option exercises and except for
the Parent Rights
-32-
Agreement, as of June 21, 2000, there are no outstanding (i) shares of capital
stock or other voting securities of Parent; (ii) securities of Parent
convertible into or exchangeable for shares of capital stock or voting
securities of Parent; (iii) options or other rights to acquire from Parent and
no obligations of Parent to issue, any capital stock, voting securities, or
securities convertible into or exchangeable for capital stock or voting
securities of Parent; or (iv) equity equivalents, interests in the ownership or
earnings of Parent, or other similar rights (including stock appreciation
rights).
SECTION 4.6 Information Supplied. None of the information supplied or to
--------------------
be supplied by Parent or Merger Sub specifically for inclusion or incorporation
by reference in (i) the S-4 will, at the time the S-4 is filed with the SEC and
at the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and
(ii) the Proxy Statement will, at the date mailed to stockholders of the Company
and at the time of the Company Stockholder Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior
to the Effective Time any event in respect of Parent, its officers and
directors, or any of its subsidiaries should occur which is required to be
described in an amendment of, or a supplement to, the S-4 or the Proxy
Statement, Parent shall promptly so advise the Company and such event shall be
so described, and such amendment or supplement (which the Company shall have a
reasonable opportunity to review) shall be promptly filed with the SEC. The S-4
will comply as to form in all material respects with the provisions of the
Securities Act and the rules and regulations thereunder. No representation is
made under this Section 4.6 with respect to any statements made or incorporated
by reference in the S-4 or the Proxy Statement based on information supplied by
the Company specifically for inclusion or incorporation by reference therein.
SECTION 4.7 Consents and Approvals; No Violations. Except for filings,
-------------------------------------
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky Laws, the HSR Act, the filing and acceptance for record
of the Certificate of Merger as required by the DGCL, and such other filings,
permits, authorizations, consents and approvals which, if not obtained or made,
are not reasonably expected to have a Material Adverse Effect on Parent and its
subsidiaries taken as a whole, no filing with or notice to, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary for
the execution and delivery by Parent or Merger Sub of this Agreement or the
Option Agreement or the consummation by Parent or Merger Sub of the transactions
contemplated hereby or thereby. The execution, delivery, and performance of
this Agreement and the Option Agreement by Parent or Merger Sub and the
consummation by Parent or Merger Sub of the transactions contemplated hereby and
thereby will not result in any violation of or conflict with, constitute a
default under (with or without due notice or lapse of time or both), require any
consent, waiver or notice under any term of, or result in the reduction or loss
of any benefit or the creation or acceleration of any right or obligation under,
(i) the respective certificate of incorporation or bylaws of Parent or Merger
Sub, (ii) any agreement, note, bond, mortgage, indenture, contract, lease,
permit or other obligation or right to
-33-
which Parent or Merger Sub is a party or by which any of their respective assets
or properties is bound, or (iii) any Law, except in the case of (ii) or (iii)
where any of the foregoing is not reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect on Parent and its subsidiaries taken
as a whole.
SECTION 4.8 Litigation. Except as disclosed in the Parent SEC Reports,
----------
there is no other suit, claim, action, proceeding or, to Parent's knowledge,
investigation, pending or, to Parent's knowledge, threatened which is reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent and its subsidiaries taken as a whole. Except as disclosed in the Parent
SEC Reports, none of Merger Sub, Parent or its subsidiaries is subject to any
outstanding order, writ, injunction or decree which is reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect on Parent and
its subsidiaries taken as a whole. Notwithstanding the foregoing, any
shareholder litigation or litigation by any Governmental Entity, in each case
brought or threatened against Parent, Merger Sub or any officer, director,
employee or agent of Parent or Merger Sub in any respect of this Agreement or
the transactions contemplated hereby shall not be deemed to have a Material
Adverse Effect on Parent and its subsidiaries taken as a whole.
SECTION 4.9 Compliance with Applicable Law. The businesses and operations
------------------------------
of Parent and Merger Sub comply in all respects with all Laws applicable to
Parent or its subsidiaries, except where the failure to comply is not reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
Parent and its subsidiaries taken as a whole.
SECTION 4.10 No Prior Activities. Except for obligations incurred in
-------------------
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby, Merger
Sub has neither incurred any obligation or liability nor engaged in any business
or activity of any type or kind whatsoever or entered into any agreement or
arrangement with any person.
SECTION 4.11 Brokers. No broker, finder, investment banker or other person
-------
(other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.) 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 and on behalf of Parent, Merger Sub or
any of their affiliates.
SECTION 4.12 Accounting Matters. Neither Parent nor, to Parent's
------------------
knowledge, any of its affiliates, has taken or agreed to take any action or is
aware of any fact or circumstance that would prevent the Merger from qualifying
as a "pooling of interests" under APB 16 and the applicable SEC rules and
regulations.
ARTICLE V
COVENANTS RELATED TO CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business of the Company. Except as set forth in
----------------------------------
Section 5.1 of the Company Disclosure Schedule, as consented to by Parent or as
contemplated by this Agreement, during the period from the date hereof to the
Effective Time, the Company will, and will cause each of its subsidiaries to,
conduct its operations in the ordinary and usual course of
-34-
business consistent with past practice and use reasonable best efforts to
preserve intact its current business organizations, keep available the service
of its current officers and key employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end that
goodwill and ongoing businesses shall be unimpaired at the Effective Time.
Without limiting the generality of the foregoing, and except as otherwise
expressly provided in this Agreement or in Section 5.1 of the Company Disclosure
Schedule, prior to the Effective Time, neither the Company nor any of its
subsidiaries will, without the prior written consent of Parent:
(a) amend its charter or bylaws (or other similar organizational or
governing instruments) or amend, modify or terminate the Company Rights
Plan;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities convertible into
or exchangeable for any stock or any equity equivalents (including, any
stock options or stock appreciation rights), except for (x) the issuance of
Shares upon the exercise of outstanding Company Stock Options, and the
grant to newly hired officers, employees or agents (in the ordinary course
of business consistent with past practice) of additional Company Stock
Options after the date hereof to purchase up to 100,000 additional Shares
and the issuance of shares on the exercise thereof and (y) the conversion
of 4 1/4% Notes;
(c) (i) split, combine or reclassify any shares of its capital stock;
(ii) declare, set aside or pay any dividend or other distribution (whether
in cash, stock or property or any combination thereof) in respect of its
capital stock (other than any dividends or distributions payable to the
Company or its subsidiaries); (iii) make any other actual, constructive or
deemed distribution in respect of any shares of its capital stock or
otherwise make any payments to stockholders in their capacity as such
(other than any distributions or payments to the Company or its
subsidiaries); or (iv) redeem, repurchase or otherwise acquire any of its
securities or any securities of any of its subsidiaries (including
redeeming any Rights);
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries (other than the
Merger);
(e) alter through merger, liquidation, reorganization, restructuring or
in any other fashion the corporate structure or ownership of any subsidiary
of Company;
(f) (i) incur or assume any indebtedness for borrowed money other than
under existing credit facilities (or any renewals, replacements or
extensions that do not increase the aggregate commitments thereunder)
except (A) in the ordinary and usual course of business consistent with
past practice or (B) in connection with any acquisition or capital
expenditure permitted by this Section 5.1; (ii) assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently
or otherwise) for the
-35-
obligations of any other person, except in the ordinary and usual course of
business consistent with past practice, and except for obligations of the
wholly owned subsidiaries of the Company; (iii) make any loans, advances or
capital contributions to, or investments in, any other person (other than
(A) any acquisition permitted by this Section 5.1, (B) loans, advances or
capital contributions to or investments in wholly owned subsidiaries of the
Company, (C) loans or advances to employees of the Company or any of its
subsidiaries in the ordinary course of business consistent with past
practice or (D) extensions of credit to customers in the ordinary course of
business consistent with past practice); (iv) pledge or otherwise encumber
shares of capital stock of the Company or its subsidiaries; or (v) create
or assume any Lien on any material assets of the Company or any of its
subsidiaries other than in the ordinary and usual course of business
consistent with past practice;
(g) (i) except as set forth in Section 5.1(g) of the Company Disclosure
Schedule or as required under existing agreements, increase in any manner
the compensation or fringe benefits of any director, officer or employee
except in the ordinary course of business consistent with past practice or
pay any benefit not required by any plan and arrangement as in effect as of
the date hereof or grant any completion bonuses or change of control
payments in respect of the Merger or that will be affected thereby; (ii)
except in the ordinary course of business consistent with past practice,
promote or change the classification or status in respect of or hire any
employee or individual; or (iii) make any contributions or other deposits
to any trust that is not qualified under Section 501(a) of the Code;
(h) acquire, sell, lease or dispose of any material assets outside the
ordinary and usual course of business consistent with past practice or any
assets which in the aggregate are material to the Company and its
subsidiaries taken as a whole, or grant any exclusive distribution rights
other than extensions or renewals in the ordinary course of business
consistent with past practice;
(i) except as may be required as a result of a change in Law or in GAAP,
make any material change in any of the accounting principles or practices
used by it;
(j) revalue in any material respect any of its assets, including,
writing down the value of inventory or writing-off notes or accounts
receivable other than in the ordinary and usual course of business
consistent with past practice or as required by GAAP;
(k) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) other than in the
ordinary and usual course of business consistent with past practice, enter
into any material contract or agreement or amend in any material respect
any of the Material Contracts or the agreements referred to in Section
3.18; (iii) authorize any new capital expenditure or expenditures which are
not provided for in the Company's current capital expenditure plan and
which, individually, is in excess of $300,000 or, in the aggregate, are in
excess of $750,000; or (iv) enter into or amend any
-36-
contract, agreement, commitment or arrangement providing for the taking of
any action that would be prohibited hereunder;
(l) make or revoke any Tax election, or settle or compromise any
material Tax liability, or change (or make a request to any taxing
authority to change) any aspect of its method of accounting for Tax
purposes;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary and usual course of business consistent with past practice or in
accordance with their terms of liabilities reflected, or reserved against
in, the consolidated financial statements of the Company and its
subsidiaries or incurred since the date of such financial statements or
waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or
any of its subsidiaries is a party;
(n) settle or compromise any pending or threatened suit, action or claim
relating to the transactions contemplated hereby;
(o) take any action (including, any action otherwise permitted by this
Section 5.1) that would prevent or impede the Merger from qualifying as a
"pooling of interests" under APB 16 and the applicable SEC rules and
regulations or as a "reorganization" under Section 368 of the Code;
(p) enter into any agreement or arrangement that limits or otherwise
restricts the Company or any of its subsidiaries or any successor thereto
or that could, after the Effective Time, limit or restrict the Surviving
Corporation and its affiliates (including Parent) or any successor thereto,
from engaging or competing in any line of business or in any geographic
area;
(q) fail to comply in any material respect with any Law applicable to
the Company, its subsidiaries, or their respective assets;
(r) enter into any direct or indirect arrangements for financial
subsidies;
(s) adopt, enter into, amend, alter or terminate (partially or
completely) any Benefit Plan or Employee Arrangement except as contemplated
by this Agreement or to the extent required by applicable Law;
(t) enter into any contract with an officer, director, employee, agent
or other similar representative of the Company or any of its subsidiaries
that is not terminable, without penalty or other liability, upon not more
than 60 calendar days' notice; or
(u) take, propose to take, or agree in writing or otherwise to take, any
of the actions described in Sections 5.1(a) through 5.1(t) or any action
which would cause the condition set forth in Section 7.2(a) not to be
satisfied.
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SECTION 5.2 Conduct of Business of Parent. Except as consented to by
-----------------------------
the Company or as contemplated by this Agreement, during the period from the
date hereof to the Effective Time, neither Parent nor any of its subsidiaries
will:
(a) amend Parent's certificate of incorporation or bylaws;
(b) take any action that would or would reasonably be expected to prevent,
impair or materially delay the ability of the Company or Parent to consummate
the transactions contemplated by this Agreement;
(c) take any action (including, any action otherwise permitted by this
Section 5.2) that would prevent or impede the Merger from qualifying as a
"pooling of interests" under APB 16 and the applicable SEC rules and regulations
or as a "reorganization" under Section 368 of the Code; or
(d) take, propose to take, or agree in writing or otherwise to take, any of
the actions described in Section 5.2(a) through 5.2(c) or any action which would
cause the condition set forth in Section 7.3(a) not to be satisfied.
SECTION 5.3 Access to Information.
---------------------
(a) Between the date hereof and the Effective Time and subject to
applicable Law, the Company will give Parent and Merger Sub and their authorized
representatives (including counsel, financial advisors, environmental
consultants and auditors) reasonable access to all employees, plants, offices,
warehouses and other facilities and to all books and records of the Company and
its subsidiaries, will permit Parent and Merger Sub to make such inspections as
Parent and Merger Sub may reasonably require, including the right to conduct
sampling of surface water, groundwater, soil and outdoor air quality, and
building materials and will cause the Company's officers and those of its
subsidiaries to furnish Parent and Merger Sub with such financial and operating
data and other information in respect of the business, properties and personnel
of the Company and its subsidiaries as Parent or Merger Sub may from time to
time reasonably request, provided that no investigation pursuant to this Section
5.3(a) shall affect or be deemed to modify any of the representations or
warranties made by the Company.
(b) Between the date hereof and the Effective Time, the Company shall
furnish to Parent and Merger Sub (i) within five business days after the
delivery thereof to management, such monthly financial statements and data as
are regularly prepared for distribution to Company management and (ii) at the
earliest time they are available, such quarterly and annual financial statements
as are prepared for the Company Board, which (in the case of this clause (ii))
shall be in accordance with the books and records of the Company.
(c) Each of Parent and the Company will hold and will cause its authorized
representatives to hold in confidence all documents and information furnished to
the other in connection with the transactions contemplated by this Agreement
pursuant to the terms of that certain Confidentiality Agreement entered into
between the Company and Parent dated May 16,
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2000 (the "Confidentiality Agreement"), which shall survive any termination of
this Agreement in all respects.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Preparation of S-4 and the Proxy Statement. Parent and the
------------------------------------------
Company will, as promptly as practicable, jointly prepare and (i) the Company
will file with the SEC the Proxy Statement in connection with the vote of the
stockholders of the Company in respect of the Merger and (ii) Parent will file
with the SEC the S-4 in connection with the registration under the Securities
Act of the shares of Parent Common Stock issuable upon conversion of the Shares
and the other transactions contemplated hereby. Parent and the Company will, and
will cause their accountants and lawyers to, use their reasonable best efforts
to have or cause the S-4 to be declared effective as promptly as practicable
after filing with the SEC, including causing their accountants to deliver
necessary or required instruments such as opinions, consents and certificates,
and will take any other action required or necessary to be taken under federal
or state securities Laws or otherwise in connection with the registration
process (other than qualifying to do business in any jurisdiction which it is
not now so qualified or filing a general consent to service of process in any
jurisdiction). The Company and Parent shall, as promptly as practicable after
the receipt thereof, provide to the other party copies of any written comments
and advise the other party of any oral comments in respect of the Proxy
Statement or the S-4 received from the staff of the SEC. The Company will
provide Parent with a reasonable opportunity to review and comment on any
amendment or supplement to the Proxy Statement prior to filing with the SEC and
will provide Parent with a copy of all such filings with the SEC. Parent will
provide the Company with a reasonable opportunity to review and comment on any
amendment or supplement on the S-4 prior to filing with SEC and will provide the
Company with a copy of all such filings with the SEC. Parent will advise the
Company, promptly after it receives notice thereof, of the time when the Form S-
4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Parent
Common Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Form S-4 or
comments thereon and responses thereto or requests by the SEC for additional
information. The Company will use its reasonable best efforts to cause the Proxy
Statement to be mailed to its stockholders at the earliest practicable date.
SECTION 6.2 Letter of Accountants.
---------------------
(a) The Company shall use all reasonable best efforts to cause to be
delivered to Parent a letter of Ernst & Young LLP, the Company's independent
auditors, dated as of the date on which the S-4 shall become effective and
addressed to Parent, in form and substance reasonably satisfactory to Parent and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the S-4.
(b) Parent shall use all reasonable best efforts to cause to be delivered
to the Company a letter of Ernst & Young LLP, the Parent's independent auditors,
dated as of the date on which the S-4 shall become effective and addressed to
the Company, in form and substance
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reasonably satisfactory to the Company and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the S-4.
SECTION 6.3 Meeting. The Company shall take all lawful action to (i)
-------
cause a special meeting of its stockholders (the "Company Stockholder Meeting")
to be duly called and held as soon as practicable after the effective date of
the Form S-4 for the purpose of voting on the approval and adoption of this
Agreement and approval of the Merger and related matters and (ii) subject to
applicable Law, solicit proxies from its stockholders to obtain the Company
Requisite Vote for the approval and adoption of this Agreement and approval of
the Merger. Subject to the provisions of Section 6.5(b), the Company Board shall
recommend approval and adoption of this Agreement and approval of the Merger by
the Company's stockholders and the Company Board shall not withdraw, amend or
modify in a manner adverse to Parent such recommendation (or announce publicly
its intention to do so).
SECTION 6.4 Reasonable Best Efforts.
-----------------------
(a) Subject to the terms and conditions of this Agreement and applicable
Law, each party will use its reasonable best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable Laws to consummate the Merger and the other
transactions contemplated by this Agreement. In furtherance and not in
limitation of the foregoing, each party hereto shall (i) make an appropriate
filing of a Notification and Report Form pursuant to the HSR Act in respect of
the transactions contemplated hereby as promptly as practicable and in any event
within ten business days of the date hereof and to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and use its reasonable best efforts to take,
or cause to be taken, all other actions consistent with this Section 6.4
necessary to cause the expiration or termination of the applicable waiting
periods under the HSR Act as soon as practicable; and (ii) make appropriate
filings required under any other applicable Antitrust Law (as hereinafter
defined) in respect of the transactions contemplated hereby as promptly as
practicable and to supply as promptly as practicable any additional information
and documentary material that may be requested by the applicable Governmental
Entities administering such Laws and use its reasonable best efforts to take, or
cause to be taken, all other action consistent with this Section 6.4 necessary
to secure the applicable clearances or approvals under such Laws as soon as
practicable. For purposes of this Agreement, "Antitrust Law" means the ▇▇▇▇▇▇▇
Act, as amended, the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other Laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade or lessening of competition through merger
or acquisition.
(b) Each of Parent and the Company shall, in connection with the efforts
referenced in Section 6.4(a) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under the HSR
Act or any other Antitrust Law, use its reasonable best efforts subject to
applicable Law to (i) cooperate in all respects with each other in connection
with any filing or submission and in connection with any investigation or other
inquiry, including any proceeding initiated by a private party; (ii) keep the
other party informed
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in all material respects of any material communication received by such party
from, or given by such party to, the Federal Trade Commission (the "FTC"), the
Antitrust Division of the Department of Justice (the "DOJ") or any other
Governmental Entity and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any of
the transactions contemplated hereby; and (iii) permit the other party to review
any material communication given by it to, and consult with each other in
advance of any meeting or conference with, the FTC, the DOJ or any such other
domestic or foreign Governmental Entity or, in connection with any proceeding by
a private party, with any other person, and to the extent permitted by the FTC,
the DOJ or such other applicable domestic or foreign Governmental Entity or
other person, give the other party the opportunity to attend and participate in
such meetings and conferences.
(c) In furtherance and not in limitation of the covenants of the parties
contained in Sections 6.4(a) and (b), each of Parent and the Company shall,
subject to applicable Law, use its reasonable best efforts to resolve such
objections if any, as may be asserted by a Governmental Entity or other person
in respect of the transactions contemplated hereby under any Antitrust Law. In
connection with the foregoing, if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any Antitrust Law, each of Parent and the Company
shall cooperate in all respects with each other and use its respective
reasonable best efforts to contest and resist any such action or proceeding and
to have vacated, lifted, reversed or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents or restricts consummation of the transactions
contemplated by this Agreement. Notwithstanding the foregoing or any other
provision of this Agreement, nothing in this Section 6.4 shall (i) limit a
party's right to terminate this Agreement pursuant to Section 8.2 so long as
such party has up to then complied in all material respects with its obligations
under this Section 6.4, (ii) require Parent to dispose or hold separate any part
of its business or operations or agree not to compete in any geographic area or
line of business or (iii) require Parent to dispose or hold separate any part of
the Company's business or operations or agree to cause the Company not to
compete in any geographic area or line of business which would in any such case
impair in any material respect any of the benefits intended to be derived by
Parent after the Effective Time as a result of the Merger.
(d) The Company agrees that in connection with any litigation which may be
brought against the Company or its directors relating to the transactions
contemplated hereby, the Company will keep Parent, and any counsel which Parent
may retain at its own expense, informed of the course of such litigation, to the
extent Parent is not otherwise a party thereto. The Company agrees that it will
consult with Parent prior to entering into any settlement or compromise of any
such litigation, and that no such settlement or compromise will be entered into
without Parent's prior written consent, which consent shall not be unreasonably
withheld.
SECTION 6.5 Acquisition Proposals.
---------------------
(a) The Company will not, nor will it permit any of its subsidiaries to,
nor will it authorize or permit any officer, director or employee of or any
investment banker, attorney,
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accountant or other advisor or representative of, the Company or any of its
subsidiaries to, directly or indirectly, (i) solicit, initiate or encourage the
submission of any Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information in respect of,
or take any other action to facilitate, any Acquisition Proposal or any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal, provided, however, that nothing
contained in this Section 6.5(a) shall prohibit the Company Board from
furnishing any information to, or entering into discussions or negotiations
with, any person that makes an unsolicited bona fide Acquisition Proposal if,
and only to the extent that (A) the Company Stockholder Meeting shall not have
occurred, (B) the Company Board, after consultation with outside legal counsel,
determines in good faith that the failure to take such action would be
inconsistent with its fiduciary duties to the Company's stockholders under
applicable Law, as such duties would exist in the absence of any limitation in
this Agreement, (C) the Company Board determines in good faith that such
Acquisition Proposal is reasonably likely to lead to a transaction that, if
accepted, is reasonably likely to be consummated taking into account all legal,
financial, regulatory and other aspects of the proposal and the person making
the proposal, and believes in good faith, after consultation with its Financial
Advisor and after taking into account the strategic benefits to be derived from
the Merger and the long-term prospects of Parent and its subsidiaries, based on
the information available to the Company Board at the time, that such
Acquisition Proposal would, if consummated, result in a transaction more
favorable to the Company's stockholders than the Merger (any such more favorable
Acquisition Proposal being referred to herein as a "Superior Proposal"), and (D)
prior to taking such action, the Company (x) provides reasonable notice to
Parent to the effect that it is taking such action and (y) receives from the
person submitting such Acquisition Proposal an executed
confidentiality/standstill agreement in reasonably customary form and in any
event containing terms at least as stringent as those contained in the
Confidentiality Agreement between Parent and the Company. The Company shall
notify Parent of any Acquisition Proposal (including, the material terms and
conditions thereof and the identity of the person making it) as promptly as
practicable (but in no case later than 24 hours) after its receipt thereof, and
shall thereafter inform Parent on a prompt basis of the status of any
discussions or negotiations with such third party, and any material changes to
the terms and conditions of such Acquisition Proposal, and shall promptly give
Parent a copy of any information delivered to such person which has not
previously been reviewed by Parent. The Company has ceased and terminated, and
has caused its subsidiaries and affiliates, and their respective officers,
directors, employees, investment bankers, attorneys, accountants and other
agents and representatives to cease and terminate, any existing activities,
discussions or negotiations with any parties conducted heretofore in respect of
any possible Acquisition Proposal. The Company shall take all necessary steps to
promptly inform the individuals or entities referred to in the first sentence of
this Section 6.5 of the obligations undertaken in this Section 6.5. "Acquisition
Proposal" means an inquiry, offer or proposal regarding any of the following
(other than the transactions contemplated by this Agreement) involving the
Company or any of its subsidiaries: (w) any merger, consolidation, share
exchange, recapitalization, business combination or other similar transaction;
(x) any sale, lease, exchange, mortgage, pledge, transfer or other disposition
of all or substantially all the assets of the Company and its subsidiaries,
taken as a whole, in a single transaction or series of related transactions; (y)
any tender offer or exchange offer for 20% or more of the outstanding Shares or
the filing of a
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registration statement under the Securities Act in connection therewith; or (z)
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
(b) The Company Board will not withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Parent, its approval or recommendation of the
Merger unless the Company Board after consultation with outside legal counsel,
determines in good faith that the failure to take such action would be
inconsistent with its fiduciary duties to the Company's stockholders under
applicable Law; provided, however, that the Company Board may not approve or
recommend an Acquisition Proposal (and in connection therewith, withdraw or
modify its approval or recommendation of the Merger) unless such an Acquisition
Proposal is a Superior Proposal (and the Company shall have first complied with
its obligations set forth in Section 8.3(a) and the time referred to in the last
sentence of Section 8.3(a) has expired) and unless it shall have first consulted
with outside legal counsel, and have determined that the failure to take such
action would be inconsistent with its fiduciary duties to the Company's
stockholders. Nothing contained in this Section 6.5(b) shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders which, in the good faith reasonable
judgment of the Company Board, after consultation with outside legal counsel, is
required under applicable Law; provided, however, that except as otherwise
permitted in this Section 6.5(b), the Company does not withdraw or modify, or
propose to withdraw or modify, its position in respect of the Merger or approve
or recommend, or propose to approve or recommend, an Acquisition Proposal.
Notwithstanding anything contained in this Agreement to the contrary, any action
by the Company Board permitted by, and taken in accordance with, this Section
6.5(b) shall not constitute a breach of this Agreement by the Company. Nothing
in this Section 6.5(b) shall (i) permit the Company to terminate this Agreement
(except as provided in Article VIII hereof) or (ii) affect any other obligations
of the Company under this Agreement.
SECTION 6.6 Public Announcements. Each of Parent, Merger Sub and the
--------------------
Company will consult with one another before issuing any press release or
otherwise making any public statements in respect of the transactions
contemplated by this Agreement, including, the Merger, and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by applicable Law or by obligations pursuant to any
listing agreement with the NYSE or the Nasdaq National Market, as determined by
Parent, Merger Sub or the Company, as the case may be.
SECTION 6.7 Indemnification.
---------------
(a) From and after the Effective Time, the Surviving Corporation shall, and
Parent shall cause the Surviving Corporation to the fullest extent permitted by
applicable Law to, indemnify, defend, and hold harmless each person who is now,
or has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director or officer of the Company or any subsidiary thereof,
and each such individual who served at the request of the Company or any of its
subsidiaries as a director, officer, trustee, partner, fiduciary, employee or
agent of another corporation, partnership, joint venture, trust, pension or
other employee benefit plan or
-43-
other enterprise (each an "Indemnified Party" and, collectively, the
"Indemnified Parties") against all losses, expenses (including, reasonable
attorneys' fees and expenses), claims, damages, costs or liabilities or, subject
to the proviso of the next succeeding sentence, amounts paid in settlement, in
connection with any claim, action, suit, proceeding or investigation, whether
civil, administrative or investigative, arising out of actions or omissions
occurring at or prior to the Effective Time and whether asserted, instituted or
claimed prior to, at or after the Effective Time that are in whole or in part
(i) based on, or arising out of the fact that such person is or was a director
or officer or acting in such other capacity on behalf of such party, subsidiary,
plan or other enterprise or (ii) based on, arising out of or pertaining to the
transactions contemplated by this Agreement. Without limiting the foregoing, in
the event of any such loss, expense, claim, damage, cost or liability (whether
or not arising before the Effective Time), (A) the Surviving Corporation shall
pay the reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to the Surviving
Corporation, promptly after statements therefor are received and otherwise
advance to such Indemnified Party, upon request for reimbursement, documented
expenses reasonably incurred, in either case to the extent not prohibited by the
DGCL and upon receipt of any affirmation and undertaking required by the DGCL,
(B) the Surviving Corporation will cooperate in the vigorous defense of any such
matter and (C) any determination required to be made in respect of whether an
Indemnified Party's conduct complies with the standards set forth under the DGCL
and the Surviving Corporation's charter or bylaws shall be made as provided by
applicable Law, subject to the rights of the Indemnified Party to have such
determination made in a court proceeding; provided, however, that the Surviving
Corporation shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld). The
Indemnified Parties as a group may retain only one law firm in respect of each
related matter except to the extent there is, in the opinion of counsel to an
Indemnified Party, under applicable standards of professional conduct, a
conflict on any significant issue between positions of any two or more
Indemnified Parties.
(b) For a period of six years after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect the policies of directors'
and officers' liability insurance maintained by the Company for the benefit of
those persons who are covered by such policies at the Effective Time (or the
Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms that are in all material respects not less
advantageous to the insured parties in respect of matters occurring prior to the
Effective Time), to the extent that such liability insurance can be maintained
annually at a cost to the Surviving Corporation not greater than 200% of the
premium for the current Company directors' and officers' liability insurance;
provided, however, that if such insurance cannot be so maintained or obtained at
such costs, the Surviving Corporation shall maintain or obtain as much of such
insurance as can be so maintained or obtained at a cost equal to 200% of the
current annual premiums of the Company for such insurance.
(c) In the event the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity or such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, or otherwise dissolves or liquidates, then and in either such
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case, proper provision shall be made so that the successors and assigns of the
Surviving Corporation (or Parent, in the case of a dissolution or liquidation)
shall assume the obligations set for in this Section 6.7.
(d) To the fullest extent permitted by Law, from and after the Effective
Time, all rights to liability limitation, exculpation or indemnification now
existing in favor of the employees, agents, directors or officers of the Company
and its subsidiaries in respect of their activities or omissions as such prior
to the Effective Time, as provided in the Company's charter or bylaws or in any
applicable agreement, in effect on the date thereof or otherwise in effect on
the date hereof, shall survive the Merger and shall continue in full force and
effect thereafter.
(e) The provisions of this Section 6.7 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs, and
his or her representatives.
SECTION 6.8 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent and Merger Sub, and Parent and Merger Sub shall give
prompt notice to the Company, of (i) the occurrence or nonoccurrence of any
event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate at or prior to the Effective Time so as to cause the conditions set
forth in Article VII hereof to fail to be satisfied, or (ii) any material
failure of the Company, Parent or Merger Sub, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder so as to cause the conditions set forth in Article VII hereof to
fail to be satisfied; provided, however, that the delivery of any notice
pursuant to this Section 6.8 shall not cure such breach or non-compliance or
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 6.9 Tax-Free Reorganization Treatment; Pooling of Interest
------------------------------------------------------
Accounting. The parties hereto intend that the Merger will qualify as a
----------
reorganization within the meaning of Section 368(a) of the Code. Each of the
parties hereto shall, and shall cause its respective subsidiaries to, use its
reasonable best efforts to cause the Merger to so qualify. The parties will use
their reasonable best efforts to cause the opinions of counsel contemplated by
Sections 7.2(e) and 7.3(d) to be timely delivered, including providing all
supporting representations reasonably requested by such counsel and customary in
scope and substance. The parties further intend that the Merger will be
accounted for as a "pooling of interests" under APB 16 and the applicable SEC
rules and regulations. The parties will use their reasonable best efforts to
establish the availability of such accounting treatment and to cause the letters
of accountants contemplated by Section 7.2(d) to be timely delivered, including
providing all supporting representations reasonably requested by such
accountants and customary in scope and substance.
SECTION 6.10 Employee Matters.
----------------
(a) The Company shall (i) discontinue the ▇▇▇▇-▇▇▇▇▇ Corporation Employee
Stock Purchase Plan as of the last business day prior to the Closing Date, and
no additional purchase rights shall be granted under such plan from and after
the date hereof, but all currently outstanding purchase rights shall remain in
effect subject to the terms of such plan, (ii) at Parent's request, terminate
the ▇▇▇▇-▇▇▇▇▇ Corporation Future Investment Plan ("FI Plan") prior to the
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Closing Date, and (iii) at Parent's request, issue a written notice pursuant to
section 204(h) of the Employee Retirement Income Security Act of 1974, as
amended, to cease further benefit accruals under the ▇▇▇▇-▇▇▇▇▇ Corporation
Employee Retirement Income Plan ("Retirement Plan") effective as of a date
designated by Parent which is on or after the Closing Date. The Company shall
provide to Parent for its prior review and comments a copy of all materials to
be provided to participants in the FI Plan regarding their right to direct the
voting or tendering of Company Common Stock allocated to their accounts under
the FI Plan. The FI Plan shall be amended, if necessary, to permit Parent Common
Stock as an investment option under such plan subject to participant directions.
(b) Except as contemplated by this Agreement, Parent will and will cause
the Surviving Corporation to honor the obligations of the Company or any of its
subsidiaries under the provisions of each Benefit Plan and Employee Arrangement;
provided that the Company shall have the right at any time to amend or terminate
any such Benefit Plan or Employee Arrangement in accordance with its terms. The
employees of the Company will be eligible to participate in Parent's applicable
employee benefit plans, as such plans may be in effect from time to time, as
soon as administratively convenient (as determined at Parent's sole discretion)
after the Effective Time and, at Parent's sole discretion, will become employees
of Parent or any of its subsidiaries. Until such time as employees of the
Company (the "Company Employees") become eligible to participate in Parent's
applicable employee benefit plans (the "Benefits Integration Date"), Parent
shall cause such employee benefits to be maintained for such Company Employees
that are, in the aggregate, no less favorable than those provided to such
Company Employees immediately prior to the Effective Time. Following the
Benefits Integration Date, with respect to each plan maintained by Parent in
which any Company Employee participates (each, a "Parent Plan") that is an
"employee benefit plan" as defined in Section 3(3) of ERISA, for purposes of
eligibility to participate, vesting and, solely with respect to severance and
vacation, level of benefit entitlement (but in no event for purposes of benefits
accrual), service with the Company and its affiliates (or predecessor employers
to the extent the Company and its affiliates provided past service credit) shall
be treated as service with Parent to the same extent such service was counted
under the corresponding Benefit Plan, if any; provided, however, that such
-------- -------
service shall not be recognized to the extent that such recognition would result
in a duplication of benefits. Such service also shall apply for purposes of
satisfying any waiting periods, evidence of insurability requirements, or the
application of any preexisting condition limitations. Each Parent Plan shall
waive preexisting condition limitations to the same extent waived under the
corresponding Benefit Plan. Company Employees shall be given credit under the
applicable Parent Plan for amounts paid under a corresponding Benefit Plan
during the same period as though such amounts had been paid in accordance with
the terms and conditions of the Parent Plan.
SECTION 6.11 Company Affiliate Agreements. Section 6.11 of the Company
----------------------------
Disclosure Schedule sets forth a list of all persons who are, and all persons
who to the Company's knowledge will be at the Closing Date, "affiliates" of the
Company for purposes of Rule 145 under the Securities Act. The Company will
cause such list to be updated promptly through the Closing Date. Not later than
45 days prior to the date of the Company Stockholder
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Meeting, the Company shall cause its "affiliates" to deliver to Parent a Company
Affiliate Agreement substantially in the form attached as Exhibit B.
---------
SECTION 6.12 SEC and Other Filings. Each of Parent and the Company shall
---------------------
promptly provide the other party (or its counsel) with copies of all filings
made by the other party or any of its subsidiaries with the SEC or any other
state, federal or foreign Governmental Entity in connection with this Agreement
and the transactions contemplated hereby.
SECTION 6.13 Fees and Expenses. Whether or not the Merger is
-----------------
consummated, all Expenses incurred in connection with this Agreement, the Option
Agreement and the transactions contemplated hereby and thereby shall be paid by
the party incurring such Expenses, except (a) Expenses incurred in connection
with the filing, printing and mailing of the Proxy Statement and the S-4, which
shall be shared equally by the Company and Parent, (b) the filing fees required
under the HSR Act, which shall be shared equally by the Company and Parent and
(c) if applicable, as provided in Section 8.5. As used in this Agreement,
"Expenses" includes all out-of-pocket expenses (including all fees and expenses
of counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with, or related to, the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, filing, printing and mailing of the Proxy Statement
and the S-4 and the solicitation of stockholder approvals and all other matters
related to the transactions contemplated hereby.
SECTION 6.14 Obligations of Merger Sub. Parent will take all action
-------------------------
necessary to cause Merger Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
SECTION 6.15 Listing of Stock. Parent shall cause the shares of Parent
----------------
Common Stock to be issued in connection with the Merger to be approved for
listing on the NYSE on or prior to the Closing Date, subject to official notice
of issuance.
SECTION 6.16 Antitakeover Statutes. If any Takeover Statute is or may
---------------------
become applicable to the Merger or the Option Agreement, each of Parent and the
Company shall use their reasonable best efforts to permit the transactions
contemplated by this Agreement or the Option Agreement, as applicable, to be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of any Takeover Statute on
the Merger or the Option Agreement.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions to Each Party's Obligations to Effect the
----------------------------------------------------
Merger. The respective obligations of each party to consummate the transactions
------
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following conditions, any or all of which may be
waived in whole or in part by the party being benefited thereby, to the extent
permitted by applicable Law:
-47-
(a) The Merger shall have been approved and adopted by the Company
Requisite Vote.
(b) Any waiting periods applicable to the Merger under the HSR Act
shall have expired or early termination thereof shall have been granted and
any waiting periods or consents under any comparable foreign antitrust Laws
shall have expired or been obtained.
(c) There shall not be in effect any Law of any Governmental Entity
of competent jurisdiction restraining, enjoining or otherwise preventing
consummation of the transactions contemplated by this Agreement and no
Governmental Entity shall have instituted any proceeding which continues to
be pending seeking any such Law.
(d) The S-4 shall have been declared effective by the SEC and shall
be effective at the Effective Time, and no stop order suspending
effectiveness shall have been issued and no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have
been initiated and be continuing.
(e) The Parent Common Stock required to be issued hereunder shall
have been approved for listing on the NYSE, subject only to official notice
of issuance.
SECTION 7.2 Conditions to the Obligations of Parent and Merger Sub. The
------------------------------------------------------
respective obligations of Parent and Merger Sub to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or prior to the
Effective Time of each of the following additional conditions, any or all of
which may be waived in whole or part by Parent and Merger Sub, as the case may
be, to the extent permitted by applicable Law:
(a) The representations and warranties of the Company contained herein
shall have been true in all respects when made and on and as of the Closing Date
as though made on and as of the Closing Date (except for representations and
warranties made as of a specified date, which shall speak only as of the
specified date), except where the failure to be true, individually or in the
aggregate, has not had or is not reasonably expected to have a Material Adverse
Effect on the Company and its subsidiaries taken as a whole.
(b) The Company shall have performed or complied in all material respects
with all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the time of the Closing.
(c) The Company shall have delivered to Parent a certificate, dated the
date of the Closing, signed by the President or any Vice President of the
Company (but without personal liability thereto), certifying as to the
fulfillment of the conditions specified in Sections 7.2(a) and 7.2(b).
(d) The Company shall have received and delivered to Parent a letter from
Ernst & Young LLP, auditors for the Company, dated as of the Closing Date,
stating that the Company qualifies as a combining company in accordance with the
provisions of APB 16 and the
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applicable SEC rules and regulations. Parent shall have received a letter from
Ernst & Young LLP, auditors for Parent, dated as of the Closing Date, stating
that accounting of the Merger as a "pooling of interests" under APB 16 and the
applicable SEC rules and regulations is appropriate if the Merger is consummated
as contemplated by this Agreement. Notwithstanding the foregoing, the
satisfaction of this Section 7.2(d) shall not be a condition to the obligations
of a party to effect the Merger if the failure to satisfy this condition results
from any action taken or agreed to be taken by or on behalf of Parent.
(e) Parent shall have received an opinion of its tax counsel, Weil,
Gotshal & ▇▇▇▇▇▇ LLP, dated the Effective Time, to the effect that (i) the
Merger will qualify as a reorganization within the meaning of Section 368(a) of
the Code; and (ii) each of Parent, Merger Sub and the Company will be a party to
the reorganization within the meaning of Section 368(b) of the Code. The
issuance of such opinion shall be conditioned on the receipt by such tax counsel
of representation letters from each of the Parent, Merger Sub and the Company,
substantially in the forms attached hereto as Exhibits D and E. Each such
---------- -
representation letter shall be dated on or before the date of such opinion and
shall not have been withdrawn or modified in any material respect.
(f) All authorizations, consents or approvals of a Governmental Entity
(other than those specified in Section 7.1(b)) required in connection with the
execution and delivery of this Agreement and the performance of the obligations
hereunder shall have been made or obtained, without any limitation, restriction
or condition that is reasonably expected to have a Material Adverse Effect on
the Company and its subsidiaries taken as a whole (or an effect on Parent and
its subsidiaries that, were such effect applied to the Company and its
subsidiaries, is reasonably expected to have a Material Adverse Effect on the
Company), except for such authorizations, consents or approvals, the failure of
which to have been made or obtained is not reasonably expected to have a
Material Adverse Effect on the Company and its subsidiaries taken as a whole (or
an effect on Parent and its subsidiaries that, were such effect applied to the
Company and its subsidiaries, is reasonably expected to have a Material Adverse
Effect on the Company).
(g) Not later than 45 days prior to the date of the Company Stockholder
Meeting, Parent shall have received from the Company's "affiliates" a Company
Affiliate Agreement substantially in the form attached as Exhibit B.
---------
SECTION 7.3 Conditions to the Obligations of the Company. The obligations
--------------------------------------------
of the Company to consummate the transactions contemplated by this Agreement are
subject to the fulfillment at or prior to the Effective Time of each of the
following conditions, any or all of which may be waived in whole or in part by
the Company to the extent permitted by applicable Law:
(a) The representations and warranties of Parent and Merger Sub contained
herein shall be true in all respects when made and on and as of the Closing Date
as though made on and as of the Closing Date (except for representations and
warranties made as of a specified date, which shall speak only as of the
specified date), except where the failure to be true, individually or in the
aggregate, has not had or is not reasonably expected to have a Material Adverse
Effect on Parent and its subsidiaries taken as a whole.
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(b) Parent shall have performed or complied in all material respects with
all agreements and conditions contained herein required to be performed or
complied with by it prior to or at the time of the Closing.
(c) Parent shall have delivered to the Company a certificate, dated the
date of the Closing, signed by the President or any Vice President of Parent
(but without personal liability thereto), certifying as to the fulfillment of
the conditions specified in Sections 7.3(a) and 7.3(b).
(d) (i) The Company shall have received an opinion of its tax counsel,
▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., dated the Effective Time, to the effect that the Merger
will qualify as a reorganization within the meaning of Section 368(a) of the
Code; and (ii) each of Parent, Merger Sub and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code. The issuance
of such opinion shall be conditioned on the receipt by such tax counsel of
representation letters from each of the Parent, Merger Sub and the Company, in
each case, in form and substance reasonably satisfactory to ▇▇▇▇▇ & ▇▇▇▇▇▇
L.L.P. Each such representation letter shall be dated on or before the date of
such opinion and shall not have been withdrawn or modified in any material
respect.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination by Mutual Agreement. This Agreement may be
-------------------------------
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after the approval of the Merger by the Company
Requisite Vote referred to in Section 7.1(a), by mutual written consent of the
Company and Parent by action of their respective boards of directors.
SECTION 8.2 Termination by Either Parent or the Company. This Agreement
-------------------------------------------
may be terminated and the Merger may be abandoned at any time prior to the
Effective Time by action of the board of directors of either Parent or the
Company if:
(a) the Merger shall not have been consummated by December 31, 2000,
whether such date is before or after the date of approval of the Merger by
the Company Requisite Vote (the "Termination Date"); provided, however,
that if either Parent or the Company reasonably determines in good faith
that additional time is necessary in connection with obtaining any consent,
registration, approval, permit or authorization required to be obtained
from any Governmental Entity, the Termination Date may be extended by
Parent or the Company from time to time by written notice to the other
party to a date not beyond February 28, 2001;
(b) the Company Requisite Vote shall not have been obtained at the
Company Stockholder Meeting or at any adjournment or postponement thereof;
(c) any Law permanently restraining, enjoining or otherwise
prohibiting consummation of the Merger shall become final and non-
appealable (whether before or after the approval of the Merger by the
Company Requisite Vote); or
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(d) any Governmental Entity shall have failed to issue an order,
decree or ruling or to take any other action which is necessary to fulfill
the conditions set forth in Sections 7.1(b), 7.1(d) and 7.2(f), as
applicable, and such denial of a request to issue such order, decree or
ruling or take such other action shall have been final and nonappealable;
provided, however, that the right to terminate this Agreement pursuant to
this Section 8.2 shall not be available to any party that has breached in
any material respect its obligations under this Agreement in any manner
that shall have proximately contributed to the occurrence of the failure of
the Merger to be consummated.
SECTION 8.3 Termination by the Company. This Agreement may be terminated
--------------------------
and the Merger may be abandoned at any time prior to the Effective Time by
action of the Company Board:
(a) if (i) the Company is not in breach of Section 6.5, (ii) the
Merger shall not have been approved by the Company Requisite Vote, (iii)
the Company Board authorizes the Company, subject to complying with the
terms of this Agreement, to enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal and the
Company notifies Parent in writing that it intends to enter into such an
agreement, attaching the most current version of such agreement to such
notice, and (iv) during the three business day period after the Company's
notice, (A) the Company shall have negotiated with, and shall have caused
its respective financial and legal advisors to negotiate with, Parent to
attempt to make such commercially reasonable adjustments in the terms and
conditions of this Agreement as would enable the Company to proceed with
the transactions contemplated hereby and (B) the Company Board shall have
concluded, after considering the results of such negotiations, that any
Superior Proposal giving rise to the Company's notice continues to be a
Superior Proposal. The Company may not effect such termination unless
contemporaneously therewith the Company pays to Parent in immediately
available funds the fees required to be paid pursuant to Section 8.5. The
Company agrees (x) that it will not enter into a binding agreement referred
to in clause (iii) above until at least the day following the third
business day after it has provided the notice to Parent required thereby
and (y) to notify Parent promptly if its intention to enter into a written
agreement referred to in its notification shall change at any time after
giving such notification; or
(b) if there is a breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement contained in this Agreement
that cannot be cured and would cause a condition set forth in Section
7.3(a) or 7.3(b) to be incapable of being satisfied as of the Termination
Date.
SECTION 8.4 Termination by Parent. This Agreement may be terminated and
---------------------
the Merger may be abandoned at any time prior to the Effective Time by Parent,
if:
(a) either (i) the Company enters into a binding agreement for a
Superior Proposal, or (ii) the Company Board shall have withdrawn or
adversely modified its approval or recommendation of the Merger; or
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(b) there is a breach by the Company of any representation, warranty,
covenant or agreement contained in this Agreement that cannot be cured and
would cause a condition set forth in Section 7.2(a) or 7.2(b) to be
incapable of being satisfied as of the Termination Date.
SECTION 8.5 Effect of Termination and Abandonment.
-------------------------------------
(a) In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article VIII, this Agreement (other than this
Section 8.5, Sections 5.3(c) and 6.13, and Article IX) shall become void and of
no effect with no liability on the part of any party hereto (or of any of its
directors, officers, employees, agents, legal and financial advisors, or other
representatives); provided, however, that except as otherwise provided herein,
no such termination shall relieve any party hereto of any liability or damages
resulting from any willful breach of this Agreement.
(b) In the event that (i) a bona fide Acquisition Proposal shall have been
made or any person shall have publicly announced an intention (whether or not
conditional) to make a bona fide Acquisition Proposal in respect of the Company
or any of its subsidiaries and thereafter this Agreement is terminated by either
Parent or the Company pursuant to Section 8.2(b) or by the Parent pursuant to
Section 8.4(b) as a result of a material breach by the Company of any of the
covenants set forth in Section 6.5 hereof (provided that within 9 months of the
termination of this Agreement any Acquisition Proposal by a third party is
entered into, agreed to, or consummated by the Company) or (ii) this Agreement
is terminated by the Company pursuant to Section 8.3(a), or (iii) this Agreement
is terminated by Parent pursuant to Section 8.4(a)(i), or (iv) this Agreement is
terminated by Parent pursuant to Section 8.4(a)(ii) and, within 9 months of such
termination, any Acquisition Proposal by any third party is entered into, agreed
to or consummated by the Company, then the Company shall pay Parent a
termination fee of $223,203,810 in same-day funds, on the date of such
termination, in the case of clause (ii) or (iii), or on the earlier of the date
an agreement is entered into in respect of an Acquisition Proposal or an
Acquisition Proposal is consummated in the case of clause (i) or (iv), provided,
--------
however, that notwithstanding the foregoing, Parent will not be entitled to a
-------
termination fee pursuant to clause (i) or (iv) above in the event the
Acquisition Proposal entered into, agreed to or consummated after such
termination is an Acquisition Proposal whereby (A) the Company or any of its
subsidiaries acquires a third party (the "Exempt Acquired Person") pursuant to a
merger, consolidation, recapitalization, share exchange or similar transaction
in which the Company survives and the shareholders of the Exempt Acquired Person
receive shares of Company Common Stock which, immediately following consummation
of such merger, consolidation, recapitalization, share exchange or similar
transaction, will represent no more than 45% of the issued and outstanding
shares of Company Common Stock (or securities convertible or exchangeable into,
or exercisable for Company Common Stock, whether upon the passage of time or
otherwise) and (B) such Exempt Acquired Person, or any affiliate or affiliates
thereof, was or were not the subject of an Acquisition Proposal at any time
after the date hereof and prior to the termination of this Agreement.
(c) The Company acknowledges that the agreements contained in Section
8.5(b) are an integral part of the transactions contemplated by this Agreement,
and that, without these
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agreements, Parent and Merger Sub would not have entered into this Agreement;
accordingly, if the Company fails to promptly pay the amount due pursuant to
Section 8.5(b), and, in order to obtain such payment, Parent commences a suit
which results in a judgment against the Company for the fee set forth in this
Section 8.5, the Company shall pay to Parent its costs and expenses (including,
attorneys' fees) in connection with such suit, together with interest from the
date of termination of this Agreement on the amounts owed at the prime rate of
Bank of America, N.A., in effect from time to time during such period.
SECTION 8.6 Amendment. This Agreement may be amended by action taken by
---------
the Company, Parent and Merger Sub at any time before or after approval of the
Merger by the Company Requisite Vote but, after any such approval, no amendment
shall be made which requires the approval of such stockholders under applicable
Law without such approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of the parties hereto.
SECTION 8.7 Extension; Waiver. At any time prior to the Effective Time,
-----------------
each party hereto (for these purposes, Parent and Merger Sub shall together be
deemed one party and the Company shall be deemed the other party) may (i) extend
the time for the performance of any of the obligations or other acts of the
other party, (ii) waive any inaccuracies in the representations and warranties
of the other party contained herein or in any document, certificate or writing
delivered pursuant hereto, or (iii) waive compliance by the other party with any
of the agreements or conditions contained herein. Any agreement on the part of
either party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure
of any party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Entire Agreement; Assignment.
----------------------------
(a) This Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the parties hereto in respect
of the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties in respect of the
subject matter hereof, other than the Confidentiality Agreement (which shall
remain in effect).
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by operation of Law (including by merger or
consolidation) or otherwise without the prior written consent of the other
parties. Any assignment in violation of the preceding sentence shall be null
and void. 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 permitted assigns.
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SECTION 9.2 Nonsurvival of Representations and Warranties.
---------------------------------------------
The representations and warranties made herein by the parties hereto shall
not survive the Effective Time. This Section 9.2 shall not limit any covenant
or agreement of the parties hereto which by its terms contemplates performance
after the Effective Time or after termination of this Agreement.
SECTION 9.3 Notices. All notices, requests, instructions or other
-------
documents to be given under this Agreement shall be in writing and shall be
deemed given (i) five business days following sending by registered or certified
mail, postage prepaid, (ii) when sent if sent by facsimile; provided, however,
that the facsimile is promptly confirmed by telephone confirmation thereof,
(iii) when delivered, if delivered personally to the intended recipient, and
(iv) one business day following sending by overnight delivery via a national
courier service, and in each case, addressed to a party at the following address
for such party:
if to Merger Sub or to
Parent, to: Texas Instruments Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇/▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
- or -
▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇/▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: Texas Instruments Incorporated
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇/▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
- or -
▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇/▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: R. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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if to the Company, to: ▇▇▇▇-▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or facsimile number as the person to whom notice
is given may have previously furnished to the other in writing in the
manner set forth above.
SECTION 9.4 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the Laws of the State of Delaware, without giving
effect to the choice of Law principles thereof.
SECTION 9.5 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 9.6 Parties in Interest. This Agreement shall be binding upon and
-------------------
inure solely to the benefit of each party hereto and its successors and
permitted assigns, and, except as provided in Section 6.7, nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
SECTION 9.7 Severability. The provisions of this Agreement shall be
------------
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If
any provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
SECTION 9.8 Specific Performance. The parties 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 of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court, this
being in addition to any
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other remedy to which they are entitled at Law or in equity. In addition, each
of the parties hereto (a) consents to submit itself to the personal jurisdiction
of any federal court located in the State of Delaware or any Delaware state
court in the event any dispute arises out of this Agreement or any of the
transactions contemplated hereby, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, and (c) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
a federal or state court sitting in the State of Delaware.
SECTION 9.9 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.10 Interpretation.
--------------
(a) The words "hereof," "herein," "herewith" and words of similar import
shall, unless otherwise stated, be construed to refer to this Agreement as a
whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit, and schedule references are to the articles,
sections, paragraphs, exhibits, and schedules of this Agreement unless otherwise
specified. Whenever the words "include," "includes," or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation," the word "or" shall mean "and/or." All terms defined in this
Agreement shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, qualified or supplemented, including (in
the case of agreements and instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and all attachments
thereto and instruments incorporated therein. References to a person are also
to its permitted successors and assigns.
(b) The phrases "the date of this Agreement," "the date hereof," and terms
of similar import, unless the context otherwise requires, shall be deemed to
refer to June 21, 2000. The phrase "made available" in this Agreement shall mean
that the information referred to has been actually delivered to the party to
whom such information is to be made available.
(c) The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
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SECTION 9.11 Definitions. As used herein,
-----------
(a) "beneficial ownership" or "beneficially own" has the meaning provided
in Section 13(d) of the Exchange Act and the rules and regulations thereunder.
(b) "business day" shall mean any day other than Saturday, Sunday or any
day on which banks in New York City, New York are required or authorized by Law
to be closed for business.
(c) "know" or "knowledge" means, in respect of any party, the actual
knowledge of the officers and employees of such party actively participating in
the negotiation of this agreement and related due diligence activities, without
any requirement to undertake an independent investigation, provided that, in the
--------
case of the Company, such officers and employees shall be limited to those
persons named in Section 9.11(c) of the Company Disclosure Schedule.
(d) "Material Adverse Effect" means in respect of any entity, any material
adverse effect on (i) the assets, properties, financial condition or results of
operations of such entity and its subsidiaries taken as a whole, other than any
change, circumstance, effect or development (A) relating to the economy in
general in any country in which such entity operates or owns assets, (B)
relating to the semiconductor industry (it being understood that this clause (B)
shall not exclude, in the case of any Material Adverse Effect with respect to
either party, any change, circumstance, effect or development relating to the
semiconductor industry that materially disproportionately impacts such party),
(C) arising out of or resulting from actions contemplated by the parties in
connection with, or which is attributable to, the announcement of this Agreement
and the transactions contemplated hereby (including loss of customers, suppliers
or employees or the delay or cancellation of orders for products), or (D) any
shareholder litigation or litigation by any Governmental Entity, in each case
brought or threatened against such entity or any member of its board of
directors in respect of this Agreement or the transactions contemplated hereby;
provided that neither (x) any change in the market price or trading volume of
--------
the Company Common Stock or Parent Common Stock nor (y) a failure by the Company
or Parent to meet the revenue or earnings predictions of equity analysts
reflected in the First Call consensus estimate, or any other revenue or earnings
predictions or expectations, for any period ending on or after the date of this
Agreement shall, in and of itself, constitute a Material Adverse Effect (it
being understood that this proviso, as it relates to (y), shall not exclude any
underlying change, circumstance, effect or development which resulted in such
failure to meet such estimates, predictions or expectations), or (ii) the
ability of such party to consummate the transactions contemplated by this
Agreement.
(e) "person" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in the Exchange Act).
(f) "subsidiary" means, in respect of any party, any corporation,
partnership or other entity or organization, whether incorporated or
unincorporated, of which (i) such other party or any other subsidiary of such
party is a general partner (excluding such partnerships where such
-57-
party or any subsidiary of such party does not have a majority of the voting
interest in such partnership) or (ii) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions in respect of
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its subsidiaries, or by such
party and one or more of its subsidiaries.
[THE REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the date first above written.
▇▇▇▇-▇▇▇▇▇ CORPORATION
By: /s/ ▇. ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, President and CEO
TEXAS INSTRUMENTS INCORPORATED
By: /s/ ▇. ▇▇▇▇▇▇ Self
----------------------------
Name: ▇. ▇▇▇▇▇▇ Self
Title: Senior Vice President and Controller
BURMA ACQUISITION CORP.
By: /s/ ▇. ▇▇▇▇▇▇ Self
----------------------------
Name: ▇. ▇▇▇▇▇▇ Self
Title: Treasurer