OFFER AGREEMENT
BY AND BETWEEN
HEWLETT-PACKARD COMPANY
AND
INDIGO N.V.
TABLE OF CONTENTS
PAGE
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ARTICLE I THE OFFER........................................................... 1
1.1 The Offer................................................... 1
1.2 Company Actions............................................. 4
1.3 Company Boards and Committees............................... 6
1.4 Stock Options; Warrants; Employee Stock Purchase Plans...... 6
1.5 Required Withholding........................................ 6
1.6 No Liability................................................ 6
ARTICLE II POST CLOSING REORGANIZATION........................................ 7
2.1 Restructuring............................................... 7
2.2 Co-operation of the Company................................. 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY......................... 7
3.1 Organization and Qualification; Subsidiaries................ 8
3.2 Articles of Association..................................... 8
3.3 Capitalization.............................................. 9
3.4 Authority Relative to this Agreement........................ 10
3.5 No Conflict; Required Filings and Consents.................. 11
3.6 Compliance; Permits......................................... 11
3.7 SEC Filings; Financial Statements........................... 12
3.8 No Undisclosed Liabilities.................................. 13
3.9 Absence of Certain Changes or Events........................ 13
3.10 Absence of Litigation....................................... 14
3.11 Employee Matters and Benefit Plans.......................... 14
3.12 Restrictions on Business Activities......................... 18
3.13 Title to Property........................................... 18
3.14 Taxes....................................................... 19
3.15 Brokers..................................................... 22
3.16 Intellectual Property....................................... 22
3.17 Agreements, Contracts and Commitments....................... 26
3.18 Opinion of Financial Advisor................................ 28
3.19 Insurance................................................... 28
3.20 Board Approval.............................................. 28
3.21 Environmental Matters....................................... 28
3.22 Grants, Incentives and Subsidies............................ 29
3.23 Disclosure.................................................. 30
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER............................ 31
4.1 Organization................................................ 31
4.2 Certificate of Incorporation and Bylaws..................... 31
4.3 Capitalization.............................................. 31
4.4 Authority Relative to this Agreement........................ 31
4.5 Issuance of Buyer Common Stock.............................. 32
4.6 No Conflict; Required Filings and Consents.................. 32
4.7 SEC Filings; Financial Statements........................... 32
4.8 Ownership of Company Common Stock........................... 33
4.9 Absences of Certain Changes or Events....................... 33
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PAGE
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ARTICLE V INTERIM CONDUCT..................................................... 33
5.1 Conduct of Business by Company.............................. 33
ARTICLE VI ADDITIONAL AGREEMENTS.............................................. 35
6.1 Confidentiality; Access to Information...................... 35
6.2 No Solicitation............................................. 36
6.3 Public Disclosure........................................... 36
6.4 Commercially Reasonable Efforts; Notification............... 36
6.5 Third Party Consents........................................ 37
6.6 Stock Options; ESPP; Warrants............................... 37
6.7 Employment and Employee Benefits............................ 39
6.8 Form S-8.................................................... 40
6.9 Indemnification............................................. 40
6.10 Regulatory Filings.......................................... 41
6.11 Israeli Approvals........................................... 41
6.12 Company Shareholder Approval................................ 42
6.13 Inspection of Real Property................................. 43
6.14 Company Affiliate Agreements................................ 43
6.15 NYSE Listing................................................ 43
6.16 CVR Agreement............................................... 43
6.17 Consultation................................................ 43
6.18 Registered Intellectual Property Rights..................... 44
6.19 Company Tender and Voting Agreements........................ 44
6.20 Employee Covenants.......................................... 44
6.21 Approved Enterprise Covenant................................ 44
6.22 Environmental Covenant...................................... 44
6.23 Sale of Company Shares...................................... 44
6.24 Dutch Tax Ruling............................................ 44
6.25 Tax Planning Cooperation.................................... 44
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER................................. 45
7.1 Termination................................................. 45
7.2 Notice of Termination; Effect of Termination................ 46
7.3 Fees and Expenses........................................... 46
7.4 Amendment................................................... 47
7.5 Extension; Waiver........................................... 47
ARTICLE VIII GENERAL PROVISIONS............................................... 47
8.1 Non-Survival of Representations and Warranties.............. 47
8.2 Notices..................................................... 47
8.3 Counterparts................................................ 48
8.4 Entire Agreement; Third Party Beneficiaries................. 48
8.5 Severability................................................ 49
8.6 Other Remedies; Specific Performance........................ 49
8.7 Governing Law............................................... 49
8.8 Rules of Construction....................................... 49
8.9 Assignment.................................................. 49
8.10 WAIVER OF JURY TRIAL........................................ 49
ARTICLE IX DEFINITIONS........................................................ 50
9.1 Definitions................................................. 50
9.2 Miscellaneous............................................... 60
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INDEX OF ANNEXES
Annex I Conditions of the Offer
INDEX OF EXHIBITS
Exhibit A Form of CVR Agreement
Exhibit B-1 Form of Company Tender Agreement
Exhibit B-2 Form of Company Tender and Option Agreement for the
Principal Company Shareholders
Exhibit C Form of Company Voting Agreement
Exhibit D Form of Company Affiliate Agreement
Exhibit E Form of Amended Articles of Association of the Company
OFFER AGREEMENT
THIS
OFFER AGREEMENT (this "AGREEMENT") is made and entered into as of
September 6, 2001, by and between Hewlett-Packard Company, a Delaware
corporation (the "BUYER"), and Indigo N.V., a corporation organized under the
laws of The Netherlands (the "COMPANY").
RECITALS
A. Upon the terms and subject to the conditions set forth in the Agreement,
the Buyer and the Company intend to enter into a business combination
transaction.
B. The Company Boards have each (i) determined that the Offer is at a price
and on terms that are favorable and fair to and in the best interests of the
Company and the Company Shareholders, and (ii) approved the Offer upon the terms
and subject to the conditions set forth in this Agreement.
C. In furtherance thereof, it is proposed that the Buyer or a Subsidiary of
the Buyer shall, as promptly as practicable, commence an exchange offer (the
"OFFER") to acquire all of the outstanding Company Shares, at a price for each
Company Share equal to either (i) the Fixed Offer Price or (ii) the Contingent
Price Exchange Ratio plus one CVR (together, the "CONTINGENT OFFER PRICE") (the
Fixed Offer Price and the Contingent Offer Price are collectively referred to
herein as the "OFFER PRICE"), upon the terms and subject to the conditions set
forth in this Agreement.
D. Also in furtherance thereof, it is proposed that, prior to and following
the consummation of the Offer, the Buyer and the Company shall cooperate to
accomplish any one or more of the post-closing reorganizations described in
Article II hereof.
E. The CVR Certificates will be issued pursuant to a Contingent Value
Rights Agreement in substantially the form attached hereto as EXHIBIT A (the
"CVR AGREEMENT") to be entered into between the Buyer and a trustee mutually
agreeable to the Company and the Buyer (the "TRUSTEE").
F. Concurrently with the execution of this Agreement, as a condition and
inducement to the Buyer's willingness to enter into this Agreement, (i) certain
officers and directors of the Company are entering into Tender Agreements in
substantially the form attached hereto as EXHIBIT B-1, and the Principal Company
Shareholders are entering into Tender and Option Agreements in substantially the
form attached hereto as EXHIBIT B-2 (collectively, the "COMPANY TENDER
AGREEMENTS"), (ii) certain officers and directors of the Company and certain
other Company Shareholders are entering into Voting Agreements in substantially
the form attached hereto as EXHIBIT C (collectively, the "COMPANY VOTING
AGREEMENTS"), (iii) the Company Affiliates are entering into the Company
Affiliate Agreements in substantially the form attached hereto as EXHIBIT D
(collectively, the "COMPANY AFFILIATE AGREEMENTS"), and (iv) the Buyer and
▇▇▇▇▇▇▇ ▇▇▇▇▇ have entered into a Consulting Agreement (the "CONSULTING
AGREEMENT").
G. The Company and the Buyer intend that the Offer shall constitute a
taxable transaction under the Code.
H. Certain terms used in this Agreement are defined in Article IX hereof.
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 and the Buyer hereby agree as follows:
ARTICLE I
THE OFFER
1.1 THE OFFER.
(a) Provided that (i) this Agreement shall not have been terminated in
accordance with Section 7.1 and (ii) none of the events set forth in Annex I
hereto that would entitle the Buyer not
to consummate the Offer shall have occurred and be continuing, as promptly
as practicable, the Buyer shall (or shall cause a Subsidiary of the Buyer
to) commence (within the meaning of Rule 14d-2 under the Exchange Act) the
Offer for any and all of the Company Shares. In the event that the Buyer
shall cause a Subsidiary of the Buyer to commence the Offer, each reference
to the Buyer in this Article I and Annex I shall be deemed, where
applicable, to refer to such Subsidiary. Each Company Share accepted by the
Buyer pursuant to the Offer shall be exchanged for the right to receive the
Offer Price from the Buyer. The obligation of the Buyer to accept for
payment and to pay for any Company Shares tendered shall be subject only to
the satisfaction or waiver of: (i) the condition that there shall be validly
tendered in accordance with the terms of the Offer prior to the Expiration
Time and not withdrawn a number of Company Shares that, together with the
Company Shares then owned by the Buyer and its Subsidiaries, represents at
least ninety-five percent (95%) of the Outstanding Company Shares (the
"MINIMUM CONDITION"); and (ii) the other conditions set forth in Annex I.
The Buyer expressly reserves the right to increase the Offer Price, to waive
any of the conditions to the Offer or to make any other changes in the terms
and conditions of the Offer; PROVIDED, HOWEVER, that, unless previously
approved by the Company in writing, no change may be made that:
(1) decreases the Offer Price; (2) changes the form or combination of
consideration to be paid in the Offer; (3) reduces the number of Company
Shares to be purchased in the Offer; (4) amends the conditions set forth in
Annex I to broaden the scope of such conditions, add any additional
conditions, or otherwise amend any other material term of the Offer in a
manner materially adverse to the Company Shareholders; (5) extends the
Offer, except as provided in Section 1.1(b) or in the next sentence; or
(6) amends the Minimum Condition, except as provided in the next sentence.
The Buyer expressly reserves the right to amend or waive the Minimum
Condition to reduce the percentage of Outstanding Company Shares required to
be validly tendered in accordance with the terms of the Offer, PROVIDED that
the Buyer shall extend the Offer for a period of not fewer than 10 Business
Days after any such amendment or waiver.
(b) (i) Subject to the terms and conditions of the Offer and this
Agreement, the Offer shall expire at midnight,
New York City time, on the
date that is twenty (20) Business Days after the date the Offer is
commenced; PROVIDED, HOWEVER, that, without the consent of the Company
Boards, the Buyer may: (i) from time to time extend the Offer, if at the
scheduled expiration date of the Offer any of the conditions to the Offer
set forth in Annex I shall not have been satisfied or waived, until such
time as such conditions are satisfied or waived; (ii) extend the Offer for
any period required by any rule, regulation, interpretation or position of
the SEC or the staff thereof applicable to the Offer; or (iii) include a
subsequent offering period (as such term is defined in Rule 14d-1 under the
Exchange Act) to the Offer for a period up to twenty (20) Business Days. The
Buyer agrees that, if any one or more of the conditions to the Offer set
forth in Annex I are not satisfied and none of the events set forth in
paragraphs (a) through (c) or (f) through (h) of Annex I that would permit
the Buyer not to accept tendered Company Shares for payment has occurred,
then, PROVIDED that such conditions are reasonably capable of being
satisfied in the Buyer's sole judgement, the Buyer shall extend the Offer
from time to time for successive extension periods not in excess of 10
Business Days per extension, unless any such condition is no longer
reasonably capable of being satisfied in the Buyer's sole judgement or any
such event has occurred; PROVIDED, HOWEVER, that in no event shall the Buyer
be required to extend the Offer beyond the End Date. Subject to the terms
and conditions of the Offer and this Agreement and the satisfaction (or
waiver to the extent permitted by this Agreement) of the conditions to the
Offer, the Buyer shall accept for payment (the "CLOSING") all Company Shares
validly tendered and not withdrawn pursuant to the Offer that the Buyer
becomes obligated to accept for payment pursuant to the Offer as soon as
practicable after the Expiration Time and shall pay for all such Company
Shares promptly after such acceptance.
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(ii) No fraction of a share of Buyer Common Stock will be issued in
connection with the payment of the Offer Price upon consummation of the
Offer, but in lieu thereof each tendering Company Shareholder who would
otherwise be entitled to receive a fraction of a share of Buyer Common
Stock (after aggregating all fractional shares of Buyer Common Stock that
otherwise would be received by such holder) in the Offer shall receive
from the Buyer an amount of cash (rounded to the nearest whole cent),
without interest, equal to the product obtained by multiplying such
fraction by the closing price of one (1) share of Buyer Common Stock on
the first date the Buyer accepts Company Shares for exchange in the
Offer, as reported on the NYSE.
(c) (i) In connection with the Offer, each holder of Company Shares
validly tendered and not withdrawn pursuant to the Offer that the Buyer
becomes obligated to accept for exchange pursuant to the Offer shall be
entitled to elect to receive the Offer Price in respect of such tendered
Company Shares in the form of either the Fixed Offer Price or the Contingent
Offer Price; PROVIDED, that the letter of transmittal shall require that
each holder shall elect either the Fixed Offer Price or the Contingent Offer
Price for all Company Shares tendered by such holder. Notwithstanding
anything in this Agreement to the contrary: (i) the number of Company Shares
that the Buyer will be obligated to acquire in exchange for the Fixed Offer
Price shall not exceed the Maximum Fixed Price Election Number; and
(ii) the number of Company Shares that the Buyer will be obligated to
acquire in exchange for the Contingent Offer Price shall not exceed the
Maximum Contingent Price Election Number.
(ii) If the aggregate number of Company Shares that the Buyer would
otherwise be obligated to acquire in exchange for the Fixed Offer Price
(the "REQUESTED FIXED PRICE AMOUNT") exceeds the Maximum Fixed Price
Election Number, each holder who has accepted the Fixed Offer Price shall
receive, with respect to each such Company Share (x) such number of
shares of Buyer Common Stock equal to the product of (A) the Fixed Offer
Price and (B) the Fixed Price Proration Factor, and (y)(1) such
additional number of shares of Buyer Common Stock equal to the product of
(A), the Contingent Price Exchange Ratio and (B) one minus the Fixed
Price Proration Factor and (2) such number of CVRs equal to one minus the
Fixed Price Proration Factor.
(iii) If the aggregate number of Company Shares that the Buyer would
otherwise be obligated to acquire in exchange for the Contingent Offer
Price (the "REQUESTED CONTINGENT PRICE AMOUNT") exceeds the Maximum
Contingent Price Election Number, each holder who has accepted the
Contingent Offer Price shall receive, with respect to each such Company
Share (x)(1) such number of shares of Buyer Common Stock equal to the
product of (A) the Contingent Price Exchange Ratio and (B) the Contingent
Price Proration Factor, and (2) such number of CVRs equal to the
Contingent Price Proration Factor and (y) such additional number of
shares of Buyer Common Stock equal to the product of (A) the Fixed Offer
Price and (B) one minus the Contingent Price Proration Factor.
(iv) The Fixed Offer Price, the Contingent Price Exchange Ratio and
any other applicable numbers or amounts shall be adjusted to reflect
appropriately the effect of any stock split, reverse stock split, stock
dividend (including any distribution or dividend of securities
convertible into or exchangeable for Buyer Common Stock or Company
Shares), extraordinary cash dividend, reorganization, reclassification,
combination, exchange of shares or other like change with respect to
Buyer Common Stock or Company Shares occurring or having a record date on
or after the date hereof and prior to the Closing Time.
(v) The Exchange Agent shall make all computations as to the
allocation and the proration contemplated by this Section 1.1(c), and any
such computation shall be conclusive and binding on the Company
Shareholders. The Buyer and the Company may agree to make
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such rules as are consistent with the Offer and this Section 1.1(c) for
the implementation of the provisions of this Section 1.1(c) as shall be
necessary or desirable to fully effect such provisions.
(d) As soon as practicable after the date of this Agreement, the Buyer
shall prepare and file with the SEC a registration statement on Form S-4 to
register the offer and sale of Buyer Common Stock and the CVRs pursuant to
the Offer (the "REGISTRATION STATEMENT") and, to the extent the Buyer in its
sole discretion determines that it is necessary, a Transaction Statement on
Schedule 13E-3 (together with all amendments and supplements thereto, and
including all exhibits thereto, the "SCHEDULE 13E-3"). The Company shall
execute, and join in the filing of, the Schedule 13E-3, if applicable. The
Registration Statement as declared effective by the SEC will include a
prospectus containing the information required under Rule 14d-4(b)
promulgated under the Exchange Act (the "PROSPECTUS"). As soon as
practicable on the date the Offer is commenced, the Buyer shall file with
the SEC a Tender Offer Statement on Schedule TO (together with all
amendments and supplements thereto, and including all exhibits thereto, the
"SCHEDULE TO") with respect to the Offer and cause the Offer Documents to be
disseminated to the Company Shareholders. The Schedule TO shall contain as
an exhibit or incorporate by reference the Prospectus (or portions thereof)
and forms of the related letter of transmittal and summary advertisement, if
any. The Buyer shall cause the Schedule TO, the Schedule 13E-3, if
applicable, the Prospectus and all amendments or supplements thereto (which
together, with any supplements or amendments thereto, collectively
constitute the "OFFER DOCUMENTS") to comply in all material respects with
the Exchange Act and the rules and regulations thereunder and other
applicable Legal Requirements. The Buyer further agrees that the Offer
Documents, on the date first published, sent or given to the Company
Shareholders, shall not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that no representation or
warranty is made by the Buyer with respect to information supplied by the
Company or any of the Company Shareholders (other than the Buyer) in writing
specifically for inclusion or incorporation by reference in the Offer
Documents. The Company agrees that the information provided by the Company
or any of the Company Shareholders (other than the Buyer) in writing
specifically for inclusion or incorporation by reference in the Offer
Documents shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of the Buyer and the Company
shall promptly correct any information provided by it for use in the
Registration Statement or the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect,
and the Buyer shall take all steps necessary to cause the Offer Documents as
so corrected to be filed with the SEC and to be disseminated to the Company
Shareholders, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given
reasonable opportunity to review and comment on the Schedule TO, the
Schedule 13E-3, if applicable, the Registration Statement and the Offer
Documents prior to the filing thereof with the SEC. The Buyer agrees to
provide in writing to the Company and its counsel any comments the Buyer or
its counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after receipt of such comments and shall provide the
Company and its counsel with a reasonable opportunity to participate in the
response of the Buyer to such comments.
1.2 COMPANY ACTIONS.
(a) The Company hereby approves of and consents to the Offer and
represents that each of the Company Boards, at meetings duly called and
held, have (i) unanimously determined that this Agreement and the
transactions contemplated hereby, including the Offer, are at a price and on
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terms that are favorable and fair to and in the best interests of the
Company and the Company Shareholders; (ii) unanimously approved this
Agreement and the transactions contemplated hereby, including the Offer, in
all respects, and (iii) unanimously resolved to recommend that the Company
Shareholders accept the Offer, tender their Company Shares thereunder to the
Buyer and vote at the EGM in favor of (x) the appointment of new members to
the Company Boards in accordance with the designation of the Buyer and
(y) the amendment of the Company's Articles of Association in the form, as
to be so amended, attached hereto as EXHIBIT E. The Company consents to the
inclusion of such recommendation and approval in the Offer Documents. In
addition, Gleacher & Co. LLC has delivered to the Company Boards its opinion
referred to in Section 3.18. The Company's approval of and consent to the
Offer also constitutes approval for purposes of the standstill provisions
set forth in Article 4 of that certain Shareholders' Agreement, dated
September 13, 2000, by and among the Company, the Buyer and the other
Company Shareholders named therein for the sole purpose of the Buyer making
the Offer and consummating the other transactions contemplated hereby;
PROVIDED, that in the event this Agreement is terminated pursuant to
Article VII hereof, such standstill provisions shall continue in full force
and effect after such termination.
(b) The Company shall file with the SEC, concurrently with the filing of
the Schedule TO, a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto, and including all
exhibits thereto, the "SCHEDULE 14D-9") containing the recommendations and
opinion described in Section 1.2(a) and shall cause the Schedule 14D-9 to be
mailed to the Company Shareholders, together with the Offer Documents,
promptly after the commencement of the Offer. The Company shall cause the
Schedule 14D-9 to comply in all material respects with the Exchange Act and
the rules and regulations thereunder and other applicable Legal
Requirements. The Company further agrees that the Schedule 14D-9, on the
date first published, sent or given to the Company Shareholders, shall not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation or warranty is made by
the Company with respect to information supplied by the Buyer in writing
specifically for inclusion or incorporation by reference in the
Schedule 14D-9. The Buyer agrees that the information provided by it in
writing specifically for inclusion or incorporation by reference in the
Schedule 14D-9 shall not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of the Company and the Buyer
shall promptly correct any information provided by it for use in the
Schedule 14D-9 or the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect,
and the Company further shall take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and be disseminated
to the Company Shareholders, in each case as and to the extent required by
applicable federal securities laws. The Buyer and its counsel shall be given
reasonable opportunity to review and comment on the Schedule 14D-9 prior to
the filing thereof with the SEC. The Company shall provide in writing to the
Buyer and its counsel any comments the Company or its counsel may receive
from the SEC or its staff with respect to the Schedule 14D-9 promptly after
receipt of such comments and shall provide the Buyer and its counsel with a
reasonable opportunity to participate in the response of the Company to such
comments.
(c) In connection with the Offer, the Company shall, or shall cause its
transfer agent, promptly following a request by the Buyer, to furnish the
Buyer with such information, including updated lists of the Company
Shareholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of Company Shares
and lists of securities positions of Company Shares held in stock
depositories, in each case as of the most
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recent practicable date, and will provide to the Buyer such additional
information (including, without limitation, updated lists of the Company
Shareholders, mailing labels and lists of securities positions), and such
assistance as the Buyer or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of the Company
Shares.
(d) Solely in connection with the tender and purchase of the Company
Shares pursuant to the Offer and other actions contemplated in this
Agreement, the Company hereby waives any and all rights of first refusal it
may have with respect to the Company Shares owned by, or issuable to, any
person, other than rights to repurchase unvested shares, if any, that may be
held by persons pursuant to the grant of restricted stock purchase rights or
following exercise of employee stock options.
1.3 COMPANY BOARDS AND COMMITTEES.
At any time following the execution of this Agreement, but in any event no
later than five (5) Business Days prior to the Expiration Time, the Company
shall convene an extraordinary meeting of shareholders (the "EGM") to
(i) accept the resignation from the Company Boards of the existing members
thereof and appoint the new members of the Company Boards in accordance with the
designation of the Buyer set out below and (ii) resolve upon the amendment of
the Articles of Association of the Company in the form, as to be so amended,
attached hereto as EXHIBIT E. The resignations and appointments referred to in
the preceding sentence will be effective as of, and conditional upon the
occurrence of, the Closing Time. As soon as practicable after the date of
execution of this Agreement and no later than 20 calendar days prior to the date
of the EGM the Buyer shall designate in writing to the Company the new members
for each of the Company Boards and furnish the Company with all information with
respect to those new members that is required to be disclosed to the Company
Shareholders under Dutch law. At the EGM, the Company shall use its commercially
reasonable efforts to secure the resignation of the existing members of the
Company Boards and the appointment of the designees of the Buyer, all such
resignations and appointments to be effective as of, and conditional upon the
occurrence of the Closing, as aforesaid.
1.4 STOCK OPTIONS; WARRANTS; EMPLOYEE STOCK PURCHASE PLANS. At the Closing
Time: (i) all options to purchase Company Shares then outstanding and granted
under the Company Option Plans shall be treated in accordance with
Section 6.6(a) hereof; (ii) all warrants to purchase Company Shares then
outstanding (collectively, the "COMPANY WARRANTS") shall be treated as set forth
in Section 6.6(b) hereof; and (iii) all purchase rights outstanding under
Company's ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Employee Share Purchase Plan, 1994 Israel Employee
Share Purchase Plan and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Employee Share Purchase Plan
(collectively, the "ESPP") shall be treated as set forth in Section 6.6(c)
hereof.
1.5 REQUIRED WITHHOLDING.
Each of the Buyer and the Company and any bank or trust company retained by
the Buyer to act as the exchange agent in connection with the Offer (an
"EXCHANGE AGENT") shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Company Shares such amounts as may be required to be
deducted or withheld therefrom under U.S. federal or state, local or foreign
law. To the extent such amounts are so deducted or withheld, such amounts shall
be treated for all purposes under this Agreement as having been paid to the
person to whom such amounts would otherwise have been paid.
1.6 NO LIABILITY.
Notwithstanding anything to the contrary in this Article I, neither the
Exchange Agent nor the Buyer nor the Company shall be liable to a holder of
shares of Buyer Common Stock or Company Shares for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
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ARTICLE II
POST CLOSING REORGANIZATION
2.1 RESTRUCTURING.
The Buyer intends, simultaneously with or as soon as possible after the
Closing, to effectuate a corporate reorganization (the "POST-CLOSING
REORGANIZATION") of the Company and its Subsidiaries, which may include, without
limitation (i) the commencement of a compulsory acquisition by the Buyer of
Company Shares from any remaining minority shareholder in accordance with
Section 2:92a of the Dutch Civil Code (the "DCC"), (ii) the amendment of the
Articles of Association of the Company to permit the creation, among other
things, of separate classes of shares, (iii) the distribution of an
extraordinary dividend on the shares of the Company or a particular class or
classes of shares of the Company, (iv) the sale and transfer by the Company, or
any of its Subsidiaries, to the Buyer, or any affiliates of the Buyer, of all or
a portion of the assets of the Company or its Subsidiaries, (v) the effectuation
by the Company and one or more Dutch Subsidiaries of the Buyer of a legal merger
within the meaning of Section 2:309 of the DCC, (vi) the termination of the
listing of the Company Shares on the Nasdaq National Market, (vii) the
deregistration of the Company under the Exchange Act and the cessation of the
Company's reporting obligations thereunder, or (viii) any one or more
combinations of any of the foregoing actions; all of which shall be conducted in
accordance with applicable laws and which, if the Buyer determines in its sole
discretion to implement any such Post-Closing Reorganization, will in any case
result in the holders of Company Shares who do not exchange such shares in the
Offer being offered or receiving in any such Post-Closing Reorganization
consideration equivalent to the Fixed Offer Price.
2.2 CO-OPERATION OF THE COMPANY.
The Company shall take as of the date of this Agreement, but effective no
earlier than the consummation of the Offer, all actions reasonably necessary or
desirable to accomplish the Post-Closing Reorganization including, without
limitation (i) the convening of the necessary meetings of the Company
Shareholders and the Company Boards, (ii) the consideration of any and all
necessary or desirable resolutions by each of the Company Boards for the purpose
of the corporate reorganizations, and (iii) the execution of any and all
reasonably requested documents, agreements or deeds that are necessary or
desirable to effectuate any of the corporate reorganizations and the filing or
registration of any or all of such documents, agreements or deeds with the
appropriate authorities or agencies. In addition, at the request of the Buyer,
the Company shall take any and all other actions that are required or desirable
to accomplish the corporate reorganization of the Company and its Subsidiaries,
so long as such actions are reasonable based on the relative detriment or
inconvenience to the Company and the relative benefit to the Buyer from such
action. With respect to all actions taken by the Company pursuant to this
Section 2.2, the Buyer shall reimburse the Company for its reasonable
out-of-pocket costs and expenses regardless of whether or not the Offer is
consummated except where the Buyer has terminated this Agreement pursuant to
Section 7.1(d), in which case the Buyer shall not be obligated so to reimburse
the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants to the Buyer, subject to such exceptions
as are disclosed in writing in the disclosure letter supplied by the Company to
the Buyer dated as of the date hereof (the "COMPANY DISCLOSURE LETTER"), which
Company Disclosure Letter shall provide an exception to or otherwise qualify the
representations and warranties of the Company (i) contained in the section of
this Agreement corresponding by number to such disclosure, and (ii) contained in
any other section of this
7
Agreement where the nature of such exception or qualification is readily
apparent from the face of such disclosure, as follows:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of the Company and its Subsidiaries is a corporation duly
organized, validly existing and in good standing (as applicable) under the
laws of the jurisdiction of its incorporation and has the requisite
corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted, except
where the failure to do so would not, individually or in the aggregate, have
a Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries (i) has been dissolved, and there is no action or request
pending to accomplish such dissolution, (ii) is involved in preparations for
a merger as described in Section 2:309 of the DCC or its foreign equivalent
(including a merger under the Israeli Companies Law, 1999), or (iii) has
been declared bankrupt and no action or request is pending to declare the
Company or any of its Subsidiaries bankrupt or obtain an official moratorium
under Dutch or other applicable law. Each of the Company and its
Subsidiaries is in possession of all Approvals necessary to own, lease and
operate the assets and properties it purports to own, operate or lease and
to carry on its business as it is now being conducted, except where the
failure to have such Approvals would not, individually or in the aggregate,
have a Company Material Adverse Effect. The Company and each of its
Subsidiaries is and has been in compliance with the terms of the Approvals,
except where the failure to be or have been in such compliance would not,
individually or in the aggregate, result in a Company Material Adverse
Effect.
(b) The Company and each of its Subsidiaries is duly qualified or
licensed to do business as a foreign corporation, and is in good standing,
under the laws of all jurisdictions where the nature of their business
requires such qualification, except where the failure to be so qualified or
in good standing would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(c) Section 3.1(c) of the Company Disclosure Letter sets forth the name,
jurisdiction of incorporation and authorized and outstanding capital of each
of the Company's Subsidiaries and the jurisdictions in which each such
Subsidiary is qualified to do business. All the outstanding capital stock of
each of the Company's Subsidiaries is owned directly or indirectly by the
Company free and clear of all Encumbrances and all material claims or
charges of any kind, and is validly issued, fully paid and nonassessable.
Neither the Company nor any of its Subsidiaries has agreed nor is obligated
to make nor is bound by any Contract, as of the date hereof or as may
hereafter be in effect under which it may become obligated to make, any
future investment in or capital contribution to any other entity. Other than
the Company's interests in its Subsidiaries, neither the Company nor any of
its Subsidiaries directly or indirectly owns any equity or similar interest
in or any interest convertible, exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint venture or other
business, association or entity.
(d) All branches of the Company or any of its Subsidiaries are properly
registered with all relevant Governmental Entities, including tax
authorities, and have complied with, and do comply with all applicable laws,
rules and regulations, except where the failure to do so would not,
individually or in the aggregate, have a Company Material Adverse Effect.
3.2 ARTICLES OF ASSOCIATION. The Company has previously furnished to the
Buyer (i) a complete and correct copy, translated into English, of its Articles
of Association, as amended to date (the "COMPANY CHARTER DOCUMENTS"), and
(ii) complete and correct copies, translated into English, of the certificate of
incorporation and by-laws or similar organizational documents of each of the
Company's Subsidiaries, as amended to date. Such Company Charter Documents and
equivalent organizational documents of each of the Subsidiaries of the Company
are in full force and effect, the Company is not in violation of any of the
provisions of the Company Charter Documents, and no Subsidiary of the Company is
in violation of its equivalent organizational documents.
8
3.3 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 240,000,000
Common Shares and 26,950,000 shares of preferred stock, par value NLG 0.04
per share (the "PREFERRED SHARES"). As of September 5, 2001,
(i) 113,676,895 Common Shares are issued and outstanding, including
3,749,532 Common Shares that are held in the treasury of the Company;
(ii) 7,046,392 Preferred Shares are designated as Series A Convertible
Preferred Shares, none of which are currently issued and outstanding;
(iii) 2,882,241 Preferred Shares are designated as Series B Convertible
Preferred Shares, none of which are currently issued and outstanding;
(iv) 3,853,333 Preferred Shares are designated as Series C Convertible
Preferred Shares, none of which are currently issued and outstanding;
(v) 3,515,680 Preferred Shares are designated as Series D Convertible
Preferred Shares, none of which are currently issued and outstanding;
(vi) 11,344,986 Common Shares are reserved for issuance upon exercise of
outstanding Company Stock Options under the Company Option Plans;
(vii) 4,422,806 Common Shares are not subject to outstanding options and are
reserved for issuance under the Company Option Plans; (viii) 1,268,366
Common Shares are reserved for issuance and unissued under the ESPP;
(ix) there are outstanding warrants designated "Series A warrants"
representing the right to purchase 3,917,999 Common Shares; (x) there are
outstanding warrants designated "Series C warrants" representing the right
to purchase 1,926,677 Common Shares; (xi) there are warrants designated
"Series D warrants," none of which are outstanding; (xii) there are
outstanding warrants designated "Litigation Settlement Warrants"
representing the right to purchase 2,000,000 Common Shares; (xiii) there are
outstanding warrants designated "Acquisition Warrants" representing the
right to purchase 14,814,815 Common Shares; (xiv) there are outstanding
warrants designated "Performance Warrants" representing the right to
purchase 12,000,000 Common Shares. All of the outstanding shares of the
Company's capital stock are, and all Common Shares subject to issuance as
aforesaid, upon issuance in accordance with the respective terms thereof,
will be, duly authorized, validly issued, fully paid and non-assessable.
There is no Voting Debt of the Company or any of its Subsidiaries issued and
outstanding. Section 3.3(a) of the Company Disclosure Letter contains a true
copy of the list of (i) shareholders of record of the Company, as at
August 31, 2001, as kept by the Company's transfer agent and (ii) holders of
record of the Company Warrants, as at September 2, 2001, as kept by the
Company.
(b) Section 3.3(b) of the Company Disclosure Letter sets forth the
following information with respect to each Company Stock Option outstanding
as of the date of this Agreement: (i) the name and address of the optionee,
with the first name and last name in separate columns; (ii) whether the
Company Stock Option is deemed an "Incentive Stock Option" pursuant to
Section 422 of the Code; (iii) the Company Option Plan under which such
Company Stock Option was granted; (iv) the number of Common Shares subject
to such Company Stock Option; (v) the exercise price of such Company Stock
Option; (vi) the date on which such Company Stock Option was granted;
(vii) the date on which such Company Stock Option expires; (viii) the extent
to which such Company Stock Option is vested; (ix) the extent to which the
exercisability of such Company Stock Option will be accelerated in any way
by the transactions contemplated by this Agreement; (x) the status of the
holder of each Company Stock Option; and (xi) the date of termination or
severance of the holder of each Company Stock Option. The Company has made
available to the Buyer accurate and complete copies of all stock option
plans pursuant to which the Company has granted such Company Stock Options
that are currently outstanding, the form of all stock option agreements
evidencing such Company Stock Options and any stock option agreement that
has been modified from the form of stock option agreement. Section 3.3(b) of
the Company Disclosure Letter lists each such stock option plan. All Common
Shares subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instrument pursuant to which they are issuable,
would be duly authorized, validly issued, fully paid and nonassessable.
There are no commitments or agreements of any character to which the Company
is bound obligating the Company to accelerate the vesting of any Company
Stock Option as a result of the Offer.
9
(c) All outstanding Common Shares, all outstanding Company Stock
Options, all outstanding Company Warrants and all outstanding shares of
capital stock of each Subsidiary of the Company have been issued and granted
in compliance with (i) all applicable securities laws and other applicable
Legal Requirements and (ii) all requirements set forth in applicable
Contracts.
(d) The Company owns free and clear of all liens, pledges,
hypothecations, charges, mortgages, security interests, Encumbrances,
claims, infringements, interferences, options, right of first refusals,
preemptive rights, community property interests or restrictions of any
nature (including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any restriction
on the possession, exercise or transfer of any other attribute of ownership
of any asset but other than restrictions imposed by federal or state
securities laws) directly or indirectly through one or more Subsidiaries,
all of the outstanding shares of capital stock of each of its Subsidiaries
and, except for shares of capital stock or other similar ownership interests
of any of the Company's Subsidiaries that are owned by certain nominee
equity holders as required by the applicable law of the jurisdiction of
organization of such Subsidiaries (which shares or other interests (i) do
not materially affect the Company's control of such Subsidiary and
(ii) shall in the case of any such Israeli Subsidiary be transferred from
any such nominee equity holder to the Company prior to the Closing), there
are no equity securities, partnership interests or similar ownership
interests of any class of equity security of any Subsidiary of the Company,
or any security or right exchangeable or convertible into or exercisable for
such equity securities, partnership interests or similar ownership
interests, issued, reserved for issuance or outstanding. There are no
subscriptions, options, warrants, equity securities, partnership interests
or similar ownership interests, calls, rights (including preemptive rights),
commitments or agreements of any character to which the Company or any of
its Subsidiaries is a party or by which it is bound obligating the Company
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, or repurchase, redeem or otherwise acquire, or cause the
repurchase, redemption or acquisition of, any shares of capital stock or
Voting Debt, partnership interests or similar ownership interests of the
Company or any of its Subsidiaries or obligating the Company or any of its
Subsidiaries to grant, extend, accelerate the vesting of or enter into any
such subscription, option, warrant, equity security, call, right, commitment
or agreement.
(e) There are no registration rights and there is, except for the
Company Tender and Voting Agreements, no voting trust, proxy, rights plan,
antitakeover plan or other agreement or understanding to which the Company
or any of its Subsidiaries is a party or by which they are bound with
respect to any equity security of any class of the Company or with respect
to any equity security, partnership interest or similar ownership interest
of any class of any of the Company's Subsidiaries.
3.4 AUTHORITY RELATIVE TO THIS AGREEMENT.
The Company has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company, including such
authorization by each of the Company Boards, and no other corporate proceedings
on the part of the Company are necessary to authorize the execution and delivery
of this Agreement or to consummate the transactions contemplated hereby. Except
for the vote of the Company Shareholders to approve the Post-Closing
Reorganization, no vote of, or consent by, the holders of any class or series of
capital stock or Voting Debt issued by the Company is necessary to authorize the
execution and delivery by the Company of this Agreement or the consummation by
it of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by the Buyer, constitutes legal and
binding obligations of the Company,
10
enforceable against the Company in accordance with its terms, except to the
extent that (i) enforcement thereof may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditor rights, (ii) the enforcement
thereof may be limited by general equitable principles (regardless of whether
such enforcement is considered in a proceeding at law or in equity), and
(iii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
3.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company shall not
(i) violate the Company Charter Documents or the equivalent organizational
documents of any of the Company's Subsidiaries, (ii) subject to obtaining
the consents, approvals, authorizations and permits, and making the filings
and notifications, set forth in Section 3.5(b) below or in Section 6.5 of
the Company Disclosure Letter, conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Company or any of
its Subsidiaries or by which its or any of their respective properties is
bound or affected, or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a
default) under, or materially impair the Company's or any of its
Subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration
or cancellation of, or result in the creation of a lien or encumbrance on
any of the properties or assets of the Company or any of its Subsidiaries
pursuant to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or its or any of their
respective properties are bound or affected.
(b) The execution and delivery of this Agreement does not, and the
performance of this Agreement by the Company shall not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity or other Person (including consents from parties to
loans, contracts, leases and other agreements to which the Company or any of
its Subsidiaries is a party), except (i) applicable requirements, if any, of
the Securities Act, the Exchange Act, Blue Sky Laws, Foreign Securities
Laws, the notification requirements of the HSR Act and the Foreign Filings,
the rules and regulations of the NYSE, NASD or NASDAQ, the consent of the
Investment Center, the consent of the OCS, the approval of the Israeli
Commissioner of Restrictive Trade Practices, and the exemption from the
Israel Securities Authority concerning the publication of a prospectus, in
respect of the exchange of the Company Stock Options for the Buyer Stock
Options, pursuant to Section 15D of the Israeli Securities Law, 1968, and
(ii) applicable consultation with all trade union representatives and bodies
under applicable employment laws, including, without limitation, the Dutch
SER Merger Rules and (iii) such other consents, approvals, authorizations or
permits, filings or notifications which (A) would not prevent consummation
of the Offer or the Post-Closing Reorganization or otherwise prevent the
parties hereto from performing their respective obligations under this
Agreement, and (B) would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect, and (iv) consents
required under the terms of any Lease to assignment of such Lease in
connection with the performance of this Agreement as set forth in
Section 6.5 of the Company Disclosure Letter.
3.6 COMPLIANCE; PERMITS
(a) Neither the Company nor any of its Subsidiaries is in conflict with,
or in default or violation of (i) any law, rule, regulation, ordinance,
order, judgment, decree, writ or injunction of any national, state or
provincial or local government (whether or not in the United States) or
11
agency thereof applicable to the Company or any of its Subsidiaries or by
which its or any of their respective assets or properties is bound, or
(ii) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries or its or any of their respective properties is bound,
except for any conflicts, defaults or violations that (individually or in
the aggregate) would not reasonably be expected to have a Company Material
Adverse Effect. No notice, charge, claim, action or assertion has been
received by the Company or any of its Subsidiaries or has been filed,
commenced or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries alleging any violation of any of the
foregoing.
(b) No investigation or review by any Governmental Entity is, to the
knowledge of the Company, pending or threatened against the Company or its
Subsidiaries, nor has any Governmental Entity indicated to the Company or
any of its Subsidiaries an intention to conduct the same, other than, in
each such case, those the outcome of which could not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
(c) The Company and each of its Subsidiaries hold all Company Permits.
The Company and each of its Subsidiaries have been and are in compliance in
all material respects with the terms of the Company Permits and any
conditions placed thereon. There is no action, proceeding, inquiry or
investigation pending or, to the knowledge of the Company, threatened for or
contemplating the suspension, cancellation, revocation or nonrenewal of any
such permit, and to the knowledge of the Company there is no existing fact
or circumstance which (with or without notice or lapse of time or both) is
reasonably likely to result in the suspension, limitation, cancellation,
revocation or nonrenewal of any such permit or any limitation of any such
permit which would not, individually or in the aggregate, have a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries has
received any written or, to the knowledge of the Company, oral notice from
any Governmental Entity that the consummation of the transactions
contemplated hereby will result in the suspension, cancellation, revocation
or nonrenewal of any such Company Permit.
3.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has made available to the Buyer a correct and complete
copy of each form, report, schedule, statement and other documents filed by
the Company with the SEC since January 1, 1998 (collectively, the"COMPANY
SEC REPORTS"), which are all the forms, reports and documents required to be
filed by the Company with the SEC since such date. As of their respective
dates or, if amended, as of the date of the last such amendment, the Company
SEC Reports (i) complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, as the case may be,
and (ii) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. None of the Company's Subsidiaries is required to
file any forms, reports or other documents with the SEC.
(b) As of their respective dates, (i) each set of consolidated financial
statements (including, in each case, any related notes thereto) contained in
the Company SEC Reports (x) was prepared from, and is in accordance with,
the books and records of the Company and its consolidated Subsidiaries,
(y) complied in all material respects with the published rules and
regulations of the SEC with respect thereto, and (z) was prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and each
fairly presents the consolidated financial position of the Company and its
consolidated Subsidiaries at the respective dates thereof and the
consolidated results of its operations and cash flows and changes in
shareholders' equity for the periods indicated; and (ii) the Company Interim
12
Financial Data (x) was prepared from, and in accordance with, the books and
records of the Company and its consolidated Subsidiaries, and (y) was
prepared in accordance with U.S. GAAP applied on a consistent basis
throughout the periods involved and fairly presents the condensed
consolidated statements of operations, condensed consolidated balance
sheets, and condensed consolidated statements of cash flows.
(c) The Company has previously furnished to the Buyer a complete and
correct copy of any amendments or modifications, which have not yet been
filed as of the date hereof with the SEC but which are required to be filed,
to agreements, documents or other instruments which previously had been
filed by the Company with the SEC pursuant to the Securities Act or the
Exchange Act or any material agreements potentially required to be filed
that have not been so filed.
(d) The Company does fully comply and has always fully complied in all
material respects with all applicable Netherlands statutory accounting and
reporting rules and regulations.
3.8 NO UNDISCLOSED LIABILITIES. Neither the Company nor any of its
Subsidiaries has any liabilities (absolute, accrued, contingent or otherwise) of
a nature required to be disclosed on a balance sheet or in the related notes to
the consolidated financial statements prepared in accordance with U.S. GAAP
which are, individually or in the aggregate, material to the business, results
of operations, assets or financial condition of the Company and its Subsidiaries
taken as a whole, except (i) liabilities provided for in the Company's balance
sheet as of June 30, 2001 or (ii) liabilities incurred since June 30, 2001 in
the ordinary course of business, none of which is material to the business,
results of operations or financial condition of the Company and its
Subsidiaries, taken as a whole. The reserves reflected in the consolidated
financial statements as of June 30, 2001 are adequate, appropriate and
reasonable and have been calculated in a consistent manner.
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 2001, there has
not been: (i) any Company Material Adverse Effect, (ii) any declaration, setting
aside or payment of any dividend on, or other distribution (whether in cash,
stock or property) in respect of, any of the Company's or any of its
Subsidiaries' capital stock, or any purchase, redemption or other acquisition by
the Company of any of its Subsidiaries' capital stock or any other securities of
the Company or of its Subsidiaries or any options, warrants, calls or rights to
acquire any such shares or other securities except for repurchases from
employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) any split, combination
or reclassification of any of the Company's or any of Subsidiaries' capital
stock, (iv) any granting by the Company or any of its Subsidiaries of any
increase in compensation or fringe benefits, except for normal increases of cash
or non-cash benefits compensation in the ordinary course of business consistent
with past practice, or any payment by the Company or any of its Subsidiaries of
any bonus, except for bonuses made in the ordinary course of business consistent
with past practice, or any granting by the Company or any of its Subsidiaries of
any increase in severance or termination pay or any entry by the Company or any
of its Subsidiaries into any currently effective employment, severance,
termination or indemnification agreement or any agreement the benefits of which
are contingent or the terms of which are materially altered upon the occurrence
of a transaction involving the Company of the nature contemplated hereby,
(v) entry by the Company or any of its Subsidiaries into any material licensing
or other agreement with regard to the acquisition or disposition of any
Intellectual Property other than licenses in the ordinary course of business
consistent with past practice or any amendment or consent with respect to any
licensing agreement filed or required to be filed by the Company with the SEC,
(vi) any material change by the Company in its accounting methods, principles or
practices, except as required by concurrent changes in U.S. GAAP, (vii) any
material revaluation by the Company of any of its assets, including, without
limitation, writing down the value of capitalized inventory or writing off notes
or accounts receivable or any sale of assets of the Company other than in the
ordinary course of business consistent with past practice, or (viii) any other
change or event that would have required the Buyer's consent under
13
Section 5.1 (except for Section 5.1(r)) if such change or event had occurred
after the execution of this Agreement.
3.10 ABSENCE OF LITIGATION. Except as specifically disclosed in the
Company SEC Reports as of the date hereof, there are no material claims,
actions, suits, inquiries, proceedings or investigations pending or, to the
knowledge of the Company, threatened (or any governmental or regulatory
investigation pending or, to the knowledge of the Company, threatened) against
the Company or any of its Subsidiaries or any properties or rights of the
Company or any of its Subsidiaries, by or before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign.
3.11 EMPLOYEE MATTERS AND BENEFIT PLANS.
(a) DEFINITIONS. For purposes of this Section 3.11 only, "AFFILIATE"
shall mean any other person or entity under common control with the Company
within the meaning of Section 414(b), (c), (m) or (o) of the Code and the
regulations issued thereunder and, for avoidance of doubt, includes each
Subsidiary.
(b) SCHEDULE. Section 3.11(b) of the Company Disclosure Letter
contains an accurate and complete list of each Company Employee Plan and
each Employment Agreement. Neither the Company nor any of its Subsidiaries
has any plan or commitment to establish any new Company Employee Plan or
Employment Agreement, to modify any Company Employee Plan or Employment
Agreement (except to the extent required by law or to conform any such
Company Employee Plan or Employment Agreement to the requirements of any
applicable law, or as required by this Agreement), or to adopt or enter into
any Company Employee Plan or Employment Agreement.
(c) DOCUMENTS. The Company has provided or made available to the Buyer
correct and complete copies of: (i) all documents embodying each Company
Employee Plan and each Employment Agreement including (without limitation)
all amendments thereto and all related trust documents, administrative
service agreements, group annuity contracts, group insurance contracts, and
policies pertaining to fiduciary liability insurance covering the
fiduciaries for each Company Employee Plan; (ii) all Employment Agreements,
current contracts of employment or material particulars of the terms of
employment (including, without prejudice to the generality of the foregoing,
severance, consulting, relocation, repatriation, and expatriation
arrangements) for Senior Employees; (iii) a current template or sample of a
contract of employment or the material particulars of the terms and
conditions of employment (including, without prejudice to the generality of
the foregoing, severance, consulting, relocation, repatriation, and
expatriation arrangements) for each grade or level of Company Employee;
(iv) the most recent annual actuarial valuations, if any, prepared for each
Company Employee Plan; (v) the three (3) most recent annual reports (Form
Series 5500 and all schedules and financial statements attached thereto), if
any, required under ERISA or the Code in connection with each U.S. Employee
Plan; (vi) if any Company Employee Plan is funded, the most recent annual
and periodic accounting of that Company Employee Plan assets; (vii) the most
recent summary plan description together with the summary(ies) of material
modifications thereto and in the case of International Employee Plans the
most recent participant booklets and all material announcements to employees
and participants; (viii) for U.S. Employee Plans the most recent IRS
determination letter, and for International Employee Plans evidence of plan
approval; (ix) all written communications relating to any Company Employee
Plan and any proposed Company Employee Plans in each case, relating to any
amendments, terminations, establishments, increases or decreases in
benefits, acceleration of payments or vesting schedules or other events
which would result in any material liability to the Company or any of its
Affiliates; (x) all material correspondence to or from any Governmental
Entity relating to any Company Employee Plan; (xi) for U.S. Employee Plans
the three (3) most recent plan years discrimination tests for each Company
Employee Plan; and (xii) all registration
14
statements, annual reports (for U.S. Employee Plans, Form 11-K and all
attachments thereto) and prospectuses prepared in connection with each
Company Employee Plan.
(d) EMPLOYEE PLAN COMPLIANCE. (i) Each of the Company and its
Subsidiaries has performed in all material respects all obligations required
to be performed by it under, is not in default or violation of, and the
Company has no knowledge of any default or violation by any other party to
each Company Employee Plan, and each Company Employee Plan has been
established and maintained in all material respects in accordance with its
terms and in compliance with all applicable laws, statutes, orders, rules
and regulations, including but not limited to ERISA or the Code; (ii) each
U.S. Employee Plan intended to qualify under Section 401(a) of the Code and
each related trust intended to qualify under Section 501(a) of the Code has
either received a favorable determination, opinion, notification or advisory
letter from the IRS with respect to each such Company Employee Plan as to
its qualified status under the Code, including all amendments to the Code
effected by the Tax Reform Act of 1986 and subsequent legislation, or has
remaining a period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a letter and make any amendments
necessary to obtain a favorable determination as to the qualified status of
each such Company Employee Plan; (iii) each International Employee Plan,
including any amendments thereto, that is capable of, or intended to be
capable of, Plan Approval has received such Plan Approval or there remains a
period of time in which to obtain such Plan Approval retroactive to the date
of any amendment that has not previously received such Plan Approval;
(iv) no "prohibited transaction," within the meaning of Section 4975 of the
Code or Sections 406 and 407 of ERISA, and not otherwise exempt under
Section 4975 of the Code or Section 408 of ERISA (or any administrative
class exemption issued thereunder), has occurred with respect to any Company
Employee Plan that could result in material liability to the Company or any
of its Subsidiaries; (v) there are no actions, suits or, claims pending or,
to the Company's knowledge, threatened (other than routine claims for
benefits) against any Company Employee Plan or against the assets of any
Company Employee Plan that could result in any material liability to the
Company or any of its Subsidiaries; (vi) each Company Employee Plan (other
than any stock option plan) can be amended, terminated or otherwise
discontinued after the Closing Time, without material liability to the
Buyer, the Company or any of its Affiliates (other than benefits accrued to
date and ordinary administration expenses); (vii) there are no audits,
inquiries or proceedings pending or, to the knowledge of the Company,
threatened by the IRS or DOL or any other Governmental Entity with respect
to any Company Employee Plan; and (viii) neither the Company nor any
Affiliate is subject to any penalty or tax with respect to any Company
Employee Plan that could result in material liability to the Company or any
of its Subsidiaries.
(e) PENSION PLAN. Neither the Company nor any Affiliate has ever
maintained, established, sponsored, participated in, or contributed to, any
Pension Plan which is subject to Title IV of ERISA or Section 412 of the
Code or any equivalent non-U.S. rule or legislation.
(f) FUNDED RETIREMENT BENEFIT RIGHTS. The latest actuarial valuation
of each Funded Retirement Plan discloses that, as of the effective date of
the valuation, the aggregate value of the assets of that Funded Pension Plan
is equal to or greater than the aggregate value of its liabilities assessed
on an ongoing and terminated basis and calculated in accordance with the
actuarial methods and assumptions used in such valuation pursuant to the
applicable Funded Pension Plan and applicable Legal Requirements.
(g) UNFUNDED RETIREMENT BENEFIT RIGHTS. In respect of each Unfunded
Pension Plan, the Company or a Subsidiary of the Company, as applicable, has
made provision for accrued liabilities in accordance with applicable Legal
Requirements.
(h) COLLECTIVELY BARGAINED, MULTIEMPLOYER AND MULTIPLE EMPLOYER
PLANS. At no time has the Company or any Affiliate participated in,
contributed to or been obligated to participate in or
15
contribute to any Multiemployer Plan or ever maintained, established,
sponsored, participated in, or contributed to any multiple employer plan, or
to any plan described in Section 413 of the Code.
(i) NO POST-EMPLOYMENT OBLIGATIONS. No Company Employee Plan provides,
or reflects or represents any liability to provide retiree health insurance
coverage to any person for any reason, except as may be required by COBRA or
other applicable statute, and, to Company's knowledge after due inquiry,
neither the Company nor its Affiliates has ever represented, promised or
contracted (whether in oral or written form to any Employee (either
individually or to Employees as a group) or any other person that such
Employees(s) or other person would be provided with retiree health, except
to the extent required by statute.
(j) HEALTH CARE COMPLIANCE. Neither the Company nor any Affiliate has,
prior to the Closing Time and in any material respect, violated any of the
health care continuation requirements of COBRA, the requirements of FMLA,
the requirements of the Health Insurance Portability and Accountability Act
of 1996, the requirements of the Women's Health and Cancer Rights Act of
1998, the requirements of the Newborns' and Mothers' Health Protection Act
of 1996, or any amendment to each such act, or any similar provisions of
state or foreign law applicable to its Employees.
(k) EFFECT OF TRANSACTION.
(i) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any Company Employee Plan, Employment Agreement, trust or loan that
will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with
respect to any Employee.
(ii) No payment or benefit which will or may be made by the Company
or its Affiliates with respect to any Employee will be characterized as a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code.
(l) EMPLOYMENT MATTERS. The Company and each of its Subsidiaries:
(i) is in material compliance with all applicable foreign, federal, state
and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each
case, with respect to Employees; (ii) has withheld and reported all amounts
required by law or by Contract to be withheld and reported with respect to
wages, salaries and other payments to Employees, except where any such
failure would not result in any material liability to the Company or any of
its Subsidiaries; (iii) is not liable for any arrears of wages or any taxes
or any penalty for failure to comply with any of the foregoing, except where
any such failure would not result in any material liability to the Company
or any of its Subsidiaries; and (iv) is not liable for any payment to any
trust or other arrangement (funded or not) governed by or maintained by or
on behalf of any Governmental Entity with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice), except where any such failure
would not result in any material liability to the Company or any of its
Subsidiaries. There are no pending or, to the knowledge of the Company,
threatened or reasonably anticipated claims or actions against the Company
or any of its Affiliates under any worker's compensation policy or long-term
disability policy (other than routine claims for benefits) that would result
in any material liability to the Company or any of its Subsidiaries.
(m) LABOR. No work stoppage, labor strike, industrial or trade
dispute, or any dispute or negotiation with any trade union, association of
trade unions, works council, European works council or body representing
Employees against the Company or any of its Subsidiaries has
16
occurred in the last 12 months, is pending or, to the knowledge of the
Company, threatened. The Company does not know of any activities or
proceedings of any labor union to organize any Employees. There are no
actions, suits, claims, labor disputes or grievances pending, or, to the
knowledge of the Company, threatened or reasonably anticipated relating to
any labor, safety or discrimination matters involving any Employee,
including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would,
individually or in the aggregate, result in any material liability to the
Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has engaged in any unfair labor practices within the meaning of
the National Labor Relations Act or similar local law. Neither the Company
nor any of its Subsidiaries is presently nor has it been in the past a party
to, or bound by, or subject to any rules relating to, any recognition,
procedural or other agreement, works council or arrangement or custom
between, or applying to, one or more employers (whether or not Affiliates)
and a union, group of employees, or an employee representative body, for
collective bargaining or other negotiating or consultation purposes, labor
union or union contract, or workers' council or similar elected employee
representatives with respect to Employees and no such agreements or
arrangements are is being negotiated by or on behalf of the Company or any
of its Subsidiaries.
(n) INTERNATIONAL EMPLOYEE PLAN. Each International Employee Plan has
been established, maintained and administered in material compliance with
its terms and conditions and with the requirements prescribed by any and all
statutory or regulatory laws that are applicable to such International
Employee Plan. Furthermore, no International Employee Plan has material
unfunded liabilities, that as of the Closing Time, will not be offset by
insurance or fully accrued or disclosed in the Company's financial
statements. Except as required by law, no condition exists that would
prevent the Company or the Buyer from terminating or amending any
International Employee Plan at any time for any reason without material
liability to the Company or its Affiliates (other than ordinary
administration expenses or routine claims for benefits).
(o) ISRAELI EMPLOYEES. Without derogating from the provisions of
Section 3.11(a)-(n), with respect to Employees who reside in Israel or whose
Employment Agreements are subject to Israeli law ("ISRAELI EMPLOYEES"):
(i) Neither the Company nor any of its Affiliates (A) is party to any
general or special collective bargaining agreement, collective bargaining
arrangements or other contract or arrangement with a labor union, trade
union or other organization or body involving any of their respective
Israeli Employees, or is otherwise required (under any legal requirement,
under any Contract or otherwise) to provide benefits or working
conditions beyond those required by law or pursuant to rules and
regulations thereunder (including extension orders (tzavei harchava)
issued by the Ministry of Labor and Welfare); (B) is a member of the
Manufacturers Association of Israel; or (C) has recognized or received a
demand for recognition from any collective bargaining representative with
respect to any of their respective Israeli Employees.
(ii) All of the Israeli Employees are "at will" employees subject to
the termination notice provisions included in Employment Agreements or
applicable law.
(iii) All Employment Agreements between the Company or any of its
Affiliates and any of their respective Israeli Employees can be
terminated by the Company or, if applicable, the relevant Affiliate upon
less than three months notice without giving rise to a claim for damages
or compensation (except for statutory severance pay).
(iv) All payments by the Company and its Affiliates into pension and
provident funds severance fund or other similar funds (including,
manager's insurance, life insurance or incapacity insurance) together
with relevant reserves reflected in the Company Interim Financial Data
fully fund and cover the liabilities of the Company and its Affiliates
pursuant
17
to all Legal Requirements, the individual Employment Agreements or other
arrangements with respect to the Israeli Employees and any binding usage
or customs, if any, which forms part of the employment relationship of
any of the Israeli Employees, for all obligations, as at June 30, 2001,
relating to pension, severance pay, sick leave, benefits and other
employee benefits, recreation pay, incapacity insurance, life insurance,
salaries and reimbursement of expenses, vacation pay and similar
liabilities and each of the Company and its Affiliates has continued and
shall continue to make all payments and such additional "top up" payments
to such pension and provident funds, severance fund or other similar
funds (including, manager's insurance, life insurance or incapacity
insurance) until the Closing Time such that the aforementioned
liabilities of the Company and its Affiliates shall be fully covered and
funded as at the Closing Time, pursuant to all Legal Requirements.
(v) Neither the Company nor any of its Affiliates is aware of any
circumstance that could give rise to any valid claim by a current or
former Israeli Employee for compensation on termination of employment
(beyond, with respect to current Israeli Employees only, the statutory
severance pay to which employees are entitled).
(vi) All amounts that the Company and its Affiliates are legally or
contractually required either (A) to deduct, or transfer, from their
respective employees' salaries or to transfer to such employees' pension
or provident fund, manager's insurance life insurance, incapacity
insurance, continuing education fund, severance fund or other similar
funds or (B) to withhold from their employees' salaries and to pay to any
Governmental Entity as required by the Israeli Income Tax Ordinance [New
Version], Israeli social security laws and Israeli national health
insurance laws or otherwise have, in each case, been duly deducted,
transferred, withheld and paid, and neither the Company nor any of its
Affiliates has any outstanding obligation to make any such deduction,
transfer, withholding or payment.
(vii) The Company and its Affiliates comply in all material respects
with all applicable Legal Requirements and Contracts relating to
employment, employment practices, wages, bonuses and other compensation
matters and terms and conditions of employment related to their
respective Israeli Employees.
3.12 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
commitment, judgment, injunction, order or decree binding upon the Company or
its Subsidiaries or to which the Company or any of its Subsidiaries is a party
which has or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company or any of its
Subsidiaries, any acquisition of property by the Company or any of its
Subsidiaries or the conduct of business by the Company or any of its
Subsidiaries as currently conducted.
3.13 TITLE TO PROPERTY.
(a) Section 3.13(a) of the Company Disclosure Letter sets forth: (a) a
list of all real property currently owned, leased to, subleased to or
otherwise occupied by the Company or any of its Subsidiaries in connection
with the business of the Company or any of its Subsidiaries or Included
Assets (collectively, "COMPANY BUSINESS FACILITIES"); and (ii) a list of all
other leases, subleases or other occupancy agreements currently in effect
between the Company or any of its Subsidiaries as lessor and any third
parties with respect to any Company Business Facilities, (each a "LEASE"
and, collectively, the "LEASES"), each amendment thereto, the commencement
date, the rentable square footage of the premises set forth in the Lease,
the aggregate monthly fixed rental, and the expiration date. The Company has
provided the Buyer with true, complete and correct copies of each Lease.
Each such Lease constitutes the entire agreement of the parties thereunder,
and there are no other agreements or arrangements whatsoever relating to the
Company's or any of its Subsidiary's use or occupancy of any of the premises
described in such Leases. Neither the Company nor any of its Subsidiaries
has transferred or assigned any interest in any Lease, other
18
than to a Subsidiary of the Company, nor has the Company or any of its
Subsidiaries subleased or otherwise granted rights of use or occupancy of
any of the premises described therein to any other person or entity, other
than to the Company or a Subsidiary of the Company. To the extent any Lease
is required, under Israeli law, to be registered with the Israeli Lands
Registry, such Lease has been duly registered, is free of any Encumbrance
(including cautionary notices) and a copy of the extract from the Israeli
Land Registry, dated no earlier that five Business Days prior to the date
hereof, regarding title to the real property subject to any such Lease is
attached as part of Section 3.13(a) of the Company Disclosure Letter.
(b) The properties and assets owned or leased by the Company and its
Subsidiaries are sufficient to conduct the business of the Company and its
Subsidiaries as currently conducted. The Company and each of its
Subsidiaries has good title to or, in the case of the leased properties and
assets, valid leasehold interests in, all of the properties and assets,
real, personal and mixed, used in their respective businesses, including the
Included Assets, free and clear of all Encumbrances (other than mortgages
made by a landlord under a Lease of real property not situated in Israel to
which mortgage the Company is not a party but the Lease may be subject),
except for liens for Taxes not yet due and payable or which are being
contested in good faith and are not material.
(c) All the Leases are in full force and effect, and there is not, under
any of such Leases, any existing default, or event of default nor has there
occurred any event which with notice or lapse of time, or both, would
constitute a default thereunder by the Company or any of its Subsidiaries,
or, to the Company's knowledge, by any other party.
3.14 TAXES.
(a) The Company and each of its Subsidiaries have timely filed all
federal, state, local and foreign returns, estimates, information statements
and reports ("RETURNS") relating to Taxes required to be filed by the
Company and each of its Subsidiaries with any Tax authority, except such
Returns which are not material to the Company. All such Returns were correct
and complete in all material respects and were made on the proper basis. The
Company and each of its Subsidiaries have paid all Taxes shown to be due on
such Returns. The Company and each of its Subsidiaries have maintained all
records required to be maintained for tax purposes; all such information was
and remains complete and accurate in all material respects.
(b) Neither the Company nor any of its Subsidiaries is or will become
liable to pay, or make reimbursement or indemnity in respect of, any tax in
consequence of the failure by any other person (other than the Company or
any of its Subsidiaries) to discharge that tax within any specified period
or otherwise, where such tax relates to income, profits or gains, earned,
accrued or received, or to any event, transaction or circumstance occurring
or arising or deemed to occur or arise (whether wholly or partly) prior to
the Closing (including, but not limited to, taxation under Treasury
Regulation Section 1.1502-6). The Company and each of its Subsidiaries have
withheld with respect to their employees, independent contractors,
creditors, shareholders, and all other third parties all federal and state
income taxes, Taxes pursuant to the Federal Insurance Contribution Act and
other Taxes required to be withheld and have timely paid over to the proper
Governmental Entities all amounts required to be withheld and paid over
under all applicable laws.
(c) Neither the Company nor any of its Subsidiaries has executed any
unexpired waiver of any statute of limitations on or extending the period
for the assessment or collection of any Tax.
(d) Neither the Company nor any of its Subsidiaries is involved in any
current dispute with any tax authority or is or has in the last six years
been the subject of any investigation, audit or non-routine visit by any tax
authority. To the knowledge of the Company, neither the Company nor
19
any of its Subsidiaries has been notified in writing of any request for such
an audit or other examination.
(e) No material adjustment relating to any Returns filed by the Company
or any of its Subsidiaries (and no claim by a Tax authority in a
jurisdiction in which the Company or any of its Subsidiaries does not file
Returns that the Company or any of its Subsidiaries may be subject to
taxation by such jurisdiction) has been proposed in writing formally or
informally by any Tax authority to the Company or any of its Subsidiaries.
(f) Neither the Company nor any of its Subsidiaries has any liability
for any unpaid Taxes which has not been accrued for or reserved on the
Company Interim Financial Data in accordance with U.S. GAAP, whether
asserted or unasserted, contingent or otherwise, other than any liability
for unpaid Taxes that may have accrued since June 30, 2001 in connection
with the operation of the business of the Company and its Subsidiaries in
the ordinary course. All other warranties relating to specific tax matters
set out in this Section 3.14 are made without prejudice to the generality of
this paragraph.
(g) No tax authority has operated or agreed to operate any special
arrangement (being an arrangement which is not directly based on relevant
legislation, even if based on any published practice, including rulings) or
has agreed on any compromise in relation to any of the Company's or
Subsidiaries' tax affairs.
(h) There is no contract, agreement, plan or arrangement to which the
Company or any of its Subsidiaries is a party as of the date of this
Agreement, including but not limited to the provisions of this Agreement,
covering any Employee that, individually or collectively, would reasonably
be expected to give rise to the payment of any amount that would not be
deductible pursuant to Sections 404 or 162(m) of the Code. There is no
contract, agreement, plan or arrangement to which the Company is a party or
by which it is bound to compensate any individual for excise taxes paid
pursuant to Section 4999 of the Code.
(i) Neither the Company nor any of its Subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a subsection
(f) asset (as defined in Section 341(f)(4) of the Code) owned by the Company
or any of its Subsidiaries.
(j) Neither the Company nor any of its Subsidiaries (i) has any of its
tax affairs dealt with on a consolidated basis, or any other basis which
allows a combined filing, profit calculation or payment of tax for more than
one person or entity, (ii) is a party to any Tax sharing or Tax allocation
agreement, arrangement or understanding, (iii) has been involved in a
business merger, share-for-share merger, legal merger or legal demerger
(split) within the meaning of the Articles 14, 14a or 14b of the Corporate
Income Tax Act and/or 3.55, 3.56 or 3.57 of the Income Tax Act (or the
predecessors of these articles under the Income Tax Act 1964) and/or
Article 37 of the Legal Transfer Taxes Act, or (iv) is a party to any joint
venture, partnership or, to the knowledge of the Company, any other
arrangement that could be treated as a partnership for income Tax purposes.
(k) The Company and each of its Subsidiaries are and have at all times
been resident for tax purposes in their place of incorporation and are not
and have not at any time been treated as resident in any other jurisdiction
for any tax purpose (including any double taxation arrangement). Neither the
Company nor any of its Subsidiaries is or has been subject to tax in any
jurisdiction other than its place of incorporation by virtue of having a
permanent establishment, a permanent representative or other place of
business or taxable presence in that jurisdiction.
(l) No relief has been claimed by and/or given to the Company or any of
its Subsidiaries, or taken into account in determining or eliminating any
provision for tax or deferred tax in the
20
Company Interim Financial Data, which could or might be effectively
withdrawn, postponed, restricted or otherwise lost as a result of the sale
and purchase hereunder or any other event or circumstance occurring or
arising at any time after June 30, 2001.
(m) All transactions between the Company and its Subsidiaries or between
Subsidiaries have been and are on fully arm's length terms. There are no
circumstances that could cause any tax authority to make any adjustment for
tax purposes, or require any such adjustment to be made, to the terms on
which any such transaction is treated as taking place, and no such
adjustment has been made or attempted in fact.
(n) In relation to the Company and each Subsidiary: (i) each is
registered for the purposes of VAT, has been so registered at all times that
it has been required to be registered by VAT legislation, and such
registration is not subject to any conditions imposed by or agreed with the
relevant tax authority; (ii) each has complied fully with and observed in
all material respects the terms of VAT legislation; (iii) each has
maintained and obtained at all times complete, correct and up-to-date
records, invoices and other documents (as the case may be) appropriate or
requisite for the purposes of VAT legislation and has preserved such
records, invoices and other documents in such form and for such periods as
are required by VAT legislation; (iv) each obtains credit for all input tax
paid or suffered by it; (v) each cannot be subjected to a revision of the
VAT position, leading to a recapture of VAT deducted on or before Closing;
(vi) each is not and has not been treated as a member of a group for the
purposes of VAT legislation, and has not applied for such treatment;
(vii) each is not and has not been subject under VAT legislation to any
penalty, fine or surcharge, or any warning or notice which could (whether
with or without other events) lead to the imposition of any penalty, fine or
surcharge, and has not been required to give any security as a condition of
making supplies for the purposes of VAT; (viii) and each has not elected
rents paid or received, and/or the acquisition of real estate, to be subject
to VAT.
(o) No claim has been made by the Company or any of its Subsidiaries for
the depreciation of any asset for tax purposes, which is likely to be
disallowed.
(p) Neither the Company nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" 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 Offer and the Post-Closing Reorganization.
(q) Neither the Company nor any of its Subsidiaries (i) holds a
receivable (x) payable by another entity in which it or a Related Company
has a Participation and (y) on which it or a Related Company has claimed a
loss for corporate income tax purposes, or (ii) has outstanding debt the
fair market value of which is below its nominal value.
(r) Neither the Company nor any of its Subsidiaries has claimed any
reduction of tax by virtue of Article 13ca of the Corporate Income Tax Act.
(s) Neither the Company nor any of its Subsidiaries has a participation
in an entity that is engaged in business activities outside the Netherlands,
where previously these activities were the activities of a Related Company.
(t) In case of a liquidation of any Participation of the Company or of
its Subsidiaries that hold(s) the shares in such Participation, are entitled
to a deductible loss for corporate income tax purposes equal to the
difference between (i) the total, or the proportionate part, as the case may
be, of the liquidation proceeds derived from the liquidation of such
Participation, minus the fair market value of the shares in any other
Participation that are a part of such liquidation proceeds, and (ii) the
book value of that Participation as shown in or adopted for the purposes of
the Company Interim Financial Data.
21
(u) Since January 1, 2001, neither the Company nor any of its
Subsidiaries has distributed or is deemed to have distributed a dividend.
(v) Neither the Company nor any of its Subsidiaries has tainted (share)
capital (BESMET FUSIE AANDELENKAPITAAL/AGIO) by reason of Article 3a of the
Dividend Withholding Tax Act.
(w) Neither the Company nor any of its Subsidiaries is a real estate
investment company within the meaning of Article 4 of the Legal Transfer
Taxes Act.
(x) All interest and other sums of an expense nature paid, payable or
accruable by the Company or any of its Subsidiaries and all sums payable or
accruable under any obligation incurred by the Company or any of its
Subsidiaries prior to the Closing and which will continue to bind the
Company or a Subsidiary after the Closing, have been and will continue to be
deductible for the purposes of corporate income tax, either in computing the
profits of the Company or a Subsidiary or in computing the corporate income
tax chargeable on it.
(y) Neither the Company nor any of its Subsidiaries has formed a reserve
for risks in relation to finance activities by virtue of Article 15b of the
Corporate Income Tax Act.
(z) Neither the Company nor any of its Subsidiaries has made an election
to report its taxable income for corporate income tax purposes in a currency
other than NLG/Euro or has requested the tax inspector to bring an action
that served to hedge a currency exchange risk on a participation, under the
participation exemption as meant in Article 13 of the Corporate Income Tax
Act.
(aa) Indigo Electronic Printing Systems Limited ("IEPS") qualifies as an
"Industrial Company" within the definition of the Israeli Encouragement of
Industry (Taxes) Law, 1969. To the Company's knowledge, there is no event or
reason (including, the consummation of the Offer and the conduct and
performance of IEPS' business and operations in accordance with IEPS' or the
Company's plans and projections) that could result in IEPS ceasing to
qualify as an Industrial Company. IEPS (i) is an Approved Enterprise for the
purposes of the Israeli Encouragement of Capital Investments Law, 1959; and
(ii) Section 3.14(dd) of the Company Disclosure Letter sets forth the
effective Israeli income tax rate applicable to IEPS for its last completed
fiscal year and the portions of IEPS which are Approved Enterprises and
their effective Israeli income Tax rates for the current fiscal year. For
the purposes of Section 47(a1)(3) of the Israeli Encouragement of Capital
Investments Law, 1959 the proportion of foreign investment in IEPS is 90% or
more.
(bb) Neither the Company nor any of its Subsidiaries is (i) a controlled
foreign corporation within the meaning of Section 957 of the Code, (ii) a
foreign personal holding company within the meaning Section 552 of the Code,
or (iii) a passive foreign investment company within the meaning of
Section 1297 of the Code.
3.15 BROKERS. Except for fees payable to Gleacher & Co. LLC pursuant to an
engagement letter, a true and correct copy of which has been provided to the
Buyer, the Company has not incurred, and will not incur, directly or indirectly,
any liability for brokerage or finders fees or agent's commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
3.16 INTELLECTUAL PROPERTY.
(a) Section 3.16(a) of the Company Disclosure Letter contains a complete
and accurate list (by name and version number) of all material products
(including any software components) or material service offerings of the
Company and any of its Subsidiaries (collectively, the "COMPANY PRODUCTS")
that have been sold, distributed or otherwise disposed of in the five
(5)-year period preceding the date hereof or which the Company or any of its
Subsidiaries intends to sell, distribute or otherwise dispose of in the
future, including without limitation any products or service offerings under
active development.
22
(b) Section 3.16(b) of the Company Disclosure Letter lists all
Registered Intellectual Property Rights owned by, filed in the name of, or
applied for, by the Company and any of its Subsidiaries (the "COMPANY
REGISTERED INTELLECTUAL PROPERTY RIGHTS") and lists any proceedings or
actions filed or pending before any court, tribunal (including the PTO) or
equivalent authority anywhere in the world related to any of the Company
Registered Intellectual Property Rights or the Company Intellectual
Property, other than proceedings to which the Company or any of its
Subsidiaries is not a party or by which any of such are not bound.
(c) Each Company Registered Intellectual Property Right is valid and
subsisting. All necessary documents and certificates in connection with such
Company Registered Intellectual Property Rights have been filed with the
relevant patent, copyright, trademark or other authorities in the United
States or foreign jurisdictions, as the case may be, for the purposes of
perfecting, prosecuting and maintaining such Registered Intellectual
Property Rights.
(d) In each case in which the Company or any of its Subsidiaries has
acquired ownership of any material Intellectual Property or material
Intellectual Property Right from any person, the Company or its Subsidiaries
has obtained a valid and enforceable assignment sufficient to irrevocably
transfer all rights in and to all such Intellectual Property and the
associated Intellectual Property Rights (including the right to seek past
and future damages with respect thereto) to the Company or its Subsidiaries.
The Company or its Subsidiaries has recorded each such assignment of a
material Registered Intellectual Property Right assigned to the Company or
any of its Subsidiaries with the relevant governmental entity in accordance
with applicable laws and regulations in each jurisdiction in which such
assignment is required to be recorded.
(e) The Company has no knowledge of any facts or circumstances that
would render any material Company Intellectual Property invalid or
unenforceable.
(f) All Company Intellectual Property will be fully transferable,
alienable or licensable by the Buyer without restriction and without payment
of any kind to any third party.
(g) Each item of the Company Intellectual Property is free and clear of
any Encumbrances, except for non-exclusive licenses granted to OEM's and
other resellers listed in the Company Disclosure Letter or to end-user
customers in the ordinary course of business. The Company is the exclusive
owner or exclusive licensee of all the Company Intellectual Property.
Without limiting the generality of the foregoing (i) the Company is the
exclusive owner of all material Trademarks used in connection with the
operation or conduct of the business of the Company and its Subsidiaries,
including the sale, distribution or provision of any Company Products by the
Company or any of its Subsidiaries, but excluding any non-material
trademarks owned by a third party that are licensed to the Company and used
to refer to third party products that are incorporated in or used in
connection with any Company Products, (ii) the Company owns exclusively all
copyrighted works that are included or incorporated into the Company
Products or which the Company or any of its Subsidiaries otherwise purports
to own, and (iii) to the extent that any Patents would be infringed by any
Company Product, the Company is the exclusive owner of such Patents.
(h) Neither the Company nor any of its Subsidiaries has (i) transferred
ownership of, or granted any exclusive license of or right to use, or
authorized the retention of any exclusive rights to use or joint ownership
of, any Intellectual Property or Intellectual Property Right that is or was
the Company Intellectual Property, to any other person, or (ii) permitted
the Company's rights in such Company Intellectual Property to lapse or enter
the public domain.
(i) Excluding any failure by a non-material Employee or contractor to
execute an assignment agreement that does not result in the loss of any
Intellectual Property each Employee, and any contractor who has contributed
to or participated in the creation, discovery or development of any
Intellectual Property whether on behalf of the Company or any of its
Subsidiaries either: (i) is a
23
party to an Employment Agreement under which the Company or its Subsidiaries
is deemed or agreed to be the original owner/author, as applicable, of such
Intellectual Property; or (ii) has executed a valid and irrevocable
assignment or an agreement to assign in favor of the Company all right,
title and interest in such Intellectual Property; or (iii) in respect of
Israeli Employees, pursuant to their respective employment agreements or
under relevant Israeli law, is deemed to have assigned all right, title and
interest to such Intellectual Property to the Company and any of its
Subsidiaries. All such Intellectual Property constitutes Company
Intellectual Property and no third party owns or has any rights to any such
Company Intellectual Property. In respect of each Israeli Employee, the
salary payable to each such Israeli Employee under the terms of the relevant
Employment Agreement expressly includes a provision to the effect whereby it
is agreed that such salary includes the full remuneration payable to such
Israeli Employee for any invention made by such employee that is a service
patent (as defined in the Israeli Patents Law 1967).
(j) To the extent that any Intellectual Property or Intellectual
Property Rights have been developed or created by a third party for the
Company or any of its Subsidiaries and is incorporated into any Company
Product, the Company has a written agreement with such third party with
respect thereto and the Company thereby either (i) has obtained ownership
of, and is the exclusive owner of, or (ii) has obtained a perpetual,
transferable license (sufficient for the conduct of its business as
currently conducted or proposed to be conducted by the Company as per the
Company SEC filings) to all such third party's Intellectual Property Rights
in such Intellectual Property or Intellectual Property Rights by operation
of law or by valid assignment.
(k) The Company Intellectual Property, together with any Intellectual
Property Rights licensed to the Company on a non-exclusive basis, constitute
all the Intellectual Property and Intellectual Property Rights material to
the business of the Company and its Subsidiaries as it currently is
conducted or proposed to be conducted by the Company as per the Company SEC
filings or which are used in and/or necessary to the conduct of such
business, including the design, development, manufacture, use, import and
sale of the Company Products.
(l) No person who has licensed any Intellectual Property or Intellectual
Property Rights to the Company or any of its Subsidiaries has ownership
rights or license rights to improvements made by or for the Company or any
of its Subsidiaries in such Intellectual Property or Intellectual Property
Rights.
(m) No open source or public library software, including any version of
any software licensed pursuant to any GNU public license, was used in the
development or modification of any software that is or was the Company
Intellectual Property or is incorporated into any Company Product.
(n) No government funding, facilities of a university, college, other
educational institution or research center or funding from third parties was
used in the development of any Company Intellectual Property. To the
knowledge of the Company, no Employee or independent contractor of the
Company or any of its Subsidiaries, who was involved in, or who contributed
to, the creation or development of any Company Intellectual Property, has
performed services for the government, university, college, or other
educational institution or research center during a period of time during
which such Employee or independent contractor was also performing services
for the Company or any of its Subsidiaries, the effect of which would confer
on such government, university, college, or other educational institution or
research center any interest in such Company Intellectual Property.
(o) All Company Intellectual Property is freely transferable,
conveyable, and/or assignable by the Company and/or the Buyer, to any entity
located in any jurisdiction in the world without any restriction,
constraint, control, supervision, or limitation whatsoever. Section 3.16(o)
of the Company Disclosure Letter describes all restrictions, constraint,
control, supervision, fees, penalties, royalties, assessments or limitations
that could be imposed by the OCS or any other
24
Governmental Entity or quasi-governmental entity on the ownership, place,
method and scope of exploitation of any Intellectual Property (including the
operation of the business of the Company or its Subsidiaries as it is
currently conducted, including the design, development, use, import,
branding, advertising, promotion, marketing, manufacture and sale of the
Company Products. Notwithstanding anything in the Disclosure Schedule to the
contrary, none of the intellectual property developed as a result of the
Company's involvement with the Magnet Program and/or the Magnet Consortium
constitutes intellectual property which is material to the Company's
Intellectual Property estate.
(p) The operation of the business of the Company and its Subsidiaries as
it is currently conducted or proposed to be conducted by the Company as per
the Company SEC filings, including the design, development, use, import,
branding, advertising, promotion, marketing, manufacture and sale of the
Company Products, does not and will not when conducted by the Buyer and/or
the Company or its Subsidiaries in substantially the same manner following
the Closing infringe or misappropriate any Intellectual Property Right of
any person, violate any right of any person (including any right to privacy
or publicity), or constitute unfair competition or trade practices under the
laws of any jurisdiction, and neither the Company nor any of its
Subsidiaries has received notice from any person claiming that such
operation or any act, product, technology or service (including products,
technology or services currently under development) of the Company or any of
its Subsidiaries infringes or misappropriates any Intellectual Property
Right of any person or constitutes unfair competition or trade practices
under the laws of any jurisdiction (nor does the Company have knowledge of
any basis therefor).
(q) No Company Intellectual Property, Company Product or service of the
Company or its Subsidiaries is subject to any proceeding or outstanding
decree, order, judgment or settlement agreement or stipulation that
restricts in any manner the use, transfer or licensing thereof by the
Company or its Subsidiaries or may be reasonably expected to materially and
adversely affect the validity, use or enforceability of such Company
Intellectual Property.
(r) Other than inbound publicly available "shrink-wrap" and other
publicly-available commercial binary code end-user licenses, and outbound
"shrink-wrap" licenses in the forms set forth on Section 3.16(r) of the
Company Disclosure Letter, Section 3.16(r) of the Company Disclosure Letter
lists all material Contracts to which the Company and any of its
Subsidiaries is a party with respect to any Intellectual Property or
Intellectual Property Rights. All such Contracts are in full force and
effect in accordance with their respect terms. Neither the Company nor any
of its Subsidiaries is in material breach of and neither the Company nor any
of its Subsidiaries has failed to perform in any material respect under, any
of the foregoing Contracts and, to the Company's knowledge, as of the date
hereof, no other party to any such Contract is in breach thereof or has
failed to perform in any material respect thereunder. The consummation of
the transactions contemplated by this Agreement will neither violate nor
result in the breach, modification, cancellation, termination or suspension
of such Contracts. Following the Closing Time, the Buyer will be permitted
to exercise all of the Company's rights under such Contracts to the same
extent the Company and its Subsidiaries would have been able to had the
transactions contemplated by this Agreement not occurred and without being
required to pay any additional amounts or consideration other than fees,
royalties or payments which the Company would otherwise be required to pay
had such transactions contemplated hereby not occurred.
(s) Other than in connection with the sale of its products in the
ordinary course of its business, Section 3.16(s) of the Company Disclosure
Letter lists all material Contracts between the Company or its Subsidiaries
and any other person wherein or whereby the Company or any of its
Subsidiaries has agreed to, or assumed, any obligation or duty to warrant,
indemnify, reimburse, hold harmless, guaranty or otherwise assume or incur
any obligation or liability or provide a right of rescission with respect to
the infringement or misappropriation by the Company or any of its
25
Subsidiaries or such other person of the Intellectual Property Rights of any
person other than the Company and its Subsidiaries.
(t) There are no Contracts between the Company (or any of its
Subsidiaries) and any other person with respect to Company Intellectual
Property under which there is any dispute regarding the scope of such
agreement, or performance under such agreement, including with respect to
any payments to be made or received by the Company or any of its
Subsidiaries thereunder.
(u) To the Company's knowledge, no person is infringing or
misappropriating any Company Intellectual Property Right.
(v) The Company and each of its Subsidiaries has protected the Company's
and each of its Subsidiaries' rights in confidential information and trade
secrets of the Company and its Subsidiaries or provided by any other person
to the Company to the extent reasonable and customary in the industry in
which the Company operates. The Company has and enforces a policy requiring
each Employee of the Company or any of its Subsidiaries to execute a
Proprietary Rights and Confidentiality Agreement substantially in the form
set forth in Section 3.16(v) of the Company Disclosure Letter and either
(i) all current and former Employees of the Company and its Subsidiaries who
have created or modified any of the Company Intellectual Property have
executed such an agreement assigning all of the rights of such Employees in
and to such Company Intellectual Property to the Company or (ii) if an
Employee has not executed such an agreement so assigning such rights to the
Company, the Employee is deemed to have assigned such rights to the Company
by operation of law, excluding any failure by a non-material Employee or
contractor to execute an assignment agreement that does not result in the
loss of any Intellectual Property.
(w) Neither this Agreement nor the transactions contemplated by this
Agreement, including the assignment to the Buyer, by operation of law or
otherwise, of any Contracts to which the Company or any of its Subsidiaries
is a party, will result in (i) any third party being granted rights or
access to, or the placement in or release from escrow, of any Company
Intellectual Property (including source code for any software belonging to
the Company or any of its Subsidiaries), (ii) the Buyer or any of its
Subsidiaries granting to any third party any right to or with respect to any
Intellectual Property or Intellectual Property Right owned by, or licensed
to, either of them pursuant to any Contract to which the Company or any of
its Subsidiaries is a party or by which it is bound, (iii) the Buyer or any
of its Subsidiaries being bound by, or subject to, any non-compete or other
restriction on the operation or scope of their respective businesses, or
(iv) the Buyer or any of its Subsidiaries being obligated to pay any
royalties or other amounts to any third party in excess of those payable by
the Company or its Subsidiaries prior to the Closing pursuant to any
Contract to which the Company or any of its Subsidiaries is a party or by
which any of them is bound.
3.17 AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) Neither the Company nor any of its Subsidiaries is a party to or is
bound by:
(i) any written employment or consulting agreement, contract or
commitment with any officer, director, Employee or member of the Company
Boards, or any service, operating or management agreement, other than
those that are terminable by the Company or any of its Subsidiaries on no
more than thirty (30) days' notice without liability or financial
obligation to the Company or any of its Subsidiaries;
(ii) any agreement of indemnification or any guaranty other than any
agreement of indemnification entered into in connection with a Lease in
respect of real property not situated in Israel for the benefit of the
landlord and its mortgage or in connection with the sale of products in
the ordinary course of business consistent with past practice pursuant to
the Company's standard form agreement previously delivered by the Company
to the Buyer;
26
(iii) any material Contract containing any covenant limiting in any
respect the right of the Company or any of its Subsidiaries to engage in
any line of business or to compete with any person or entity or granting
any exclusive distribution rights;
(iv) any Contract currently in force relating to the disposition or
acquisition by the Company or any of its Subsidiaries after the date of
this Agreement of a material amount of assets not in the ordinary course
of business or pursuant to which the Company or any of its Subsidiaries
has any material ownership interest in any corporation, partnership,
joint venture or other business enterprise other than the Subsidiaries of
the Company;
(v) any dealer, distributor, joint marketing or development Contract
currently in force under which the Company or any of its Subsidiaries
have continuing material obligations to jointly market any product,
technology or service and which may not be canceled without penalty upon
notice of ninety (90) days or less, or any material agreement pursuant to
which the Company or any of its Subsidiaries have continuing material
obligations to jointly develop any intellectual property that will not be
owned, in whole or in part, by the Company or any of its Subsidiaries and
which may not be canceled without penalty upon notice of ninety
(90) days or less;
(vi) any Contract currently in force to license any third party to
manufacture or reproduce any product, service or technology of the
Company or any of its Subsidiaries or any Contract currently in force to
sell or distribute any products, service or technology of the Company or
any of its Subsidiaries except agreements with distributors or sales
representatives in the normal course of business cancelable without
penalty upon notice of ninety (90) days or less and substantially in the
form previously provided to the Buyer;
(vii) any Contract currently in force to provide source code or design
specifications to any third party for any product or technology that is
material to the Company and its Subsidiaries taken as a whole;
(viii) any mortgages, indentures, guarantees, other Encumbrances, loans
or credit agreements, security agreements or other agreements or
instruments relating to, or securing, the borrowing of money or extension
of credit (other than mortgages made by a landlord under a Lease to which
mortgage the Company is not a party but the Lease may be subject);
(ix) any material settlement agreement under which the Company has
ongoing obligations.
(b) Other than Leases, neither the Company nor any of its Subsidiaries
nor, to the Company's knowledge, any other party to a Company Contract, is
in breach, violation or default under, and neither the Company nor any of
its Subsidiaries has received written notice that it has breached, violated
or defaulted under, any of the material terms or conditions of any of the
Company Contract in such a manner as would permit any other party to cancel
or terminate any such Company Contract, or would permit any other party to
seek material damages or other remedies (for any or all of such breaches,
violations or defaults, in the aggregate), subject to the representations
and warranties contained in Section 3.13, including without limitation,
Section 3.13(c). The Company has made available to the Buyer true and
correct copies of any Contracts (excluding purchase orders) the Company and
its Subsidiaries may have with its top ten customers measured by revenue.
(c) Neither the Company nor any of its Subsidiaries is restricted by
agreement from carrying on its business anywhere in the world.
(d) Neither the Company nor any of its Subsidiaries has any power of
attorney outstanding or any obligations or liabilities (whether absolute,
accrued, contingent or otherwise), as guarantor,
27
surety, co-signer, endorser, co-maker, indemnitor or otherwise in respect of
the obligation of any Person, corporation, partnership, joint venture,
association, organization or other entity.
3.18 OPINION OF FINANCIAL ADVISOR. The Company Boards have been advised by
the Company's financial advisor, Gleacher & Co. LLC, that in its opinion, as of
the date of this Agreement, the Offer Price is fair to the holders of Company
Shares from a financial point of view, and the Company will provide a copy of
the written confirmation of such opinion to the Buyer as soon as reasonably
practicable.
3.19 INSURANCE. The Company and each of its Subsidiaries maintain
Insurance Policies which the Company believes are upon terms that are reasonable
and adequate for and are of the type and in amounts customarily carried by
persons conducting businesses, operations, properties and locales similar to
those of the Company and its Subsidiaries. There is no material claim by the
Company or any of its Subsidiaries pending under any of the material Insurance
Policies as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All insurance policies referred to in
this Section are valid and binding in accordance with their terms, except to the
extent such enforceability may be limited by the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar law affecting
creditors' rights generally and general principles of equity or public policy
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and are in full force and effect.
3.20 BOARD APPROVAL. Each of the Company Boards, at a combined meeting
duly called and held on September 5, 2001, has unanimously (i) determined that
this Agreement and the transactions contemplated hereby, including the Offer,
are at a price and on terms that are favorable and fair to and in the best
interests of the Company and its shareholders; (ii) approved this Agreement and
the transactions contemplated hereby, including the Offer, in all respects; and
(iii) resolved to recommend that the Company Shareholders accept the Offer and
tender their Company Shares thereunder to the Buyer or a Subsidiary of the Buyer
and vote at the EGM in favor of (x) the appointment of new members to the
Company Boards in accordance with the designation of the Buyer, (y) the
amendment of the Company's Articles of Association attached hereto as EXHIBIT E
and (z) taking all actions reasonably necessary to accomplish any part of the
Post-Closing Reorganization.
3.21 ENVIRONMENTAL MATTERS.
(a) Each of the Company and its Subsidiaries is in material compliance
with all Environmental Laws. Such compliance includes, but is not limited
to, the possession by the Company and each of its Subsidiaries of all
permits and other governmental Approvals required under all applicable
Environmental Laws, and compliance with the terms and conditions thereof.
Each permit and other governmental Approval currently held by the Company
and each of its Subsidiaries pursuant to the Environmental Laws is
specifically identified in the Company Disclosure Letter.
(b) Neither the Company nor any of its Subsidiaries has received any
communication (written or oral), whether from a Governmental Entity,
citizens group, employee or otherwise, that alleges that the Company or any
of its Subsidiaries is not in full compliance with any Environmental Laws.
The Company has delivered to the Buyer prior to the execution of this
Agreement all information (whether oral or written and including, but not
limited to, assessments, reports, data, results of investigations or audits)
that is in the possession of or reasonably available to the Company or any
of its Subsidiaries regarding the evaluation of material environmental
matters pertaining to, or the environmental condition of, the businesses of
the Company and its Subsidiaries or the compliance (or non-compliance) by
the Company or any of its Subsidiaries with any Environmental Laws.
(c) There is no Environmental Claim by any Person that is pending or, to
the Company's knowledge, threatened against the Company or any of its
Subsidiaries, or against any Person whose
28
liability for any Environmental Claim the Company or any of its Subsidiaries
has retained or assumed either contractually or by operation of law.
(d) There are no past or present actions, activities, circumstances,
conditions, events or incidents, including the release, emission, discharge,
presence or disposal of any Materials of Environmental Concern, that could
result in a risk of any material Environmental Claim being asserted against
the Company or any of its Subsidiaries or, to the knowledge of the Company,
against any Person whose liability for any Environmental Claim the Company
or any of its Subsidiaries has retained or assumed either contractually or
by operation of law.
(e) Without in any way limiting the generality of the foregoing,
(i) all on-site and off-site locations where the Company or any of its
Subsidiaries has (previously or currently) stored, disposed or arranged for
the disposal of Materials of Environmental Concern are specifically
identified in the Company Disclosure Letter, (ii) all underground storage
tanks, and the capacity and contents of such tanks, located on any property
owned, leased, operated or controlled by the Company or any of its
Subsidiaries, to the Company's knowledge, are specifically identified in the
Company Disclosure Letter, (iii) there is, to the Company's knowledge, no
asbestos contained in or forming part of any building, building component,
structure or office space owned, leased, operated or controlled by the
Company or any of its Subsidiaries and (iv) no PCBs or PCB-containing items
are, to the Company's knowledge, used or stored at any property owned,
leased, operated or controlled by the Company or any of its Subsidiaries.
(f) None of the Company or any of its Subsidiaries is, to the Company's
knowledge, subject to any order or judgement issued pursuant to any
Environmental Laws requiring (i) the performance of site assessment for
Materials of Environmental Concern, (ii) the removal or remediation of
Materials of Environmental Concern, (iii) the giving of notice to, or
receiving the approval of, any Governmental Entity or (iv) the recording or
delivery to any other Person of any disclosure document or statement
pertaining to environmental matters by virtue of the transactions
contemplated hereby or as a condition to the effectiveness of any such
transactions.
(g) The Company has not sold or distributed any Materials of
Environmental Concern, or any substances, preparations, mixtures or products
containing or comprising Materials of Environmental Concern (collectively,
"COMPANY PRODUCTS OF CONCERN"), nor to the knowledge of the Company has any
other Person sold or distributed any Company Products of Concern, in any
country (including, without limitation, the U.S., European Union, New
Zealand, Australia, Japan, Philippines, Republic of Korea, Canada and the
People's Republic of China) which has chemical registration requirements
(including, without limitation, and by way of example, the Toxic Substances
Control Act, 15 U.S.C. Section 2601 ET SEQ. and related foreign laws) except
in compliance in all material respects with all such requirements.
3.22 GRANTS, INCENTIVES AND SUBSIDIES. Section 3.22 of the Company
Disclosure Letter provides a complete list of all pending and outstanding
grants, incentives (including, Tax incentives) and subsidies (collectively,
"GRANTS") from the Government of the State of Israel or any agency thereof, or
from any foreign governmental or administrative agency, granted to the Company
or any of its Subsidiaries, including, without limitation, (i) Approved
Enterprise Status from the Investment Center, (ii) Grants from or administered
by the OCS or by The Director General of the Israeli Ministry of Industry and
Trade, (iii) the Israel-US Binational Industrial Research and Development
Foundation (BIRD), (iv) the Magnet DPI 2000 Program ("DPI 2000"), and (v) the
Print IT Program administered by the European Union ("PRINT IT"). Section 3.22
of the Company Disclosure Letter includes correct copies of all documents
evidencing Grants submitted by the Company or any of its Subsidiaries, all
applications submitted in connection with any Grants and all letters of
approval, and supplements thereto, granted to the Company or any of its
Subsidiaries and, without derogating from the generality of the foregoing, in
respect of Tax incentives, the period for which Tax incentives apply and the
nature of such Tax
29
incentives. Section 3.22 of the Company Disclosure Letter details and attaches
copies of all material undertakings of the Company or any of its Subsidiaries
given in connection with the Grants. Without limiting the generality of the
above, Section 3.22 of the Company Disclosure Letter includes the aggregate
amounts of each Grant, and the aggregate outstanding obligations thereunder of
the Company or any of its Subsidiaries with respect to royalties, or the
outstanding amounts to be paid by the OCS to the Company or any of its
Subsidiaries and the composition of such obligations or amount by the product or
product family to which it relates. The Company and its Subsidiaries are in
compliance, in all material respects, with the terms and conditions of their
respective Grants and have duly fulfilled, in all material respects, all the
undertakings relating thereto. To the Company's knowledge, the Company is not
aware of any event or other set of circumstances which might lead to the
revocation or material modification of any of the Grants. All Intellectual
Property created, discovered, arising or resulting from any research or
development that has, directly or indirectly, in whole or in part, been funded
or financed by any Grant ("GRANT FUNDED IP") is Company Intellectual Property,
the exclusive ownership, right and title in respect thereof vests in the Company
or its Subsidiaries. Section 3.22 of the Company Disclosure Letter details all
Grant Funded IP and the relevant Grant that funded or financed the same. To the
extent any Grant Funded IP is registered in the name of, or is owned or vests in
the Company or any of its non-Israeli Subsidiaries the Company and its
Subsidiaries have received all necessary Approvals (including, Approvals
required pursuant to Section 19 of the Israeli Encouragement of Industrial
Research and Development Law 1984 and Approvals as may be required pursuant to
the terms of any letter of undertakings given in connection therewith) in
connection with the transfer to, registration or ownership of such Grant Funded
IP by, the Company or its non-Israeli Subsidiaries as aforesaid. Copies of such
Approvals are attached to Section 3.22 of the Company Disclosure Letter. Save in
respect to those limited items of Grant Funded IP detailed in Section 3.22 of
the Company Disclosure Letter that arose or resulted from research funded, as
aforesaid, by Grants received by the Company or any of its Subsidiaries within
the framework of the DPI 2000 (such Grant Funded IP, the "MAGNET IP"), none of
the Grant Funded IP is subject, under the terms of any Grant, as a result of
receiving such Grant or under the rules of the DPI 2000 or the Print IT, to
licenses to third parties. All rights of any third parties, under the terms of
the DPI 2000 or the Print IT, in and to the Grant Funded IP are detailed in
Section 3.22 of the Company Disclosure Letter. Except for the approvals of the
Investment Center and the OCS referred to in Section 6.11(a)(iii) below, no
consent or approval of any Person or any Governmental Entity is required, by
reason of the consummation of the Offer or any of the transactions contemplated
hereunder, in order to preserve the entitlement of the Company or any of its
Subsidiaries to any of the Grants. The Grant Funded IP is not Company Core
Technology. The Magnet IP does not constitute Intellectual Property that is
material to the business of the Company or any of its Subsidiaries. No
government funding, facilities of a university, college, other educational
institution or research center or funding from third parties was used in the
development of any Company Core Technology. Further, all activities related to
the Company's (or any of its Subsidiaries) overall involvement in the DPI 2000
or the Print IT, or any other similar program, have been at all times kept fully
separated from all other development activities and no Intellectual Property or
Intellectual Property Right has been, or could be construed as being, tainted as
a result of the Company's (or any of its Subsidiaries) membership, participation
(or overall involvement with) in the DPI 2000 or the Print IT or any other
similar program.
3.23 DISCLOSURE.
The Company has not failed to disclose to the Buyer any facts material to
the business, results of operations, assets, liabilities or financial condition
of the Company or its Subsidiaries. No representation or warranty by the Company
contained in this Agreement and no statement contained in any document
(including financial statements and the Company Disclosure Letter), certificate,
or other writing furnished or to be furnished by the Company to the Buyer or any
of its representatives pursuant to the provisions hereof or in connection with
the transactions contemplated hereby, contains
30
or will contain any untrue statement of material fact or omits or will omit to
state any material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to the Company, subject to such exceptions
as are disclosed in writing in the disclosure letter supplied by the Buyer to
the Company dated as of the date hereof (the "BUYER DISCLOSURE LETTER"), which
Buyer Disclosure Letter shall provide an exception to or otherwise qualify the
representations and warranties of the Buyer (i) contained in the section of this
Agreement corresponding by number to such disclosure, and (ii) contained in any
other section of this Agreement where the nature of such exception or
qualification is readily apparent from the face of such disclosure, as follows:
4.1 ORGANIZATION. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to do so would not, in the aggregate, have a Buyer Material
Adverse Effect. Each of the Buyer and its Subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not, in the aggregate, have a Buyer Material Adverse Effect.
4.2 CERTIFICATE OF INCORPORATION AND BYLAWS. The Buyer is not in violation
of any provision of its certificate of incorporation or bylaws (together, the
"BUYER CHARTER DOCUMENTS"), except where the violation of any Buyer Charter
Document would not, in the aggregate, have a Buyer Material Adverse Effect.
4.3 CAPITALIZATION. As of the date of this Agreement, the authorized
capital stock of the Buyer consists of 9,600,000,000 shares of Buyer Common
Stock and 300,000,000 shares of Buyer Preferred Stock. As of the close of
business on July 31, 2001, 1,939,159,231 shares of Buyer Common Stock were
issued and outstanding and no shares of Buyer Preferred Stock were issued or
outstanding. All of the issued and outstanding shares of Buyer Common Stock are
duly authorized, validly issued, fully paid and nonassessable.
4.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The Buyer has all necessary
corporate power and authority to execute and deliver this Agreement and the CVR
Agreement and to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the CVR Agreement by the Buyer and the
consummation by the Buyer of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action on the
part of the Buyer, and no other corporate proceedings on the part of the Buyer
are necessary to authorize this Agreement and the CVR Agreement or to consummate
the transactions contemplated hereby and thereby. This Agreement has been, and
the CVR Agreement shall have been on the Closing Time, duly and validly executed
and delivered by the Buyer and, assuming the due authorization, execution and
delivery by the Company, constitute legal and binding obligations of the Buyer,
enforceable against the Buyer in accordance with their respective terms, except
to the extent that (i) enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditor rights, (ii) the
enforcement thereof may be limited by general equitable principles (regardless
of whether such enforcement is considered in a proceeding at law or in equity),
and (iii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
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4.5 ISSUANCE OF BUYER COMMON STOCK. When issued in accordance with the
terms of this Agreement, the shares of Buyer Common Stock to be issued pursuant
to the Offer will be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights.
4.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement and the CVR Agreement
by the Buyer do not, and the performance of this Agreement and the CVR
Agreement by the Buyer shall not, (i) conflict with or violate the Buyer
Charter Documents, (ii) subject to obtaining the consents, approvals,
authorization and permits, and making the filings and notifications, set
forth in Section 4.6(b) below, conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Buyer or any of its
Subsidiaries or by which it or their respective properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default)
under, or impair the Buyer's or any such Subsidiary's rights or alter the
rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Buyer or any of its Subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which the Buyer or any of its
Subsidiaries is a party or by which the Buyer or any of its Subsidiaries or
its or any of their respective properties are bound or affected, except to
the extent such conflict, violation, breach, default, impairment or other
effect could not in the case of clauses (ii) or (iii), individually or in
the aggregate, reasonably be expected to have a Buyer Material Adverse
Effect.
(b) The execution and delivery of this Agreement and the CVR Agreement
by the Buyer does not, and the performance of this Agreement and the CVR
Agreement by the Buyer shall not, require any consent, approval,
authorization or permit of, or filing with or notification to, any
Governmental Entity except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, Blue Sky Laws, the notification
requirements of the HSR Act and Foreign Filings, the rules and regulations
of the NYSE, NASD or NASDAQ, the consent of the Investment Center, the
consent of the OCS, the approval of the Israeli Commissioner of Restrictive
Trade Practices and the Israeli Securities Exemption; (ii) applicable
consultation with all trade union representatives and bodies under
applicable employment laws, including, without limitation, the Dutch SER
Merger Rules; and (iii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, (A) would not prevent consummation of the Offer or the
Post-Closing Reorganization or otherwise prevent the Buyer from performing
its obligations under this Agreement and the CVR Agreement, or (B) could
not, individually or in the aggregate, reasonably be expected to have a
Buyer Material Adverse Effect.
4.7 SEC FILINGS; FINANCIAL STATEMENTS.
(a) A true and complete copy of each annual, quarterly and other report,
registration statement, and definitive proxy statement filed by the Buyer
with the SEC since December 31, 2000 (the "BUYER SEC REPORTS") is available
on the Web site maintained by the SEC at ▇▇▇▇://▇▇▇.▇▇▇.▇▇▇. As of their
respective dates or, if amended, as of the date of the last such amendment,
the Buyer SEC Reports (i) complied in all material respects with the
applicable requirements of the Securities Act or the Exchange Act, as the
case may be, and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) At their respective dates, each set of consolidated financial
statements (including, in each case, any related notes thereto) contained in
the Buyer SEC Reports was prepared in accordance with U.S. GAAP applied on a
consistent basis throughout the periods involved (except as may be
32
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q of the Exchange Act) and each fairly presents the
consolidated financial position of the Buyer and its Subsidiaries at the
respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to the absence of footnotes and
normal adjustments which (in addition to those noted therein) were not or
are not expected to be material in amount.
4.8 OWNERSHIP OF COMPANY COMMON STOCK. The Buyer and its Subsidiaries own
14,814,815 Company Shares as of the date of this Agreement.
4.9 ABSENCES OF CERTAIN CHANGES OR EVENTS. Since June 30, 2001, there has
not been any Buyer Material Adverse Effect.
ARTICLE V
INTERIM CONDUCT
5.1 CONDUCT OF BUSINESS BY COMPANY. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Closing Time, the Company and each of its
Subsidiaries shall carry on its business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted and in material
compliance with all applicable laws and regulations, pay its debts and taxes
when due subject to good faith disputes over such debts or taxes, pay or perform
other material obligations when due, and use its commercially reasonable efforts
consistent with past practices and policies to (i) preserve intact its present
business organization, (ii) keep available the services of its present officers
and employees and (iii) preserve its relationships with customers, suppliers,
distributors, licensors, licensees and others with which it has significant
business dealings. In addition, the Company will promptly notify the Buyer of
any material event involving its business or operations occurring outside the
ordinary course of business.
In addition, except as disclosed in Section 5.1 of the Company Disclosure
Letter, without the prior written consent of the Buyer, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement pursuant to its terms or the Closing Time, the Company shall
not do any of the following and shall not permit its Subsidiaries to do any of
the following:
(a) Waive any stock repurchase rights, accelerate, amend or change the
period of exercisability or vesting of options or restricted stock, or
reprice options granted under any employee, consultant, director or other
stock plans or authorize cash payments in exchange for any options granted
under any such plans;
(b) Grant any severance or termination pay or benefits, or payments or
benefits triggered by a change of control or acquisition (including the
Offer), to any Employee except to persons who are Employees of the Company
as of the date hereof pursuant to written agreements outstanding, or written
policies existing, on the date hereof and disclosed on Section 3.11 of the
Company Disclosure Letter (PROVIDED, HOWEVER, that the Company shall not
grant, or offer to grant, any such severance or termination payments or
benefits, or payments or benefits triggered upon a change of control or
acquisition (including the Offer), to any person who is hired or offered
employment with the Company on or after the date hereof), or adopt any new
severance plan, or amend or modify or alter in any manner any severance
plan, agreement or arrangement existing on the date hereof, or take any
other action that would trigger the payment of any severance payments or
other benefits pursuant to any agreement;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Company Intellectual Property, or enter
into grants to transfer or license to any
33
person future patent rights, other than non-exclusive licenses granted to
resellers and end-users in the ordinary course of business consistent with
past practices;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in
respect of any capital stock or split, combine or reclassify any capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for any capital stock, except for
dividends or other distributions paid to the Company by any of its
wholly-owned Subsidiaries;
(e) Purchase, redeem or otherwise acquire, directly or indirectly, any
shares of capital stock of the Company or its Subsidiaries;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber or
propose any of the foregoing with respect to any shares of capital stock or
any securities convertible into shares of capital stock, or subscriptions,
rights, warrants or options to acquire any shares of capital stock or any
securities convertible into shares of capital stock, or enter into other
agreements or commitments of any character obligating it to issue any such
shares or convertible securities, or grant any equity-based compensation
whether payable in cash or stock, other than the issuance delivery and/or
sale of (x) Company Shares pursuant to the exercise of stock options,
warrants and convertible preferred stock outstanding as of the date of this
Agreement, and (y) Company Shares issuable to participants in the ESPP
consistent with the terms thereof;
(g) Cause, permit or propose any amendments to the Company's Articles of
Association (or similar governing instruments of any of its Subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a material portion of the assets of, or
by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire all or substantially all of the assets of any of
the foregoing, or purchase any equity interest in any of the foregoing or
enter into any joint ventures, strategic partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets except sales or leases of inventory in the ordinary
course of business consistent with past practice, and except for the sale,
lease or disposition (other than through licensing unless permitted by
Section 5.1(c)) of property or assets which are not material, individually
or in the aggregate, to the business of the Company and its Subsidiaries,
taken as a whole;
(j) Materially modify, amend or terminate any existing lease, license or
contract affecting the use, possession or operation of any material
properties or material assets; grant or otherwise create or consent to the
creation of any easement, covenant, restriction, assessment or charge which
would materially and adversely affect the Company's use, or the value of,
any material owned property or leased property; convey, assign, sublease,
license or otherwise transfer all or any portion of any material real
property or any interest or rights therein; commit any waste or nuisance on
any such property; or make any material changes in the construction or
condition of any such property;
(k) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
the Company or any of its Subsidiaries, enter into any "keep well" or other
agreement to maintain any financial statement condition or enter into any
arrangement having the economic effect of any of the foregoing other than in
connection with the financing of working capital consistent with past
practice;
34
(l) Adopt or amend any employee benefit plan, policy or arrangement; any
employee stock purchase or employee stock option plan; or enter into any
employment contract or collective bargaining agreement (other than offer
letters and letter agreements entered into in the ordinary course of
business consistent with past practice with employees who are terminable "at
will"); pay any special bonus or special remuneration to any director or
employee other than consistent with past practice; or increase the salaries
or wage rates or fringe benefits (including rights to severance or
indemnification) of its directors, officers, employees or consultants
except, in each case, as may be required by law or for normally scheduled
increases in the ordinary course;
(m) (i) pay, discharge, settle or satisfy any material litigation
(whether or not commenced prior to the date of this Agreement) or any
material claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge,
settlement or satisfaction, in the ordinary course of business consistent
with past practice or in accordance with their terms, or liabilities
recognized or disclosed in the most recent consolidated financial statements
(or the notes thereto) of the Company included in the Company SEC Reports or
incurred since the date of such financial statements in the ordinary course
of business consistent with past practices, or (ii) waive the benefits of,
agree to modify in any manner, terminate, release any person from or
knowingly fail to enforce any confidentiality or similar provisions of any
agreement to which the Company or any of its Subsidiaries is a party or of
which the Company or any of its Subsidiaries is a beneficiary;
(n) Except in the ordinary course of business consistent with past
practice, modify, amend or terminate any Company Contract or waive, delay
the exercise of, release or assign any material rights or claims thereunder;
(o) Except as required by U.S. GAAP, revalue any of its assets or make
any change in accounting methods, principles or practices;
(p) Make any payment or series of related payments outside the ordinary
course of business, or enter into any Contract or series of related
Contracts outside the ordinary course of business requiring the Company or
any of its Subsidiaries to pay, in excess of $250,000 in the aggregate;
(q) Make any Tax election or accounting method change inconsistent with
past practice that, individually or in the aggregate, would be reasonably
likely to adversely affect in any material respect the Tax liability or Tax
attributes of the Company or any of its Subsidiaries, taken as a whole,
settle or compromise any material Tax liability;
(r) Hire any employee; or
(s) Agree in writing or otherwise to take any of the actions described
in Section 5.1 (a) through (r) above.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 CONFIDENTIALITY; ACCESS TO INFORMATION. The parties acknowledge that
the Company and the Buyer have previously executed a Confidentiality Agreement,
which will continue in full force and effect in accordance with its terms. The
Company will afford the Buyer and its accountants, counsel and other
representatives reasonable access during normal business hours, upon reasonable
notice, to the properties, books, records and personnel of the Company during
the period prior to the Closing Time to obtain all information concerning the
business, including the status of product development efforts, properties,
results of operations and personnel of the Company and its Subsidiaries, as the
Buyer may reasonably request. No information or knowledge obtained by the Buyer
in any investigation
35
pursuant to this Section 6.1 will affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Offer.
6.2 NO SOLICITATION.
(a) From and after the date of this Agreement until the Closing Time or
termination of this Agreement pursuant to Article VII, the Company and its
Subsidiaries will not, nor will they authorize or permit any of their
respective officers, directors, affiliates or employees or any investment
banker, attorney, accountant, consultant or other agent, advisor or
representative retained by any of them to, directly or indirectly,
(i) solicit, initiate, encourage or induce the making, submission or
announcement of any Acquisition Proposal, (ii) engage or participate in any
discussions or negotiations regarding, or furnish to any person any
information relating to the Company or any of its Subsidiaries or afford
access to the business, properties, assets, books or records of the Company
or any of its Subsidiaries to any person that has made, or take any other
action intended to assist or facilitate any inquiries or the making,
submission, or announcement of any proposal that constitutes or would
reasonably be expected to lead to, any Acquisition Proposal, (iii) approve,
endorse or recommend any Acquisition Proposal or (iv) enter into any letter
of intent or similar document or any contract, agreement or commitment
contemplating or otherwise relating to any Acquisition Transaction;
provided, however, that nothing contained in this Section 6.2(a) shall
prohibit the Company or the Company Boards from taking and disclosing to the
Company Shareholders a position with respect to a tender or exchange offer
by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the
Exchange Act; provided, further, that the aforementioned provision shall not
permit the Company or the Company Boards to withhold, withdraw, modify or
change in a manner adverse to the Buyer, or fail to make, any of its
Recommendations in connection with, or approve, endorse or recommend, any
Acquisition Proposal.
(b) In addition to the obligations of the Company set forth in
paragraph (a) of this Section 6.2, the Company as promptly as practicable,
and in any event within 24 hours, shall advise the Buyer orally and in
writing of (i) any request for information which the Company reasonably
believes would lead to an Acquisition Proposal or of any Acquisition
Proposal, or any inquiry with respect to or which the Company reasonably
believes would lead to any Acquisition Proposal, (ii) the material terms and
conditions of such request, Acquisition Proposal or inquiry, and (iii) the
identity of the person or group making any such request, Acquisition
Proposal or inquiry. The Company will keep the Buyer informed in all
material respects of the status and details (including material amendments
or proposed amendments) of any such request, Acquisition Proposal or
inquiry.
6.3 PUBLIC DISCLOSURE. The Buyer and the Company will consult with each
other, and agree, before issuing any press release, and will consult with each
other and to the extent practicable, agree, before otherwise making any public
statement with respect to the Offer, this Agreement, the other party, or an
Acquisition Proposal, and will not issue any such press release or make any such
public statement prior to such agreement or consultation, as applicable, except
as may be required by law or any listing agreement with a national securities
exchange, in which case reasonable efforts to consult with the other party will
be made prior to any such release or public statement.
6.4 COMMERCIALLY REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its commercially reasonable
efforts to take, or cause to be taken, all reasonable actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in
doing, all things reasonably necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the
transactions contemplated by this Agreement, including to accomplish the
following: (i) causing of the conditions precedent set forth
36
on Annex I hereto be satisfied, (ii) the obtaining of all necessary actions
or nonactions, waivers, consents, approvals, orders and authorizations from
Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings
with Governmental Entities, if any) and the taking of all commercially
reasonable steps as may be necessary to avoid any suit, claim, action,
investigation or proceeding by any Governmental Entity, (iii) the defending
of any suits, claims, actions, investigations or proceedings, whether
judicial or administrative, challenging this Agreement or the consummation
of the transactions contemplated hereby, including seeking to have any stay
or temporary restraining order entered by any court or other Governmental
Entity vacated or reversed and (iv) the execution or delivery of any
additional instruments reasonably necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement. In
connection with and without limiting the foregoing, the Company and the
Company Boards shall, if any state or foreign takeover statute or similar
statute or regulation is or becomes applicable to this Agreement or any of
the transactions contemplated by this Agreement, use its best efforts to
take, or cause to be taken, all reasonable actions to ensure that the
transactions contemplated by this Agreement may be consummated as promptly
as practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on this Agreement and the
transactions contemplated hereby. Notwithstanding anything herein to the
contrary, nothing in this Agreement shall be deemed to require the Buyer or
the Company or any Subsidiary or affiliate thereof to make proposals,
execute or carry out agreements or submit to orders providing for the sale,
license or other disposition or holding separate (through the establishment
of a trust or otherwise) of any assets or categories of assets of the Buyer,
any of its affiliates or Company or its Subsidiaries or the holding separate
of the Company Shares or imposing or seeking to impose any limitation on the
ability of the Buyer or any of its subsidiaries or affiliates to conduct
their business or own such assets or to acquire, hold or exercise full
rights of ownership of the Company Shares.
(b) Each of Company and Buyer will give prompt notice to the other of
(i) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the
transactions contemplated hereby, (ii) any notice or other communication
from any Governmental Entity in connection with the transactions
contemplated hereby, (iii) any litigation relating to, involving or
otherwise affecting Company, the Buyer or their respective Subsidiaries that
relates to the consummation of the transactions contemplated hereby. The
Company shall give prompt notice to the Buyer upon becoming aware that any
representation or warranty made by it contained in this Agreement has become
materially untrue or inaccurate, or of any failure of the Company to comply
with or satisfy in any material respect any covenant, condition or agreement
to be complied with or satisfied by it under this Agreement; PROVIDED,
HOWEVER, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
6.5 THIRD PARTY CONSENTS. As soon as practicable following the date
hereof, the Company will use commercially reasonable efforts to obtain all
consents, waivers and approvals set forth in Section 6.5 of the Company
Disclosure Letter or otherwise required as a result of the pendency or
consummation of the Offer.
6.6 STOCK OPTIONS; ESPP; WARRANTS.
(a) STOCK OPTIONS. Unless the Buyer and the Company agree otherwise
and subject to local laws, the Buyer shall take all actions necessary to
convert each outstanding option to purchase Company Shares (each, a "COMPANY
STOCK OPTION" and, collectively, the "COMPANY STOCK OPTIONS") that is
outstanding immediately prior to the Closing Time into a stock option to
purchase the Buyer Shares subject to the Buyer 2000 Stock Plan with
substantially equal value and substantially equivalent provisions as the
Company Stock Option (collectively, the "BUYER STOCK OPTIONS"), effective
immediately after the Closing Time.
37
(i) Unless the Buyer and the Company agree otherwise and subject to
local laws, the Company shall use commercially reasonable efforts, to the
extent the Buyer provides funding for such activity, to repurchase prior
to the Closing Time each outstanding Company Stock Option that is
outstanding and held by an optionee who is not an employee of the Company
or any of its Subsidiaries.
(ii) Unless the Buyer and the Company agree otherwise and subject to
local laws, each Buyer Stock Option covering a Company Stock Option
intended to qualify as an incentive stock option under Section 422 of the
Code (A) shall be exercisable for, and represent the right to acquire,
that number of shares of Buyer Common Stock (rounded down to the nearest
whole share) equal to (i) the number of Company Shares subject to such
Company Stock Option in effect immediately prior to the Closing Time
multiplied by (ii) the Fixed Offer Price; and (B) shall have an exercise
price per share of Buyer Common Stock subject to such converted Company
Stock Option equal to (i) the exercise price per Company Share subject to
such Company Stock Option in effect immediately prior to the Closing Time
divided by (ii) the Fixed Offer Price (rounded up to the nearest whole
cent). With respect to all other outstanding Company Stock Options, the
Buyer shall determine whether the Buyer Stock Options covering all other
such Company Stock Options shall (A) (x) be exercisable for, and
represent the right to acquire, that number of shares of Buyer Common
Stock (rounded up to the nearest whole share) equal to (i) the number of
Company Shares subject to such Company Stock Option in effect immediately
prior to the Closing Time multiplied by (ii) the Fixed Offer Price; and
(y) have an exercise price per share of Buyer Common Stock subject to
such converted Company Stock Option equal to (i) the exercise price per
Company Share subject to such Company Stock Option in effect immediately
prior to the Closing Time divided by (ii) the Fixed Offer Price (rounded
down to the nearest whole cent) (the "FIXED OPTION ALTERNATIVE") or
(B) (x) be exercisable for, and represent the right to acquire shares of
Buyer Common Stock pursuant to the terms of the Fixed Option Alternative
or, to the extent the holder thereof makes an effective written election
prior to the Closing Time, (y) (I) be exercisable for, and represent the
right to acquire, a number of units equal to the number of Company Shares
subject to such Company Stock Option in effect immediately prior to the
Closing Time, each such unit comprised of that number of shares of Buyer
Common Stock equal to the Contingent Offer Price and (II) have an
exercise price per such unit equal to the exercise price per Company
Share suject to such Company Stock Option in effect immediately prior to
the Closing Time.
(iii) The Company shall use commercially reasonable efforts to obtain
an executed copy of each Buyer Stock Option. Copies of each Buyer Stock
Option that are not executed and returned to the Buyer shall not be
entered into the Buyer's computer system.
(iv) Each Company Stock Option may be subject to a blackout period
for as brief a period as is reasonably practicable, and in any event not
more than two weeks, after the Closing Time due to administrative
constraints. Holders of a converted Company Stock Option will not be able
to exercise any such option during any such blackout period.
(v) The Company and the Buyer further agree that each of the Company
Option Plans and agreements shall be amended, to the extent necessary, to
reflect the transactions contemplated by this Agreement.
(b) COMPANY WARRANTS. Unless the Buyer and the Company agree
otherwise, the Company shall request that all holders of the Company
Warrants exercise the Company Warrants prior to the Closing Time. As of the
effective time of a Post-Closing Reorganization satisfying the applicable
provisions covering mergers, consolidations and/or other similar
transactions of the Company Warrants, if any, each remaining outstanding
Company Warrant shall cease to represent
38
a right to acquire Company Shares and shall be converted automatically into
a warrant to purchase either shares of Buyer Common Stock based on the Fixed
Offer Price or, to the extent the holder thereof makes an effective written
election prior to the Closing Time, shares of Buyer Stock and CVRs based on
the Contingent Offer Price (collectively, the "NEW BUYER WARRANTS") in an
amount, at an exercise price and subject to such terms and conditions
determined as provided below. Each Company Warrant so substituted by the
Buyer shall be subject to, and exercisable upon, the same terms and
conditions as under the applicable Company Warrant and the applicable
warrant agreement related thereto, except that (i) each substituted Company
Warrant shall be exercisable for, and represent the right to acquire, either
(I) that number of shares of the Buyer Common Stock (rounded to the nearest
whole share) equal to (A) the number of Company Shares subject to such
Company Warrant in effect immediately prior to the Closing Time multiplied
by (B) the Fixed Offer Price; and (ii) the exercise price per share of the
Buyer Common Stock subject to such substituted Company Warrant shall be an
amount equal to (A) the exercise price per Company Share subject to such
Company Warrant in effect immediately prior to the Closing Time divided by
(B) the Fixed Offer Price (rounded up to the nearest whole cent) or (II) a
number of units equal to (A) the number of Company Shares subject to such
Company Warrant in effect immediately prior to the Closing Time, each such
unit comprised of that number of shares of Buyer Common Stock equal to the
Contingent Offer Price and (ii) the exercise price per such unit subject to
such substituted Company Warrant shall be an amount equal to the exercise
price per Company Share subject to such Company Warrant in effect
immediately prior to the Closing Time. If and to the extent necessary or
required by the terms of the Company Warrants or pursuant to the terms of
any warrant agreement related thereto, each of the Buyer and the Company
shall request the consent of each holder of outstanding Company Warrants to
the foregoing treatment of such Company Warrants. The Company will provide
any notice to warrantholders required under the terms of each Company
Warrant in connection with the Offer.
(c) ESPP. Unless otherwise agreed upon by the parties and subject to
local laws, the Buyer agrees that, from and after the Closing Time, eligible
employees of the Company may participate in the Buyer's 2000 Employee Stock
Purchase Plan (the "2000 ESPP"), subject to the terms and conditions of the
2000 ESPP and any special sub-plan thereto created for the purpose of
facilitating this special enrollment. Accordingly, Buyer shall take such
actions as are necessary to provide for a special offering period that gives
eligible employees of the Company, as of the Closing Time, the ability to
immediately participate in the 2000 ESPP after the Closing Time.
6.7 EMPLOYMENT AND EMPLOYEE BENEFITS.
(a) EMPLOYEES. To the extent required by applicable local law, the
Buyer shall assume, perform and discharge the Company's and its Affiliates'
obligations, or cause the Company and its Affiliates to perform and
discharge such obligations, under all Employment Agreements, except where
employees agree to waive their rights under such Employment Agreements or
accept other rights or benefits in lieu of the rights and benefits provided
in such Employment Agreements. The Buyer shall continue the employment of
all of the Company's and its Affiliates' employees, including employees on
leaves of absence (together, "Transferred Employees"), except where the
Buyer reasonably concludes that any employee's position is redundant in
relation to the Buyer's operational needs. Transferred Employees shall
initially receive a package of compensation and benefits (including, without
limitation, equity compensation) that is approximately equivalent in the
aggregate to the compensation and benefits they had received from Company or
its Affiliates immediately prior to the Closing Time.
(b) EMPLOYEE BENEFIT PLANS. The Buyer's U.S. Benefit Plans that
provide health, disability, life insurance or other welfare benefits shall
provide Transferred Employees and their dependents and beneficiaries with
immediate eligibility and coverage after the Closing Time, shall waive any
exclusions or limitations with respect to pre-existing conditions, waiting
periods, evidence of
39
insurability or good health, and actively-at-work requirements, and shall
either (i) provide that any expenses incurred through the Closing Time by
Transferred Employees or their covered dependents shall be taken into
account for purposes of satisfying applicable deductible, co-insurance and
maximum out-of-pocket provisions, or (ii) reimburse Transferred Employees
for any duplicate payment of such expenses. The Buyer shall use its best
efforts to provide similarly advantageous transition arrangements under its
non-U.S. Benefit Plans.
(c) VACATION. As of the Closing Time, the Buyer shall assume, honor
and be responsible for any accrued but unused vacation time to which any
Transferred Employee is entitled pursuant to the vacation policy applicable
to such employee immediately prior to the Closing Time. The Buyer shall
allow each Transferred Employee to use such accrued but unused vacation time
under the terms and subject to the conditions of the Buyer's vacation or
Flexible Time Off ("FTO") policies and programs, including any terms and
conditions of the same that allow unused vacation time to be paid in cash
upon an employee's termination of employment with the Buyer. A Transferred
Employee's continuous service with the Company and its Affiliates shall be
recognized in determining the Transferred Employee's rate of accrual of
future vacation time (i) under the Buyer's U.S. vacation or FTO policies and
programs and (ii) to the extent it is reasonable under local conditions,
under the Buyer's non-U.S. vacation policies and programs.
(d) 401(k) Plan. The Company shall 100% vest all plan participants, and
terminate, effective as of the day immediately preceding the date the
Company becomes a member of the same Controlled Group of Corporations (as
defined in Section 414(b) of the Code) as the Buyer (the "401(K) TERMINATION
DATE"), any and all 401(k) plans unless the Buyer provides notice to the
Company that such 401(k) plan(s) shall not be terminated. The Buyer shall
receive from the Company evidence that the Company's plan(s) and/or
program(s) have been terminated pursuant to resolutions of each of the
Company Boards (the form and substance of such resolutions shall be subject
to review and approval of the Buyer), effective as of the 401(k) Termination
Date. To the extent permitted by the Buyer's applicable plan and otherwise
practicable, the Buyer shall take appropriate steps to enable continuing
employees to roll over distributions from the terminated plans (including
promissory notes for plan loans) to a tax-qualified defined contribution
plan or plans maintained by the Buyer or an affiliate.
6.8 FORM S-8. If necessary, the Buyer (i) agrees to file a registration
statement on Form S-8 for the shares of Buyer Common Stock issuable with respect
to the Buyer Stock Options as soon as is reasonably practicable after the
Closing Date, and in any event no later than one (1) Business Day after the
Closing Time; (ii) shall cause all such shares of Buyer Common Stock to be
listed on the NYSE; and (iii) shall properly authorize issuance of and reserve
an adequate number of shares equal to the number of shares of Buyer Common Stock
issuable under all such Buyer Stock Options. The Buyer shall not be required to
register any shares issuable upon exercise of stock options which are not
eligible to be registered on Form S-8, as determined in good faith by the Buyer
and its counsel.
6.9 INDEMNIFICATION. Buyer hereby agrees, from and after the Closing Time,
to indemnify, defend and hold harmless the Company's officers and directors, to
the fullest extent provided under the Company Charter Documents as in effect
immediately prior to the Closing Time and any indemnification agreements as in
effect on the date of this Agreement and under applicable law until the sixth
(6th) anniversary of the Closing Time for all claims arising at or prior to the
Closing Time made against such officers or directors in their capacities as
such. Buyer will at all times maintain assets sufficient to satisfy its
obligations under this Section 6.9. All such indemnification agreements are
listed on Section 6.9 of the Company Disclosure Letter.
40
6.10 REGULATORY FILINGS. Promptly after the date of this Agreement, the
Company and the Buyer each shall file with the FTC and the DOJ Notification and
Report Forms relating to the transactions contemplated herein as required by the
HSR Act, as well as any Foreign Filings that are necessary, material or
appropriate. The Company and the Buyer each shall (a) cooperate and coordinate
with one another in the making of such filings, (b) supply the other with any
information which may be required in order to effectuate such filings, and
(c) supply any additional information which reasonably may be required by the
FTC, the DOJ or the competition or acquisition control authorities of any other
Governmental Entity; PROVIDED, HOWEVER, that the Buyer shall not be required to
agree to any divestiture by the Buyer or the Company or any of the Buyer's
Subsidiaries or affiliates of shares of capital stock or of any business, assets
or property of the Buyer, or its Subsidiaries or affiliates, or of the Company,
or its Subsidiaries or affiliates, or the imposition of any limitation on the
ability of any of them to conduct their businesses or to own or exercise control
of such assets, properties and stock.
6.11 ISRAELI APPROVALS.
(a) GOVERNMENT FILINGS. Each of the Buyer and the Company shall use
its commercially reasonable efforts to deliver and file, as promptly as
practicable after the date of this Agreement, each notice, report or other
document required to be delivered by such party to or filed by such party
with any Israeli Governmental Entity with respect to the Offer. Without
limiting the generality of the foregoing:
(i) As promptly as practicable after the date of this Agreement, the
Company and the Buyer shall prepare and file the notifications required
under the Israeli Restrictive Trade Practices Law, 1968 in connection
with the Offer and the transactions contemplated hereunder;
(ii) The Company and the Buyer shall respond as promptly as
practicable to any inquiries or requests received from the Israeli
Restrictive Trade Practices Commissioner for additional information or
documentation; and
(iii) The Company shall use all commercially reasonable efforts to
obtain, as promptly as practicable after the date of this Agreement, the
following consents: (x) approval of the OCS and (y) approval of the
Investment Center. In this connection, if required, the Buyer shall
provide to the OCS and the Investment Center any information reasonably
requested by such authorities and shall, without limitation of the
foregoing, execute an undertaking in customary form in which the Buyer
undertakes to comply with the OCS laws and regulations and confirm to the
OCS and the Investment Center that the Company shall continue after the
Closing Time to operate in a manner consistent with its previous
undertakings to the OCS and the Investment Center.
(b) LEGAL PROCEEDINGS. Each of the Buyer and the Company shall
(i) give the other party prompt notice of the commencement of any legal or
administrative proceeding by or before any Israeli Governmental Entity with
respect to the Offer or the transactions contemplated hereunder, (ii) keep
the other party informed as to the status of any such legal or
administrative proceeding, and (iii) promptly inform the other party of any
communication to the Israeli Restrictive Trade Practices Commissioner, the
OCS, the Investment Center, the Israel Securities Authority, or any other
Israeli Governmental Entity regarding the Offer, or any of the other
transactions contemplated by this Agreement. The Buyer and the Company will
consult and cooperate with one another, and will consider in good faith the
views of one another, in connection with any analysis, appearance,
presentation, memorandum, brief, argument, opinion or proposal made or
submitted in connection with any Israeli legal or administrative proceeding
relating to the Offer. In addition, except as may be prohibited by any
Israeli Governmental Entity or by any Israeli legal requirement, in
connection with any such legal or administrative proceeding under or
relating to the Israeli Restrictive Trade Practices Law or any other Israeli
antitrust or fair trade law, each
41
party hereto will permit authorized representatives of the other party to be
present at each meeting or conference relating to any such legal or
administrative proceeding and to have access to and be consulted in
connection with any document, opinion or proposal made or submitted to any
Israeli Governmental Entity in connection with any such legal or
administrative proceeding.
(c) ISRAELI INCOME TAX RULING. As soon as reasonably practicable after
the execution of this Agreement, the Company shall cause the Company's
Israeli counsel, advisors and accountants to prepare and file with the
Israeli Income Tax Commissioner an application for a ruling confirming that
the conversion of the Company Stock Options into the Buyer Stock Options
will not result in a requirement for an immediate Israeli tax payment and
that the Israeli taxation will be deferred until the exercise of the Buyer
Stock Options, or in the event of substituted Company Stock Options which
are part of a "Section 102 Plan," until the actual sale of the shares of
Buyer Common Stock by the option holders (the "ISRAELI INCOME TAX RULING").
Each of the Company and the Buyer shall cause their respective Israeli
counsel to coordinate all activities, and to cooperate with each other, with
respect to the preparation and filing of such application and in the
preparation of any written or oral submissions that may be necessary, proper
or advisable to obtain the Israeli Income Tax Ruling. Subject to the terms
and conditions hereof, the Company shall use reasonable best efforts to
promptly take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable Law to
obtain the Israeli Income Tax Rulings, or as appropriate the confirmation
referred to in Annex I, as promptly as practicable. Notwithstanding any
provisions contained in Section 5.1 hereof to the contrary, the Company
shall be permitted to comply with any conditions contained in the ruling
described in this Section 6.11 or reasonable requests made by the Israeli
Tax Commissioner in connection with its delivery of such ruling; PROVIDED,
HOWEVER, (i) that the Company shall give the Buyer at least three (3) days
written notice of any such conditions or requests prior to compliance with
such conditions or requests, and (ii) that in no event shall the Company
comply with any such condition or request in the event any such condition or
request might reasonably be expected to (A) have a Company Material Adverse
Effect, (B) prohibit or impair any business practice of the Company, any
acquisition of property by the Company or any of its subsidiaries or the
conduct of business by the Company of any of its subsidiaries, or
(C) adversely impact or materially delay the consummation of the Offer or
any of the other transactions contemplated by this Agreement.
(d) ISRAELI SECURITIES LAW EXEMPTION. As soon as reasonably
practicable after the execution of this Agreement, the Buyer shall prepare
and file with the Israeli securities authority ("ISA") an application
(i) for an exemption from the requirements of the Israeli Securities Law,
1968 concerning the publication of a prospectus in respect of the exchange
of the Company Options for the Buyer Stock Options, pursuant to Section 15D
of the Securities Law of Israel and (ii) for a pre-ruling regarding the
inapplicability of the prospectus requirement pursuant to the Israeli
Securities Law, 1968, in respect of the exchange offer of the Company Shares
for the Offer Price and the exchange of Company Warrants for New Buyer
Warrants (the "ISRAELI SECURITIES EXEMPTION"). Each of the Buyer and the
Company shall cause their respective Israeli counsel to coordinate all
activities, and to cooperate with each other, with respect to the
determination of such facts as are required to assess the Buyer's
obligations under the Israeli Securities Law, 1968, and with respect to the
preparation and filing of such application and in the preparation of any
written or oral submissions that may be necessary, proper or advisable to
obtain the Israeli Securities Exemption. Subject to the terms and conditions
hereof, the Buyer and the Company shall use their respective commercially
reasonable efforts to promptly take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable Law to obtain the Israeli Securities Exemption as promptly as
practicable.
6.12 COMPANY SHAREHOLDER APPROVAL. If approval of the Company Shareholders
is required in order to consummate the Post-Closing Reorganization or any of the
transactions contemplated thereby,
42
the Company as soon as practicable following the Closing Time, shall submit such
transactions to the Company Shareholders for approval as provided by Dutch Law.
6.13 INSPECTION OF REAL PROPERTY. Subject to and in accordance with
Leases, from and after the date of this Agreement, the Buyer and its agents,
contractors and representatives shall have the right and privilege, upon at
least seventy-two (72) hours prior notice to the Company, of entering upon any
or all of the Company Business Facilities during reasonable business hours and
of reviewing, at the Buyer's sole expense, the Company's and its Subsidiaries'
books and records regarding such properties from time to time as needed to make
any inspections, evaluations, surveys or tests which the Buyer may reasonably
deem necessary or appropriate. Without limiting the generality of the foregoing,
the Buyer and its agents, contractors and representatives shall have the right,
at the Buyer's sole expense, and privilege of conducting such engineering
studies, seismic tests, environmental studies (including, without limitation,
surface and subsurface tests, borings and samplings) and surveys of such
properties and such feasibility studies as the Buyer deems necessary or
appropriate and to investigate all matters relating to zoning, use and
compliance with other applicable laws regarding the use and occupancy of such
properties and any proposed impositions, assessments and governmental
regulations affecting such properties. The Company shall, and shall procure that
its Subsidiaries shall, cooperate reasonably with the Buyer in completing such
inspections and evaluations. the Buyer's exercise of its right to inspect such
properties, or the Buyer's election not to inspect any property, shall in no way
be interpreted as a waiver of any of the Buyer's rights or remedies contained in
this Agreement, including, without limitation, the Buyer's right to rely on the
Company's representations and warranties made herein.
6.14 COMPANY AFFILIATE AGREEMENTS. Set forth in Section 6.14 of the
Company Disclosure Letter is a complete and accurate list of those persons who
may be deemed to be, in the Company's reasonable judgment, the Company
Affiliates. The Company will provide the Buyer with such information and
documents as the Buyer reasonably requests for purposes of reviewing such list.
The Company has delivered herewith written Company Affiliate Agreements
substantially in the form attached hereto as EXHIBIT D executed by all Company
Affiliates as of the date hereof. Each Company Affiliate Agreement will be in
full force and effect as of the Closing Time. The Buyer will be entitled to
place appropriate legends on the certificates evidencing any Buyer Common Stock
to be received by a Company Affiliate pursuant to the terms of this Agreement,
and to issue appropriate stop transfer instructions to the transfer agent for
the Buyer Common Stock, consistent with the terms of the Company Affiliate
Agreement.
6.15 NYSE LISTING. The Buyer agrees to use its commercially reasonable
efforts to cause the listing on NYSE, effective as of the Closing Time, of the
shares of Buyer Common Stock issuable, and those required to be reserved for
issuance, in connection with the Offer, subject to official notice of issuance.
6.16 CVR AGREEMENT. The Buyer, at or prior to the consummation of the
Offer, shall cause the CVR Agreement to be duly authorized, executed and
delivered by the Buyer or a Subsidiary of the Buyer.
6.17 CONSULTATION.
(a) EMPLOYEE CONSULTATION. The Company and each of its Subsidiaries
shall procure compliance with, and satisfaction of, all obligations under
the European Communities Council Directive of 14 February 1977 (77/187/EEC)
(the "ACQUIRED RIGHTS DIRECTIVE"), equivalent national laws or regulations,
or any applicable works council or agreements to provide information about
the Offer to employees (or employee representatives of such employees) of
the Company or any of its Subsidiaries affected by the Offer and, where
required, to consult with such employees or employee representatives and, as
the case may be, to continue the consultations with Dutch employees or
employee representatives pursuant to the Dutch SER Merger Rules. The Company
shall be deemed not to have complied with its obligations under this
Section 6.18 if the Company
43
or any of its Subsidiaries has failed prior to the date of this Agreement to
satisfy any such obligations in relation of the Offer applying prior to the
date of this Agreement.
(b) ISRAELI EMPLOYEES CONSULTATION. As soon as practicable, and at a
time and manner as reasonably determined by the Buyer, after the
commencement of the Offer, the Company shall procure that IEPS and P.F.E.
Investments Limited shall, in accordance with the Buyer's reasonable
directions, notify the current Israeli Employees of the proposed acquisition
of Company Shares contemplated hereunder and, together with representatives
of the Buyer, hold consultations with such Employees, in such manner as may
be mutually agreed upon by the Buyer and the Company as aforesaid, regarding
such proposed acquisition.
6.18 REGISTERED INTELLECTUAL PROPERTY RIGHTS. The Company shall use its
commercially reasonable efforts to deliver to the Buyer prior to the Closing
Time a written list of all actions that must be taken by the Company or any of
its Subsidiaries within one hundred and eighty (180) days of the date 90 days
after the execution of this Agreement, including the payment of any
registration, maintenance or renewal fees or the filing of any responses to PTO
(or any equivalent authority anywhere in the world) office actions, documents,
applications or certificates for the purposes of obtaining, maintaining,
perfecting or preserving or renewing any Registered Intellectual Property
Rights.
6.19 COMPANY TENDER AND VOTING AGREEMENTS. The Company shall use its best
efforts to obtain and deliver to the Buyer executed Company Tender Agreements
and executed Company Voting Agreements from each of the Company's directors and
executive officers as soon as practicable after the date of this Agreement.
6.20 EMPLOYEE COVENANTS. The Company shall use its commercially reasonable
efforts to retain all Company Employees.
6.21 APPROVED ENTERPRISE COVENANT. The Company shall use its best efforts
to cause IEPS to obtain any and all remaining, if any, approvals required for
IEPS' status as an Approved Enterprise for the purpose of the Israeli
Encouragement of Capital Investments Law, 1959.
6.22 ENVIRONMENTAL COVENANT. The Company shall cooperate with the Buyer in
the review of the Company's regulatory matters, and shall, upon request of the
Buyer, made in good faith, take all such actions, implement such registrations,
submit such permit applications and seek all such Approvals as may be required,
in the good faith judgment of the Buyer, by Environmental Laws to insure that
the Company and the products it manufactures, sells or distributes are, and have
been at all relevant times, in compliance with all Environmental Laws in all
relevant jurisdictions.
6.23 SALE OF COMPANY SHARES. None of the Buyer or any of its Subsidiaries
shall sell or otherwise transfer any of such Company Shares (other than to the
Buyer or a Subsidiary of the Buyer) until the earlier of the Closing Time or the
termination of this Agreement pursuant to Article VII.
6.24 DUTCH TAX RULING. Promptly after the date of this Agreement, the
Company and the Buyer jointly shall file with The Netherlands competent tax
authorities an advance tax ruling request, in which the tax authorities are
asked to confirm that the conversion of Company Stock Options held by optionees
who are employees of the Company or any of its Subsidiaries into Buyer Stock
Options will not qualify as an exercise or an alienation within the meaning of
Article 10a(3) of the Wage Withholding Tax Act. The Company shall use all
commercially reasonable effort to obtain this advance tax ruling prior to the
Closing.
6.25 TAX PLANNING COOPERATION. Prior to the Closing, the Company shall use
its commercially reasonable efforts to cooperate in Buyer's development and
implementation of a comprehensive tax planning strategy for the combined entity.
The Company shall use its best efforts to obtain any tax rulings that the Buyer
requests be obtained.
44
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated and the Offer may be
abandoned at any time prior to the Closing Time:
(a) by mutual written agreement of the Company and the Buyer; or
(b) by either the Company or the Buyer, if:
(i) the Offer shall have expired or been terminated in accordance
with the terms of this Agreement without the Buyer or a Subsidiary of the
Buyer having accepted for exchange any Company Shares pursuant to the
Offer; or
(ii) the Offer has not been consummated on or before August 30, 2002
(the "END DATE"); PROVIDED, HOWEVER, that the right to terminate this
Agreement under this Section 7.1(b)(ii) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has
been the principal cause of or resulted in the failure of the Offer to
have been consummated on or before such date and such action or failure
to act constitutes a material breach of this Agreement; or
(iii) there shall be any applicable law or regulation that makes
consummation of the Offer illegal or otherwise prohibited or any
judgment, injunction, order or decree of any court or governmental body
having competent jurisdiction enjoining the Company or the Buyer from
consummating the Offer is entered and such judgment, injunction, judgment
or order shall have become final and nonappealable; or
(c) by the Company, prior to the Closing Time, upon a material breach of
any covenant or agreement on the part of the Buyer set forth in this
Agreement, or if any representation or warranty of the Buyer shall have been
untrue or inaccurate when made or shall have become untrue or inaccurate
such that, in the aggregate, in the case of such representations and
warranties, such untruths or inaccuracies would reasonably be expected to
have a Buyer Material Adverse Effect; PROVIDED, that if such untruth or
inaccuracy in the Buyer's representations and warranties or breach by the
Buyer is curable by the Buyer through exercise of its commercially
reasonable efforts, then the Company may not terminate this Agreement
pursuant to this Section 7.1(c) until the earlier of (i) the expiration of a
thirty (30) day period after delivery of written notice from the Company to
the Buyer of such untruth or inaccuracy or breach, or (ii) the Buyer's
ceasing to exercise commercially reasonable efforts to cure such untruth or
inaccuracy or breach, PROVIDED that the Buyer continues to exercise
commercially reasonable efforts to cure such untruth or inaccuracy or breach
(it being understood that the Company may not terminate this Agreement
pursuant to this Section 7.1(c) if such untruth or inaccuracy or breach by
the Buyer is cured during such thirty-day period);
(d) by the Buyer, prior to the Closing Time, upon a breach of any
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have
been untrue or inaccurate when made or shall have become untrue or
inaccurate such that the Buyer or a Subsidiary of the Buyer would not have
been required to accept for exchange any Company Shares tendered pursuant to
the Offer by virtue of clause (e) or (d), respectively, of the condition
(vi) of Annex I hereto if the expiration of the Offer had occurred on such
date, PROVIDED that, if such untruth or inaccuracy in the Company's
representations and warranties or breach by the Company is curable by the
Company through exercise of its commercially reasonable efforts, then the
Buyer may not terminate this Agreement pursuant to this Section 7.1(d) until
the earlier of (i) the expiration of a thirty (30) day period
45
after delivery of written notice from the Buyer to the Company of such
untruth or inaccuracy or breach, or (ii) the Company's ceasing to exercise
commercially reasonable efforts to cure such untruth or inaccuracy or
breach, PROVIDED that the Company continues to exercise commercially
reasonable efforts to cure such untruth or inaccuracy or breach (it being
understood that the Buyer may not terminate this Agreement pursuant to this
Section 7.1(d) if such untruth or inaccuracy or breach by the Company is
cured during such thirty-day period); or
(e) by the Buyer if a Triggering Event shall have occurred.
The party desiring to terminate this Agreement pursuant to this Section 7.1
(other than pursuant to Section 7.1(a)) shall give notice of such termination to
the other party.
7.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any proper termination
of this Agreement under Section 7.1 above will be effective immediately (or if
the termination is pursuant to Section 7.1(c) or (d) above and the proviso is
applicable, at such time as such provision provides for) upon the delivery of
written notice of the terminating party to the other parties hereto. In the
event of the termination of this Agreement under Section 7.1, this Agreement
shall be of no further force or effect without liability of any party (or any
stockholder, director, officer, employee, agent, consultant or representative of
such party) to the other party hereto, except (i) as set forth in this
Section 7.2, Section 7.3 and Article VIII, each of which shall survive the
termination of this Agreement, and (ii) that nothing herein shall relieve any
party from liability for any intentional or willful breach of or fraud in
connection with this Agreement. No termination of this Agreement shall affect
the obligations of the parties contained in the Confidentiality Agreement, all
of which obligations shall survive termination of this Agreement in accordance
with their terms.
7.3 FEES AND EXPENSES.
(a) GENERAL. Except as set forth in this Section 7.3, all attorneys',
accountants' and consultants' fees and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such fees and expenses whether or not the Offer is
consummated.
(b) COMPANY PAYMENTS.
(i) If this Agreement is terminated by the Buyer prior to the Closing
Time pursuant to Section 7.1(d), the Company shall promptly, but in any
event no later than one day after the date requested by the Buyer, pay
the Buyer a fee equal to all of the Buyer's fees and expenses, including,
without limitation, costs of internal, legal, accounting and similar
professional services incurred in connection with this Agreement and the
transactions contemplated herein, in immediately available funds;
PROVIDED, HOWEVER that the maximum amount payable by the Company to the
Buyer under this Section 7.3(b)(i) shall be $2,000,000.00 (the
"TERMINATION FEE").
(ii) If this Agreement is terminated by the Buyer prior to the
Closing Time pursuant to Section 7.1(e), the Company shall promptly, but
in no event later than one day after the date requested by the Buyer, pay
the Buyer the Termination Fee plus an additional fee equal to U.S.
$27,000,000.00 in immediately available funds.
(iii) The Company acknowledges that the agreements contained in this
Section 7.3(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, the Buyer would not
enter into this Agreement. Accordingly, if the Company fails to pay in a
timely manner the amounts due pursuant to this Section 7.3(b), and, in
order to obtain such payment, the Buyer makes a claim that results in a
judgment against the Company, the Company shall pay to the Buyer its
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) in connection with such suit, together with interest
46
on the amounts set forth in this Section 7.3(b) at the prime rate set by
Bank of America N.T. and S.A. in effect on the date such payment was
required to be made. Payment of the fees described in this
Section 7.3(b) shall not be in lieu of damages incurred in the event of
any intentional or willful breach of or fraud in connection with this
Agreement.
(c) BUYER PAYMENTS.
(i) If this Agreement is terminated by the Company prior to the
Closing Time pursuant to Section 7.1(c), the Buyer shall promptly, but in
any event no later than one day after the date requested by the Company,
pay the Company a fee equal to all of the Company's fees and expenses,
including, without limitation, costs of internal, legal, accounting and
similar professional services incurred in connection with this Agreement
and the transactions contemplated herein, in immediately available funds;
PROVIDED, HOWEVER, that the maximum amount payable by the Buyer to the
Company under this Section 7.3(c)(i) shall be $2,000,000.00.
(ii) The Buyer acknowledges that the agreements contained in this
Section 7.3(c) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, the Company would not
enter into this Agreement. Accordingly, if the Buyer fails to pay in a
timely manner the amounts due pursuant to this Section 7.3(c), and, in
order to obtain such payment, the Company makes a claim that results in a
judgment against the Buyer, the Buyer shall pay to the Company its
reasonable costs and expenses (including reasonable attorneys' fees and
expenses) in connection with such suit, together with interest on the
amounts set forth in this Section 7.3(c) at the prime rate set by Bank of
America N.T. and S.A. in effect on the date such payment was required to
be made. Payment of the fees described in this Section 7.3(c) shall not
be in lieu of damages incurred in the event of any intentional or willful
breach of or fraud in connection with this Agreement.
7.4 AMENDMENT. Subject to applicable law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of the Buyer and the Company.
7.5 EXTENSION; WAIVER. At any time prior to the Closing Time any party
hereto may, to the extent legally allowed and except as otherwise set forth
herein (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a 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. Delay in exercising any right under this Agreement shall not constitute a
waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties and covenants of the Company and the Buyer contained in this
Agreement shall terminate at the Closing Time, and only the covenants that by
their terms survive the Closing Time shall survive the Closing Time.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt
47
confirmed) to the parties at the following addresses or telecopy numbers (or at
such other address or telecopy numbers for a party as shall be specified by like
notice):
(a) if to the Buyer, to:
Hewlett-Packard Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to:
Indigo N.V.
Kiryat ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Attention: Legal Department
Telecopy No.: (▇▇▇) ▇▇▇-▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
8.3 COUNTERPARTS. This Agreement may be executed in one 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 party, it being understood that all
parties need not sign the same counterpart.
8.4 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Disclosure Letter
and the Buyer Disclosure Letter (a) constitute the entire
48
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, it being understood that
the Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; and (b) except with
respect to the Indemnified Parties pursuant to Section 6.9, are not intended to
confer upon any other person any rights or remedies hereunder.
8.5 SEVERABILITY. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.6 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of
New York, regardless of the
laws that might otherwise govern under applicable principles of conflicts of law
thereof. Each of the Company and the Buyer hereby irrevocably consents to the
exclusive jurisdiction and venue of any court within the State of
New York in
connection with any matter based upon or arising out of this Agreement of the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the State of
New York for such persons and
waives any covenants not to assert or plead any objection which they might
otherwise have to such jurisdiction, venue and such process.
8.8 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.9 ASSIGNMENT. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
8.10 WAIVER OF JURY TRIAL. EACH OF THE BUYER AND THE COMPANY HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF BUYER OR COMPANY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
49
ARTICLE IX
DEFINITIONS
9.1 DEFINITIONS. As used in this Agreement, the following defined terms
shall have the meanings indicated below:
"401(k) TERMINATION DATE" has the meaning ascribed to it in Section 6.7.
"ACQUIRED RIGHTS DIRECTIVE" has the meaning ascribed to it in Section 6.18.
"ACQUISITION PROPOSAL" means any offer or proposal (other than an offer or
proposal by the Buyer) relating to any Acquisition Transaction.
"ACQUISITION TRANSACTION" means any transaction or series of related
transactions other than the transactions contemplated by this Agreement
involving: (A) any acquisition or purchase from the Company by any person or
"group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) of more than a 10% interest in the total outstanding
voting securities of the Company or any of its Subsidiaries or any tender offer
or exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 10% or more of the total outstanding voting
securities of the Company or any of its Subsidiaries or any acquisition,
consolidation, business combination or similar transaction involving the Company
pursuant to which the shareholders of the Company immediately preceding such
transaction hold less than 90% of the equity interests in the surviving or
resulting entity of such transaction; (B) any sale, lease (other than in the
ordinary course of business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition of more than 10% of the
assets of the Company; or (C) any liquidation, dissolution, recapitalization or
other significant corporate reorganization of the Company.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGREEMENT" has the meaning ascribed to it in the forepart of this
Agreement.
"APPROVALS" means franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders.
"AVERAGE BUYER STOCK PRICE" means the average of the closing sales prices of
the Buyer Common Stock on the NYSE for the twenty (20) consecutive trading days
ending with the third trading day immediately preceding the Closing Time.
"BLUE SKY LAWS" means U.S. state security laws.
"BUSINESS DAY" means any day, other than Saturday, Sunday or a U.S. federal
holiday, and shall consist of the time period from 12:01 a.m. through 12:00
midnight U.S. Eastern time.
"BUYER" has the meaning ascribed to it in the forepart of this Agreement.
"BUYER CHARTER DOCUMENTS" has the meaning ascribed to it in Section 4.2.
"BUYER COMMON STOCK" means shares of common stock of the Buyer, par value
$0.01 per share.
50
"BUYER DISCLOSURE LETTER" has the meaning ascribed to it in Article IV.
"BUYER MATERIAL ADVERSE EFFECT" means any change or effect that,
individually or when taken together with all other such changes or effects that
have occurred prior to the date of determination of the Buyer Material Adverse
Effect, is or is reasonably likely to be materially adverse to the business,
assets (including intangible assets), financial condition or results of
operations of the Buyer and its Subsidiaries, taken as a whole; PROVIDED,
HOWEVER, that in no event shall any of the following be deemed to constitute a
Buyer Material Adverse Effect: (i) any change or effect that results or arises
primarily and directly from changes affecting any of the industries in which the
Buyer operates generally or the worldwide economy generally; or (ii) any change
or effect primarily and directly resulting from the pendency of the Offer or the
transactions contemplated by this Agreement; or (iii) any change in the Buyer's
stock price or trading volume (which changes or effects in the case of
clause (i) above does not disproportionately affect the Buyer); PROVIDED, that
to successfully assert the exception in clause (i) or (ii) above, the Buyer must
show by a preponderance of the evidence that such exception is applicable.
"BUYER PREFERRED STOCK" means shares of preferred stock of the Buyer, par
value $0.01 per share.
"BUYER SEC REPORTS" has the meaning ascribed to it in Section 4.7(a).
"BUYER STOCK OPTIONS" has the meaning ascribed to it in Section 6.6(a).
"CLOSING" has the meaning ascribed to it in Section 1.1(b).
"CLOSING TIME" means the date and time at which the Buyer (or a Subsidiary
of the Buyer) shall initially accept for payment Company Shares tendered in the
Offer.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.
"CODE" means the U.S. Internal Revenue Code of 1986, as amended.
"COMPANY" has the meaning ascribed to it in the forepart of this Agreement.
"COMPANY AFFILIATE" means each affiliate of the Company within the meaning
of Rule 145 promulgated under the Securities Act.
"COMPANY AFFILIATE AGREEMENTS" has the meaning ascribed to it in the
recitals to this Agreement.
"COMPANY BOARDS" means the Company Management Board and the Company
Supervisory Board, collectively.
"COMPANY BUSINESS FACILITY" has the meaning ascribed to it in
Section 3.13(a).
"COMPANY CHARTER DOCUMENTS" has the meaning ascribed to it in Section 3.2.
"COMPANY CONTRACT" means any such agreements, contracts or commitments to
which the Company or any of its Subsidiaries is a party or by which it is bound
that are required to be disclosed in the Company Disclosure Letter, including
agreements relating to Taxes with Governmental Entities.
"COMPANY CORE TECHNOLOGY" means Company technology which enables the
creation of a printed image employing a liquid composition of charged, pigmented
thermoplastic particles which are being transferred from an image-bearing
surface to a final substrate.
"COMPANY DISCLOSURE LETTER" has the meaning ascribed to it in Article III.
"COMPANY EMPLOYEES" means employees of the Company or any of its
Subsidiaries.
51
"COMPANY EMPLOYEE PLAN" means any plan, program, policy, practice, contract,
agreement or other arrangement providing for compensation, severance,
termination pay, deferred compensation, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written or unwritten or otherwise, funded or unfunded,
including, without limitation, each "employee benefit plan," within the meaning
of Section 3(3) of ERISA which is or has been maintained, contributed to, or
required to be contributed to, by the Company or any Affiliate for the benefit
of any Employee, or with respect to which the Company or any Affiliate has or
may have any liability or obligation.
"COMPANY INTELLECTUAL PROPERTY" means any Intellectual Property and
Intellectual Property Rights including the Company Registered Intellectual
Property Rights that are owned by, or exclusively licensed to, the Company or
any of its Subsidiaries.
"COMPANY INTERIM FINANCIAL DATA" means the unaudited interim financial data
(i) that the Company publishes on a quarterly basis by way of earnings release
which consists of a condensed consolidated statements of operations, condensed
consolidated balance sheets, and (ii) the related condensed consolidated
statements of cash flows.
"COMPANY MANAGEMENT BOARD" means the Management Board of the Company.
"COMPANY MATERIAL ADVERSE EFFECT" means any change or effect that,
individually or when taken together with all other such changes or effects that
have occurred prior to the date of determination of the Company Material Adverse
Effect, is or is reasonably likely to be materially adverse to the business,
assets (including intangible assets), financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole; PROVIDED,
HOWEVER, that in no event shall any of the following be deemed to constitute a
Company Material Adverse Effect: (i) any change or effect that results or arises
primarily and directly from changes affecting the digital commercial printing
industry generally or the worldwide economy generally; or (ii) any change or
effect primarily and directly resulting from the pendency of the Offer or the
transactions contemplated by this Agreement; or (iii) any change in the
Company's stock price or trading volume (which changes or effects in the case of
clause (i) above does not disproportionately affect the Company); provided, that
to successfully assert the exception in clause (i) or (ii) above, the Company
must show by a preponderance of the evidence that such exception is applicable.
"COMPANY OPTION PLANS" means the Company's International Consolidated Stock
Incentive Plan, as amended, and sub-plans, limited to Israel Stock Option Plan,
as amended, Netherlands Stock Option Plan, as amended, United States Incentive
Stock Option Plan, as amended, and United States Non-Qualified Stock Option
Plan, as amended.
"COMPANY PERMITS" means all permits, licenses, variances, exemptions,
orders, approvals and other authorizations from governmental authorities which
are necessary for the ownership of the assets and properties of the Company or
any of its Subsidiaries and the carrying on of the business of the Company and
its Subsidiaries.
"COMPANY PRODUCTS" has the meaning ascribed to it in Section 3.16(a).
"COMPANY PRODUCTS OF CONCERN" has the meaning ascribed to it in
Section 3.21(h).
"COMPANY REGISTERED INTELLECTUAL PROPERTY RIGHTS" has the meaning ascribed
to it in Section 3.16(b).
"COMPANY SEC REPORTS" has the meaning ascribed to it in Section 3.7(a).
"COMPANY SHARES" means the common shares of the Company, par value NLG 0.04
per share.
"COMPANY SHAREHOLDERS" means holders of Company Shares.
52
"COMPANY STOCK OPTION" has the meaning ascribed to it in Section 6.6(a).
"COMPANY SUPERVISORY BOARD" means the Supervisory Board of the Company.
"COMPANY TENDER AGREEMENTS" has the meaning ascribed to it in the recitals
to this Agreement.
"COMPANY VOTING AGREEMENTS" has the meaning ascribed to it in the recitals
to this Agreement.
"COMPANY WARRANTS" has the meaning ascribed to it in Section 1.4.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement between the
Company and the Buyer, dated as of August 30, 2001.
"CONTINGENT OFFER PRICE" has the meaning ascribed to it in the recitals of
this Agreement.
"CONTINGENT PRICE EXCHANGE RATIO" means that number of shares of Buyer
Common Stock computed as follows (rounded to the fourth decimal place): (i) if
the Average Buyer Stock Price is less than or equal to $23.68 and greater than
or equal to $16.69, the Contingent Price Exchange Ratio shall be equal to the
quotient obtained by dividing U.S. $6.00 by the Average Buyer Stock Price,
(ii) if the Average Buyer Stock Price is less than $16.69, the Contingent Price
Exchange Ratio shall be equal to 0.3595, and (iii) if the Average Buyer Stock
Price is greater than $23.68, the Contingent Price Exchange Ratio shall be equal
to 0.2534.
"CONTINGENT PRICE PRORATION FACTOR" means a fraction (expressed as a
decimal) the numerator of which is the Maximum Contingent Price Election Number
and the denominator of which is the Requested Contingent Price Amount.
"CONTRACT" means any written or oral agreement, contract, subcontract,
lease, binding understanding, instrument, note, option, warranty, purchase
order, license, sublicense, insurance policy, benefit plan, commitment or
undertaking of any nature.
"COPYRIGHTS" has the meaning ascribed to it under "Intellectual Property" of
this Article IX.
"CORPORATE INCOME TAX" means VENNOOTSCHAPSBELASTING as imposed under the
Corporate Income Tax Act.
"CORPORATE INCOME TAX ACT" means WET OP DE VENNOOTSCHAPSBELASTING 1969.
"CVR" means a contingent value right as defined in the CVR Certificate.
"CVR AGREEMENT" has the meaning ascribed to it in the recitals to this
Agreement.
"CVR CERTIFICATE" means the certificate representing the CVR in the form of
attached as ANNEX A to the CVR Agreement.
"DCC" has the meaning ascribed to it in Section 2.1.
"DIVIDEND WITHHOLDING TAX" means DIVIDENDBELASTING as imposed under the
Dividend Withholding Tax Act.
"DIVIDEND WITHHOLDING TAX ACT" means WET OP DE DIVIDENDBELASTING 1965.
"DOJ" means the Antitrust Division of the United States Department of
Justice.
"DOL" means the Department of Labor.
"DPI 2000" has the meaning ascribed to it in Section 3.22.
53
"DOMAIN NAMES" has the meaning ascribed to it in Section 3.16.
"DUTCH LAW" has the meaning ascribed to it in Section 1.2.
"EGM" has the meaning ascribed to it in Section 1.3(a).
"EMPLOYEE" means any current or former or retired employee, officer,
consultant or director of the Company or any Affiliate anywhere in the world.
"EMPLOYMENT AGREEMENT" means each employment, severance, consulting,
relocation, repatriation, expatriation, visas, work permit or other agreement or
Contract relating to provisions of services between the Company or any Affiliate
and any Employee.
"ENCUMBRANCES" means any and all liens, charges, security interests,
options, claims, mortgages, attachments, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions on
title or transfer, including restrictions imposed by any Governmental Entity.
"END DATE" has the meaning ascribed to it in Section 7.1(b)(ii).
"ENVIRONMENTAL CLAIM" means any claim, action, cause of action,
investigation or notice (written or oral) by any Person alleging actual or
potential liability for investigatory, cleanup or governmental response costs,
or natural resources or property damages, or personal injuries, attorney's fees
or penalties relating to (1) the presence, or release into the environment, of
any Materials of Environmental Concern at any location owned or operated by the
Company or any Company Subsidiary, now or in the past, or (2) circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Law.
"ENVIRONMENTAL LAWS" means each applicable federal, state, local and foreign
law and regulation and each treaty, directive, ordinance, order, guidance rule
or code having the force of law (1) relating to pollution, protection or
preservation of human health or the environment including ambient air, surface
water, ground water, land surface or subsurface strata, and natural resources,
and including those relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacturing, processing, distribution, sale, use, treatment, generation,
storage, containment (whether above ground or underground), disposal, transport
or handling of or exposure of any Person to Materials of Environmental Concern
or any product containing Materials of Environmental Concern, or the
preservation of the environment or mitigation of adverse effects thereon; and
(2) with regard to record keeping, notification, disclosure registration and
reporting requirements respecting Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESPP" has the meaning ascribed to it in Section 1.4.
"ESPP TERMINATION DATE" has the meaning ascribed to it in Section 6.6(c).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE AGENT" has the meaning ascribed to it in Section 1.5.
"EXPIRATION TIME" means the time and date of the expiration of the Offer.
"FIXED OFFER PRICE" means that number of shares of Buyer Common Stock
computed as follows (rounded to the fourth decimal place): (i) if the Average
Buyer Stock Price is less than or equal to U.S. $23.68 and greater than or equal
to U.S. $16.69, the Fixed Offer Price shall be equal to the quotient obtained by
dividing U.S. $7.50 by the Average Buyer Stock Price, (ii) if the Average Buyer
Stock Price
54
is less than U.S. $16.69, the Fixed Offer Price shall be equal to 0.4494, and
(iii) if the Average Buyer Stock Price is greater than U.S. $23.68, the Fixed
Offer Price shall be equal to 0.3167.
"FIXED PRICE PRORATION FACTOR" means a fraction (expressed as a decimal) the
numerator of which is the Maximum Fixed Price Election Number and the
denominator of which is the Requested Fixed Price Amount.
"FMLA" means the Family Medical Leave Act of 1993, as amended.
"FOREIGN SECURITIES LAWS" means all relevant securities laws, other than
U.S. securities laws and Israeli securities laws, and including the securities
laws of The Netherlands, Belgium, France, Germany and Italy and any other
jurisdiction where Company Employees, Company Shareholders or holders of Company
Options or Company Warrants are located.
"FOREIGN FILINGS" means applicable requirements of antitrust or competition
laws and regulations of foreign Governmental Entities.
"FTC" means the United States Federal Trade Commission.
"FUNDED PENSION PLAN" means a Pension Plan under which the assets to satisfy
the benefit obligations are legally segregated from the general assets of the
employer and are not subject to the creditors of the employer or its
Subsidiaries and Affiliates.
"GAAP" means United States generally accepted accounting principles.
"GOVERNMENTAL ENTITY" means any court, administrative agency, commission,
governmental or regulatory authority, domestic or foreign anywhere in the world,
including in those countries where the Company or any of its Subsidiaries has
Employees, activities or shareholders.
"GRANT FUNDED IP" has the meaning ascribed to it in Section 3.22.
"GRANTS" has the meaning ascribed to it in Section 3.22.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder.
"HSR APPROVAL" means the pre-merger notification requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder.
"INCLUDED ASSETS" means all those assets necessary for the operation of the
business of the Company or any of its Subsidiaries, in either case, as presently
conducted.
"INCOME TAX ACT" means WET INKOMSTENBELASTING 2001.
"INCOME TAX ACT 1964" means WET OP DE INKOMSTENBELASTING 1964.
"INDEMNIFIED PARTIES" has the meaning ascribed to it in Section 6.9(a).
"IEPS" has the meaning ascribed to it in Section 3.14(dd).
"INSURANCE POLICIES" means insurance policies or fidelity bonds covering the
assets, business, equipment, properties, operations, Employees of the Company
and its Subsidiaries.
"INTELLECTUAL PROPERTY" means any or all of the following: (i) works of
authorship including, computer programs, algorithms, routines, source code and
executable code, whether embodied in software or otherwise, documentation,
designs, files, records and data; (ii) inventions (whether or not patentable),
improvements, and technology; (iii) proprietary and confidential information,
including
55
technical data and customer and supplier lists, trade secrets, show how, know
how and techniques; (iv) databases, data compilations and collections and
technical data; (v) processes, devices, prototypes, schematics, bread boards,
net lists, mask works, test methodologies and hardware development tools;
(vi) logos, trade names, trade dress, trademarks, service marks, World Wide Web
addresses, uniform resource locators and domain names, tools, methods and
processes; and (vii) all instantiations of the foregoing in any form and
embodied in any media.
"INTELLECTUAL PROPERTY RIGHTS" means any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States and
foreign patents and utility models and applications therefor and all reissues,
divisions, re-examinations, renewals, extensions, provisionals, continuations
and continuations-in-part thereof, and equivalent or similar rights anywhere in
the world in inventions and discoveries including invention disclosures
("Patents"); (ii) all trade secrets and similar rights in know-how and
confidential or proprietary information; (iii) all copyrights, copyright
registrations and applications therefor and all other rights corresponding
thereto throughout the world ("Copyrights"); (iv) all industrial designs and any
registrations and applications therefor throughout the world; (v) mask works
(including rights in the topography of integrated circuits), mask work
registrations and applications therefor, and all other rights corresponding
thereto throughout the world ("MASK WORKS"); (vi) all rights in World Wide Web
addresses, uniform resource locators and domain names and applications and
registrations therefor; (vii) all rights in all trade names, logos, common law
trademarks and service marks, trademark and service ▇▇▇▇ registrations and
applications therefor and all goodwill associated therewith throughout the world
("TRADEMARKS"); (viii) all moral and economic rights of authors and inventors
however denominated throughout the world; and (ix) any similar, corresponding or
equivalent rights to any of the foregoing anywhere in the world.
"INTERNATIONAL EMPLOYEE PLAN" means each the Company Employee Plan that has
been adopted or maintained by the Company or any Affiliate, whether informally
or formally, or with respect to which the Company or any Affiliate will or may
have any liability, for the benefit of Employees who perform services outside
the United States.
"INVESTMENT CENTER" means the Israeli Investment Center of the Israeli
Ministry of Trade & Industry.
"IRS" means the U.S. Internal Revenue Service.
"ISA" has the meaning ascribed to it in Section 6.11(d).
"ISRAEL EMPLOYEES" has the meaning ascribed to it in Section 3.11(m).
"ISRAELI INCOME TAX RULING" has the meaning ascribed to it in
Section 6.11(c).
"ISRAELI SECURITIES EXEMPTION" has the meaning ascribed to it in
Section 6.11(d).
"KNOWLEDGE" means with respect to a party hereto, with respect to any matter
in question, knowledge of the officers or their direct reports or directors of
such party or its Subsidiaries if: (a) such individual is actually aware of such
fact or matter; or (b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of conducting
a reasonable investigation concerning the existence of such fact or matter.
"LEASES" has the meaning ascribed to it in Section 3.13(a).
"LEGAL REQUIREMENTS" means any federal, state, local, municipal, foreign or
other law, statute, constitution, principle of common law, resolution,
ordinance, code, edict, decree, rule, regulation, ruling or requirement issued,
enacted, adopted, promulgated, implemented or otherwise put into effect by or
under the authority of any Governmental Entity.
56
"LEGAL TRANSFER TAXES ACT" means the WET OP BELASTINGEN VAN RECHTSVERKEER.
"MAGNET IP" has the meaning ascribed to it in Section 3.22.
"MASK WORKS" has the meaning ascribed to it under "Intellectual Property" of
this Article IX.
"MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals; pollutants;
contaminants; wastes; toxic or hazardous substances, materials and wastes;
petroleum and petroleum products; asbestos and asbestos-containing materials;
polychlorinated biphenyls; lead and lead-based paints and materials; ozone-
depleting substances and radon.
"MAXIMUM CONTINGENT PRICE ELECTION NUMBER" means fifty percent (50%) of the
sum of the Non-Buyer Company Shares and the Option Share Number, in each case as
of the Closing Time.
"MAXIMUM FIXED PRICE ELECTION NUMBER" means the amount by which (x) fifty
percent (50%) of the sum of the Non-Buyer Company Shares and the Option Share
Number exceeds (y) the Option Share Number, in each case as of the Closing Time.
"MINIMUM CONDITION" has the meaning ascribed to it in Section 1.1(a).
"MULTIEMPLOYER PLAN" means any "PENSION PLAN" (as defined below) which is a
"multiemployer plan," as defined in Section 3(37) of ERISA.
"NASD" means the National Association of Securities Dealers, Inc.
"NASDAQ" means National Association of Securities Dealers Automated
Quotations System.
"NEW BUYER WARRANTS" has the meaning ascribed to it in Section 6.6(b).
"NON-BUYER COMPANY SHARES" means the Outstanding Company Shares excluding,
without duplication, (i) any Company Shares held by the Buyer or its affiliates
and (ii) all Company Shares issuable upon exercise of Company Warrants that have
not been exercised prior to the Closing.
"NON-COMPETITION AGREEMENTS" has the meaning ascribed to it in the recitals
to this Agreement.
"NYSE" means the
New York Stock Exchange.
"OCS" means the Office of the Chief Scientist of the Israeli Ministry of
Trade & Industry.
"OFFER" has the meaning ascribed to it in the recitals of this Agreement.
"OFFER DOCUMENTS" has the meaning ascribed to it in Section 1.1(d).
"OFFER PRICE" has the meaning ascribed to it in the recitals of this
Agreement.
"OUTSTANDING COMPANY SHARES" means the outstanding Company Shares plus the
Company Shares issuable upon exercise of all outstanding Company Warrants
(excluding for this purpose the Principal Shareholder Warrants and any Warrants
held by the Buyer or any of its Subsidiaries), in each case as of immediately
prior to the Closing Time.
"PARTICIPATION" means an interest in a company or other qualifying entity
the profits derived from and capital gains realized on which are exempt from
corporate income tax under the participation exemption as meant in Article 13 of
the Corporate Income Tax Act.
"PATENTS" has the meaning ascribed to it in the definition of "Intellectual
Property Rights."
"PENSION PLAN" means each Company Employee Plan which is an "employee
pension benefit plan," within the meaning of Section 3(2) of ERISA.
57
"PERSON" means a natural person, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Entity or other entity or organization.
"PLAN APPROVAL" means approval by, and/or registration for and/or
qualification for special tax status with, the appropriate taxation, social
security and/or supervisory authorities in the relevant country, state,
territory, or the like.
"POST-CLOSING REORGANIZATION" has the meaning ascribed to it in
Section 2.1.
"PREFERRED SHARES" has the meaning ascribed to it in Section 3.3(a).
"PRINCIPAL COMPANY SHAREHOLDERS" means Walthroup Corporation N.V.,
Visionvest Corporation N.V., Gemini Systems N.V., Toscal N.V., OZF Ltd., and
▇▇▇▇▇▇▇ Corporation N.V.
"PRINCIPAL SHAREHOLDER WARRANTS" means the Company Warrants held by the
Principal Company Shareholders.
"PRINT IT" has the meaning ascribed to it in Section 3.22.
"PROPERTY" means any real, personal or mixed property, whether tangible or
intangible.
"PROSPECTUS" has the meaning ascribed to it in Section 1.1(d).
"PTO" means the United States Patent and Trademark Office.
"RECOMMENDATION" has the meaning ascribed to it in the definition of
"Triggering Events."
"REGISTERED INTELLECTUAL PROPERTY RIGHTS" means all United States,
international and foreign: (i) Patents, including applications therefor;
(ii) registered Trademarks, applications to register Trademarks, including
intent-to-use applications, or other registrations or applications related to
Trademarks; (iii) Copyright registrations and applications to register
Copyrights; (iv) registered Mask Works and applications to register Mask Works;
and (v) any other Intellectual Property that is the subject of an application,
certificate, filing, registration or other document issued by, filed with, or
recorded by, any private, state, government or other public legal authority at
any time.
"REGISTRATION STATEMENT" has the meaning ascribed to it in Section 1.1(d).
"RELATED COMPANY" means any company (i) in which the Company (or a
Subsidiary of such Company) has or at any time had, directly or indirectly, an
interest of 33 1/3% or more, (ii) which has or at any time had an interest
directly or indirectly, of 33 1/3% or more in the Company (or a Subsidiary of
such Company), or (iii) in which a party has or at any time had directly or
indirectly, an interest of 33 1/3% or more whilst that same party has or had,
respectively, directly or indirectly, an interest of 33 1/3% or more in the
Company (or a Subsidiary of such Company).
"RETURNS" has the meaning ascribed to it in Section 3.14(a).
"REQUESTED CONTINGENT PRICE AMOUNT" has the meaning ascribed to it in
Section 1.1(c).
"REQUESTED FIXED PRICE AMOUNT" has the meaning ascribed to it in
Section 1.1(c).
"SEC" means the Securities and Exchange Commission.
"SCHEDULE 13E-3" the meaning ascribed to it in Section 1.1(c).
"SCHEDULE 14D-9" has the meaning ascribed to it in Section 1.2(b).
"SCHEDULE TO" has the meaning ascribed to it in Section 1.1(d).
58
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR EMPLOYEE" means a Company Employee earning remuneration in excess of
US $60,000 per year.
"SPECIAL REPRESENTATIONS" has the meaning ascribed to it in Annex I.
"SUBSIDIARY" means any Person in which an entity, directly or indirectly,
through Subsidiaries or otherwise, beneficially owns at least 50% of either the
equity interest in, the economic interest in, or the voting control of, such
Person, whether or not existing on the date of this Agreement.
"TAX" or, collectively, "TAXES", means (i) any and all U.S. federal, state,
local, Dutch, Israeli and other foreign taxes, including taxes based upon or
measured by gross receipts, income, profits, sales, use and occupation, and
value added, ad valorem, transfer, franchise, withholding, payroll, recapture,
employment, excise, property and stamp duty taxes, together with all interest,
penalties and additions imposed with respect to such amounts; (ii) any liability
for the payment of any amounts of the type described in clause (i) as a result
of being or ceasing to be a member of an affiliated, consolidated, combined or
unitary group for any period (including, without limitation, any liability under
Treas. Reg. Section 1.1502-6 or any comparable provision of foreign, state or
local law); (iii) any liability for the payment of any social security
contributions, and (iv) any liability for the payment of any amounts of the type
described in clause (i) or (ii) as a result of any express or implied obligation
to indemnify any other Person or as a result of any obligations under any
agreements or arrangements with any other Person with respect to such amounts
and including any liability for taxes of a predecessor entity.
"TERMINATION FEE" has the meaning ascribed to it in Section 7.3(b).
"TRADEMARKS" has the meaning ascribed to it under "Intellectual Property" of
this Article IX.
"TRIGGERING EVENT" shall be deemed to have occurred if, prior to the Closing
Time: (i) either of the Company Boards or any committee thereof shall have
approved or recommended to Company Shareholders any Acquisition Proposal,
(ii) either of the Company Boards or any committee thereof shall for any reason
have withheld, withdrawn, amended or modified its recommendation in favor of the
Offer (the "RECOMMENDATION"); (iii) the Company shall have failed to include the
Recommendation in the Offer Documents or the Schedule 14D-9; (iv) the Company
shall have breached the provisions of Section 6.2 in any material respect;
(v) any of Walthroup Corporation N.V., Visionvest Corporation N.V., Gemini
Systems N.V., Toscal N.V., OZF Ltd., and ▇▇▇▇▇▇▇ Corporation N.V., or any such
entity's affiliates shall have breached the provisions of any of the Company
Voting Agreements or the Company Tender Agreements in any material respect or
(vi) a tender or exchange offer shall have been commenced by a person
unaffiliated with the Buyer, and the Company shall not have sent to the Company
Shareholder pursuant to Rule 14e-2 promulgated under the Securities Act, within
ten (10) Business Days after such tender or exchange offer is first published
sent or given, a statement disclosing that the Company recommends rejection of
such tender or exchange offer and reaffirming the Recommendation.
"TRUSTEE" has the meaning ascribed to it in the recitals to this Agreement.
"UNFUNDED PENSION PLAN" means a Pension Plan which is not a Funded Pension
Plan.
"U.S." means the United States of America, its territories and possessions,
any State of the United States of America, and the District of Columbia.
"U.S. EMPLOYEE PLAN" means a Company Employee Plan which is not an
International Employee Plan.
"VAT" means value added tax or any similar sales or turnover tax of any
relevant jurisdiction.
59
"VOTING DEBT" means indebtedness having general voting rights and debt
convertible into securities having such rights.
"WAGE WITHHOLDING TAX ACT" means WET OP DE LOONBELASTING 1964.
9.2 MISCELLANEOUS. When a reference is made in this Agreement to Exhibits,
such reference shall be to an Exhibit to this Agreement unless otherwise
indicated. When a reference is made in this Agreement to Sections, such
reference shall be to a Section of this Agreement. Unless otherwise indicated
the words "include," "includes" and "including" when used herein shall be deemed
in each case to be followed by the words "without limitation." The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. When reference is made herein to "the business of" an entity, such
reference shall be deemed to include the business of all direct and indirect
Subsidiaries of such entity. Reference to the Subsidiaries of an entity shall be
deemed to include all direct and indirect Subsidiaries of such entity.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
60
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
HEWLETT-PACKARD COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Title: Vice President,
Strategy
and Corporate
Development
-----------------------
INDIGO N.V.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
Title: Chairman and CEO
-----------------------
SIGNATURE PAGE TO
OFFER AGREEMENT
61
ANNEX I
CONDITIONS OF THE OFFER. Notwithstanding any other provisions of the Offer,
and in addition to (and not in limitation of) the Buyer's rights to extend and
amend the Offer at any time in its sole discretion (subject to the provisions of
the Agreement), the Buyer shall not be required to accept for exchange or,
subject to any applicable rules and regulations of the SEC, including
Rule 14e-1(c) under the Exchange Act (relating to the Buyer's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), exchange or deliver shares of Buyer Common Stock in respect of, and may
delay the acceptance for exchange or, subject to the restriction referred to
above, the exchange or delivery of shares of Buyer Common Stock in respect of,
any tendered Company Shares if by the expiration of the Offer (as it may be
extended in accordance with the requirements of Section 1.1) (i) any applicable
waiting period or approval under the HSR Act or any Foreign Filing shall not
have expired or terminated or been obtained, as applicable, (ii) any Israeli
Governmental Approvals required pursuant to Israeli legal requirements for the
consummation of the Offer, including approval of the OCS, and the receipt of
approval from the OCS, without obligation to pay materially increased royalties,
of the ownership of any Grant Funded IP by the Company, the Investment Center
and the Israeli Commissioner of Restrictive Trade Practices and receipt by Buyer
of the Israeli Securities Exemption, shall not have been obtained, (iii) the
Minimum Condition shall not have been satisfied, (iv) the Registration Statement
shall not have become effective under the Securities Act or shall be the subject
of any stop order or proceedings seeking a stop order, (v) the shares of Buyer
Common Stock to be issued in the Offer shall not have been approved for listing
on the NYSE, subject to official notice of issuance, and shall not be exempt
from such requirement under then applicable laws, regulations and rules of the
NYSE, or (vi) it shall fail to be the case that seventy-five percent (75%) of
the individuals identified in Section 6.20(a) of the Company Disclosure Letter
continue to be Company Employees at the Closing Time, or (vii) at any time on or
after the date of the Agreement and before the time of acceptance for exchange
for any such Company Shares, any of the following events shall have occurred and
be continuing:
(a) there shall be pending any suit, action or proceeding by any
Governmental Entity against the Buyer, the Company, any Subsidiary of the
Company or any Subsidiary of the Buyer (i) seeking to prohibit or impose any
material limitations on the Buyer's ownership or operation (or that of any
of its Subsidiaries or Affiliates) of all or a material portion of their or
the Company's businesses or assets, or to compel the Buyer or its
Subsidiaries and Affiliates to dispose of or hold separate any material
portion of the business or assets of the Company or the Buyer and their
respective Subsidiaries, in each case taken as a whole, (ii) challenging the
acquisition by the Buyer of any Company Shares under the Offer, seeking to
restrain or prohibit the making or consummation of the Offer or the
performance of any of the other transactions contemplated by this Agreement,
the Company Tender Agreements, or the Company Voting Agreements (including
the voting provisions thereunder), or seeking to obtain from the Company or
the Buyer any damages that are material in relation to the Company and its
Subsidiaries taken as a whole, (iii) seeking to impose material limitations
on the ability of the Buyer, or render the Buyer unable, to accept for
payment, pay for or purchase some or all of the Company Shares pursuant to
the Offer, (iv) seeking to impose material limitations on the ability of the
Buyer effectively to exercise full rights of ownership of the Company
Shares, including, without limitation, the right, to vote the Company Shares
purchased by it on all matters properly presented to the Company's
Shareholders, (v) compel the Buyer or its affiliates to dispose of or hold
separate any portion of the business or assets or Shares of the Company or
the Buyer and their respective Subsidiaries, (vi) oblige the Company, the
Buyer or any of their respective Subsidiaries to pay material damages in
connection with the transactions contemplated by the Agreement, or
(vii) which otherwise is reasonably likely to have a Company Material
Adverse Effect or, as a result of the transactions contemplated by this
Agreement, a Buyer Material Adverse Effect;
A-1
(b) there shall be any law, statute, rule, regulation, ordinance,
judgment, order, decree or injunction enacted, entered, enforced,
promulgated, or deemed applicable, pursuant to an authoritative
interpretation by or on behalf of a Government Entity, to the Offer, or any
other action shall be taken by any Governmental Entity, other than the
application to the Offer of applicable waiting periods or approvals under
the HSR Act or any Foreign Filing and any Israeli Governmental Approvals
required pursuant to Israeli legal requirements for the consummation of the
Offer, including approval of the OCS, the Investment Center and the Israeli
Commissioner of Restrictive Trade Practices and receipt by Buyer of the
Israeli Securities Exemption, that, is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in clauses
(i) through (vii) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the NYSE, for a period in excess
of 24 hours (excluding suspensions or limitations resulting solely from
physical damage or interference with such exchanges not related to market
conditions), (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not
mandatory), (iii) a commencement of a war, armed hostilities or other
international or national calamity directly involving the United States,
(iv) a commencement of a war or escalation of armed hostilities or a general
mobilization or other international or national calamity directly involving
Israel that is or is reasonably likely to be materially adverse to the
Company's ability to conduct business in Israel, (v) any limitation (whether
or not mandatory) by any United States governmental authority on the
extension of credit generally by banks or other financial institutions, or
(vi) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;
(d) the representations and warranties of the Company contained in this
Agreement:
(i) shall not have been true and correct in all respects (if
qualified by Company Material Adverse Effect, materiality or other
qualifications based on the word "material" or similar phrases) or in all
material respects (if not so qualified) as of the date of this Agreement;
provided that, for purposes of determining the accuracy of the Company's
representations and warranties for purposes of this clause (i) any update
of or modification to the Company Disclosure Letter made or purported to
have been made after the date of this Agreement shall be disregarded; or
(ii) with respect to the representations and warranties contained in
Sections 3.1, 3.2, 3.3, 3.4, 3.7, 3.15, 3.18 and 3.20 (the "Special
Representations"), shall not be true and correct in all respects (if
qualified by Company Material Adverse Effect, materiality or other
qualifications based on the word "material" or similar phrases) or in all
material respects (if not so qualified) on and as of the Expiration Time
with the same force and effect as if made on or as of such time, except
for those Special Representations which address matters only as of a
particular date which Special Representations shall have been true and
correct in all respects (if qualified by Company Material Adverse Effect,
materiality or other qualifications based on the word "material" or
similar phrases) or in all material respects (if not so qualified) as of
such particular date; provided that, for purposes of determining the
accuracy of the Special Representations for purposes of this clause (ii)
any update of or modification to the Company Disclosure Letter made or
purported to have been made after the date of this Agreement shall be
disregarded; or
(iii) with respect to the representations and warranties that are not
Special Representations, shall not be true and correct in all respects on
and as of the Expiration Time with the same force and effect as if made
on or as of such time, except (A) in the aggregate, as does not, and
could not reasonably be expected to, constitute a Company Material
Adverse
A-2
Effect and (B) for those representations and warranties which address
matters only as of a particular date which representations shall have
been true and correct (subject to the Company Material Adverse Effect
qualification set forth in the preceding clause (A)) as of such
particular date; provided, that for purposes of determining the accuracy
of the Company's representations and warranties other than the Special
Representations for purposes of this clause (iii), (x) all Company
Material Adverse Effect and materiality qualifications and other
qualifications based on the word "material" or similar phrases contained
in such representations and warranties shall be disregarded, and (y) any
update of or modification to the Company Disclosure Letter made or
purported to have been made after the date of this Agreement shall be
disregarded.
(e) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement;
(f) the Company shall not have received the consents, waivers and
approvals required to be obtained in connection with the consummation of the
transactions contemplated by the Agreement;
(g) the EGM shall not have passed on the appointments of members of the
Company Boards and the amendment of the Company's Articles of Association in
accordance with Section 1.3(a); or
(h) the Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of the Buyer and may be
waived by the Buyer, in whole or in part at any time and from time to time in
the sole discretion of the Buyer prior to the Expiration of the Offer. The
failure by the Buyer at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
A-3