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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
TERADYNE, INC.,
M MERGER CORP.
AND
MEGATEST CORPORATION
DATED AS OF SEPTEMBER 5, 1995
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TABLE OF CONTENTS
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ARTICLE I THE MERGER................................................................... 1
SECTION 1.01. The Merger........................................................... 1
SECTION 1.02. Effective Time....................................................... 1
SECTION 1.03. Effect of the Merger................................................. 2
SECTION 1.04. Certificate of Incorporation; By-Laws................................ 2
SECTION 1.05. Directors and Officers............................................... 2
SECTION 1.06. Effect on Capital Stock.............................................. 2
SECTION 1.07. Exchange of Certificates............................................. 3
SECTION 1.08. Stock Transfer Books................................................. 4
SECTION 1.09. Dissenting Shares.................................................... 4
SECTION 1.10. No Further Ownership Rights in Company Common Stock.................. 5
SECTION 1.11. Lost, Stolen or Destroyed Certificates............................... 5
SECTION 1.12. Tax and Accounting Consequences...................................... 5
SECTION 1.13. Taking of Necessary Action; Further Action........................... 5
SECTION 1.14. Material Adverse Effect.............................................. 5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................... 5
SECTION 2.01. Organization and Qualification; Subsidiaries......................... 5
SECTION 2.02. Certificate of Incorporation and By-Laws............................. 6
SECTION 2.03. Capitalization....................................................... 6
SECTION 2.04. Authority Relative to this Agreement................................. 6
SECTION 2.05. No Conflict, Required Filings and Consents........................... 7
SECTION 2.06. Compliance; Permits.................................................. 7
SECTION 2.07. SEC Filings; Financial Statements.................................... 8
SECTION 2.08. Absence of Certain Changes or Events................................. 8
SECTION 2.09. No Undisclosed Liabilities........................................... 9
SECTION 2.10. Absence of Litigation................................................ 9
SECTION 2.11. Employee Benefit Plans, Employment Agreements........................ 9
SECTION 2.12. Labor Matters........................................................ 10
SECTION 2.13. Registration Statement, Proxy Statement.............................. 10
SECTION 2.14. Restrictions on Business Activities.................................. 11
SECTION 2.15. Title to Property.................................................... 11
SECTION 2.16. Taxes................................................................ 11
SECTION 2.17. Environmental Matters................................................ 13
SECTION 2.18. Brokers.............................................................. 13
SECTION 2.19. Full Disclosure...................................................... 13
SECTION 2.20. Intellectual Property................................................ 13
SECTION 2.21. Interested Party Transactions........................................ 15
SECTION 2.22. Insurance............................................................ 15
SECTION 2.23. Option Plans......................................................... 15
SECTION 2.24. Vote Required........................................................ 15
SECTION 2.25. Pooling Matters...................................................... 15
SECTION 2.26. Opinion of Financial Advisor......................................... 15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB..................................................................... 15
SECTION 3.01. Organization and Qualification....................................... 15
SECTION 3.02. Authority Relative to this Agreement................................. 16
SECTION 3.03. No Conflict; Required Filings and Consents........................... 16
SECTION 3.04. Articles of Organization and By-Laws................................. 16
SECTION 3.05. Capitalization....................................................... 16
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SECTION 3.06. Compliance, Permits.................................................. 17
SECTION 3.07. SEC Filings, Financial Statements.................................... 17
SECTION 3.08. Absence of Certain Changes or Events................................. 18
SECTION 3.09. Restrictions on Business Activities.................................. 18
SECTION 3.10. Title to Property.................................................... 18
SECTION 3.11. Full Disclosure...................................................... 18
SECTION 3.12. No Undisclosed Liabilities........................................... 18
SECTION 3.13. Absence of Litigation................................................ 19
SECTION 3.14. Insurance............................................................ 19
SECTION 3.15. Registration Statement; Proxy Statement; Prospectus.................. 19
SECTION 3.16. Taxes................................................................ 19
SECTION 3.17. Brokers.............................................................. 19
SECTION 3.18. Opinion of Financial Advisor......................................... 20
SECTION 3.19. Pooling Matters...................................................... 20
SECTION 3.20. No Stockholder Vote.................................................. 20
SECTION 3.21. Employee Benefit Plans, Employment Agreements........................ 20
SECTION 3.22. Labor Matters........................................................ 20
SECTION 3.23. Environmental Matters................................................ 21
SECTION 3.24. Intellectual Property................................................ 21
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER...................................... 22
SECTION 4.01. Conduct of Business by the Company Pending the Merger................ 22
SECTION 4.02. No Solicitation...................................................... 23
SECTION 4.03. Conduct of Business by Parent Pending the Merger..................... 24
ARTICLE V ADDITIONAL AGREEMENTS........................................................ 25
SECTION 5.01. Proxy Statement/Prospectus; Registration Statement................... 25
SECTION 5.02. Stockholders Meeting................................................. 25
SECTION 5.03. Access to Information; Confidentiality............................... 25
SECTION 5.04. Consents; Approvals.................................................. 26
SECTION 5.05. Stock Options........................................................ 26
SECTION 5.06. Company Employee Stock Purchase Plan................................. 26
SECTION 5.07. Agreements of Affiliates............................................. 27
SECTION 5.08. Indemnification and Insurance........................................ 27
SECTION 5.09. Employee Benefit Plans............................................... 27
SECTION 5.10. Notification of Certain Matters...................................... 28
SECTION 5.11. Further Action/Tax Treatment......................................... 28
SECTION 5.12. Public Announcements................................................. 28
SECTION 5.13. Listing of Parent Common Shares...................................... 28
SECTION 5.14. Conveyance Taxes..................................................... 28
SECTION 5.15. Accountants' Letters................................................. 28
SECTION 5.16. Employment Agreements................................................ 29
ARTICLE VI CONDITIONS TO THE MERGER.................................................... 29
SECTION 6.01. Conditions to Obligation of Each Party to Effect the Merger.......... 29
SECTION 6.02. Additional Conditions to Obligations of Parent and Merger Sub........ 29
SECTION 6.03. Additional Conditions to Obligation of the Company................... 30
ARTICLE VII TERMINATION................................................................ 31
SECTION 7.01. Termination.......................................................... 31
SECTION 7.02. Effect of Termination................................................ 31
SECTION 7.03. Fees and Expenses Payable By Company................................. 31
SECTION 7.04. Fees and Expenses Payable By Parent.................................. 32
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ARTICLE VIII GENERAL PROVISIONS........................................................ 33
SECTION 8.01. Effectiveness of Representations, Warranties and Agreements.......... 33
SECTION 8.02. Notices.............................................................. 33
SECTION 8.03. Certain Definitions.................................................. 34
SECTION 8.04. Amendment............................................................ 34
SECTION 8.05. Waiver............................................................... 34
SECTION 8.06. Headings............................................................. 34
SECTION 8.07. Severability......................................................... 34
SECTION 8.08. Entire Agreement..................................................... 35
SECTION 8.09. Assignment, Merger Sub............................................... 35
SECTION 8.10. Parties in Interest.................................................. 35
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies Cumulative................ 35
SECTION 8.12. Governing Law........................................................ 35
SECTION 8.13. Counterparts......................................................... 35
EXHIBITS:
Exhibit A: Form of Affiliate Agreement
Exhibit B: Employment Agreement Terms
Exhibit 1.06(b): Adjustment of Conversion Ratio
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, as amended, dated as of
September 5, 1995 (this "Agreement"), among TERADYNE, INC., a Massachusetts
corporation ("Parent"), M MERGER CORP., a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and MEGATEST CORPORATION, a Delaware
corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company have
each determined that it is advisable and in the best interests of their
respective stockholders for Parent to enter into a business combination with the
Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors of
Parent, Merger Sub and the Company have each approved the merger (the "Merger")
of Merger Sub with and into the Company in accordance with the applicable
provisions of the Delaware General Corporation Law ("Delaware Law") upon the
terms and subject to the conditions set forth herein;
WHEREAS, pursuant to the Merger, each outstanding share (a "Share") of the
Company's common stock, $0.001 par value per share (the "Company Common Stock"),
shall be converted into the right to receive the Merger Consideration (as
defined in Section 1.07(b)), upon the terms and subject to the conditions set
forth herein;
WHEREAS, Parent, Merger Sub and the Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations thereunder, and to cause
the Merger to qualify as a reorganization under the provisions of Section 368(a)
of the Code;
WHEREAS, for accounting purposes, it is intended that the transactions
contemplated hereby shall be accounted for as a pooling of interests under
United States generally accepted accounting principles ("GAAP");
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER.
(a) Effective Time. At the Effective Time (as defined in Section
1.02), and subject to and upon the terms and conditions of this Agreement
and Delaware Law, Merger Sub shall be merged with and into the Company, the
separate corporate existence of Merger Sub shall cease, and the Company
shall continue as the surviving corporation. The Company as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to
Section 7.01 and subject to the satisfaction or waiver of the conditions
set forth in Article VI, the consummation of the Merger will take place as
promptly as practicable (and in any event within two business days) after
satisfaction or waiver of the conditions set forth in Article VI, at the
offices of ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, unless another date, time or place is agreed to in writing
by the parties hereto.
SECTION 1.02. EFFECTIVE TIME. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger as contemplated by Section 251 of Delaware Law (the "Certificate of
Merger"), together with any required related certificates, with the Secretary of
State of the State of Delaware, in such form as
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required by, and executed in accordance with the relevant provisions of,
Delaware Law (the time of such filing being the "Effective Time").
SECTION 1.03. EFFECT OF THE MERGER. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of Delaware Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.04. CERTIFICATE OF INCORPORATION; BY-LAWS.
(a) Certificate of Incorporation. Unless otherwise determined by
Parent prior to the Effective Time, at the Effective Time the Certificate
of Incorporation of Merger Sub, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by Delaware Law and such
Certificate of Incorporation; provided, however, that Article I of the
Certificate of Incorporation of the Surviving Corporation shall be amended
to read as follows: "FIRST: The name of the corporation is MEGATEST
Corporation."
(b) By-Laws. The By-Laws of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended as provided by Delaware Law, the
Certificate of Incorporation of the Surviving Corporation and such By-Laws.
SECTION 1.05. DIRECTORS AND OFFICERS. The directors of Merger Sub
immediately prior to the Effective Time and the additional persons listed on
Schedule 1.05 of the Company Disclosure Schedule shall be the initial directors
of the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-Laws of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
SECTION 1.06. EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Sub, the Company
or the holders of any of the following securities:
(a) Conversion of Securities. Each Share issued and outstanding
immediately prior to the Effective Time (excluding any Shares to be
canceled pursuant to Section 1.06(b) and any Dissenting Shares (as defined
in Section 1.09)) shall be converted, subject to Section 1.06(f), into the
right to receive .9091 shares (.9091, as adjusted pursuant to Section
1.06(b), the "Exchange Ratio") of validly issued, fully paid and
nonassessable shares of common stock of Parent, $.125 par value ("Parent
Common Shares").
(b) Adjustment of Conversion Ratio. If the Final Parent Stock Price
(as defined below) is equal to or less than $36.00 per share, no adjustment
to the Exchange Ratio shall be made. If the Final Parent Stock Price is
greater than $36.00 per share, then the Exchange Ratio shall be adjusted in
accordance with the formula specified on Exhibit 1.06(b) hereto provided,
however, that the Exchange Ratio as adjusted pursuant to this Section
1.06(b) shall in no event be less than .8333. For purposes hereof, "Final
Parent Stock Price" shall mean the average of the closing prices of the
Parent Common Stock for the twenty consecutive days on which the Parent
Common Shares are traded on The New York Stock Exchange (the "NYSE") ending
on the fifth calendar day immediately preceding the Company Stockholders
Meeting (as defined in Section 2.13).
(c) Cancellation. Each Share held in the treasury of the Company and
each Share owned by Parent, Merger Sub or any direct or indirect wholly
owned subsidiary of the Company or Parent immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding, be canceled and
retired without payment of any consideration therefor and cease to exist.
(d) Assumption of Stock Options; Stock Purchase Rights. All options
to purchase Company Common Stock then outstanding under the Company Stock
Option Plans (as defined in Section 5.05) shall be assumed by Parent in
accordance with Section 5.05. Immediately prior to the Effective Time, all
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rights to purchase Company Common Stock then outstanding under the Company
Stock Purchase Plan (as defined in Section 5.06) shall be exercised in
accordance with Section 5.06 and the shares so purchased shall be converted
into Parent Common Shares at the Effective Time.
(e) Capital Stock of Merger Sub. Each share of common stock, $0.001
par value per share, of Merger Sub issued and outstanding immediately prior
to the Effective Time shall be converted into and exchanged for one validly
issued, fully paid and nonassessable share of common stock, no par value,
of the Surviving Corporation. Each stock certificate of Merger Sub
evidencing ownership of any such shares shall continue to evidence
ownership of such shares of capital stock of the Surviving Corporation.
(f) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities
convertible into Parent Common Shares or Company Common Stock),
reorganization, recapitalization or other like change with respect to
Parent Common Shares or Company Common Stock occurring after the date
hereof and prior to the Effective Time.
(g) Fractional Shares. No fraction of a share of Parent Common Shares
will be issued, but, except as provided in Section 5.05, in lieu thereof
each holder of Company Common Stock who would otherwise be entitled to a
fraction of a share of Parent Common Shares (after aggregating all
fractional shares of Parent Common Shares to be received by such holder)
shall receive from Parent an amount of cash (rounded to the nearest whole
cent), without interest, equal to the product of (i) such fraction,
multiplied by (ii) the average of the closing prices of Teradyne Common
Stock for the twenty consecutive days on which Teradyne Common Stock is
traded on the NYSE ending on the fifth calendar day immediately preceding
the day on which the Special Meeting is held.
SECTION 1.07. EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. Immediately prior to the Effective Time, Parent
shall supply, or shall cause to be supplied, to or for the account of a
bank or trust company designated by Parent (the "Exchange Agent"), in trust
for the benefit of the holders of Company Common Stock (other than
Dissenting Shares), for exchange in accordance with this Section 1.07,
through the Exchange Agent, certificates evidencing the Parent Common
Shares issuable pursuant to Section 1.06 in exchange for outstanding Shares
plus cash in an amount sufficient for payment in lieu of fractional shares
as provided in Section 1.06(g).
(b) Exchange Procedures. Promptly after the Effective Time, Parent
shall cause the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
evidenced outstanding Shares (other than Dissenting Shares) (the
"Certificates") (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent
may reasonably specify) and (ii) instructions to effect the surrender of
the Certificates in exchange for the certificates evidencing shares of
Parent Common Shares and, in lieu of any fractional shares thereof, cash.
Upon surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange
therefor (A) certificates evidencing that number of whole Parent Common
Shares which such holder has the right to receive in accordance with the
Exchange Ratio in respect of the Shares formerly evidenced by such
Certificate, (B) any dividends or other distributions to which such holder
is entitled pursuant to Section 1.07(c), and (C) cash in lieu of fractional
Parent Common Shares to which such holder is entitled pursuant to Section
1.06(g) (the Parent Common Shares, dividends, distributions and cash
described in this clause (C) being, collectively, the "Merger
Consideration"), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Shares which is not
registered in the transfer records of the Company as of the Effective Time,
Parent Common Shares and cash may be issued and paid in accordance with
this Article I to a transferee if the Certificate evidencing such Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer pursuant to this Section 1.07(b) and by
evidence that any applicable stock transfer taxes have been paid. Until so
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surrendered, each outstanding Certificate that, prior to the Effective
Time, represented shares of the Company Common Stock will be deemed from
and after the Effective Time, for all corporate purposes, other than the
payment of dividends, to evidence the ownership of the number of full
shares of Parent Common Shares into which such shares of the Company Common
Stock shall have been so converted and the right to receive an amount in
cash in lieu of the issuance of any fractional shares in accordance with
Section 1.06.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time, with respect
to Parent Common Shares with a record date after the Effective Time, shall
be paid to the holder of any unsurrendered Certificate until the holder of
such Certificate shall surrender such Certificate. Subject to applicable
law, following surrender of any such Certificate, there shall be paid to
the record holder of the certificates representing whole shares of Parent
Common Shares issued in exchange therefor, without interest, at the time of
such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
whole shares of Parent Common Shares.
(d) Transfers of Ownership. If any certificate for shares of Parent
Common Shares is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange will have paid to Parent or any person
designated by it any transfer or other taxes required by reason of the
issuance of a certificate for shares of Parent Common Shares in any name
other than that of the registered holder of the certificate surrendered, or
established to the satisfaction of Parent or any agent designated by it
that such tax has been paid or is not payable.
(e) No Liability. Neither Parent, Merger Sub nor the Company shall be
liable to any holder of Company Common Stock for any Merger Consideration
(or dividends or distributions with respect thereto) delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
(f) Withholding Rights. Parent, the Surviving Corporation and the
Exchange Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable pursuant to this Agreement to any holder of
Company Common Stock such amounts as Parent, the Surviving Corporation or
the Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the Code or any provision of state, local,
provincial or foreign tax law. To the extent that amounts are so withheld,
such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the Shares in respect of which such
deduction and withholding was made by Parent or the Exchange Agent.
SECTION 1.08. STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of the Company Common Stock thereafter on the records
of the Company.
SECTION 1.09. DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
any shares of capital stock of the Company held by a holder who has
exercised dissenters' rights for such shares in accordance with Delaware
Law and who, as of the Effective Time, has not effectively withdrawn or
lost such dissenters' rights ("Dissenting Shares"), shall not be converted
into or represent a right to receive Merger Consideration pursuant to
Section 1.06, but the holder thereof shall only be entitled to such rights
as are granted by Delaware Law.
(b) Notwithstanding the provisions of subsection (a), if any holder of
Dissenting Shares shall effectively withdraw or lose (through failure to
perfect or otherwise) such holder's dissenters' rights, then, as of the
later of the Effective Time or the occurrence of such event, such holder's
shares shall automatically be converted into and represent only the right
to receive the Merger Consideration, without interest thereon, upon
surrender of the certificate or certificates representing such Dissenting
Shares.
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(c) The Company shall give Parent (i) prompt notice of any written
demands received by the Company for an appraisal of shares of capital stock
of the Company pursuant to Section 262 of Delaware Law, withdrawals of such
demands, and any other related instruments served pursuant to Delaware Law
and received by the Company and (ii) the opportunity to participate in all
negotiations and proceedings with respect to such demands. The Company
shall not, except with the prior written consent of Parent, voluntarily
make any payment with respect to any such demands or offer to settle or
settle any such demands.
SECTION 1.10. NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. The
Merger Consideration delivered upon the surrender for exchange of Shares in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Surviving Corporation of
Shares which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article I.
SECTION 1.11. LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such Parent Common
Shares as may be required pursuant to Section 1.06; provided, however, that
Parent may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Certificates to
deliver a bond in such sum as it may reasonably direct as indemnity against any
claim that may be made against Parent or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
SECTION 1.12. TAX AND ACCOUNTING CONSEQUENCES. It is intended by the
parties hereto that the Merger shall (i) constitute a reorganization within the
meaning of Section 368 of the Code and (ii) qualify for accounting treatment as
a pooling of interests under GAAP. The parties hereto hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations promulgated
under the Code.
SECTION 1.13. TAKING OF NECESSARY ACTION; FURTHER ACTION. Subject to the
terms and conditions herein, each of Parent, Merger Sub and the Company in good
faith will take all such commercially reasonable and lawful action as may be
necessary or appropriate in order to effectuate the Merger in accordance with
this Agreement as promptly as possible. If, at any time after the Effective
Time, any such further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
SECTION 1.14. MATERIAL ADVERSE EFFECT. When used in this Agreement with
respect to the Company or any of its subsidiaries, or Parent or any of its
subsidiaries, as the case may be, the term "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
occurrence of the 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
or Parent and its subsidiaries, as the case may be, in each case taken as a
whole; provided, however, that a Material Adverse Effect shall not include any
change or effect in respect of the Company and its subsidiaries or in respect of
Parent and its subsidiaries, as the case may be, resulting from conditions
affecting the semiconductor automatic test equipment industry generally or
general economic conditions.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub that,
except as set forth in the written disclosure schedule previously delivered by
Company to Parent (the "Company Disclosure Schedule"):
SECTION 2.01. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of
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its incorporation and has the requisite corporate power and authority necessary
to own, lease and operate the 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 be so organized, existing and in good standing or to have such power
and authority would not have a Material Adverse Effect. Each of the Company 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 character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that would not have a
Material Adverse Effect. A true and complete list of all of the Company's
subsidiaries, together with the jurisdiction of incorporation of each subsidiary
and the percentage of each subsidiary's outstanding capital stock owned by the
Company or another subsidiary, is set forth in Section 2.01 of the Company
Disclosure Schedule, except as is noted therein. Except as set forth in Section
2.01 of the Company Disclosure Schedule, the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
SECTION 2.02. CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and By-Laws, as amended to date, and, except as is set forth in
Section 2.02 of the Company Disclosure Schedule, equivalent organizational
documents of each of its subsidiaries (the "Subsidiary Documents"). Such
Certificate of Incorporation, By-Laws and equivalent organizational documents of
each of its subsidiaries are in full force and effect. Neither the Company nor
any of its subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation or By-Laws or Subsidiary Documents except, in the
case of any subsidiary of the Company, to the extent any such violation would
not have a Material Adverse Effect.
SECTION 2.03. CAPITALIZATION. The authorized capital stock of the Company
consists of 20,000,000 shares of Company Common Stock and 5,000,000 shares of
the Company's Preferred Stock $.001 par value per share (the "Company Preferred
Stock"). As of August 26, 1995, (i) 7,422,462 shares of Company Common Stock
were issued and outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) no shares of Company Common Stock were held by subsidiaries
of the Company, (iii) 1,546,119 shares of Company Common Stock were reserved for
future issuance pursuant to option grants under the Company Stock Option Plans,
(iv) 406,834 shares of Company Common Stock were reserved for future issuance
under the Company Stock Purchase Plan and (v) no shares of Company Preferred
Stock were issued and outstanding. No material change in such capitalization has
occurred between August 26, 1995 and the date hereof. For purposes hereof,
option exercises by optionholders of Company Common Stock in the ordinary course
of business and issuances of Company Common Stock under the 1992 Employee Stock
Purchase Plan pursuant to the terms of such plan shall not be deemed a material
change in the Company's capitalization. Except as set forth in this Section 2.03
or Section 2.11 hereof or in Section 2.03 or Section 2.11 of the Company
Disclosure Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue or sell any shares of capital stock
of, or other equity interests in, the Company or any of its subsidiaries. All
shares of Company Common Stock subject to issuance as aforesaid, upon issuance
on the terms and conditions specified in the instruments pursuant to which they
are issuable, shall be duly authorized, validly issued, fully paid and
nonassessable. There are no obligations, contingent or otherwise, of the Company
or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares
of Company capital stock or the capital stock of any subsidiary or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any such subsidiary or any other entity other than guarantees of
bank obligations of subsidiaries entered into in the ordinary course of
business. All of the outstanding shares of capital stock of each of the
Company's subsidiaries are duly authorized, validly issued, fully paid and
nonassessable, and, other than directors' qualifying shares, all such shares are
owned by the Company or another subsidiary free and clear of all security
interests, liens, claims, pledges, agreements, limitations in the Company's
voting rights, charges or other encumbrances of any nature whatsoever.
SECTION 2.04. 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
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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 and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than the approval and adoption of the Merger
by the holders of at least a majority of the outstanding shares of the Company
Common Stock entitled to vote in accordance with Delaware Law and the Company's
Certificate of Incorporation and By-Laws). The Board of Directors of the Company
has determined that it is advisable and in the best interest of the Company's
stockholders for the Company to enter into a business combination with Parent
upon the terms and subject to the conditions of this Agreement. This Agreement
has been duly and validly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by Parent and Merger Sub, as
applicable, constitutes the legal, valid and binding obligation of the Company.
SECTION 2.05. NO CONFLICT, REQUIRED FILINGS AND CONSENTS.
(a) Section 2.05(a) of the Company Disclosure Schedule includes a list
of (i) all material contracts of the Company and its subsidiaries and (ii)
all agreements which, as of the date hereof, will be required to be filed
with the Securities and Exchange Commission (the "SEC") pursuant to the
requirements of the Securities Exchange Act of 1934, as amended, and the
SEC's rules thereunder (collectively, the "Exchange Act") as "material
contracts" ((i) and (ii) being, collectively, the "Material Contracts") of
the Company and its subsidiaries.
(b) Except as set forth in Section 2.05(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws or
equivalent organizational documents of the Company or any of its
subsidiaries, (ii) to the Company's knowledge, 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), or 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, any Material Contract, 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 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 or affected, except in any such case for any
such breaches, defaults or other occurrences that would not individually or
in the aggregate, have a Material Adverse Effect.
(c) Except as set forth in Section 2.05(c) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Securities
Act of 1933, as amended (the "Securities Act"), the Exchange Act, state
securities laws ("Blue Sky Laws") and the pre-merger notification
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and the filing and recordation of appropriate
merger or other documents as required by Delaware Law and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent or delay the Company from
performing its obligations under this Agreement, or would not otherwise
have a Material Adverse Effect.
SECTION 2.06. COMPLIANCE; PERMITS.
(a) Neither the Company nor any of its subsidiaries is in conflict
with, or in default or violation of, (i) to the Company's knowledge, 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
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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 or affected, except for any such conflicts, defaults or violations
which, individually or in the aggregate, would in either such case not have
a Material Adverse Effect.
(b) To the Company's knowledge, the Company and its subsidiaries hold
all permits, licenses, easements, variances, exemptions, consents,
certificates, orders and approvals from governmental authorities which are
material to the operation of the business of the Company and its
subsidiaries taken as a whole (collectively, the "Company Permits"). The
Company and its subsidiaries are in compliance with the terms of the
Company Permits, except where the failure to so comply would not have a
Material Adverse Effect.
SECTION 2.07. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents required to
be filed with the SEC since March 1, 1993 and has made available to Parent
(i) its Quarterly Reports on Form 10-Q for the periods ended November 30,
1994, February 28, 1995 and May 31, 1995 respectively, (ii) all proxy
statements relating to the Company's meetings of stockholders (whether
annual or special) held since ▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇▇) all other reports or
registration statements filed by the Company with the SEC (other than
Reports on Forms 3, 4 and 5 and Schedule 13G filed on behalf of affiliates
of the Company) since March 1, 1993 and (iv) all amendments and supplements
to all such reports and registration statements filed by the Company with
the SEC (collectively, the "Company SEC Reports"). The Company SEC Reports
(i) were prepared in accordance with the requirements of the Securities Act
or the Exchange Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) 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
the 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) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports was
prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved (except as may be indicated therein or in the notes
thereto) and each fairly presented the consolidated financial position of
the Company and its subsidiaries as 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 normal and recurring year-end adjustments which were not or
are not expected to be material in amount.
(c) The Company has heretofore furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been
filed with the SEC 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.
SECTION 2.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 2.08 of the Company Disclosure Schedule or in any Company SEC Report,
since August 31, 1994, the Company has conducted its business in the ordinary
course and there has not occurred: (i) any Material Adverse Effect; (ii) any
amendments or changes in the Certificate of Incorporation or By-laws of the
Company; (iii) any damage to, destruction or loss of any assets of the Company
(whether or not covered by insurance) that had or could have a Material Adverse
Effect; (iv) any change by the Company in its accounting methods, principles or
practices; (v) any revaluation by the Company of any of its material assets,
including, without limitation, writing down the value of capitalized software or
inventory, or writing off notes or accounts receivable other than in the
ordinary course of business; (vi) any sale of a material amount of property of
the Company, except for sales in the ordinary course of business; or (vii) any
other action or event that would have required the consent of Parent pursuant to
Section 4.01 had such action or event occurred after the date of this Agreement.
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SECTION 2.09. NO UNDISCLOSED LIABILITIES. Except as is disclosed in
Section 2.09 of the Company Disclosure Schedule or in any Company SEC Report,
neither the Company nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise) which are, in the aggregate, material to the
business, operations or financial condition of the Company and its subsidiaries
taken as a whole, except liabilities (a) adequately provided for in the
Company's audited balance sheet (including any related notes thereto) for the
fiscal year ended August 31, 1994 included in the Company SEC Reports (the "1994
Balance Sheet"), (b) incurred in the ordinary course of business and not
required under GAAP to be reflected on the 1994 Balance Sheet or on any balance
sheet contained in an SEC Report filed for any subsequent period, or (c)
incurred since August 31, 1994 in the ordinary course of business and consistent
with past practice, and liabilities incurred in connection with this Agreement.
SECTION 2.10. ABSENCE OF LITIGATION. Except as set forth in the Company
SEC Reports, there are no claims, actions, suits, proceedings or investigations
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, before any court, arbitrator or administrative, governmental
or regulatory authority or body, domestic or foreign that, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.
SECTION 2.11. EMPLOYEE BENEFIT PLANS, EMPLOYMENT AGREEMENTS.
(a) Section 2.1 l (a) of the Company Disclosure Schedule lists all
employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), regardless
of whether ERISA is applicable thereto, all other bonus, stock option,
stock purchase, incentive, deferred compensation, supplemental retirement,
severance or termination pay, medical or life insurance, supplemental
unemployment benefits, profit-sharing, pension or retirement plans,
agreements or arrangements and other similar fringe or employee benefit
plans, programs or arrangements, and any current or former employment or
executive compensation or severance agreements, written or otherwise, for
the benefit of, or relating to, any employee of the Company, any trade or
business (whether or not incorporated) which is a member of a controlled
group including the Company or which is under common control with the
Company (an "ERISA Affiliate") within the meaning of Section 414 of the
Code, or any subsidiary of the Company, to which the Company, an ERISA
Affiliate, or any subsidiary is a party, with respect to which the Company,
an ERISA Affiliate, or any subsidiary has or could have any material
obligation, as well as each plan with respect to which the Company or an
ERISA Affiliate could incur any material liability if such plan has been or
were terminated (together, the "Employee Plans"), and a copy of each such
written Employee Plan has been made available to Parent.
(b) Except as set forth in Section 2.11 (b) of the Company Disclosure
Schedule, (i) none of the Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person and none of the
Employee Plans is a "multi-employer plan" as such term is defined in
Section 3(37) of ERISA; (ii) there has been no transaction or failure to
act with respect to any Employee Plan, which could result in any material
liability of the Company or any of its subsidiaries; (iii) all Employee
Plans are in compliance in all material respects with the requirements
prescribed by any and all statutes, orders, or governmental rules and
regulations currently in effect with respect thereto, and the Company and
each of its subsidiaries have performed all material obligations required
to be performed by them under, are not in any material respect in default
under or violation of, and have no knowledge of any default or violation by
any other party to, any of the Employee Plans; (iv) each Employee Plan
intended to qualify under Section 401(a) of the Code is the subject of a
favorable determination letter from the IRS, and nothing has occurred which
may reasonably be expected to impair such determination; (v) all
contributions required to be made to any Employee Plan pursuant to Section
412 of the Code, or the terms of the Employee Plan or any collective
bargaining agreement, have been made on or before their due dates and a
reasonable amount has been accrued for contributions to each Employee Plan
for the current plan years; (vi) with respect to each Employee Plan, no
"reportable event" within the meaning of Section 4043 of ERISA (excluding
any such event for which the thirty (30) day notice requirement has been
waived under the regulations to Section 4043 of ERISA) nor any event
described in Section 4062, 4063 or 4041 of ERISA has occurred; and (vii)
neither the Company nor any ERISA Affiliate has
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incurred, nor reasonably expects to incur, any liability under Title IV of
ERISA (other than liability for premium payments to the Pension Benefit
Guaranty Corporation arising in the ordinary course).
(c) Each Employee Plan that is required or intended to be qualified
under applicable law or registered or approved by a governmental agency or
authority, has been so qualified, registered or approved by the appropriate
governmental agency or authority, and nothing has occurred since the date
of the last qualification, registration or approval to adversely affect, or
cause the appropriate governmental agency or authority to revoke, such
qualification, registration or approval.
(d) All contributions (including premiums) required by law or contract
to have been made or approved by the Company under or with respect to
Employee Plans have been paid or accrued by the Company. Except as
disclosed in Section 2.11(d) of the Company Disclosure Schedule, without
limiting the foregoing, there are no material unfunded liabilities under
any Employee Plan.
(e) There are no pending or, to the knowledge of the Company,
threatened investigations, litigation or other enforcement actions against
the Company with respect to any of the Employee Plans.
(f) There are no actions, suits or claims pending or, to the knowledge
of the Company, threatened by former or present employees of the Company
(or their beneficiaries) with respect to Employee Plans or the assets or
fiduciaries thereof (other than routine claims for benefits).
(g) To the Company's knowledge, no condition or event has occurred
with respect to the Employee Plans which has or could reasonably be
expected to result in a material liability to the Company.
(h) Section 2.11(h) of the Company Disclosure Schedule sets forth as
of August 26, 1995 a true and complete list of each current or former
employee, officer or director of the Company or any of its subsidiaries who
holds any option to purchase Company Common Stock as of the date hereof,
together with the number of shares of Company Common Stock subject to such
option, the date of grant of such option, the extent to which such option
is vested (or will become vested within six months of the date hereof, or
as a result of the Merger), the option price of such option (to the extent
determined as of the date hereof), whether such option is intended to
qualify as an incentive stock option within the meaning of Section 422(b)
of the Code (an "ISO"), and the expiration date of such option. Section
2.11(h) of the Company Disclosure Schedule also sets forth the total number
of such ISOs and such nonqualified options.
(i) The Company has made available to Parent (i) copies of all
employment agreements with officers of the Company; (ii) copies of all
agreements with consultants who are individuals obligating the Company to
make annual cash payments in an amount exceeding $100,000; (iii) a schedule
listing all officers of the Company who have executed a non-competition
agreement with the Company; (iv) copies (or descriptions) of all severance
agreements, programs and policies of the Company with or relative to its
employees, excluding programs and policies required to be maintained by
law; (v) copies of all plans, programs, agreements and other arrangements
of the Company with or relating to its employees which contain change in
control provisions; and (vi) the form of standard employment agreement, if
any, of the Company for its non-executive employees. The Company has
provided to Parent a complete list of (i) all salary increases for each
officer of the Company for the fiscal year 1996 and (ii) all bonus amounts
earned by each officer of the Company for fiscal year 1995.
SECTION 2.12. LABOR MATTERS. There are no controversies pending or, to the
knowledge of the Company or any of its subsidiaries, threatened, between the
Company or any of its subsidiaries and any of their respective employees, which
controversies have or could reasonably be expected to have a Material Adverse
Effect; neither the Company nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or its subsidiaries nor does the Company or any
of its subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and neither the Company nor any of its subsidiaries
has any knowledge of any strikes, slowdowns, work stoppages, lockouts, or
threats thereof, by or with respect to any employees of the Company or any of
its subsidiaries.
SECTION 2.13. REGISTRATION STATEMENT, PROXY STATEMENT. None of the
information supplied or to be supplied by the Company in writing for inclusion
or incorporation by reference in (i) the Registration
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Statement on Form S-4 to be filed with the SEC by Parent in connection with the
issuance of Parent Common Shares in the Merger (the "Registration Statement") or
(ii) the proxy statement relating to the meeting of the Company's stockholders
(the "Company Stockholders Meeting") to be held in connection with the Merger
(the "Proxy Statement" and, together with the Registration Statement, the "Proxy
Statement/Prospectus") will, at the respective times filed with the SEC or other
regulatory agency and, in addition, (a) in the case of the Proxy
Statement/Prospectus, at the date it or any amendment or supplement thereto is
mailed to stockholders, at the time of the Company Stockholders Meeting and at
the Effective Time and (b) in the case of the Registration Statement, when it
becomes effective under the Securities Act and at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the applicable provisions of the Exchange Act and the rules and regulations
thereunder. If at any time prior to the Effective Time any event relating to the
Company or any of its respective affiliates, officers or directors should be
discovered by the Company which is required to be set forth in an amendment to
the Registration Statement or a supplement to the Proxy Statement/Prospectus,
the Company shall promptly inform Parent and Merger Sub. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information supplied by Parent or Merger Sub which is contained in any of the
foregoing documents.
SECTION 2.14. RESTRICTIONS ON BUSINESS ACTIVITIES. Except for this
Agreement, there is no material agreement, judgment, injunction, order or decree
binding upon the Company or any of its subsidiaries which has or could
reasonably be expected to have the effect of prohibiting or impairing any
material business practice of the Company or any of its subsidiaries,
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 by
the Company.
SECTION 2.15. TITLE TO PROPERTY. Section 2.15 of the Company Disclosure
Statement sets forth a true and complete list of all real property owned by the
Company and all real property leased by the Company or any of its subsidiaries
requiring annual lease payments of more than $50,000, and the aggregate monthly
rental or other fee payable under such lease. The Company and each of its
subsidiaries have good, marketable and defeasible title to all of their
properties and assets, free and clear of all liens, charges and encumbrances
except liens for taxes not yet due and payable and such liens or other
imperfections of title, if any, as do not materially detract from the value of
or interfere with the present use of the property affected thereby or which
would not, individually or in the aggregate, have a Material Adverse Effect; and
all leases pursuant to which the Company or any of its subsidiaries lease from
others material amounts of real or personal property are in good standing, valid
and effective in accordance with their respective terms, and there is not under
any of such leases, any existing material default or event of default on the
part of the Company (or event which with notice or lapse of time, or both, would
constitute a material default on the part of the Company and in respect of which
the Company or such subsidiary has not taken adequate steps to prevent such a
default from occurring) except where the lack of such good standing, validity
and effectiveness or the existence of such default or event of default would not
have a Material Adverse Effect. All the facilities of the Company and its
subsidiaries, except such as may be under construction, are in good operating
condition and repair, except where the failure of such plants, structures and
equipment to be in such good operating condition and repair would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 2.16. TAXES.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
fees, levies, duties, tariffs, imposts and governmental impositions or
charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, provincial, local or foreign taxing authority, including
(without limitation) (i) income, franchise, profits, gross receipts, ad
valorem, net worth, value added, sales, use, service, real or personal
property, special assessments, capital stock, license, payroll,
withholding, employment, social security, workers' compensation,
unemployment compensation, utility, severance, production, excise, stamp,
occupation, premiums, windfall profits, transfer and gains taxes and (ii)
interest, penalties, additional taxes and additions to tax imposed with
respect thereto; and "Tax Returns" shall mean returns,
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reports and information statements with respect to Taxes required to be
filed with the United States Internal Revenue Service (the "IRS") or any
other taxing authority, domestic or foreign, including, without limitation,
consolidated, combined and unitary tax returns.
(b) Other than as disclosed on Section 2.16(b) of the Company
Disclosure Schedule, the Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax purposes of
which the Company or any of its subsidiaries is or has been a member, have
filed all United States federal income Tax Returns and all other material
Tax Returns required to be filed by them or any of them, and have paid and
discharged all Taxes shown therein to be due and there are no other Taxes
that would be due if asserted by a taxing authority, except such as are
being contested in good faith by appropriate proceedings (to the extent
that any such proceedings are required) or with respect to which the
Company is maintaining reserves in accordance with GAAP in its financial
statements to the extent currently required in all material respects
adequate for their payment, except, in each instance, to the extent the
failure to do so would not have a Material Adverse Effect. Neither the IRS
nor any other taxing authority or agency is now asserting or, to the best
of the Company's knowledge, threatening to assert against the Company or
any of its subsidiaries any deficiency or claim for additional Taxes other
than additional Taxes with respect to which the Company is maintaining
reserves in accordance with GAAP in its financial statements which are in
all material respects adequate for their payment, except, in each instance,
to the extent the failure to do so would not have a Material Adverse
Effect. No Tax Return of either the Company or any of its subsidiaries is
currently being audited by any taxing authority. No material tax claim has
become a lien on any assets of the Company or any subsidiary thereof and
neither the Company nor any of its subsidiaries has granted any waiver of
any statute of limitations with respect to, or any extension of a period
for the assessment of, any Tax.
(c) The Company on behalf of itself and all its subsidiaries hereby
represents that, other than as disclosed on Section 2.16(c) of the Company
Disclosure Schedule, and other than with respect to items the inaccuracy of
which would not have a Material Adverse Effect: (i) neither the Company nor
any of its subsidiaries is a party to any agreement, contract or
arrangement that may result, separately or in the aggregate, in the payment
of (a) any "excess parachute payment" within the meaning of Section 28OG of
the Code, determined without regard to Section 28OG(b)(4) of the Code or
(b) any amount that would not be deductible by the Parent or the Company
under Section 162(m) of the Code; (ii) neither the Company nor any of its
subsidiaries has been subject to any accumulated earning tax or personal
holding company tax; (iii) neither the Company nor any of its subsidiaries
is now or owns stock in a passive foreign investment company within the
meaning of Section 1296 of the Code; (iv) neither the Company nor any of
its subsidiaries is obligated under any agreement with respect to
industrial development bonds or other obligations with respect to which the
excludability from gross income of the holder for United States federal or
state income tax purposes could be affected by the transactions
contemplated hereunder; (v) neither the Company nor any of its subsidiaries
has entered into any deferred intercompany transaction within the meaning
of Section 1.1502-13(a)(2) of the United States Treasury Regulations
promulgated under the Code as to which material items of deferred gain or
loss have not been restored; and (vi) no material excess loss account
within the meaning of Section 1.1502-32 and -19 of the United States
Treasury Regulations promulgated under the Code exists with respect to the
stock of any of the Company's subsidiaries; (vi) neither the Company nor
any of its Subsidiaries has filed a consent under Section 341(f) concerning
collapsible corporations; (vii) neither the Company nor any of its
subsidiaries has been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code; (viii) neither the
Company nor any of its subsidiaries has any liability for the Taxes of
another person (other than any of the Company and its subsidiaries) under
Section 1.1502-6 of the United States Treasury Regulations promulgated
under the Code (or any similar provision of state, local or foreign law),
as a transferee or successor, by contract, or otherwise.
(d) No power of attorney has been granted by the Company or any of its
subsidiaries with respect to any matter relating to Taxes which is
currently in force.
(e) Neither the Company nor any of its subsidiaries is a party to any
agreement or arrangement (written or oral) providing for the allocation or
sharing of Taxes.
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(f) The Company and each of its subsidiaries have withheld from each
payment made to any of their respective past or present employees, officers
or directors the amount of all Taxes and other deductions required to be
withheld therefrom and paid the same to the proper tax or other receiving
officers within the time required by law, except to the extent that any
failure to do so would not have a Material Adverse Effect.
(g) The Company has remitted to the appropriate Tax authority when
required by law to do so all amounts collected by it on account of all
retail sales Tax, except to the extent that any failure to do so would not
have a Material Adverse Effect.
(h) There has been no material debt to a third party of the Company or
any of its subsidiaries which has been forgiven and which has given rise to
(or is expected to give rise to) "cancellation of indebtedness income"
under the provisions of the Code.
SECTION 2.17. ENVIRONMENTAL MATTERS. Except in all cases, in the
aggregate, as have not had and could not reasonably be expected to have a
Material Adverse Effect, to the Company's knowledge, the Company and each of its
subsidiaries (i) have obtained all applicable permits, licenses and other
authorizations which are required under federal, state, provincial or local laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into ambient air, surface
water, ground water or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
by the Company or its subsidiaries (or their respective agents); (ii) are in
compliance with all terms and conditions of such required permits, licenses and
authorization, and also are in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirement, obligations,
schedules and timetables contained in such laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder; (iii) as of the date hereof, are not aware
of nor have received notice of any event, condition, circumstance, activity,
practice, incident, action or plan which is reasonably likely to interfere with
or prevent continued compliance with or which would give rise to any common law
or statutory liability, or otherwise form the basis of any claim, action, suit
or proceeding, based on or resulting from the Company's or any of its
subsidiary's (or any of their respective agent's) manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (iv) have taken all
actions necessary under applicable requirements of federal, state or local laws,
rules or regulations to register any products or materials required to be
registered by the Company or its subsidiaries (or any of their respective
agents) thereunder.
SECTION 2.18. BROKERS. No broker, finder or investment banker (other than
▇▇▇▇▇▇▇▇▇▇ Securities is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and ▇▇▇▇▇▇▇▇▇▇ Securities pursuant to which such firm would
be entitled to any payment relating to the transactions contemplated hereunder.
SECTION 2.19. FULL DISCLOSURE. No statement contained in any certificate
or schedule furnished or to be furnished by the Company or its subsidiaries to
Parent or Merger Sub in, or pursuant to the provisions of, this Agreement
contains or shall contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in the light of the
circumstances under which it was made and based upon the facts and circumstances
existing at the time it was made, to make the statements herein or therein not
misleading.
SECTION 2.20. INTELLECTUAL PROPERTY.
(a) The Company owns, or is licensed or otherwise possesses legally
sufficient rights to use, all patents, trademarks, trade names, service
marks, copyrights and any applications therefor, technology, know-how,
computer software programs or applications (in both source code and object
code form) and tangible or intangible proprietary information or material
that are used or proposed to be used in the
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business of the Company as currently conducted, except where the failure to
own or to license or possess such rights would not have a Material Adverse
Effect. Section 2.20(a) of the Company Disclosure Schedule lists all
current patents, registered and material unregistered trademarks and
service marks, registered and material unregistered copyrights, trade names
and any applications therefor owned by the Company (the "Company
Intellectual Property Rights"), and specifies the jurisdictions in which
each such Company Intellectual Property Right has been issued or registered
or in which an application for such issuance and registration has been
filed, including the respective registration or application numbers and the
names of all registered owners, together with a list of all material
software products marketed by the Company on a standalone (independent of
hardware) basis and an indication as to which, if any, of such software
products have been registered for copyright protection with the United
States Copyright Office and any foreign offices and by whom such items have
been registered. Section 2.20(a) of the Company Disclosure Schedule
includes and specifically identifies all material third-party patents,
trademarks or copyrights (including software) (the "Third Party
Intellectual Property Rights"), to the knowledge of the Company, which are
incorporated in, are, or form a part of, any Company product. Section
2.20(a) of the Company Disclosure Schedule lists (i) except for object code
license agreements for the Company's products executed in the ordinary
course of business and in accordance with the Company's past practices, all
material licenses, sublicenses and other agreements as to which the Company
is a party and pursuant to which any person is authorized to use any
Company Intellectual Property Right, or any trade secret material to the
Company; and (ii) except for all software programs available on a general
commercial basis, all material licenses, sublicenses and other agreements
as to which the Company is a party and pursuant to which the Company is
authorized to use any Third-Party Intellectual Property Rights or other
trade secret of a third party, in or as any Company product, and includes
the identity of all parties thereto, a description of the nature and
subject matter thereof, the applicable royalty and the term thereof.
(b) Except as set forth in Section 2.20(b) of the Company Disclosure
Schedule, the Company is not, nor will it be as a result of the execution
and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any license, sublicense or agreement described
in Section 2.20(a) of the Company Disclosure Schedule, which violation
would have a Material Adverse Effect. No claims with respect to the Company
Intellectual Property Rights, any trade secret material to the Company, or
Third Party Intellectual Property Rights to the extent arising out of any
use, reproduction or distribution of such Third Party Intellectual Property
Rights by or through the Company, are currently pending or, to the
knowledge of the Company, are threatened by any person; nor does the
Company know of any valid grounds for any bona fide claims (i) to the
effect that the manufacture, sale, licensing or use of any product as so
used, sold or licensed or proposed for use, sale or license by the Company
infringes on any copyright, patent, trademark, service ▇▇▇▇ or trade secret
of any other person; (ii) against the use by the Company of any trademarks,
trade names, trade secrets, copyrights, patents, technology, know-how or
computer software programs and applications used in the Company's business
as currently conducted by the Company; (iii) challenging the ownership,
validity or effectiveness of any of the Company Intellectual Property
Rights or other trade secret material to the Company; or (iv) challenging
the Company's license or legally enforceable right to use of the Third
Party Intellectual Rights. To the Company's knowledge, all patents,
registered trademarks, registered maskworks and registered copyrights held
by the Company are valid and subsisting. Except as set forth in Section
2.20(b) of the Company Disclosure Schedule, to the Company's knowledge,
there is no unauthorized use, infringement or misappropriation of any of
the Company Intellectual Property Rights by any third party, including any
employee or former employee of the Company or any of its subsidiaries,
which use, infringement or misappropriation would have a Material Adverse
Effect. Neither the Company nor any of its subsidiaries (i) has been sued
or charged in writing as a defendant in any claim, suit, action or
proceeding which involves a claim or infringement of trade secrets, any
patents, trademarks, service marks, maskworks or copyrights and which has
not been finally terminated prior to the date hereof, (ii) has been
informed or notified by any third party in writing that the Company may be
engaged in such infringement or (iii) has knowledge of any infringement
liability with respect to, or infringement by, the Company or any of its
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subsidiaries of any trade secret, patent, trademark, service ▇▇▇▇, maskwork
or copyright of another, which infringement would have a Material Adverse
Effect.
(c) Each employee of the Company with access to confidential
information concerning the Company has executed a confidentiality and
invention agreement in the forms previously delivered to Parent.
SECTION 2.21. INTERESTED PARTY TRANSACTIONS. Except as set forth in
Section 2.21 of the Company Disclosure Schedule or in the Company SEC Reports
since December 9, 1994, no event has occurred that would be required to be
reported as a Certain Relationship or Related Transaction, pursuant to Item 404
of Regulation S-K promulgated by the SEC.
SECTION 2.22. INSURANCE. Section 2.22 of the Company Disclosure Schedule
lists all material insurance policies and fidelity bonds covering the assets,
business, equipment, properties, operations, employees, officers and directors
of the Company and its subsidiaries. There is no material claim by the Company
or any of its subsidiaries pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds. All premiums payable under all such policies and bonds
have been paid and the Company and its subsidiaries are otherwise in full
compliance with the terms of such policies and bonds (or other policies and
bonds providing substantially similar insurance coverage in all material
respects). The Company does not know of any threatened termination of, or
material premium increase with respect to, any of such policies.
SECTION 2.23. OPTION PLANS. Except as set forth in Section 2.23 of the
Company Disclosure Schedule, the Board of Directors of the Company has taken all
necessary action (or refrained from taking action, where appropriate) under the
Company Stock Option Plans (as defined in Section 5.05) so that no Stock Options
(or any portion thereof) will be accelerated or entitled to receive cash or
other property as a result of the consummation of the transactions contemplated
hereby, but instead shall be assumed as provided in Section 1.06(c) hereof.
SECTION 2.24. VOTE REQUIRED. The affirmative vote of the holders of at
least a majority of the outstanding shares of the Company Common Stock is the
only vote of the holders of any class or series of the Company's capital stock
necessary to approve the Merger.
SECTION 2.25. POOLING MATTERS. To the Company's knowledge and based upon
consultation with its independent accountants, neither the Company nor any of
its affiliates has taken or agreed to take any action that would affect the
ability of Parent to account for the business combination to be effected by the
Merger as a pooling of interests. The Company has received from Price Waterhouse
LLP a written opinion addressed to it and Parent to the effect that the Merger
qualifies for a pooling of interests accounting treatment if consummated in
accordance with this Agreement.
SECTION 2.26. OPINION OF FINANCIAL ADVISOR. The Company has been advised
by its financial advisor, ▇▇▇▇▇▇▇▇▇▇ Securities, that in its opinion, as of the
date hereof, the terms of the Merger are fair to the stockholders of the Company
from a financial point of view, and the Company has delivered a written copy of
such opinion to Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and warrant
to the Company that, except as set forth in the written disclosure schedule
previously delivered by Parent to the Company (the "Parent Disclosure
Schedule"):
SECTION 3.01. ORGANIZATION AND QUALIFICATION. Parent and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority and is in possession of all Approvals
necessary to own, lease and operate the 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 be so organized, existing and in good standing or to have such
power, authority and Approvals would not have a Material Adverse Effect. Parent
and each of its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
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the character of its properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would not
have a Material Adverse Effect.
SECTION 3.02. AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Merger Sub 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 Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. The Board of Directors of Parent has determined that it is
advisable and in the best interest of Parent's stockholders for Parent to enter
into a business combination with the Company upon the terms and subject to the
conditions of this Agreement. This Agreement has been duly and validly executed
and delivered by Parent and Merger Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of Parent and Merger Sub.
SECTION 3.03. NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a) The
execution and delivery of this Agreement by Parent and Merger Sub do not,
and the performance of this Agreement by Parent and Merger Sub shall not,
(i) conflict with or violate the Articles of Organization or By-Laws of
Parent or the Certificate of Incorporation or By-Laws of Merger Sub; (ii)
conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Parent or any of it subsidiaries or by which its or
their respective properties are bound or affected; or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or impair Parent'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, any
Material Contract or result in the creation of a lien or encumbrance on any
of the properties or assets of Parent 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 Parent or any of its subsidiaries is a party or by which Parent or
any of its subsidiaries or its or any of their respective properties are
bound or affected, except in any such case for any such breaches, defaults
or other occurrences that would not have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and Merger
Sub will not require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, the NYSE, the Blue Sky Laws and the
pre-merger notification requirements of the HSR Act and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent Parent or Merger Sub from
performing their respective obligations under this Agreement, and would not
have a Material Adverse Effect.
SECTION 3.04. ARTICLES OF ORGANIZATION AND BY-LAWS. Parent has heretofore
furnished to the Company a complete and correct copy of its Articles of
Organization and the By-Laws, as amended to date. Such Articles of Organization
and By-Laws are in full force and effect. Neither Parent nor Merger Sub is in
violation of any of the provisions of its Certificate of Incorporation or
By-Laws.
SECTION 3.05. CAPITALIZATION. As of June 30, 1995, the authorized capital
stock of Parent consisted of 75,000,000 Parent Common Shares of which:
37,610,648 shares were issued and outstanding, 1,575,008 shares were held in
treasury, 5,677,973 shares were reserved for issuance pursuant to outstanding
options under Parent's stock option plans, and 560,640 shares were reserved for
future issuance under Parent's employee purchase plan. No material change in
such capitalization has occurred between June 30, 1995 and the date hereof
except that (A) on July 24, 1995, Parent declared a two-for-one stock split in
the form of a stock dividend on its issued and outstanding Parent Common Shares
payable to holders of record on August 8, 1995 and (B) on July 17, 1995, Parent
amended its Articles of Organization to increase its authorized capital stock
from 75,000,000 Parent Common Shares to 125,000,000 Parent Common Shares. Except
as set forth in this Section 3.05, there are no options, warrants or other
rights, agreements, arrangements or commitments of
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any character relating to the issued or unissued capital stock of Parent or any
of its subsidiaries or obligating Parent or any of its subsidiaries to issue or
sell any shares of capital stock of, or other equity interests in, Parent or any
of its subsidiaries. The authorized capital stock of Merger Sub consists of
1,000 shares of common stock, par value $0.001 per share, 100 shares of which,
as of the date hereof, are issued and outstanding. All of the outstanding shares
of Parent's and Merger Sub's respective capital stock have been duly authorized
and validly existing and are fully paid and nonassessable. Parent owns all of
the capital stock of Merger Sub. The Parent is party to a Rights Agreement (the
"Rights Agreement") dated as of March 14, 1990, a copy of which has been
provided to the Company. Parent represents and warrants that since March 14,
1990 there has not occurred an event which has caused the rights issuable under
the Rights Agreement to separate from the Parent Common Shares.
SECTION 3.06. COMPLIANCE, PERMITS. (a) Neither Parent nor any of its
subsidiaries is in conflict with, in default with respect to or in
violation of (i) any law, rule, regulation, order, judgment or decree
applicable to Parent or any of its subsidiaries or by which its or any of
their respective properties is bound or affected or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries is or
any of their respective properties is bound or affected, except for any
such conflicts, defaults or violations which would not have a Material
Adverse Effect.
(b) Parent and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities which are material to the operation of the
business of the Company and its subsidiaries taken as a whole as it is now
being conducted (collectively, the "Parent Permits"). Parent and its
subsidiaries are in compliance with the terms of the Parent Permits, except
where the failure to so comply would not have a Material Adverse Effect.
SECTION 3.07. SEC FILINGS, FINANCIAL STATEMENTS. (a) Parent has filed
all forms, reports and documents required to be filed with the SEC since
December 31, 1992, and has heretofore delivered to the Company, in the form
filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal
years ended December 31, 1993 and 1994 and its quarterly report on Form
10-Q for the fiscal quarters ended March 31, 1995 and June 30, 1995 (ii)
all proxy statements relating to Parent's meetings of stockholders (whether
annual or special) held since December 31, 1994, (iii) all other reports or
registration statements (other than Reports on Form 3, 4 or 5 filed on
behalf of affiliates of the Parent) filed by Parent with the SEC since
December 31, 1994 and (iv) all amendments and supplements to all such
reports and registration statements filed by Parent with the SEC
(collectively, the "Parent SEC Reports"). The Parent SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) 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 the light
of the circumstances under which they were made, not misleading. None of
Parent's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports has
been prepared in accordance with 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
Parent and its subsidiaries as 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 normal and recurring year-end adjustments which were not or
are not expected to be material in amount.
(c) Parent has heretofore furnished to the Company a complete and
correct copy of any amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements,
documents or other instruments which previously had been filed by Parent
with the SEC pursuant to the Securities Act or the Exchange Act.
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(d) The Parent has provided to the Company copies of (x) all of its
material contracts and (y) all agreements which, as of the date hereof, are
required to be filed with the SEC pursuant to the requirements of the
Exchange Act and the SEC's rules thereunder as "material contracts" of the
Parent and its subsidiaries.
SECTION 3.08. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Section 3.08 of the Parent Disclosure Schedule, since December 31, 1994, Parent
has conducted its business in the ordinary course and there has not occurred:
(i) any Material Adverse Effect; (ii) any amendments or changes in the Articles
of Organization or By-Laws of Parent; (iii) any damage to, destruction or loss
of any assets of the Parent (whether or not covered by insurance) that could
have a Material Adverse Effect; (iv) any revaluation by Parent of any of its
assets, including, without limitation, writing down the value of capitalized
software or inventory or writing off notes or accounts receivable other than in
the ordinary course of business; or (v) except as disclosed in Section 3.08 of
the Parent Disclosure Schedule, any other action or event that would have
required the consent of the Company pursuant to Section 4.03 had such action or
event occurred after the date of this Agreement.
SECTION 3.09. RESTRICTIONS ON BUSINESS ACTIVITIES. Except for this
Agreement, there is no material agreement, judgment, injunction, order or decree
binding upon Parent or any of its subsidiaries which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of Parent or any of its subsidiaries, any acquisition of property by
Parent or any of its subsidiaries or the conduct of business by Parent or any of
its subsidiaries as currently conducted or as proposed to be conducted by
Parent.
SECTION 3.10. TITLE TO PROPERTY. Parent and each of its subsidiaries have
good, marketable and defensible title to all of their properties and assets,
free and clear of all liens, charges and encumbrances except liens for taxes not
yet due and payable and such liens or other imperfections of title, if any, as
do not materially detract from the value of or interfere with the present use of
the property affected thereby or which would not have a Material Adverse Effect;
and, to Parent's knowledge, all leases pursuant to which Parent or any of its
subsidiaries lease from others material amounts of real or personal property are
in good standing, valid and effective in accordance with their respective terms,
and there is not, to the knowledge of Parent, under any of such leases, any
existing material default or event of default (or event which, with notice or
lapse of time, or both, would constitute a material default and in respect of
which Parent or such subsidiary has not taken adequate steps to prevent such a
default from occurring) except where the lack of such good standing, validity
and effectiveness, or the existence of such default or event of default would
not have a Material Adverse Effect.
SECTION 3.11. FULL DISCLOSURE. No statement contained in any certificate
or schedule furnished, or to be furnished, by Parent or Merger Sub to the
Company in, or pursuant to the provisions of, this Agreement contains or will
contain any untrue statement of a material fact or omits or shall omit to state
any material fact necessary, in the light of the circumstances under which it
was made and based upon the facts and circumstances existing at the time it was
made, to make the statements herein or therein not misleading.
SECTION 3.12. NO UNDISCLOSED LIABILITIES.
(a) Except as is disclosed in the Parent SEC Reports, neither Parent
nor any of its subsidiaries has any liabilities (absolute, accrued,
contingent or otherwise) which are, in the aggregate, material to the
business, operations or financial condition of Parent and its subsidiaries
taken as a whole, except liabilities (i) adequately provided for in
Parent's balance sheet (including any related notes thereto) as of December
31, 1994 included in the Parent SEC Reports (the "December 31 Balance
Sheet"), (ii) incurred in the ordinary course of business and not required
under GAAP to be reflected on the December 31 Balance Sheet, or (iii)
incurred since December 31, 1994 in the ordinary course of business and
consistent with past practice, and liabilities incurred in connection with
this Agreement.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except
for this Agreement and any other agreements or arrangements contemplated by
this Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary
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or affiliate, any obligations or liabilities or engaged in any business
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person.
SECTION 3.13. ABSENCE OF LITIGATION. Except as set forth in Section 3.13
of the Parent Disclosure Schedule or as reflected in the Parent SEC Reports,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of Parent, threatened against Parent or any of its
subsidiaries, or any properties or rights of Parent or any of its subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, that could have a Material Adverse
Effect.
SECTION 3.14. INSURANCE. Parent and its subsidiaries maintain fire and
casualty, general liability, business interruption, product liability and
sprinkler and water damage insurance that Parent believes to be reasonably
prudent for its business.
SECTION 3.15. REGISTRATION STATEMENT; PROXY STATEMENT; PROSPECTUS. Subject
to the accuracy of the representations of the Company in Section 2.13, the
Registration Statement pursuant to which the Parent Common Shares to be issued
in the Merger will be registered with the SEC shall not, at the time the
Registration Statement (including any amendments or supplements thereto) is
declared effective by the SEC, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
included therein, in light of the circumstances under which they were made, not
misleading. Subject to the accuracy of the representations of the Company in
Section 2.13, the information supplied by Parent for inclusion in the Proxy
Statement/Prospectus will not, on the date the Proxy Statement/Prospectus is
first mailed to stockholders, at the time of the Company Stockholders Meeting
and at the Effective Time, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or misleading
with respect to any material fact, or will omit to state any material fact
necessary in order to make the statements therein not false or misleading. The
Registration Statement will comply as to form in all material respects with the
applicable provisions of the Securities Act and the rules and regulations
promulgated thereunder. If at any time prior to the Effective Time any event
relating to Parent, Merger Sub or any of their respective affiliates, officers
or directors should be discovered by Parent or Merger Sub which should be set
forth in an amendment to the Registration Statement or a supplement to the Proxy
Statement/ Prospectus, Parent or Merger Sub will promptly inform the Company.
Notwithstanding the foregoing, Parent makes no representation or warranty with
respect to any information supplied, by the Company which is contained in, or
furnished in connection with the preparation of, any of the foregoing.
SECTION 3.16. TAXES. Parent and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax purposes of which
Parent or any of its subsidiaries is or has been a member, have filed all United
States federal income Tax Returns and all other material Tax Returns required to
be filed by them or any of them, and have paid and discharged all Taxes shown
therein to be due and there are no other Taxes that would be due if asserted by
a taxing authority, except such as are being contested in good faith by
appropriate proceedings (to the extent that any such proceedings are required)
or with respect to which Parent is maintaining reserves in accordance with GAAP
in its financial statements to the extent currently required in all material
respects adequate for their payment, except, in each instance, to the extent the
failure to do so would not have a Material Adverse Effect. Neither the IRS nor
any other taxing authority or agency is now asserting or, to the best of
Parent's knowledge, threatening to assert against Parent or any of its
subsidiaries any deficiency or claim for additional Taxes other than additional
Taxes with respect to which Parent is maintaining reserves in accordance with
GAAP in its financial statements which are in all material respects adequate for
their payment, except, in each instance, to the extent that the failure to do so
would not have a Material Adverse Effect. No Tax Return of either Parent or any
of its subsidiaries is currently being audited by any taxing authority except as
would not have a Material Adverse Effect. No material tax claim has become a
lien on any assets of Parent or any subsidiary thereof and neither Parent nor
any of its subsidiaries has, except as would not have a Material Adverse Effect,
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax.
SECTION 3.17. BROKERS. No broker, finder or investment banker (other than
▇.▇. ▇▇▇▇▇▇▇ & Co., Inc.) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or Merger Sub.
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SECTION 3.18. OPINION OF FINANCIAL ADVISOR. Parent has been advised by its
financial advisor, ▇.▇. ▇▇▇▇▇▇▇ & Co., Inc., that in its opinion, as of the date
hereof, the Exchange Ratio is fair from a financial point of view to Parent, and
Parent has delivered a copy of such opinion to the Company.
SECTION 3.19. POOLING MATTERS. Neither Parent nor any of its affiliates,
to its knowledge and based upon consultation with its independent accountants,
is aware of any fact or has taken or agreed to take any action that (without
giving effect to any action taken or agreed to be taken by the Company or any of
its affiliates) would affect the ability of Parent to account for the business
combination to be effected by the Mergers as a pooling of interests. Parent has
received from Coopers & ▇▇▇▇▇▇▇ LLP an opinion addressed to it and the Company
to the effect that the Merger qualifies for a pooling of interests accounting
treatment consummated in accordance with this agreement.
SECTION 3.20. NO STOCKHOLDER VOTE. No vote of the stockholders of Parent
is necessary to approve the Merger or the issuance of Parent Common Shares
therein.
SECTION 3.21. EMPLOYEE BENEFIT PLANS, EMPLOYMENT AGREEMENTS.
(a) Each employee benefit plan (as defined in Section 3(d) of ERISA),
regardless of whether ERISA is applicable thereto, all other bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance or termination pay, medical or life insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement
plans, agreements or arrangements and other similar fringe or employee
benefit plans, programs or arrangements, and any current or former
employment or executive compensation or severance agreements, written or
otherwise, for the benefit of, or relating to, any employee of the Parent,
any trade or business (whether or not incorporated) which is a member of a
controlled group including the Parent or which is under common control with
the Parent (a "Parent ERISA Affiliate") within the meaning of Section 414
of the Code, or any subsidiary of the Parent, to which the Parent, a Parent
ERISA Affiliate, or any subsidiary is a party, with respect to which the
Parent, a Parent ERISA Affiliate, or any subsidiary has or could have any
obligation, as well as each plan with respect to which the Parent or a
Parent ERISA Affiliate could incur liability if such plan has been or were
terminated (together, the "Parent Employee Plans") that is required or
intended to be qualified under applicable law or registered or approved by
a governmental agency or authority, has been so qualified, registered or
approved by the appropriate governmental agency or authority, and nothing
has occurred since the date of the last qualification, registration or
approval to adversely affect, or cause the appropriate governmental agency
or authority to revoke, such qualification, registration or approval.
(b) All contributions (including premiums) required by law or contract
to have been made or approved by the Parent under or with respect to the
Parent Employee Plans have been paid or accrued by the Parent.
(c) There are no pending or, to the knowledge of the Parent,
threatened material investigations, litigation or other enforcement actions
against the Parent with respect to any of the Parent Employee Plans.
(d) There are no material actions, suits or claims pending or, to the
knowledge of the Parent, threatened by former or present employees of the
Parent (or their beneficiaries) with respect to the Parent Employee Plans
or the assets or fiduciaries thereof (other than routine claims for
benefits).
(e) To the Parent's knowledge, no condition or event has occurred with
respect to the Parent Employee Plans which has or could reasonably be
expected to result in a Material Adverse Effect to the Parent.
SECTION 3.22. LABOR MATTERS. There are no controversies pending or, to the
knowledge of the Parent or any of its subsidiaries, threatened, between the
Parent or any of its subsidiaries and any of their respective employees, which
controversies have or could reasonably be expected to have a Material Adverse
Effect; neither the Parent nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Parent or its subsidiaries nor does the Parent or any of
its subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and neither the Parent nor any of its subsidiaries
has any knowledge of any strikes, slowdowns, work stoppages, lockouts, or
threats thereof, by or with respect to any employees of the Parent or any of its
subsidiaries.
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SECTION 3.23. ENVIRONMENTAL MATTERS. Except in all cases, in the
aggregate, as have not had and could not reasonably be expected to have a
Material Adverse Effect, to the Parent's knowledge the Parent and each of its
subsidiaries (i) have obtained all applicable permits, licenses and other
authorizations which are required under federal, state, provincial or local laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into ambient air, surface
water, ground water or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
by the Parent or its subsidiaries (or their respective agents); (ii) are in
compliance with all terms and conditions of such required permits, licenses and
authorization, and also are in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirement, obligations,
schedules and timetables contained in such laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder; (iii) as of the date hereof, are not aware
of nor have received notice of any event, condition, circumstance, activity,
practice, incident, action or plan which is reasonably likely to interfere with
or prevent continued compliance with or which would give rise to any common law
or statutory liability, or otherwise form the basis of any claim, action, suit
or proceeding, based on or resulting from the Parent's or any of its
subsidiary's (or any of their respective agent's) manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (iv) have taken all
actions necessary under applicable requirements of federal, state or local laws,
rules or regulations to register any products or materials required to be
registered by the Parent or its subsidiaries (or any of their respective agents)
thereunder.
SECTION 3.24. INTELLECTUAL PROPERTY.
(a) The Parent owns, or is licensed or otherwise possesses legally
sufficient rights to use, all patents, trademarks, trade names, service
marks, copyrights and any applications therefor, technology, know-how,
computer software programs or applications (in both source code and object
code form) and tangible or intangible proprietary information or material
that are used or proposed to be used in the business of the Parent as
currently conducted (the "Parent Intellectual Property Rights"), except
where the failure to own or to license or posses such rights would not have
a Material Adverse Affect. No claims with respect to the Parent
Intellectual Property Rights, any trade secret material to the Parent, or
third party patents, trademarks, or copyrights (including software) (the
"Parent Third Party Intellectual Property Rights") to the extent arising
out of any use, reproduction or distribution of such Parent Third Party
Intellectual Property Rights by or through the Parent, are currently
pending or, to the knowledge of the Parent, are threatened by any person
which claims would, if resolved adversely to Parent, have a Material
Adverse Affect, nor does the Parent know of any valid grounds for any bona
fide claims (i) to the effect that the manufacture, sale, licensing or use
of any product as so used, sold or licensed or proposed for use, sale or
license by the Parent infringes on any copyright, patent, trademark,
service ▇▇▇▇ or trade secret of any other person; (ii) against the use by
the Parent of any trademarks, trade names, trade secrets, copyrights,
patents, technology, know-how or computer software programs and
applications used in the Parent's business as currently conducted by the
Parent; (iii) challenging the ownership, validity or effectiveness of any
of the Parent Intellectual Property Rights or other trade secret material
to the Parent; or (iv) challenging the Parent's license or legally
enforceable right to use of the Parent Third Party Intellectual Rights. To
the Parent's knowledge, all patents, registered trademarks, registered
maskworks and registered copyrights held by the Parent are valid and
subsisting. Neither the Parent nor any of its subsidiaries (i) has been
sued or charged in writing as a defendant in any claim, suit, action or
proceeding which involves a claim or infringement of trade secrets, any
patents, trademarks, service marks, maskworks or copyrights and which has
not been finally terminated prior to the date hereof; (ii) has been
informed or notified by any third party in writing that the Parent may be
engaged in such infringement; or (iii) has knowledge of any infringement
liability with respect to, or infringement by, the Parent or any of its
subsidiaries of any trade secret, patent, trademark, service ▇▇▇▇, maskwork
or copyright of another, which infringement would have a Material Adverse
Effect.
(b) Each employee of the Parent with access to confidential
information concerning the Parent has executed a confidentiality and
invention agreement in the forms previously delivered to the Company.
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ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE
MERGER. During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, the
Company covenants and agrees that, unless Parent shall otherwise agree in
writing, the Company shall conduct its business and shall cause the businesses
of its subsidiaries to be conducted only in, and the Company and its
subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use reasonable commercial efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of the present officers, employees and consultants of the Company and its
subsidiaries, to prevent the loss, cancellation, abandonment, forfeiture or
expiration of any Company Intellectual Property, and to preserve the present
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has significant
business relations. By way of amplification and not limitation, except as
expressly contemplated by this Agreement, neither the Company nor any of its
subsidiaries shall, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, directly or indirectly do, or propose to do, any of the
following without the prior written consent of Parent:
(a) amend or otherwise change the Company's Certificate of
Incorporation or By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of
capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest (including, without limitation, any
phantom interest) of the Company, any of its subsidiaries or affiliates
(except for the issuance of shares of the Company Common Stock issuable
pursuant to stock options under the Company Stock Option Plans (as defined
in Section 5.05) or pursuant to rights to purchase such shares under the
Company Stock Purchase Plan (as defined in Section 5.06), which options or
rights, as the case may be, are outstanding on the date hereof); provided,
however, that the Company may grant stock options under the Company Stock
Option Plans to employees hired subsequent to August 26, 1995 so long as
(i) such options vest ratably over a period of not less than four years and
(ii) no person hired to serve as an officer of the Company shall receive
option grants for more than 40,000 shares of Company Common Stock and no
other person shall receive option grants in excess of the Company's
standard policies and practices in effect at the date of this Agreement,
copies of which have been provided to Parent; and provided, further, that
the Company may continue to offer rights to purchase Company Common Stock
pursuant to the Company Stock Purchase Plan as in effect on the date of
this Agreement;
(c) sell, pledge, dispose of or encumber any material assets of the
Company or any of its subsidiaries (except for (i) sales of assets in the
ordinary course of business and in a manner consistent with past practice
and (ii) dispositions of obsolete or worthless assets);
(d) accelerate, amend or change the period (or permit any
acceleration, amendment or change) of exercisability of options granted
under the Employee Plans (including the Company Stock Option Plans or
authorize cash payments in exchange for any options granted under any of
such plans;
(e) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly owned
subsidiary of the Company may declare and pay a dividend to its parent;
(ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock; or (iii) amend
the terms of, repurchase, redeem or otherwise acquire, or permit any
subsidiary to repurchase, redeem or otherwise acquire, any of its
securities or any securities of its subsidiaries, or propose to do any of
the foregoing;
(f) sell, transfer, license, sublicense or otherwise dispose of any
material Company Intellectual Property, or amend or modify any existing
agreements with respect to any material Company Intellectual
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Property or Third Party Intellectual Property Rights, other than
nonexclusive object and source code licenses in the ordinary course of
business consistent with past practice;
(g) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee (other than guarantees of bank
debt of the Company's subsidiaries entered into in the ordinary course of
business) or endorse or otherwise as an accommodation become responsible
for, the obligations of any person, or make any loans or advances, except
in each case in the ordinary course of business consistent with past
practice, except that the Company may incur short-term indebtedness for
borrowed money not to exceed in the aggregate $10,000,000 on terms that do
not include the payment of any prepayment penalty or premium; (iii) enter
into or amend any material contract or agreement other than in the ordinary
course of business; (iv) authorize any capital expenditures or purchase of
fixed assets other than in the ordinary course of business consistent with
the Company's present business plan or (v) enter into or amend any
contract, agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 4.01(g);
(h) increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of employees
of the Company or its subsidiaries who are not officers of the Company in
accordance with past practices, and except for any such increases in salary
of officers of the Company approved by the Board of Directors prior to the
date of this Agreement and payment of bonuses to Company officers with
respect to the fiscal year ended August 26, 1995 in accordance with the
Company's incentive bonus plan previously approved by the Board of
Directors; or grant any severance or termination pay to, or enter into any
employment or severance agreement with any director, officer (except for
officers who are terminated on an involuntary basis) or other employee of
the Company or any of its subsidiaries; or establish, adopt, enter into or
amend any Employee Plan;
(i) take any action, other than as required by GAAP, to change
accounting policies or procedures (including, without limitation,
procedures with respect to revenue recognition, capitalization of software
development costs, payments of accounts payable and collection of accounts
receivable);
(j) make any material Tax election inconsistent with past practices or
settle or compromise any material federal, state, local or foreign tax
liability or agree to an extension of a statute of limitations for any
assessment of any Tax, except to the extent the amount of any such
settlement has been reserved for on the Company's most recent SEC Report;
(k) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements of
the Company or incurred in the ordinary course of business and consistent
with past practice;
(l) except as may be required by law, take any action to terminate or
amend any of its Employee Plans in any material respect other than in
connection with the Merger;
(m) take or allow to be taken or fail to take any act or omission
within the control of the Company which would reasonably be expected to
jeopardize the treatment of the Merger as a pooling of interests for
accounting purposes under GAAP; or
(n) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.01(a) through (m) above, or any action which would
make any of the representations or warranties of the Company contained in
this Agreement untrue or in any material respect incorrect or prevent the
Company from performing in any material respect or cause the Company not to
perform in any material respect its covenants hereunder or result in any of
the conditions to the Merger set forth herein not being satisfied.
SECTION 4.02. NO SOLICITATION. (a) The Company shall not, directly or
indirectly, through any officer, director, employee, representative or
agent of the Company or any of its subsidiaries, solicit or encourage
(including by way of furnishing information) the initiation or submission
of any inquiries, proposals or offers regarding any acquisition, merger,
take-over bid, sale of all or substantially all of its
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assets, sale of shares of capital stock (including without limitation by
way of a tender offer) representing more than 15% of the voting securities
of the Company or similar transactions involving the Company or any
subsidiaries of the Company (any of the foregoing inquiries or proposals
being referred to herein as an "Acquisition Proposal"); provided, however,
that nothing contained in this Agreement shall prevent the Board of
Directors of the Company from referring any third party to this Section
4.02(a) or providing a copy of this Agreement to any third party. Nothing
contained in this Section 4.02(a) or any other provision of this Agreement
shall prevent the Board of Directors of the Company from considering,
negotiating, approving and recommending to the stockholders of the Company
an unsolicited bona fide written Acquisition Proposal which the Board of
Directors of the Company determines in good faith (after consultation with
its financial advisors and after consultation with outside counsel as to
whether the Board of Directors is required to do so in order to discharge
properly its fiduciary duties to stockholders under applicable law) would
result in a transaction more favorable to the Company's stockholders from a
financial point of view than the transaction contemplated by this Agreement
(any such Acquisition Proposal being referred to herein as a "Superior
Proposal").
(b) The Company shall immediately notify Parent after receipt of any
Acquisition Proposal or any request for nonpublic information relating to
the Company or any of its subsidiaries in connection with an Acquisition
Proposal or for access to the properties, books or records of the Company
or any subsidiary by any person or entity that informs the Board of
Directors of the Company or such subsidiary that it is considering making,
or has made, an Acquisition Proposal. Such notice to Parent shall be made
orally and in writing and shall indicate in reasonable detail the identity
of the offeror and the terms and conditions of such proposal, inquiry or
contact.
(c) If the Board of Directors of the Company receives a request for
material nonpublic information by a party who makes, or who states in
writing that it intends, subject to satisfactory review of such nonpublic
information, to make, a bona fide Acquisition Proposal and the Board of
Directors of the Company determines that such proposal, if consummated
pursuant to its terms, would be a Superior Proposal, then, and only in such
case, the Company may, subject to the execution of a confidentiality and
standstill agreement substantially similar to that then in effect between
the Company and Parent, provide such party with access to information
regarding the Company.
(d) Subject to the second sentence of Section 4.02(a), the Company
shall immediately cease and cause to be terminated any existing discussions
or negotiations with any parties (other than Parent and Merger Sub)
conducted heretofore with respect to any of the foregoing. The Company
agrees not to release any third party from any confidentiality or
standstill agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and
employees of the Company and its subsidiaries and any investment banker or
other advisor or representative retained by the Company are aware of the
restrictions described in this Section, and shall be responsible for any
breach of this Section 4.02 by such bankers, advisors and representatives.
(f) Nothing contained in this Section 4.02 shall prevent the Company
from complying with Rule 14e-2(a) or Rule 14d-9 promulgated under the
Exchange Act with regard to an Acquisition Proposal.
SECTION 4.03. CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Parent covenants and agrees
that, unless the Company shall otherwise agree in writing, Parent shall conduct
its business, and cause the businesses of its subsidiaries to be conducted, in
the ordinary course of business and consistent with past practice, other than
actions taken by Parent or its subsidiaries in contemplation of the Merger, and
shall not directly or indirectly do, or propose to do, any of the following
without the prior written consent of the Company:
(a) amend or otherwise change Parent's Articles of Organization, or
amend the terms of the Parent Common Shares;
(b) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership,
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association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets of any other person,
which, in each case, would materially delay or prevent the consummation of
the transactions contemplated by this Agreement;
(c) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of any of its capital stock, except that a wholly owned subsidiary of
Parent may declare and pay a dividend to its parent;
(d) sell, transfer, license, sublicense or otherwise dispose of any
material assets;
(e) take or allow to be taken or fail to take any act or omission
within the control of Parent or Merger Sub which would reasonably be
expected to jeopardize the treatment of the Merger as a pooling of
interests for accounting purposes under GAAP; or
(f) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.03(a) through (e) above, or any action which would
make any of the representations or warranties of Parent contained in this
Agreement untrue or incorrect in any material respect or prevent Parent
from performing in any material respect or cause Parent not to perform in
any material respect its covenants hereunder or result in any of the
conditions of the Merger not being satisfied.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT. As
promptly as practicable after the execution of this Agreement, the Company and
Parent shall prepare and file with the SEC preliminary proxy materials which
shall constitute the Proxy Statement of the Company and the Registration
Statement of Parent with respect to the Parent Common Shares to be issued in
connection with the Merger. As promptly as practicable after comments are
received from the SEC thereon and after the furnishing by the Company and Parent
of all information required to be contained therein, the Company and Parent
shall file with the SEC a combined proxy and registration statement on Form S-4
(or on such other form as shall be appropriate) relating to the approval of the
Merger and the transactions contemplated hereby by the stockholders of the
Company and shall use all reasonable efforts to cause the Registration Statement
to become effective as soon thereafter as practicable. The Proxy Statement shall
include the recommendation of the Board of Directors of the Company in favor of
the Merger, subject to the second sentence of Section 4.02.
SECTION 5.02. STOCKHOLDERS MEETING. The Company shall in accordance with
Delaware Law and the Company's Certificate of Incorporation and Bylaws call and
hold the Company Stockholders Meeting as promptly as practicable for the purpose
of voting upon the approval of the Merger. Subject to the second sentence of
Section 4.02, the Company shall use its reasonable best efforts to hold the
Company Stockholders Meeting as soon as practicable after the date on which the
Registration Statement becomes effective. Subject to the second sentence of
Section 4.02, the Company shall use its reasonable best efforts to solicit from
its respective stockholders proxies in favor of the approval of the Merger, and
shall take all other action necessary or advisable to secure the vote or consent
of stockholders required by Delaware Law to obtain such approvals.
SECTION 5.03. ACCESS TO INFORMATION; CONFIDENTIALITY. Upon reasonable
notice and subject to restrictions contained in confidentiality agreements to
which such party is subject, the Company and Parent shall each (and shall cause
each of their subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of the other, reasonable access, during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company and Parent each
shall (and shall cause each of their subsidiaries to) furnish promptly to the
other all information concerning its business, properties and personnel as such
other party may reasonably request, and each shall make available to the other
the appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the other's business, properties and personnel
as either party may reasonably request. Each party shall keep such information
confidential in accordance with the terms of the currently effective
confidentiality agreement dated August 16, 1995 (the "Confidentiality
Agreement") between Parent and the Company.
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SECTION 5.04. CONSENTS; APPROVALS. The Company and Parent shall each use
their best efforts to obtain all consents, waivers, approvals, authorizations or
orders (including, without limitation, all United States and foreign
governmental and regulatory rulings and approvals), and the Company and Parent
shall make all filings (including, without limitation, all filings with United
States and foreign governmental or regulatory agencies) required in connection
with the authorization, execution and delivery of this Agreement by the Company
and Parent and the consummation by them of the transactions contemplated hereby.
The Company and Parent shall furnish all information required to be included in
the Proxy Statement and the Registration Statement, or for any application or
other filing to be made pursuant to the rules and regulations of any United
States, or foreign governmental body in connection with the transactions
contemplated by this Agreement. If either party receives a request for
additional information or documentary material from any governmental authority
with respect to the transactions contemplated hereby, then such party shall take
all reasonable efforts to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other party, an appropriate response
in compliance with such request. The parties will cooperate in connection with
reaching any understandings, undertakings or agreements (oral or written)
involving the Federal Trade Commission, the Department of Justice or any other
governmental authority in connection with the transactions contemplated hereby.
SECTION 5.05. STOCK OPTIONS.
(a) At the Effective Time, the Company's obligations with respect to
each outstanding option to purchase shares of Company Common Stock (each, a
"Company Option") under the Company's 1990 Stock Option Plan and Director
Stock Option Plan (the "Company Stock Option Plans"), whether vested or
unvested, will be assumed by Parent. Each Company Option so assumed by
Parent under this Agreement shall continue to have, and be subject to, the
same terms and conditions set forth in the Company Stock Option Plans and
agreement pursuant to which such Company Option was issued as in effect
immediately prior to the Effective Time, except that (i) such Company
Option will be exercisable for that number of Parent Common Shares equal to
the product of the number of shares of Company Common Stock that were
purchasable under such Company Option immediately prior to the Effective
Time multiplied by the Exchange Ratio, rounded down to the nearest whole
number of shares of Parent Common Shares (with any resulting fractional
share paid in cash), and (ii) the per share exercise price for the shares
of Parent Common Shares issuable upon exercise of such assumed Company
Option will be equal to the quotient determined by dividing the exercise
price per share of Company Common Stock at which such Company Option was
exercisable immediately prior to the Effective Time by the Exchange Ratio,
and rounding the resulting exercise price up to the nearest whole cent.
(b) It is the intention of the parties that the Company Options
assumed by Parent qualify following the Effective Time as incentive stock
options as defined in the Code ("ISO's") to the extent the Company Options
qualified as ISO's prior to the Effective Time.
(c) After the Effective Time, Parent will issue to each holder of an
outstanding Company Option a document evidencing the foregoing assumption
by Parent.
(d) Parent will file a registration statement on Form S-8 with the SEC
covering the Company Options assumed by Parent under this Section 5.05 not
later than the Effective Time.
SECTION 5.06. COMPANY EMPLOYEE STOCK PURCHASE PLAN.
(a) The Company shall take such actions as are necessary to establish
a "new exercise date" (as such term is used in the Company's 1992 Employee
Stock Purchase Plan (the "Company Stock Purchase Plan")) in accordance with
the terms of the Company Stock Purchase Plan (the "New Exercise Date") for
the then current offering period (as such term is used in the Company Stock
Purchase Plan). The New Exercise Date shall be the last trading day on
which the Parent Common Shares are traded on the Nasdaq National Market
immediately prior to the Effective Time provided, that the New Exercise
Date shall be conditioned upon the consummation of the Merger. On the New
Exercise Date , the Company shall apply the funds credited as of such date
under the Company Stock Purchase Plan within each participant's payroll
withholdings account to the purchase of whole shares of Company Common
Stock in accordance with the terms of the Company Stock Purchase Plan.
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(b) Employees of the Company as of the Effective Time shall be
permitted to participate in Parent's Employee Stock Purchase Plan
commencing on the first enrollment date following the Effective Time,
subject to compliance with the eligibility provisions of such plan (with
employees receiving credit, for purposes of such eligibility provisions,
for service with the Company).
SECTION 5.07. AGREEMENTS OF AFFILIATES. The Company shall deliver to
Parent, prior to the date the Registration Statement becomes effective under the
Securities Act, a letter (the "Affiliate Letter") identifying all persons who
are, or may deemed to be, at the time of the Company Stockholders' Meetings,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
The Company shall use its best efforts to cause each person who is identified as
an "affiliate" in the Affiliate Letter to deliver to Parent, prior to the
Effective Time, a written agreement (an "Affiliate Agreement") in substantially
the form of Exhibit A hereto. Parent shall use its best efforts to cause each
person who is an affiliate of Parent for purposes of Rule 145 under the
Securities Act to deliver to Parent, prior to the Effective Time, an Affiliate
Agreement.
SECTION 5.08. INDEMNIFICATION AND INSURANCE.
(a) The Certificate of Incorporation of the Surviving Corporation
shall contain the provisions with respect to indemnification set forth in
the By-Laws of the Company, which provisions shall not be amended, repealed
or otherwise modified after the Effective Time in any manner that would
adversely affect the rights thereunder existing at the Effective Time of
individuals who at the Effective Time were directors, officers, employees
or agents of the Company, unless such modification is required by law.
(b) After the Effective Time, the Surviving Corporation and Parent
shall, to the fullest extent permitted under applicable law or under the
Surviving Corporation's and Parent's, as the case may be, Certificate of
Incorporation or By-Laws, indemnify and hold harmless, each present and
former director, officer, employee, fiduciary and agent of the Company or
any of its subsidiaries (collectively, the "Indemnified Parties") against
any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of or
pertaining to any action or omission occurring at or prior to the Effective
Time (including, without limitation, the transactions contemplated by this
Agreement). In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) any
counsel retained by the Indemnified Parties for any period after the
Effective Time shall be reasonably satisfactory to the Surviving
Corporation and Parent, (ii) after the Effective Time, the Surviving
Corporation and Parent shall pay the reasonable fees and expenses of such
counsel in a timely manner after statements therefor are received, and
(iii) the Surviving Corporation and Parent will cooperate in the defense of
any such matter; provided, however, that neither the Surviving Corporation
nor Parent shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld). The Indemnified
Parties as a group may retain only one law firm to represent them with
respect to any single action unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the
positions of any two or more Indemnified Parties.
(c) From and after the Effective Time, Parent and the Surviving
Corporation shall honor all of the indemnity agreements entered into prior
to the date hereof by Company with its respective officers and directors,
whether or not such persons continue in their positions with Parent or the
Surviving Corporation following the Effective Time.
(d) From and after the Effective Time until at least six years after
the Effective Time, Parent shall, or shall cause the Surviving Corporation
to use its best efforts to maintain in effect directors' and officers'
liability insurance covering those persons who are currently covered by the
Company's directors' and officers' liability insurance policy (a copy of
which has been heretofore delivered to Parent) of at least the same
coverage and amounts, containing terms that are no less advantageous with
respect to claims arising at or before the Effective Time than the
Company's policies in effect immediately prior to the Effective Time
provided, however, that in no event shall Parent or the Surviving
Corporation, be required to expend in excess of 150% of the annual premium
currently paid by Company for such coverage in which event the Parent shall
purchase such coverage as is available for such 150% of such annual
premium.
SECTION 5.09. EMPLOYEE BENEFIT PLANS. (a) Parent intends to include
Company employees in Parent's welfare plans (within the meaning of Section
3(1) of ERISA) and fringe benefit plans on the same basis and terms as
Parent employees not later than two years following the Effective Time and,
in any event, with respect to particular welfare plans of Parent, upon the
termination of the equivalent
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Company welfare plans; and until such time of inclusion, Parent intends to
cause the Surviving Corporation to maintain in effect, on terms not
materially less favorable to employees of the Company as were in effect at
the Effective Time, all Employee Plans of the Company. In addition, Parent
intends that Company employees be eligible to participate in Parent's stock
option and stock purchase plans on the same basis and terms as Parent
employees from and after the Effective Time. Notwithstanding the foregoing,
Parent may at any time terminate or modify the terms of any such Employee
Plans if the cost of maintaining any such Employee Plan has increased by a
material amount or if, in the good faith judgment of Parent, continuing to
maintain any such Employee Plan conflicts in any material respect with
Parent's overall compensation policies then in effect.
(b) Parent shall cause each of the persons listed on Section 1.05 of
the Company Disclosure Schedule to be elected and remain in office as
directors of the Surviving Corporation until such time as all of such
person's Company Options outstanding at the Effective Time have vested in
full in accordance with their respective terms.
SECTION 5.10. NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) any event known to the Company the occurrence, or non-occurrence, of which
would be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect, and (ii) any
failure of the Company, Parent or Merger Sub, as the case may be, materially to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder provided, however, that the delivery of any notice
pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice; and provided, further,
that failure to give such notice shall not be treated as a breach of covenant
for the purposes of Sections 6.02(a) and 6.03(a) unless the failure to give such
notice is willful by the party required to give notice and results in material
prejudice to the other party.
SECTION 5.11. FURTHER ACTION/TAX TREATMENT. Upon the terms and subject to
the conditions hereof, each of the parties hereto in good faith shall use all
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all other things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, to obtain in a timely manner all necessary
waivers, consents and approvals and to effect all necessary registrations and
filings, and to otherwise satisfy or cause to be satisfied all conditions
precedent to its obligations under this Agreement. Each of Parent, Merger Sub
and the Company shall use its best efforts to cause the Merger to qualify, and
will not (both before and after consummation of the Merger) take any actions
which could prevent the Merger from qualifying, as a reorganization under the
provisions of Section 368 of the Code.
SECTION 5.12. PUBLIC ANNOUNCEMENTS. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Merger or this Agreement and shall not issue any
such press release or make any such public statement without the prior consent
of the other party, which shall not be unreasonably withheld; provided, however,
that a party may, without the prior consent of the other party, issue such press
release or make such public statement as may upon the advice of counsel be
required by law, the National Association of Securities Dealers or the NYSE if
it has used all reasonable efforts to consult with the other party.
SECTION 5.13. LISTING OF PARENT COMMON SHARES. Parent shall cause the
shares of Parent Common Shares to be issued in the Merger to be approved for
listing on the NYSE (or the principal exchange on which Parent's Common Shares
are then trading) on or before the Effective Time.
SECTION 5.14. CONVEYANCE TAXES. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time.
SECTION 5.15. ACCOUNTANTS' LETTERS. Each party, upon reasonable notice
from the other party, shall use its best efforts to cause its independent public
accountants (Price Waterhouse LLP in the case of the Company, and Coopers &
▇▇▇▇▇▇▇ LLP in the case of Parent) to deliver to the other party a letter
covering
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such matters as are customarily addressed in accountant's "comfort" letters in
transactions similar to those contemplated by this Agreement.
SECTION 5.16. EMPLOYMENT AGREEMENTS. Prior to the Effective Time, Parent
shall offer to each of the persons listed on Exhibit B hereto a form of
employment agreement substantially upon the terms and conditions specified on
Exhibit B hereto.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceedings
for that purpose and no similar proceeding in respect of the Proxy
Statement shall have been initiated or, to the knowledge of Parent or the
Company, threatened by the SEC;
(b) Stockholder Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the stockholders of the
Company;
(c) HSR Act. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated;
(d) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition (an "Injunction") preventing the consummation of the Merger
shall be in effect, nor shall any proceeding brought by any administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, seeking any of the foregoing be pending; and there
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger, which makes
the consummation of the Merger illegal;
(e) Tax Opinions. Parent and the Company shall have received
substantially identical written opinions of ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ and
Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ respectively, in form and substance
reasonably satisfactory to them to the effect that the Mergers will
constitute a reorganization within the meaning of Section 368 of the Code;
and
(f) Accountants' Pooling Letters. The Company and Parent shall have
received a letter from each of Price Waterhouse LLP and Coopers & ▇▇▇▇▇▇▇
LLP confirming their respective opinions dated at the Effective Time, to
the effect that the Merger qualifies for a pooling of interests accounting
treatment if consummated in accordance with this Agreement.
SECTION 6.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER
SUB. The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in this Agreement (together with the
Company Disclosure Schedule) shall be true and correct in all material
respects on and as of the Effective Time, with the same force and effect as
if made on and as of the Effective Time, except for (i) changes
contemplated by this Agreement, (ii) those representations and warranties
which address matters only as of a particular date (which shall remain true
and correct as of such date) and (iii) where the failure to be true and
correct would not have a Material Adverse Effect on the Company; and Parent
and Merger Sub shall have received a certificate to such effect signed by
the President and Chief Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with
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by it on or prior to the Effective Time, and Parent and Merger Sub shall
have received a certificate to such effect signed by the President and
Chief Financial Officer of the Company;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by the Company for the authorization, execution and delivery of
this Agreement and the consummation by it of the transactions contemplated
hereby shall have been obtained and made by the Company;
(d) Governmental Actions. There shall not have been instituted or
threatened any action or proceeding (or any investigation or other inquiry
that could reasonably be expected to result in such an action or
proceeding) by any governmental authority or administrative agency before
any governmental authority, administrative agency or court of competent
jurisdiction, nor shall there be in effect any judgment, decree or order of
any governmental authority, administrative agency or court of competent
jurisdiction, in either case, seeking to prohibit or limit Parent from
exercising all rights and privileges pertaining to its ownership of the
Surviving Corporation or the ownership or operation by Parent or any of its
subsidiaries of all or a portion of the business or assets of Parent or any
of its subsidiaries, or seeking to compel Parent or any of its subsidiaries
to dispose of or hold separate all or any material portion of the business
or assets of Parent or any of its subsidiaries, as a result of the Merger
or the transactions contemplated by this Agreement if any of the foregoing
shall have a Material Adverse Effect on Parent;
(e) Affiliate Agreements. Parent shall have received from each person
who is identified in the Affiliate Letter as an "affiliate" of the Company
an Affiliate Agreement, and each such Affiliate Agreement shall be in full
force and effect; and
(f) Opinion of Counsel. Parent shall have received an opinion of
Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, as to matters
that are customary for transactions of this type.
SECTION 6.03. ADDITIONAL CONDITIONS TO OBLIGATION OF THE COMPANY. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub contained in this Agreement (together
with the Parent Disclosure Schedule) shall be true and correct in all
material respects on and as of the Effective Time, with the same force and
effect as if made on and as of the Effective Time, except for (i) changes
contemplated by this Agreement, (ii) those representations and warranties
which address matters only as of a particular date (which shall remain true
and correct as of such date) and (iii) failures to be true and correct that
would not have a Material Adverse Effect on Parent and Merger Sub, and the
Company shall have received a certificate to such effect signed by the
President and Chief Financial Officer of Parent;
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Effective Time, and the Company shall have received
a certificate to such effect signed by the President and Chief Financial
Officer of Parent;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by Parent and Merger Sub for the authorization, execution and
delivery of this Agreement and the consummation by them of the transactions
contemplated hereby shall have been obtained and made by Parent and Merger
Sub; and
(d) Opinion of Counsel. The Company shall have received an opinion of
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel to the Parent and the Merger Sub, as to
matters that are customary for transactions of this type.
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ARTICLE VII
TERMINATION
SECTION 7.01. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have been
consummated by January 31, 1996 (provided that the right to terminate this
Agreement under this Section 7.01(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Merger to occur on or before
such date); or
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a non-appealable final order, decree or ruling
or taken any other action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger; or
(d) by Parent or the Company, if, at the Company Stockholders' Meeting
(including any adjournment or postponement thereof), the requisite vote of
the stockholders of the Company shall not have been obtained; or
(e) by Parent, if (i) the Board of Directors of the Company shall
withdraw, modify or change its recommendation of this Agreement or the
Merger in a manner adverse to Parent or shall have resolved to do so; or
(ii) the Board of Directors of the Company shall have taken a "neutral"
position with respect to (or shall have failed to reject as inadequate or
failed to have reaffirmed its recommendation of this Agreement and the
Merger within 10 business days after the public announcement or
commencement of an Alternative Transaction (as defined in Section 7.03(c));
or
(f) by Parent or the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company or Parent and
Merger Sub, respectively, set forth in this Agreement or if any
representation or warranty of the Company or Parent and Merger Sub,
respectively, shall have become untrue, in either case, such that the
conditions set forth in Section 6.02(a) or 6.02(b), or Section 6.03(a) or
6.03(b), would not be satisfied (a "Terminating Breach"), provided that, if
such Terminating Breach is curable prior to the expiration of 30 days from
its occurrence (but in no event later than January 31, 1996) by Parent or
the Company, as the case may be, through the exercise of its reasonable
best efforts and for so long as Parent or the Company, as the case may be,
continues to exercise such reasonable best efforts, neither the Company nor
Parent, respectively, may terminate this Agreement under this Section
7.01(f) unless such 30-day period expires without such Terminating Breach
having been cured; or
(g) by the Company or Parent, if the Board of Directors of the Company
shall have resolved to accept, or accepted, a Superior Proposal.
SECTION 7.02. EFFECT OF TERMINATION. In the event of the termination of
this Agreement pursuant to Section 7.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except (i) as set forth in
Section 7.03 and Section 7.04 and Section 8.01 hereof, and (ii) nothing herein
shall relieve any party from liability for any willful breach hereof.
SECTION 7.03. FEES AND EXPENSES PAYABLE BY COMPANY.
(a) Except as set forth in this Section 7.03, all fees and expenses
incurred by the Company in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Company, whether or
not the Merger is consummated.
(b) The Company shall pay Parent a fee of $9,000,000, plus actual,
documented and reasonable out-of-pocket expenses of Parent relative to the
transactions contemplated by this Agreement (including
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but not limited to, fees and expenses of Parent's counsel, accountants and
financial advisors) in an aggregate amount not to exceed $1.0 million upon
the earliest to occur of the following events:
(i) the termination of this Agreement by Parent pursuant to Section
7.01(e) or 7.01(f); or
(ii) the termination of this Agreement by Parent or the Company
pursuant to Section 7.01(g); or
(iii) the termination of this Agreement by the Company or Parent
pursuant to Section 7.01(d) as a result of the failure to receive the
requisite vote for approval and adoption by the stockholders of the
Company at the Company Stockholders Meeting if at the time of the
Company Stockholders Meeting there shall exist an Alternative
Transaction; provided, however, that the Company shall not be obligated
to pay a fee pursuant to this Section 7.03(b)(iii) unless such
Alternative Transaction is consummated not later than nine months
following the Company Stockholders Meeting.
(c) As used herein, "Alternative Transaction" means (i) a transaction
pursuant to which any person (or group of persons) other than Parent or its
affiliates (a "Third Party") acquires (or publicly proposes to acquire)
more than 30 percent of the outstanding Shares, whether from the Company or
pursuant to a tender offer or exchange offer or otherwise, (ii) a merger or
other business combination involving the Company pursuant to which any
Third Party acquires (or publicly proposes to acquire) more than 30 percent
of the outstanding equity securities of the Company or the entity surviving
such merger or business combination or (iii) any other transaction pursuant
to which any Third Party acquires (or publicly proposes to acquire) control
of assets (including for this purpose the outstanding equity securities of
subsidiaries of the Company, and the entity surviving any merger or
business combination including any of them) of the Company and its
subsidiaries having a fair market value equal to more than 30 percent of
the fair market value (as determined by the Board of Directors in good
faith) of all the assets of the Company and its subsidiaries, taken as a
whole, immediately prior to such transaction (or proposal).
(d) The fee payable pursuant to Section 7.03(b) shall be paid within
ten days following consummation of an Alternative Transaction in the case
of 7.03(b)(iii) and with respect to the first to occur of the events
described in Section 7.03(b)(i) and (b)(ii) following written notice from
Parent to the Company (A) with respect to 20% of the fee, within ten
business days and (B) with respect to the balance of the fee (including all
expenses owing to Parent pursuant to this Section 7.03), within thirty
business days.
SECTION 7.04. FEES AND EXPENSES PAYABLE BY PARENT.
(a) Except as set forth in this Section 7.04, all fees and expenses
incurred by Parent or Merger Sub in connection with this Agreement and the
transactions contemplated hereby shall be paid by Parent, whether or not
the Merger is consummated.
(b) Parent shall pay the Company a fee of $9,000,000, plus actual,
documented and reasonable out-of-pocket expenses of the Company relative to
the transactions contemplated by this Agreement (including but not limited
to, fees and expenses of the Company's counsel, accountants and financial
advisors) in an aggregate amount not to exceed $1.0 million upon the
termination of this Agreement by the Company pursuant to Section 7.01(f).
(c) Parent shall reimburse the Company for up to $1,000,000 of its
actual, documented and reasonable out-of-pocket expenses (the "Reimbursable
Expenses") incurred by the Company (including but not limited to, fees and
expenses of the Company's counsel, accountants and financial advisors) in
connection with matters relating to the Company's filings under the HSR Act
if either party terminates this Agreement pursuant to Section 7.01(b) or
(c) because the conditions specified in Section 6.01(c), 6.01(d) or 6.02(d)
(in each case as a result of an order, decree or ruling arising in
connection with matters relating specifically to the HSR Act) have not been
satisfied; provided however, that Parent shall reimburse the Company for up
to an additional $2.0 million of Reimbursable Expenses if such Reimbursable
Expenses were reviewed by Parent in advance of their being incurred.
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ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. EFFECTIVENESS OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. Except as otherwise provided in this Section 8.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. Any disclosure made with reference to one or more sections of
the Company Disclosure Schedule or the Parent Disclosure Schedule shall be
deemed disclosed with respect to each other section therein as to which such
disclosure is relevant provided such relevance is reasonably apparent. The
representations, warranties and agreements in this Agreement shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section
7.01, as the case may be, except that the agreements set forth in Sections 5.05,
5.06, 5.08 and 5.09 shall survive the Effective Time indefinitely and those set
forth in Sections 5.03 and 7.03 shall survive termination indefinitely. The
Confidentiality Agreement shall survive termination of this Agreement as
provided therein.
SECTION 8.02. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if delivered personally, three days after being
sent by registered or certified mail (postage prepaid, return receipt
requested), one day after dispatch by recognized overnight courier (provided
delivery is confirmed by the carrier) and upon transmission by telecopy,
confirmed received, to the parties at the following addresses (or at such other
address for a party as shall be specified by like changes of address):
(a) If to Parent or Merger Sub:
TERADYNE, INC.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
High Street Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) If to the Company:
MEGATEST CORPORATION
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Chairman and CEO
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ Plant, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 8.03. CERTAIN DEFINITIONS. For purposes of this Agreement, the
term:
(a) "affiliates" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person, including, without limitation,
any partnership or joint venture in which the Company (either alone, or
through or together with any other subsidiary) has, directly or indirectly,
an interest of 10 percent or more;
(b) "business day" means any day other than a day on which banks in
Boston, Massachusetts, or San Francisco, California, are required or
authorized to be closed;
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(d) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity interests the
holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity.
SECTION 8.04. AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the stockholders of the Company, no amendment may be made which
by law requires further approval by such stockholders without such further
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.05. WAIVER. At any time prior to the Effective Time, any party
hereto may, with respect to any other party hereto, (a) extend the time for the
performance of any of the obligations or other acts, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
SECTION 8.06. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.07. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as
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possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
SECTION 8.08. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Agreement), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein, are not intended to confer upon any other person any
rights or remedies hereunder.
SECTION 8.09. ASSIGNMENT, MERGER SUB. This Agreement shall not be assigned
by operation of law or otherwise, except that Parent and Merger Sub may assign
all or any of their rights hereunder to any affiliate provided that no such
assignment shall relieve the assigning party of its obligations hereunder.
Parent guarantees the full and punctual performance by Merger Sub and the
Surviving Corporation of all of their respective obligations hereunder.
SECTION 8.10. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, expressed or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 5.08 (which is intended to be for the
benefit of the Indemnified Parties and may be enforced by such Indemnified
Parties).
SECTION 8.11. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 8.12. GOVERNING LAW. This agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware
applicable to contracts executed and fully performed within the State of
Delaware.
SECTION 8.13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
TERADYNE, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. d.'ARBELOFF
------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. d'Arbeloff
Title: President
M MERGER CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
MEGATEST CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive
Officer
35