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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 9, 2000
AMONG
EASTMAN KODAK COMPANY
SUNFISH ACQUISITION CORP.
AND
LUMISYS INCORPORATED
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TABLE OF CONTENTS
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ARTICLE I THE MERGER
1.1 The Merger.................................................... 1
1.2 Closing....................................................... 1
1.3 Effective Time of the Merger.................................. 1
1.4 Effect of the Merger.......................................... 2
ARTICLE II THE SURVIVING CORPORATION
2.1 Certificate of Incorporation.................................. 2
2.2 By-Laws....................................................... 2
2.3 Board of Directors; Officers.................................. 2
ARTICLE III CONVERSION OF SHARES
3.1 Merger Consideration.......................................... 3
3.2 Dissenting Shares............................................. 4
3.3 Surrender and Exchange of Share Certificates and Payment
of Merger Consideration....................................... 4
3.4 No Further Rights............................................. 5
3.5 Closing of the Company's Transfer Books....................... 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Organization, Good Standing and Qualification................. 6
4.2 Capitalization................................................ 6
4.3 Subsidiaries.................................................. 6
4.4 Authorization................................................. 7
4.5 SEC Reports and Financial Statements.......................... 7
4.6 Proxy Statement............................................... 8
4.7 Absence of Certain Changes or Events.......................... 8
4.8 No Conflicts, Required Filings and Consents................... 10
4.9 Material Contracts............................................ 11
4.10 Litigation.................................................... 12
4.11 Intellectual Property......................................... 12
4.12 Compliance with other Instruments............................. 15
4.13 Affiliate Transactions........................................ 15
4.14 Corporate Documents........................................... 15
4.15 Title to Property and Assets.................................. 16
4.16 Employee Benefit Plans........................................ 18
4.17 Tax Returns and Payments...................................... 18
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4.18 Restrictions on Business Activities.......................... 18
4.19 Insurance.................................................... 18
4.20 Labor Agreements and Actions................................. 18
4.21 Certain Business Practices................................... 19
4.22 Compliance with Applicable Laws.............................. 19
4.23 Regulatory Matters........................................... 19
4.24 Environmental and Safety Laws................................ 20
4.25 Brokers...................................................... 21
4.26 Board Approval............................................... 21
4.27 Opinion of the Company's Financial Advisor................... 21
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
5.1 Organization and Qualification................................ 22
5.2 Authority Relative to this Agreement.......................... 22
5.3 No Conflicts, Required Filings and Consents................... 22
5.4 Company Information Statement................................. 23
5.5 Ownership of Company Stock.................................... 23
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER
6.1 Conduct of the Business Pending the Effective Time............ 23
6.2 Company Stockholder Vote...................................... 25
6.3 Acquisition Proposals......................................... 25
6.4 Financial Information......................................... 27
6.5 Inventory..................................................... 27
ARTICLE VII ADDITIONAL AGREEMENTS
7.1 Access to Information......................................... 27
7.2 Further Action, Consents, Filings............................. 28
7.3 Minority Interest in AuntMinnie.com........................... 28
7.4 Public Announcements.......................................... 28
7.5 Efforts, Consents............................................. 29
7.6 Agreement to Defend and Indemnify............................. 29
7.7 Notice of Breaches............................................ 30
SECTION VIII CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation to Effect the Merger.... 31
8.2 Conditions to Obligation of the Company to Effect the Merger.. 31
8.3 Conditions to Obligations of Parent and Merger Subsidiary to
Effect the Merger............................................. 31
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SECTION IX TERMINATION, AMENDMENT AND WAIVER
9.1 Termination................................................... 32
9.2 Effect of Termination......................................... 34
9.3 Fees and Expenses............................................. 34
9.4 Amendment..................................................... 35
9.5 Waiver........................................................ 36
ARTICLE X GENERAL PROVISIONS
10.1 Notices....................................................... 36
10.2 Entire Agreement.............................................. 36
10.3 Assignments; Parties in Interest.............................. 36
10.4 Governing Law................................................. 36
10.5 Headings...................................................... 38
10.6 Certain Definitions and Rules of Construction................. 38
10.7 Counterparts.................................................. 42
10.8 Severability.................................................. 42
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Merger Agreement"), dated as of
November 9, 2000, by and among Eastman Kodak Company ("Parent" ), a New Jersey
corporation, Sunfish Acquisition Corp. ("Merger Subsidiary"), a Delaware
corporation and a wholly-owned subsidiary of Parent, and Lumisys Incorporated
(the "Company"), a Delaware corporation.
WHEREAS, the respective Boards of Directors of Merger Subsidiary and
the Company have approved the merger of the Merger Subsidiary with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
herein; and
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, as a condition and inducement to Parent's and Merger Subsidiary's
willingness to enter into this Agreement, certain stockholders of the Company
are entering into an agreement with respect to voting and irrevocable proxy,
option and other matters (the "Stockholders' Agreement") pursuant to which,
among other things, such Stockholders will vote in favor of the transactions
contemplated by this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein the parties hereto
agree as follows:
ARTICLE I
The Merger
Section 1.1 The Merger. Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 1.3), the Merger Subsidiary
shall be merged with and into the Company and the separate existence of the
Merger Subsidiary shall thereupon cease, and the Company shall continue as the
surviving corporation in the Merger (the "Surviving Corporation") under the laws
of the State of Delaware under the name "Lumisys Incorporated"
Section 1.2 Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 9.1, and subject to the satisfaction or waiver of the
conditions set forth in Article VIII, the closing of the Merger will take place
as promptly as practicable after satisfaction or waiver of the conditions set
forth in Article VIII, at the offices of Pillsbury Madison & Sutro LLP, Silicon
Valley Office 2550 Hanover Street, Palo Alto, California, unless another date,
time or place is agreed to in writing by the parties hereto (the "Closing
Date").
Section 1.3 Effective Time of the Merger. The Merger shall become
effective upon the filing of a certificate of merger ("Certificate of Merger")
with the Secretary of State of the State of Delaware in accordance with the
provisions of Section 251 of the Delaware General Corporation Law (the "DGCL").
When used in this Agreement, the term "Effective Time" shall
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mean the time at which the Certificate of Merger is accepted for filing by the
Secretary of State of Delaware.
Section 1.4 Effect of the Merger. The Merger shall, from and after
the Effective Time, have all the effects provided by the DGCL and other
applicable laws. If at any time after the Effective Time the Surviving
Corporation shall consider or be advised that any further deeds, conveyances,
assignments or assurances in law or any other acts are necessary, desirable or
proper to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, the title to any property or rights of Merger Subsidiary or the
Company (the "Constituent Corporations") to be vested in the Surviving
Corporation, by reason of, or as a result of, the Merger, or otherwise to carry
out the purposes of this Agreement, the Constituent Corporations agree that the
Surviving Corporation and its proper officers and directors shall approve,
execute and deliver all such deeds, conveyances, assignments and assurances in
law and do all things necessary, desirable or proper to vest, perfect or confirm
title to such property or rights in the Surviving Corporation and otherwise to
carry out the purposes of this Agreement, and that the proper officers and
directors of the Surviving Corporation are fully authorized in the name of each
of the Constituent Corporations or otherwise to take any and all such action.
The Surviving Corporation may be served with process in the State of Delaware in
any proceeding for enforcement of any obligation of Merger Subsidiary, as well
as for enforcement of any obligation of the Surviving Corporation arising from
the Merger, including any suit or other proceeding to enforce the right of any
stockholders as determined in appraisal proceedings pursuant to the provisions
of Section 262 of the DGCL and irrevocably appoints the Secretary of State of
the State of Delaware as its agent to accept service of process in any such suit
or proceedings. The address to which a copy of such process shall be mailed by
such Secretary of State is 343 State Street, Rochester, New York 14653, Attn.
General Counsel.
ARTICLE II
The Surviving Corporation
Section 2.1 Certificate of Incorporation. The Certificate of
Incorporation of the Merger Subsidiary as in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation after the Effective Time, except that the name shall be changed to
"Lumisys Incorporated", until thereafter changed or amended as provided therein
or by applicable law.
Section 2.2 By-laws. The By-laws of the Merger Subsidiary as in
effect immediately prior to the Effective Time shall be the By-laws of the
Surviving Corporation, until thereafter changed or amended as provided therein
or by applicable law.
Section 2.3 Board of Directors; Officers. The directors of Merger
Subsidiary immediately prior to the Effective Time shall be the directors of the
Surviving Corporation and the officers of the Merger Subsidiary immediately
prior to the Effective
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Time shall be the officers of the Surviving Corporation, in each case, until the
earlier of their respective resignations or the time that their respective
successors are duly elected or appointed and qualified.
ARTICLE III
Conversion of Shares
Section 3.1 Merger Consideration. As of the Effective Time, by
virtue of the Merger and without any action on the part of any stockholder of
the Company or Merger Subsidiary:
(a) All shares of common stock, $0.001 par value, of the Company ("Company
Common Stock") which are held by Parent, the Company or any wholly-owned
subsidiary of Parent (including Merger Subsidiary) or of the Company shall be
canceled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(b) Each issued and outstanding share of Company Common Stock, other than
those to which Section 3.1(a) applies and other than any Dissenting Shares (as
defined in Section 3.2), shall be converted into the right to receive $4.05 for
each share of Company Common Stock (the "Merger Consideration").
(c) Each issued and outstanding share of common stock of Merger Subsidiary
shall be converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation which shall constitute all of the
issued and outstanding capital stock of the Surviving Corporation and shall be
owned by Parent.
(d) If at any time during the period between the date of this Agreement
and the Effective Time, the Company changes the number of shares of the Company
Common Stock outstanding, the Merger Consideration and any other items dependent
thereon shall be appropriately adjusted so that the Merger Consideration will be
equivalent to that which it would have been if the change had not occurred.
(e) The outstanding and unexercised Company Stock Options shall, for each
share of Company Common Stock subject to such Company Stock Option, become the
right to receive an amount equal to the Merger Consideration less the exercise
price per share of Company Common Stock provided in such Company Stock Option.
All outstanding Company Stock Options and all other options or warrants to
purchase the Company Common Stock which are exercisable for a price per share of
Company Common Stock which is greater than the Merger Consideration shall,
solely by virtue of the Merger and without any other consideration or action on
the part of Parent, the Company, Merger Subsidiary or the holders thereof, be
canceled and of no further force or effect.
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Section 3.2 Dissenting Shares. Each share of Company Common Stock:
(i) as to which a written notice of an intent to demand appraisal is given to
the Company in accordance with Section 262 of the DGCL prior to the vote of the
Company's Stockholders on the Merger taken at the Company Special Meeting (as
such term is defined in Section 4.6) and not withdrawn at or prior to the time
of such vote, (ii) which is not voted by the holder thereof in favor of the
Merger at the Company Special Meeting, and (iii) as to which a written demand
for appraisal shall have been timely filed (in accordance with Section 262 of
the DGCL) with the Company (a "Dissenting Share"), shall not be converted into
and represent the right to receive the Merger Consideration and such Share shall
be subject to the provisions of 262 of the DGCL; provided, however, that if any
such Stockholder shall withdraw his or her demand for payment or shall fail to
perfect his or her rights to such payment in accordance with the DGCL, then such
holder's Dissenting Shares shall cease to be Dissenting Shares and each such
Share shall, subject to the terms of this Agreement and the DGCL, be converted
into and represent the right to receive the Merger Consideration. Each holder
of a Dissenting Share who becomes entitled, pursuant to the DGCL, to receive an
appraisal of his or her Dissenting Share or the Surviving Company may file a
petition in the Chancery Court of the State of Delaware demanding a
determination of the value of the Company's Common Stock in accordance with
Section 262 of the DGCL.
Section 3.3 Surrender of Share Certificates and Payment of Merger
Consideration.
(a) At the Effective Time, Parent shall pay, by wire transfer of
immediately available funds to EquiServe (the "Paying Agent") the aggregate
amount of the Merger Consideration payable with respect to the Company Common
Stock other than the Dissenting Shares.
(b) On the Closing Date, Parent shall instruct the Paying Agent to
mail to each person who was a holder of record of shares of the Company Common
Stock immediately prior to the Effective Time: (i) a letter of transmittal, and
(ii) instructions for use in effecting the surrender of the certificates
representing the Company Common Stock held by such holder (the "Certificates")
nominally representing the Company Common Stock for a check in the aggregate
amount of the Merger Consideration for the number of shares of Company Common
Stock held by such holder immediately prior to the Effective Time.
(c) After the Effective Time, each holder of a Certificate shall
surrender and deliver such Certificate to the Paying Agent together with a duly
completed and executed transmittal letter. Upon such surrender and delivery, the
holder shall receive a check of Paying Agent for the Merger Consideration into
which such holder's shares of the Company Common Stock have been converted.
(d) Any amount of the Merger Consideration that remains undistributed
to the stockholders of the Company for a period of twelve months after the
Effective Time shall be delivered to Parent by the Paying Agent upon demand, and
any former stockholders of the
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Company who have not previously complied with this Section 3.3 shall thereafter
look only to Parent for payment of their claim for Merger Consideration.
(e) Neither the Paying Agent, nor any of the Company, Merger
Subsidiary or Parent shall be liable to any holder of shares of the Company
Common Stock with respect to any amount of the Merger Consideration delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law, rule, regulation, statute, order, judgment or decree.
(f) In the event any Certificates shall have been lost, stolen or
destroyed, the Paying Agent shall issue Merger Consideration to which such
holder is entitled in exchange for such lost, stolen or destroyed Certificates
upon the making of an affidavit of that fact by the holder thereof and the
delivery of such bond as the Paying Agent may reasonably require.
(g) Prior to the Effective Time, the Company shall cause all
outstanding Company Stock Options with an exercise price per share which is less
than the Merger Consideration to become fully vested and exercisable immediately
prior to the Merger (referred to herein as "Vested Company Stock Options"), and
shall take such action as may be necessary to amend outstanding Company Stock
Options, Company Stock Option Plans or Company Benefit Plans to permit such
vesting and exercisability, and to cause all other options or warrants to
purchase the Company Common Stock which are exercisable for a price per share of
Company Common Stock which is greater than the Merger Consideration to be
canceled and of no further force or effect at the Effective Time. On the
Closing Date, Parent shall instruct the Paying Agent to mail to each person who
is a holder of Vested Company Stock Options immediately prior to the Effective
Time: (i) an optionee letter of transmittal, and (ii) instructions for use in
surrendering the stock option agreements evidencing such Vested Company Stock
Options held by such holder for a check in the aggregate amount of the Merger
Consideration less the exercise price of such Vested Company Stock Options for
the number of shares of Company Common Stock subject to such Vested Company
Stock Options, less any taxes or other withholding required by law.
Section 3.4 No Further Rights. From and after the Effective Time,
holders of certificates theretofore evidencing shares of Company Common Stock,
or Company Stock Options or other options or warrants to acquire Company Common
Stock shall cease to have any rights as stockholders or holders of derivative
securities of the Company, except to receive the Merger Consideration and except
as provided by law with respect to the Dissenting Shares.
Section 3.5 Closing of the Company's Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of the Company's Common Stock shall be made thereafter. In
the event that, after the Effective Time, certificates for Shares are presented
to Parent or the Surviving Corporation, they shall be canceled and exchanged for
Merger Consideration for each Share represented as provided in Section 3.3,
subject to applicable law in the case of Dissenting Shares.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Subsidiary
that, except as set forth in the Company Disclosure Schedule (as defined in
Section 10.6) delivered to the Parent prior to the date of this Agreement:
Section 4.1 Organization, Good Standing and Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as now conducted. The Company is duly
qualified to transact business and is in good standing in each jurisdiction
where the character of its properties or the nature of its activities make such
qualification necessary except where the failure to be so qualified would not
have a material adverse effect on its business, properties, prospects or
financial condition. The Company has not used any other name, legal or
fictitious, in the conduct of its business except as set forth in the Disclosure
Schedule.
Section 4.2 Capitalization. The authorized capital of the Company
consists of 5,000,000 shares of preferred stock, none of which are issued or
outstanding, and 25,000,000 shares of Company Common Stock, of which 9,275,014
are issued and outstanding. In addition, 3,234,083 shares of Company Common
Stock have been reserved for issuance pursuant to the Company's Stock Option
Plans (as defined in Section 4.18), of which, options to purchase 2,142,727
shares of Company Common Stock are outstanding on the date of this Agreement and
1,091,356 shares of Company Common Stock are available for grant. The Company
has reserved 200,000 shares of Company Common Stock for issuance under its 1995
Employee Stock Purchase Plan ("Company ESSP") of which 129,578 shares of Company
Common Stock have been issued and up to an additional 12,000 shares of Company
Common Stock may be issued under the current offering under the Company ESPP.
The Company has issued warrants to purchase 92,800 shares of Company Common
Stock at a price of $7.20 per share which are exercisable at any time prior to
August 2001. There are no other classes of capital stock of the Company
authorized and no other rights to acquire, or exchange any other security for,
any class of capital stock of the Company. There are no other outstanding
contractual obligations of the Company or any subsidiary to sell, issue,
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries. All the outstanding shares of Company
Common Stock are validly issued, fully paid and nonassessable.
Section 4.3 Subsidiaries. The Company does not currently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity except that the Company owns all of the
issued and outstanding capital stock of AuntMinnie.com, Inc. ("AuntMinnie.com")
and the other wholly-owned subsidiaries ("Other Subsidiaries") and investments
listed in Section 4.3 of the Company Disclosure Schedule. The Company has no
obligation to purchase any interest in or make any capital contribution to or
otherwise to provide material funds to, or make any material investment (in the
form of a loan, capital contribution or otherwise) in, any person. The Company
is not a participant
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in any joint venture, partnership or similar arrangement. There are no
outstanding contractual obligations of AuntMinnie.com to sell, issue,
repurchase, redeem or otherwise acquire any shares of its capital stock. All the
outstanding shares of capital stock of AuntMinnie.com are validly issued, fully
paid and nonassessable and, except as set forth in Section 4.3 of the Company
Disclosure Schedule, owned beneficially and of record by the Company. The Other
Subsidiaries have been inactive and had no material assets or liabilities since
the dates set forth in Section 4.3 of the Company Disclosure Schedule.
Section 4.4 Authorization. All corporate action on the part of the
Company's board of directors necessary for the authorization, execution and
delivery of this Agreement and all exhibits hereto, the Stockholders' Agreement
and all other agreements described in or required pursuant to this Agreement
(collectively, the "Related Agreements") to which the Company is a party, and
the performance of all obligations of the Company hereunder and thereunder have
been duly and validly taken and the Company's board of directors has acted to
recommend the approval of this Agreement to its Stockholders. This Agreement
and the Related Agreements to which the Company is a party, when executed and
delivered by the Company, shall constitute valid and legally binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms. The affirmative vote of the holders of at least a majority of
the total number of votes entitled to be cast by the holders of the Company
Common Stock outstanding as of the record date for a special meeting of the
Company's Stockholders is the only vote of the holders of any class or series of
the Company's capital stock or other securities necessary to approve this
Agreement and the Related Agreements to which the Company is a party and the
transactions contemplated by this Agreement and such Related Agreements (the
"Transactions").
Section 4.5 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports, schedules,
registration statements and proxy statements (the "Company SEC Reports")
required to be filed by it with the SEC since November 1, 1995. As of their
respective dates, the Company SEC Reports, as the same have been amended,
complied with the requirements of the Exchange Act or the Securities Act, as the
case may be, and the rules and regulations of the SEC thereunder applicable to
such Company SEC Reports in all material respects. As of their respective dates
and as of the date any information from such Company SEC Reports has been
incorporated by reference, the Company SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company has filed
all contracts, agreements and other documents or instruments required to be
filed as exhibits to the Company SEC Reports.
(b) The consolidated balance sheets of the Company as of December 31,
1999 and 1998 and the related consolidated statements of earnings, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1999 (including the related notes and schedules thereto) contained in the
Company's Form 10-K for the year
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ended December 31, 1999 present fairly, all material respects, the consolidated
financial position and the consolidated results of operations and cash flows of
the Company and its consolidated subsidiaries as of the dates or for the periods
presented therein in conformity with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
except as otherwise noted therein, including in the related notes.
(c) The consolidated balance sheets and the related statements of
earnings and cash flows (including, in each case, the related notes thereto) of
the Company contained in the Form 10-Q for the quarterly periods ended March 30
and June 30, 2000 and the balance sheets and the related statements of earnings
and cash flows as of September 30, 2000 contained in the Company's press release
dated October 17, 2000 (the "Quarterly Financial Statements") have been prepared
in accordance with the requirements for interim financial statements contained
in Regulation S-X. The Quarterly Financial Statements reflect all adjustments
necessary to present fairly in accordance with GAAP (except as indicated therein
and except for the absence of footnotes), in all material respects, the
consolidated financial position, results of operations and cash flows of the
Company for all periods presented therein.
(d) Except as set forth in the Company's Form 10-K, Form 10-Q or
Quarterly Financial Statements, the Company has no material liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to September 30, 2000, and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in the
September 30, 2000 Quarterly Financial Statements. The Company maintains and
will continue to maintain a standard system of accounting established and
administered in accordance with GAAP and applicable Law.
Section 4.6 Proxy Statement. None of the information included or to
be included by the Company in its proxy statement (the "Company Proxy
Statement") for its special meeting of Stockholders to be duly called and held
to approve the merger agreement and the consummation of the Transactions (the
"Company Special Meeting") will, at the time of filing with the SEC, at the time
of the mailing of the Proxy Statement or any amendments or supplements thereto
to the Company's stockholders or at the time of the Company Special Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Company Proxy Statement will comply with the applicable
provisions of the Exchange Act and the rules and regulations thereunder in all
material respects.
Section 4.7 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports or in the Company Disclosure Schedule,
since December 31, 1999, the Company and AuntMinnie.com has each conducted its
business only in the ordinary course, and there has not been:
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(a) any change that would have a Company Material Adverse Effect, or
any change in the assets, available cash, liabilities, financial condition or
operating results of the Company and AuntMinnie.com on a consolidated basis from
that reflected in the Financial Statements, except changes in the ordinary
course of business that have not been, in the aggregate, materially adverse and
no incurrence of any indebtedness for borrowed money, leases, guarantees,
assumptions of the indebtedness or letters of comfort or similar instruments;
(b) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the Company's or AuntMinnie.com's capital stock, or, any redemption, purchase or
other acquisition of any of its capital stock,
(c) any split, combination or reclassification of any of the
Company's capital stock or, except with respect to Company Stock Options granted
prior to the date of this Agreement as described in the Company SEC Reports or
identified in Section 4.2, any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for shares of
the Company's or AuntMinnie.com's capital stock,
(d) any granting by the Company or any of its subsidiaries to any
employee of any increase in compensation, except in the ordinary course of
business consistent with prior practice or as required under employment
agreements in effect as of December 31, 1999,
(e) any granting by the Company or any of its subsidiaries to any
employee of any increase in severance or termination pay or other special, or
extraordinary compensation or benefits, except as required under employment,
severance or termination agreements or plans in effect as of December 31, 1999;
or any entry by the Company or any of its subsidiaries into any employment,
severance or termination agreement with any employee, or any increase in
benefits available under or establishment of any Company Benefit Plan (as
defined below) except in the ordinary course of business consistent with past
practice, or the adoption of any new Company Benefit Plan (as defined in Section
4.16);
(f) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the Business, properties or
financial condition of the Company or AuntMinnie.com, or any changes in
insurance coverage reducing coverage or materially increasing the cost of
coverage or any notice of cancellation or nonrenewal of any insurance policy;
(g) any sale, assignment or transfer of any Technology except in
connection with the sale of Products in the ordinary course of business;
(h) any material change in accounting methods, principles or
practices by the Company, except insofar as may have been required by a change
in GAAP;
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(i) any waiver or compromise by the Company or AuntMinnie.com of any
material right with respect to the Technology or Material Contracts or any
material amendment, waiver, cancellation or other change in any Material
Contract;
(j) receipt of notice that there has been a loss of, or material
order cancellation by, any major customer of or supplier to the Company or
AuntMinnie.com;
(k) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company or AuntMinnie.com, with respect to any of its
material properties or assets, except liens for taxes not yet due or payable or
which do not materially impair the value of such properties or assets;
(l) any loans or guarantees made by the Company or AuntMinnie.com to
or for the benefit of its employees, officers or directors, or any members of
their immediate families, other than travel advances and other advances made in
the ordinary course of its business;
(m) any arrangement or commitment by the Company or AuntMinnie.com to
do any of the things described in this Section 4.7.
4.8 No Conflicts, Required Filings and Consents.
(a) None of the execution and delivery of this Agreement by the
Company, the consummation by the Company of the Transactions or compliance by
the Company with any of the provisions hereof will (i) subject to approval by
the Company's stockholders referred to in Section 4.4 conflict with or violate
the Certificate of Incorporation or By-laws of the Company or the comparable
organizational documents of AuntMinnie.com, (ii) subject to receipt or filing of
the Consents (as defined in Section 10.6(a)) listed in Section 4.8 of the
Company Disclosure Schedule, result in a Default of any statute, ordinance,
rule, regulation, order, judgment or decree applicable to the Company or any of
the Company's subsidiaries, or by which any of them or any of their respective
properties or assets may be bound or affected, or (iii) subject to receipt or
filing of the required Consents listed in Section 4.8 of the Company Disclosure
Schedule, result in a Default 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 the Company's subsidiaries is a party
or by which the Company or any of the Company's subsidiaries or any of their
respective properties may be bound or affected, except in the case of the
foregoing clause (ii) or (iii) for any such Defaults which would not have a
Company Material Adverse Effect.
(b) None of the execution and delivery of this Agreement by the
Company, the consummation by the Company of the transactions contemplated hereby
or compliance by the Company with any of the provisions hereof will require any
Consent of any Governmental Entity, except for (i) compliance with any
applicable requirements of the Exchange Act, (ii) the filing of the Certificate
of Merger pursuant to DGCL, (iii) certain state takeover, securities, "blue sky"
and environmental statutes, and (iv) compliance with
<PAGE>
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the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), or (iii) any Consent with respect to any business or operating permit,
where the failure to obtain such Consent is not material to the Business.
4.9 Material Contracts. Set forth in Section 4.9 of the Company
Disclosure Schedule are lists of the following documents (the "Material
Contracts"), true and complete copies of which (and all amendments and
modifications thereof and consent and waivers thereunder) have been provided to
Parent by the Company or are filed as exhibits to the Company SEC Reports:
(a) All agreements with customers in existence on and not performed
as of September 30, 2000 and (i) involving a purchase price of more than
$100,000 in the aggregate for products shipped and not yet accepted and paid for
or to be shipped or requiring professional services to be performed; or (ii) for
which all or a portion of the purchase price has been paid; in each case, for
products that have not been shipped, delivered or installed or for professional
services which have not been fully performed by the Company or AuntMinnie.com.
(b) All written contracts with any employee (or former employee which
has not been fully performed by the Company or AuntMinnie.com or the employee)
and all consulting contracts relating to professional services or product
development for the Business' Products (as defined in Section 4.11(b)).
(c) Any contracts which are to be performed in any material respect
on or after the Effective Time which (i) involve payments to or from the Company
or AuntMinnie.com in amounts greater than $100,000 annually or by their terms
extend more than twelve months after the date of this Agreement (other than
pursuant to automatic renewal provisions which permit cancellation without
penalty upon 90 days or less notice); (ii) agreements with respect to the use,
occupancy or acquisition of real property; (iii) creating or evidencing any
indebtedness or obligation with respect to borrowed money of the Company or
AuntMinnie.com or assuming any direct or indirect responsibility for the
obligations of any other person; (iv) all Third Person Licenses (as defined in
Section 4.11(c)), or (iv) any contract, agreement or understanding which would
limit or restrict the conduct of the Business in the future in any material
respect, including any confidentiality, non-compete or other similar agreement.
(d) All forms of product or service warranty with respect to the
Company or AuntMinnie.com.
Except as set forth on Section 4.9 of the Company Disclosure Schedule there is
no event or occurrence with respect to any Material Contract, the occurrence of
which of itself or with the giving of notice or the passage of time or both
would constitute an event of default under or breach of such agreement,
contract, instrument or lease or would permit the other party thereto to cancel
or terminate performance or seek damages for breach ("Default") by the Business
or, to the Company's knowledge, any notice of any Default on the part of any
other
<PAGE>
-12-
party in the performance of any obligation to be performed or paid under any
Material Contract listed on Section 4.9 of the Company Disclosure Schedule.
4.10 Litigation. Except as set forth in the Company Disclosure
Schedule, there is no action, suit, proceeding or investigation involving the
Company or AuntMinnie.com currently pending or, to the knowledge of the Company,
threatened or which they currently intend to initiate. Neither the Company nor
AuntMinnie.com is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or Government Entity. There is no
action, suit, proceeding or investigation pending or, to the Company's
knowledge, currently threatened against either the Company or AuntMinnie.com
that questions the validity of this Agreement or the Transactions, or the right
of the Company or AuntMinnie.com to enter into them, or to consummate the
transactions contemplated hereby or thereby, or that might reasonably be
expected to result, either individually or in the aggregate in a Company
Material Adverse Effect, or any change in the current equity ownership of the
Company or AuntMinnie.com, nor has the Company received any written notice that
there is any basis for the foregoing. The foregoing includes, to the Company's
knowledge, actions pending or threatened (or any basis therefor known to the
Company) involving any of the Company's or AuntMinnie.com's employees' use of
any information or techniques allegedly proprietary to any of their former
employers in connection with any of the Company's or AuntMinnie.com's employees'
obligations under any confidentiality, non-compete or assignment of invention
agreements with prior employers, and workers' compensation, employment
discrimination or other claims by in respect of employees or former employees.
4.11 Intellectual Property.
(a) The Company or AuntMinnie.com owns or is licensed or otherwise
has all rights in and to the following as required to conduct their Business,
except where the failure to own or have such rights would not have a Company
Material Adverse Effect: (i) all products, tools, computer programs,
specifications, source code, object code, graphics, devices, techniques,
algorithms, methods, processes, procedures, packaging, trade dress, formulae,
drawings, designs, improvements, discoveries, development and other tools,
inventions (whether or not patentable or copyrightable and whether or not
reduced to practice), designs, know-how and other technology that are now, have
been or are currently proposed to be developed, produced, used, marketed or sold
by the Company or AuntMinnie.com (collectively, the "Technology-Related
Assets"); and (ii) all intellectual property and other proprietary rights in the
Technology-Related Assets, including, without limitation, all trade secrets,
copyrights, and domestic and foreign letters patent, and the registrations,
applications, renewals, extensions and continuations (in whole or in part)
thereof, all goodwill associated therewith, and all rights and causes of action
for infringement, misappropriation, misuse, dilution or unfair trade practices
associated therewith.
<PAGE>
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(b) All products developed, produced, used, marketed or sold by the
Company or AuntMinnie.com currently or as to which the Company or AuntMinnie.com
has any ongoing obligations, including warranty or support, are listed on
Schedule 4.11 to the Company Disclosure Schedule (collectively, the "Products").
Except for the Third Person Technologies (as defined in Section 4.11(c) below),
the Company or AuntMinnie.com owns all right, title and interest in and to the
following, free and clear of all liens and encumbrances: (i) the Products; (ii)
any and all updates, enhancements and corrections to the Products; (iii) any and
all technology and work in progress; and (iv) all inventions, discoveries,
processes, designs, trade secrets, know-how and other confidential or
proprietary information related thereto (collectively, the "Technology"). The
Technology, excluding the Third Person Technologies, is sometimes referred to
herein as the "Company Technology."
(c) All Technology used by the Company or AuntMinnie.com in the
Business for which the Company does not own all right, title and interest, other
than Technology which is in the public domain (collectively, the "Third Person
Technologies"), and all license agreements pursuant to which the Company or
AuntMinnie.com has the right to use the Third Person Technologies, other than
license agreements included in shrink-wrapped software packages for software
which is readily and generally commercially available to Parent (the "Third
Person Licenses") is listed in Schedule 4.11 to the Company Disclosure Schedule
and true and complete copies of all such Third Person Licenses have heretofore
been provided to Parent. The Company or AuntMinnie.com has the lawful right to
use under the terms of the applicable Third Person License, free of any material
restriction not expressly set forth in the Third Person Licenses and subject to
the other terms of such Third Person Licenses: (i) all Third Person Technology
that is incorporated in or used in the development or production of the Company
Technology, and (ii) all other Third Person Technology necessary for the conduct
of the Business.
(d) All patents, patent applications, copyright registrations and
applications and trademark registrations and applications (collectively, the "IP
Registrations") are listed on Section 4.11(d) to the Company Disclosure
Schedule. The Company has appropriate IP Registrations to protect its interest
and use of the Company Technology and trademarks, trade names, brand names,
service marks used in the Business (the "Marks"). The Company or AuntMinnie.com
owns all right, title and interest, free and clear of any liens, pledges,
licenses or other encumbrances, in and to the IP Registrations, together with
any other rights in or to any copyrights (registered or unregistered), rights in
the Marks (registered or unregistered), trade secret rights and other
intellectual property rights (including, without limitation, rights of
enforcement) contained or embodied in the Company Technology and the Marks
(collectively, the "IP Rights").
(e) Neither the Company nor AuntMinnie.com has conducted its
Business, or has used or enforced any IP Rights or taken any action (or, to its
knowledge, failed to use or enforce or take any action) with respect to IP
Rights, in a manner that would result in the abandonment, cancellation,
unenforceability or forfeiture or relinquishment of any material
<PAGE>
-14-
item of the IP Rights or the IP Registrations. Except as set forth in Section
4.11 of the Company Disclosure Schedule, neither the Company nor AuntMinnie.com
has granted to any third Person any rights or permissions to use any of the
Technology or the IP Rights and neither the Company nor AuntMinnie.com is under
any contractual or other obligation to disclose to any third Person any Company
Technology.
(f) (i) Neither the Company nor AuntMinnie.com has received any
written notice or claim challenging their ownership or rights in the Company
Technology or the IP Rights or claiming that any other person or entity has any
legal or beneficial ownership with respect thereto or claiming such rights with
respect to any IP Rights believed by the Company or AuntMinnie.com to be in the
public domain; (ii) to the Company's knowledge, all the IP Rights are legally
valid and enforceable without any material qualification, limitation or
restriction on their use which would have a Company Material Adverse Effect, and
neither the Company nor AuntMinnie.com has received any written notice or claim
challenging the validity or enforceability of any of the IP Rights; and (iii) to
the Company's knowledge, no other person or entity is infringing or
misappropriating any part of the IP Rights or otherwise making any unauthorized
use of the Company Technology.
(g) (i) To the Company's knowledge, the use, manufacture, provision,
sale, import or export to or from the U.S. of Products, services or processes,
including business methods, by the Company or AuntMinnie.com in or for the
Business does not and will not infringe, violate or interfere with or constitute
an appropriation of any right, title or interest (including, without limitation,
any patent, copyright, trademark or trade secret right) held by any other person
or entity, and there have been no claims made with respect thereto; (ii) to the
Company's knowledge, the use of any of the Marks and other IP Rights in the
Business will not infringe, violate or interfere with or constitute an
appropriation of any right, title or interest (including, without limitation,
any patent, copyright, trademark or trade secret right) held by any other person
or entity, and there have been no claims made with respect thereto; and (iii)
neither the Company nor AuntMinnie.com has received any written notice or claim
regarding any infringement, misappropriation, misuse, abuse or other
interference with any third Person intellectual property or proprietary rights
(including, without limitation, infringement of any patent, copyright, trademark
or trade secret right of any third Person) by the Company, the Technology or the
Marks or other IP Rights or claiming that any other entity has any claim of
infringement with respect thereto.
(i) The Technology is free from known material defects and
substantially conforms to the applicable specifications and documentation for
such Technology. Neither the Company nor AuntMinnie.com has received any written
claims that its Products do not so conform.
(j) Except as set forth in Section 4.11 of the Company Disclosure
Schedule, neither the Company nor AuntMinnie.com has entered into any agreement
or offered to indemnify any Person against any charge of infringement of third
person's IP Rights by the Company or AuntMinnie.com. Neither the Company nor
AuntMinnie.com has entered into
<PAGE>
-15-
any agreement granting any Person the right to bring any infringement action
with respect to, or otherwise to enforce, any of the Technology or IP Rights.
4.12 Compliance with Other Instruments. The Company is not in
violation or Default in any material respect of any provisions of its
Certificate of Incorporation, as amended or Bylaws or of any material
instrument, judgment, order, writ, decree, license or contract to which it is a
party or by which it is bound or, of any provision of federal or state statute,
rule or regulation applicable to the Company or AuntMinnie.com. The execution,
delivery and performance of this Agreement and the Related Agreements and the
consummation of the Transactions will not result in any such violation or be in
material conflict with or constitute, with or without the passage of time and
giving of notice, either a Default under any such provision, instrument,
judgment, order, writ, decree or contract or an event which results in the
creation of any material lien, charge or encumbrance upon any assets of the
Company or AuntMinnie.com; except for such Defaults which do not, in the
aggregate, result in a Company Material Adverse Effect.
4.13 Affiliate Transactions. Neither the Company nor AuntMinnie.com
is indebted, directly or indirectly, to any of its officers or directors or to
their respective spouses or children, in any amount whatsoever other than in
connection with expenses or advances of expenses incurred in the ordinary course
of business or relocation expenses of employees. To the Company's knowledge,
other than as set forth on the Company Disclosure Schedule, none of the
Company's nor AuntMinnie.com's officers or directors, or any members of their
immediate families, are, directly or indirectly, indebted to the Company or
AuntMinnie.com or have any direct or indirect ownership interest in any firm or
corporation with which the Company or AuntMinnie.com is affiliated or with which
the Company or AuntMinnie.com has a business relationship, or any firm or
corporation which competes with the Company other than ownership of a less than
five percent interest in the outstanding capital stock of any publicly traded
company that may compete with the Company. To the knowledge of the Company,
none of the Company's or AuntMinnie.com's officers or directors or any members
of their immediate families are, directly or indirectly, interested in any
material contract with the Company or AuntMinnie.com. Neither the Company nor
AuntMinnie.com is a guarantor or indemnitor of any indebtedness of any other
Person.
4.14 Corporate Documents The Company has heretofore made available to
Parent a complete and correct copy of the Certificate of Incorporation and By-
laws or comparable organizational documents, each as amended to the date hereof,
of the Company and AuntMinnie.com. The Company has provided Parent with access
to true and complete copies of the records of proceedings of the board of
directors of the Company and AuntMinnie.com and their respective stockholders
since incorporation of the Company and AuntMinnie.com. Such records do not omit
any actions: (a) authorizing material transactions of the Company and
AuntMinnie.com, respectively, or (b) which are required by law or agreement to
be authorized by the board of directors or stockholders of the Company or
AuntMinnie.com.
<PAGE>
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4.15 Title to Property and Assets. Other then as set forth in the
Company SEC Reports, each of the Company and AuntMinnie.com owns its property
and assets free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens which arise in the ordinary course of
business and do not materially impair their ownership or use of such property or
assets. With respect to the property and assets it leases, each of the Company
and AuntMinnie.com is in material compliance with such leases and holds a valid
leasehold interest free of any liens, claims or encumbrances.
4.16 Employee Benefit Plans.
(a) The Company Disclosure Schedule sets forth a complete and correct
list of all "employee benefit plans," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and any other
pension plans or employee benefit arrangements or payroll practices (including,
without limitation, severance pay, vacation pay, company awards, salary
continuation for disability, sick leave, deferred compensation, bonus or other
incentive compensation, stock option or stock purchase arrangements or policies,
oral or written) maintained, or contributed to, by the Company or any trade or
business (whether or not incorporated) which is treated with the Company as a
single employer under Section 414(b), (c), (m) or (o) of the Code, ("ERISA
Affiliate") with respect to employees of the Company or their ERISA Affiliates
(each, a "Company Benefit Plan"). The Company has furnished Parent with a true
and complete copy of each Company Benefit Plan document, including, all
amendments thereto, and a true and complete copy of each material document
prepared in connection with each Company Benefit Plan, including, without
limitation, (i) a copy of each trust or other funding arrangement, (ii) each
summary plan description and summary of material modifications, (iii) the three
most recently filed Form 5500's, including all attachments thereto, and (iv) the
most recently prepared actuarial report and financial statement, if any, in
connection with each Company Benefit Plan.
(b) AuntMinnie.com has no "employee benefit plans" as defined in
Section 3(3) of ERISA or any other benefit or compensation plans or arrangements
other than the Company Benefit Plans set forth on the Company Disclosure
Schedule.
(c) Except as set forth on the Company Disclosure Schedule, the
Company does not have any express or implied commitment (i) to create or incur
liability with respect to or cause to exist any other employee benefit plan,
program or arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Company Benefit Plan, other than with respect to a modification,
change or termination required by ERISA or the Code.
(d) The Company's equity incentive plans are listed in Section 4.16(d)
of the Company Disclosure Schedule (the "Company Stock Option Plans"). The
Company also maintains a 1995 Employee Stock Purchase Plan which has been
operated in compliance with Section 423 of the Code and other applicable Law.
The Board of Directors of the Company has taken action to terminate the current
option period under the Employee Stock Purchase Plan on
<PAGE>
-17-
November 15, 2000 and employee participants have the option of purchasing up to
12,000 shares of Company Common Stock at a price equal to $2.71.
(e) The only Company Benefit Plan that is intended to qualify under
Section 401(a) of the Code is the Lumisys, Inc. 401(k) Profit Sharing Plan (the
"Plan"), and the Company has received a favorable determination letter from the
Internal Revenue Service ("IRS") indicating that the underlying nonstandardized
prototype plan documents for the Plan are so qualified as to form. To the
knowledge of the Company, there are no circumstances likely to jeopardize the
Plan's qualified status or result in the imposition of any material liability,
penalty or tax under ERISA or the Code.
(f) Except as set forth in the Company Disclosure Schedule, there has
been no prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) with respect to any Company Benefit Plan. The Company
is not currently liable and has not previously incurred any liability for any
tax or penalty arising under Sections 4972, 4975, 4979, 4980, or 4980B of the
Code or Section 502 of ERISA, and there are no circumstances which would subject
the Company to material liability.
(g) Each of the Company Benefit Plans has been maintained, in all
material respects, in accordance with its terms and all provisions of applicable
Laws. All amendments and actions required to bring each of the Company Benefit
Plans into conformity in all material respects with all of the applicable
provisions of ERISA and other applicable laws and regulations have been made or
taken except to the extent that such amendments or actions are not required by
law to be made or taken until a date after the Closing Date.
(h) Neither the Company nor AuntMinnie.com or any predecessor in
interest have maintained a welfare benefit plan providing continuing benefits
after the termination of employment (other than as required by Section 4980B of
the Code), and the Company, AuntMinnie.com and each of their ERISA Affiliates
have complied in all material respects with the notice and continuation
requirements of Section 4980B of the Code and the regulations thereunder.
(i) Except as set forth on the Company Disclosure Schedule, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any material payment
(including, without limitation, severance, "change of control" compensation or
golden parachute) becoming due to any director or employee of the Company or
AuntMinnie.com, (ii) materially increase any benefits otherwise payable under
any Company Benefit Plan or (iii) result in the acceleration of the time of
payment or vesting of any such benefits to any material extent.
(j) All unfunded liabilities with respect to current and former
employees have been disclosed.
(k) The Company has heretofore provided Parent with a complete and
correct list of, with respect to both the Company and AuntMinnie.com, all former
employees and current
<PAGE>
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employees who are not actively at work, and who are entitled to benefits under
one or more Company Benefit Plans, and lists the benefits to which each such
employee or former employee is entitled.
4.17 Tax Returns and Payments. The Company and its subsidiaries have
duly filed all material foreign, federal, state and local income, franchise,
excise, real and personal property and other Tax (as defined in Section 10.6)
returns and reports (including, but not limited to, those filed on a
consolidated, combined or unitary basis) required to have been filed by the
Company and its subsidiaries prior to the date hereof. All of the foregoing
returns and reports are true and correct in all material respects. The Company
has paid or made adequate provision in accordance with GAAP in the financial
statements of the Company for all Tax payable in respect of all periods ending
on or prior to the date of this Agreement and will have made or provided for all
Taxes payable in respect of all periods ending in or prior to the Closing Date.
As of the date hereof, all deficiencies proposed as a result of any audits have
been paid or settled. The Company has paid, collected or withheld, or caused to
be paid, collected or withheld, all amounts of Tax required to be paid,
collected or withheld, other than such Taxes for which adequate reserves in the
Company Financial Statements have been established or which are being contested
in good faith. There are no claims or assessments pending against the Company
for any alleged deficiency in any Tax, and the Company has not been notified in
writing of any proposed Tax claims or assessments against the Company.
4.18 Restrictions on Business Activities. There is no agreement
(written or oral) except those listed in Section 4.9 of the Company Disclosure
Schedule, judgment, injunction, order or decree binding upon the Company or
AuntMinnie.com or any of their properties which has had or could reasonably be
expected to have the effect of prohibiting or materially impairing the conduct
of the Business by the Company or AuntMinnie.com.
4.19 Insurance. Each of the Company and AuntMinnie.com has in full
force and effect the fire and casualty insurance, business interruption
insurance and directors and officers liability and all insurance required by Law
covering the Business and any outstanding claims against the Company are
described in the Company SEC Reports or the Company Disclosure Schedule. The
Company has provided to Parent copies of the policies for such insurance and its
insurance loss runs for the preceding three years.
4.20 Labor Agreements and Actions. Neither the Company nor
AuntMinnie.com is bound by or subject to (and none of its assets or properties
is bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or, to the knowledge of the Company, has sought to represent any of the
employees, representatives or agents of the Company or AuntMinnie.com. There is
no strike or other labor dispute involving the Company or AuntMinnie.com
pending, or to the knowledge of the Company threatened, nor has the Company or
AuntMinnie.com received notice of any labor organization activity involving its
employees. The Company believes that the employment of each officer and
employee of the Company and AuntMinnie.com is terminable at the will of the
Company.
<PAGE>
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To the best of its knowledge, the Company and AuntMinnie.com have
complied in all material respects with all applicable state and federal equal
employment opportunity laws and with other Laws related to employment,
immigration, employment taxes and related matters.
4.21 Certain Business Practices. Neither the Company nor
AuntMinnie.com nor, to the knowledge of the Company or AuntMinnie.com, any of
their directors, officers, employees or agents has, in connection with or
furtherance of the Business: (i) used any funds for unlawful contributions,
gifts, entertainment or other unlawful payments relating to political activity,
(ii) made any unlawful payment to any foreign or domestic government official or
employee or to any foreign or domestic political party or campaign or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, (iii)
consummated any transaction, made any payment, entered into any agreement or
arrangement or taken any other action in violation of Section 1128B(b) of the
Social Security Act, as amended, or (iv) made any other unlawful payment or
other arrangement which could cause the Company or its affiliates to be
disqualified or debarred from serving as a contractor, directly or indirectly,
for any Government Entity.
4.22 Compliance with Applicable Laws. The Business has not been, and
is not currently being, conducted in material violation of any federal, state,
local or foreign law, statute, rule, regulation, judgment, order, injunction,
decree, arbitration award, requirement, license or permit of any Governmental
Entity (collectively, "Company Permits") and no Product has been exported in
violation of the applicable provisions of the U.S. export control laws. No
investigation or review by any Governmental Entity with respect to the Business
is pending or, to the Company's knowledge, threatened, nor has any Governmental
Entity indicated an intention to conduct the same. To the Company's knowledge,
no material change is required in the Business's processes, properties or
procedures in connection with any such Company Permits, and neither the Company
nor AuntMinnie.com has received any notice or communication of any material
noncompliance with any such Company Permits that has not been cured as of the
date hereof. The Company or AuntMinnie.com has all permits, licenses,
franchises, variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to conduct the Business except where the
failure to hold or obtain such would not have a Company Material Adverse Effect.
4.23 Regulatory Compliance. The conduct of the Business, and each of
the Products, is in material compliance with applicable provisions of the United
States Food, Drug and Cosmetic Act and applicable regulations promulgated by the
Food and Drug Administration ("FDA" and "FDA Act") and other applicable Law.
The Company and each of its facilities is registered with and licensed to
operate and manufacture the Products by the FDA and under the FDA Act to the
extent required by applicable Law and the Products have been manufactured in
accordance with the Laboratory Best Practices Act and the Quality System
Regulations promulgated by the FDA and all applicable regulations and approvals
under the Laws of the Jurisdictions in which the Products are sold outside the
U.S., including applicable CE marking provisions and other approvals. The
Products have not (i) been adulterated or misbranded within the meaning of the
FDA Act, or within the meaning of any applicable state or local law or
regulation, or (ii) been manufactured or sold in material violation of any
applicable Equal
<PAGE>
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Employment Opportunity requirements, including those set forth in Section 202 of
Executive Order 11246, as amended. The Company has not received any written
notice from the FDA to the effect that, or otherwise been advised in writing
from the FDA that, it is not in material compliance with any law, rule or
regulation, carrier payment manual, intermediary manual, payor bulletin or
guidelines provision, including without limitation the federal Mail or Wire
Fraud Acts, the Stark Laws and regulations thereunder, and any parallel or
related provisions of federal, state or local Law.
4.24 Environmental and Safety Laws.
(a) Each of the Company and AuntMinnie.com (i) is in material
compliance with all, and is not subject to any asserted liability or, to the
Company's knowledge, any liability (including liability with respect to current
or former subsidiaries or operations), in each case with respect to any,
applicable Environmental Laws (as defined below) and Laws relating to the health
and safety of its employees, (ii) holds or has applied for all Environmental
Permits (as defined below) applicable to its business and properties and (iii)
is in material compliance with its Environmental Permits;
(b) neither the Company nor AuntMinnie.com has received any written
notice, demand, letter, claim or request for information alleging that it is or
may be in violation of, or liable under, any Environmental Law;
(c) neither the Company nor AuntMinnie.com: (i) has entered into or
agreed to any consent decree or order or is subject to any judgment, decree or
judicial order relating to compliance with Environmental Laws, Environmental
Permits or the investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Materials (as defined below) and, no
investigation, litigation or other proceeding is pending or threatened in
writing with respect thereto, or (ii) is an indemnitor in connection with any
threatened or asserted claim by any third-Person indemnitee for any liability
under any Environmental Law or relating to any Hazardous Materials; and
(d) neither the Company nor AuntMinnie.com owns any real property and
none of the real property leased by the Company or AuntMinnie.com is listed or,
to the knowledge of the Company, proposed for listing on the "National
Priorities List" under CERCLA, as updated through the date hereof, or any
similar state or foreign list of sites requiring investigation or cleanup.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended as of the date hereof.
"Environmental Laws" means any applicable Law in existence as of the
Closing Date, relating to the pollution, protection, investigation or
restoration of the environment, health and safety or natural resources,
including those relating to the use, handling, presence,
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transportation, treatment, storage, disposal, release, threatened release or
discharge of Hazardous Materials or noise, odor, wetlands, pollution,
contamination or any injury or threat of injury to persons or property or to the
siting, construction, operation, closure and post-closure care of waste
disposal, handling and transfer facilities.
"Environmental Permits" means any permit, approval, identification
number, license and other authorization required under any Environmental Law.
"Hazardous Materials" means (i) any petroleum, petroleum products, by-
products or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (ii) any chemical, material or other
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any Environmental Law.
4.25 Brokers. Except for UBS Warburg LLC (the "Company's Financial
Advisor"), no agent, broker, finder, investment banker, lawyer or other firm or
person is or will be entitled to any broker's or finder's fee or other similar
commission or fee in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company and the
fees of the Company's Financial Advisor shall not exceed $1,000,000 and
reasonable out-of-pocket expenses not to exceed $85,000.
4.26 Board Approval. The Board of Directors of the Company by
resolutions duly adopted by the majority of the Board of Directors voting at a
meeting duly called and held and not subsequently rescinded or modified in any
way (the "Company Board Approval"), has duly (i) determined that this Agreement
and the Merger are in the best interests of the Company and its stockholders,
(ii) approved this Agreement and the Merger and (iii) recommended that the
stockholders of the Company adopt this Agreement and approve the Merger and
directed that this Agreement and the Transactions be submitted for consideration
by the Company's stockholders at the Company Special Meeting. The Company Board
Approval constitutes approval of this Agreement and the Merger for purposes of
Section 203 of the DGCL. Except for Section 203 of the DGCL, which has been
rendered inapplicable by the Company Board Approval, no state takeover statute
is applicable to the Merger or the other Transactions.
4.27 Opinion of the Company's Financial Advisor. The Board of
Directors of the Company has received the opinion of the Company's Financial
Advisor, dated the date of this Agreement, to the effect that, as of such date,
the Merger Consideration is fair, from a financial point of view, to the holders
of Company Common Stock and shall comply as to form with the requirements of Law
for inclusion in the Company Proxy Statement, a copy of which opinion will be
made available to Parent promptly after its receipt by the Company for
informational purposes only.
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ARTICLE V
Representations and Warranties of Parent and Merger Subsidiary
Parent and Merger Subsidiary jointly and severally represent and
warrant to the Company that:
Section 5.1 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New Jersey. Merger Subsidiary is a corporation duly formed, validly
existing and in good standing under the laws of the State of Delaware. Each of
Parent and Merger Subsidiary has the requisite corporate power and authority to
carry on its business as it is now being conducted and is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification material to Parent.
Section 5.2 Authority Relative to this Agreement. Each of Parent and
Merger Subsidiary has all necessary power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Merger and the other Transactions. The execution and delivery of this Agreement
by Parent and Merger Subsidiary and the consummation by Parent and Merger
Subsidiary of the Merger and the other Transactions have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Parent or Merger Subsidiary are necessary to authorize the
execution and delivery of this Agreement or to consummate the Merger and the
other Transactions other than, with respect to the Merger, the filing and
recordation of appropriate merger documents as required by the DGCL. This
Agreement has been duly and validly executed and delivered by Parent and Merger
Subsidiary and, assuming the due authorization, execution and delivery by the
Company, this Agreement constitutes a legal, valid and binding obligation of
Parent and Merger Subsidiary, enforceable against Parent and Merger Subsidiary
in accordance with its terms.
Section 5.3 No Conflicts, Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and Merger
Subsidiary does not, and the performance of this Agreement by Parent and Merger
Subsidiary will not: (i) conflict with or violate the certificate of
incorporation or by-laws of Parent and Merger Subsidiary, (ii) assuming the
consents, approvals, authorizations and waivers specified in Section 5.3(b) have
been received and the waiting periods referred to therein have expired, and any
condition precedent to such consent, approval, authorization, or waiver has been
satisfied, conflict with or violate any Laws applicable to Parent or Merger
Subsidiary or by which any property or asset of Parent or Merger Subsidiary is
bound, or (iii) result in any such conflicts, Default, breaches, defaults or
other occurrences of the type referred to above which would prevent or
materially delay the consummation of the Merger.
(b) The execution and delivery of this Agreement by Parent and Merger
Subsidiary does not, and the performance of this Agreement by Parent and Merger
Subsidiary
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will not, require any consent, approval, authorization, waiver or permit of, or
filing with or notification to, any Governmental Entity, except for applicable
requirements of the Exchange Act, the HSR Act, and filing and recordation of the
Certificate of Merger as required by DGCL and except where failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not have a material adverse effect on the Parent or would
not prevent or materially delay the consummation of the Merger.
Section 5.4 Company Proxy Statement Information. No information
supplied by Parent or Merger Subsidiary in writing for inclusion by the Company
in the Company Proxy Statement, as amended or supplemented, will, at the date
the Proxy Statement is first mailed to the Company's stockholders or at the time
of the Company Special Meeting, contain any statement which, at such time and in
light of the circumstances under which it is 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 contained in such information no false or
misleading.
Section 5.5 Ownership of Company Stock. Immediately prior to the
execution of this Agreement and the Stockholders' Agreement by Parent and Merger
Subsidiary, none of Parent or any of its affiliates (which shall not include any
pension or benefit plan for employees of Parent or its affiliates): (a)
"beneficially owns" (as such term is defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, or (b) is a party to any agreement, arrangement or
understanding for the purposes of acquiring holding voting or disposing of, in
each case shares of the capital stock of the Company.
ARTICLE VI
Conduct of Business Pending the Merger
Section 6.1 Conduct of the Business Pending the Effective Time. From
and after the date hereof, prior to the Effective Time, except as contemplated
by this Agreement and set forth in Section 6.1 of the Company Disclosure
Schedule or required by Law or regulation, or unless Parent shall otherwise
agree in writing, the Company covenants and agrees that it shall, and shall
cause AuntMinnie.com to, carry on its business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and to
use reasonable efforts to conduct their Business in a manner consistent with the
budgets and plans heretofore made available to Parent, including all capital
expenditure and plant expansion plans, use all reasonable efforts to preserve
intact its present business organizations, keep available the services of its
employees and consultants and preserve its relationships and goodwill with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with the Company and to protect their Technology to the end
that their goodwill and on-going Business shall not be impaired in any material
respect at the Effective Time.
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(a) Unless Parent shall otherwise agree in writing, prior to the
Effective Time, the Company shall not, and shall not permit AuntMinnie.com, to:
(i) declare, set aside, or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, purchase, redeem or otherwise acquire, other
than pursuant to the exercise of Vested Company Stock Options outstanding
on the date of this Agreement, any shares of capital stock of the Company
or any other equity securities thereof or any rights, warrants, or options
to acquire any such shares or other securities other than purchases,
redemptions or acquisitions of equity securities of subsidiaries of the
Company as provided in Section 7.3 or rights, warrants or options to
acquire such securities;
(ii) grant, award or enter into any compensation or change of
control arrangement with any employee including the repricing of any
outstanding stock options;
(iii) issue, deliver, sell, pledge, dispose of or otherwise
encumber any shares of its capital stock including any Company Options, any
other voting securities of the Company or any securities convertible into,
or any rights, warrants or options to acquire, any such shares or voting
securities (other than the issuance of Company Common Stock upon the
exercise of Company Stock Options outstanding on the date of this
Agreement) or amend the terms of any such securities, rights, warrants or
options or, except as described in Section 3.3(g) take any action to
accelerate the vesting thereof;
(iv) amend the certificate of incorporation or by-laws of the
Company or AuntMinnie.com;
(v) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof, or any
assets that are material, individually or in the aggregate;
(vi) subject to a Lien or sell, lease, license or otherwise
dispose of or transfer any of its properties or assets or any Technology
used in the Business other than in connection with: (y) the sale of
Products in the ordinary course of Business, and (z) the sale of tangible
personal property from inactive lines of business which are not currently
used in the Business pursuant to agreements in effect as of the date of
this Agreement and disclosed on Schedule 4.9 to the Company Disclosure
Schedule or for consideration which is not less than the greater of the
book value of the asset or its fair market value;
(vii) incur or modify any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities, guarantee any debt securities of another person, or enter into
any "keep well" or other agreement to maintain any financial condition of
another person, except, in any such
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case, for borrowings or other transactions incurred in the ordinary course
of business under any existing credit facility including to repay existing
indebtedness pursuant to the terms thereof, enter into any leases,
guarantees, assumptions of indebtedness or letters of comfort or similar
instruments or make any loans, advances or capital contributions to, or
investments in, any other person, or compromise any material claims or
litigation;
(viii) alter, amend or delay in any material respect the
implementation of its plans for capital expenditures and
completion/expansion of plant and production facilities previously
delivered to Parent;
(ix) take any action or omit to take any action that would
cause any of its representations and warranties herein to become untrue in
any material respect; and
(x) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Within 10 days after the end of each month following the date of
this Agreement, the Company shall deliver to Parent financial statements
presented on a basis consistent with the Quarterly Financial Statements and
copies of any Material Contracts entered into in accordance with this Agreement
during the preceding month. The Company shall promptly provide the Parent
copies of all filings made by the Company with any Governmental Entity,
including any Company SEC Reports.
(c) The Company and AuntMinnie.com shall, before settling or
compromising any material litigation, claim, income tax or other liability,
consult with Parent and its advisors as to the positions and elections that will
be taken or made with respect to such matter and shall not enter into any such
settlement or compromise without the consent of Parent, which will not be
unreasonably withheld or delayed. After the date of this Agreement, the Company
shall promptly provide copies to Parent of all pleadings made and any public
document filed in connection with all pending litigation or claim and copies of
all notices or correspondence relating to insurance coverage with respect to
such litigation or claims.
Section 6.2 Company Stockholder Vote. The Company shall file the
Company Proxy Statement within 10 days after the date of this Agreement, and as
soon as practicable, the Company shall take all other action reasonably
necessary, in accordance with applicable law and its certificate of
incorporation and by-laws, to convene the Company Special Meeting for the
purposes of obtaining stockholder approval of the Merger and this Agreement and
Transactions. To the extent Parent is required to by law to provide
information or can reasonably assist in the preparation of the Company Proxy
Statement or the Company Special Meeting, Parent shall cooperate with the
Company to do so.
Section 6.3 Acquisition Proposals. The Company agrees that the
Company shall not nor shall it authorize any of its officers, directors,
employees, agents or representatives of the Company or any subsidiary
(including, any investment banker,
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attorney or accountant retained by any of the foregoing) to, initiate, continue,
solicit or encourage, directly or indirectly, any inquiries or the making of any
proposal or offer to Stockholders of the Company, with respect to a merger,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, the Company or
AuntMinnie.com (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, or otherwise knowingly facilitate any
effort or attempt to make or implement an Acquisition Proposal or enter into any
agreement or understanding with any other person or entity with the intent to
effect any Acquisition Proposal. The Company will notify Parent of any written
Acquisition Proposals or oral Acquisition Proposals made to any officer of the
Company which in either event shall include the value of the Acquisition
Proposal. Promptly after the execution of this Agreement and the announcement of
the Transactions, the Company will request each person which has heretofore
executed a confidentiality agreement in connection with its consideration of
acquiring the Company or any portion thereof to return or destroy all
confidential information heretofore furnished to such person by or on behalf of
the Company. Nothing contained in this Section shall prohibit Company and its
Board of Directors from (i) taking and disclosing positions with respect to a
tender offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated by
the SEC under the Exchange Act or making any disclosure required by Law to the
Company's stockholders as determined in good faith by the Board of Directors,
taking into account the advice of legal counsel to the Company, or (ii)
furnishing information, including without limitation nonpublic information, to
or entering into negotiations with, any person or entity that has indicated its
willingness to make an unsolicited bona fide proposal to acquire the Company
pursuant to a merger, consolidation, share exchange, purchase of a substantial
portion of the assets, business combination or other similar transaction, if,
and only to the extent that, (A) such unsolicited bona fide proposal relating to
a Company Acquisition Proposal is made by a third party that the Board of
Directors of the Company determines in good faith has a good faith intention to
proceed with negotiations to consider, and financial capability to consummate,
such Company Acquisition Proposal, such Company Acquisition Proposal is to
acquire at least (a) 50% of the consolidated assets or outstanding voting power
of the Company's securities, or (b) all of the outstanding securities or assets
of Aunt Minnie.com and is financially superior to the Transactions to the
shareholders of the Company, as determined in good faith in each case by the
Company's Board of Directors taking into account the advice of its financial
advisors and legal counsel (a "Superior Proposal"), (B) the Board of Directors
of Company, after duly considering the advice of legal counsel to Company,
determines in good faith that such action is required for the Board of Directors
of Company to comply with its fiduciary duties to stockholders imposed by
applicable law, (C) contemporaneous with furnishing such information to, or
entering into discussion or negotiations with, such person or entity Company
provides written notice to Parent to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or entity and (D) Company uses all reasonable efforts to keep Parent informed in
all material respect of the status and terms of any such negotiations or
discussions (including without limitation the
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identity of the person or entity with whom such negotiations or discussions are
being held) and provides Parent copies of such written proposal and any
amendments or revisions thereto or correspondence related thereto; provided,
that Parent agrees to execute a confidentiality agreement, in form reasonably
acceptable to Parent, with respect to any such information delivered to Parent
pursuant to this clause (D), which confidentiality agreement shall be subject to
Parent's disclosure obligations arising under applicable law or securities
exchange regulations.
6.4 Financial Information. As soon as practicable after the date
hereof, the Company shall use its best efforts to cooperate and assist Parent
and Parent's independent public accountants in the compilation and preparation
of all financial statements and financial statement schedules of the Company
prepared in accordance with GAAP and reports and consents of the Company's
independent public accountants as may be necessary or deemed advisable by Parent
to comply with SEC reporting and disclosure requirements. The Company shall
deliver to Parent's independent public accountants and/or the Company's
independent public accountants all engagement letters and management
representation letters as may be reasonably requested by Parent or such
accountants. The Company shall use its best efforts to cause its independent
public accountants to cooperate with and assist Parent and its independent
public accountants in the preparation of the financial statements contemplated
by this Section 6.4.
6.5 Inventory. The Company shall produce finished goods inventory at
a rate which would cause there to be, as of February 28, 2001, six-weeks supply
of Products in inventory.
ARTICLE VII
Additional Agreements
Section 7.1 Access to Information. From the date hereof through the
Effective Time, the Company shall afford to Parent and Parent's accountants,
counsel and other representatives full and reasonable access during normal
business hours to its properties, books, contracts, commitments, records and
personnel and, during such period, shall furnish promptly to Parent (i) a copy
of each report, Schedules and other document filed or received by it pursuant to
the requirements of any law, and (ii) all other information concerning its
business, properties and personnel as Parent may reasonably request. Parent and
its accountants, counsel and other representatives shall, in the exercise of the
rights described in this Section 7.1, not unduly interfere with the operation of
the business of the Company or its subsidiaries.
Section 7.2 Further Action; Consents; Filings.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use its reasonable best efforts to (i) take, or cause to be
taken, all
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appropriate action and do, or cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make effective the
Merger and the other transactions contemplated by this Agreement, (ii) obtain
from Governmental Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by Parent or the
Company or any of their subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement and (iii) make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement, the Merger and the other transactions contemplated by
this Agreement that are required under (A) the Exchange Act and the Securities
Act and the rules and regulations thereunder and any other applicable federal or
state securities laws, (B) the HSR Act, and (C) any other applicable Law. The
parties hereto shall cooperate with each other in connection with the making of
all such filings, including by providing copies of all such documents to the
nonfiling party and its advisors prior to filing and, if requested, by accepting
all reasonable additions, deletions or changes suggested in connection
therewith.
(b) Parent and the Company shall, and the Company shall cause its
Affiliates who are required to do so to, file as soon as practicable after the
date of this Agreement but in no event more than five business days after the
date of this Agreement, notifications under the HSR Act and any other
applications or notices required under other Law and shall respond as promptly
as practicable to all inquiries or requests that may be made pursuant to the HSR
Act or any other applicable Laws for additional information or documentation and
shall respond as promptly as practicable to all inquiries and requests received
from any Governmental Entity in connection with antitrust matters. The parties
shall cooperate with each other in connection with the making of all such
filings or responses, including providing copies of all such documents to the
other party and its advisors prior to filing or responding. Each of Parent,
Merger Subsidiary and the Company, to the extent applicable, further agrees to
file contemporaneously with the filing of the applications any requests for
waivers of applicable Governmental Entities as may be required to expeditiously
prosecute such waiver requests and to diligently submit any additional
information or amendments for which the Governmental Entity may ask with respect
to such waiver requests.
Section 7.3 Minority Ownership in AuntMinnie.com. Prior to the
Effective Time, the Company or AuntMinnie.com shall have purchased or
repurchased, as the case may be, from the holders thereof, all outstanding
shares or rights to acquire shares, of the capital stock of AuntMinnie.com on
terms no less favorable than set forth in Section 6.1 of the Company Disclosure
Schedule.
Section 7.4 Public Announcements. On or before the Closing Date,
Parent and the Company shall not (nor shall they permit any of their respective
Affiliates to), without prior consultation with the other party and such other
party's review of and consent to any public announcement concerning the
transactions contemplated by this Agreement, issue any press release or make any
public announcement with respect to such transactions
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during such period, and Parent and the Company shall, to the extent practicable,
allow the other party reasonable time to review and comment on such release or
announcement in advance of its issuance and use reasonable efforts in good faith
to reflect the reasonable and good faith comments of such other party, provided,
however, no party shall be prevented from making any disclosure required by law
at the time so required because of any delay on the part of the other party. The
parties intend that the initial announcement of the terms of the transactions
contemplated by this Agreement shall be made by joint press release of Parent
and the Company.
Section 7.5 Efforts; Consents. Prior to the Effective Date, the
Company shall use its reasonable best efforts to assist Parent in its
integration of the acquisition of the Company, including the prompt and orderly
transition of employees, customers and suppliers of the Company's business and
providing assistance to Parent in connection with the integration of the
Company's lines of business and services with those of Parent.
Section 7.6 Agreement to Defend and Indemnify.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain indemnification provisions identical or superior (from
the point of view of the Indemnified Parties) to those contained in the
Certificate of Incorporation and By-Laws of the Company in existence on the date
of this Agreement and that were provided to Parent in accordance with this
Agreement and shall not be amended, repealed or otherwise modified for a period
of six years after the Effective Time in any manner that would adversely affect
the rights thereunder of individuals who immediately prior to the Effective
Time, are or were directors or officers of the Company or otherwise entitled to
indemnification under the Certificate of Incorporation or By-Laws or
Indemnification Agreements listed in Section 4.9 of the Company Disclosure
Schedule, and their respective heirs, executors and personal representatives or
under the Underwriting Agreement, dated November 14, 1995, between the Company
and the underwriters named therein (the "Indemnified Parties"). The Company
shall, to the fullest extent permitted under the DGCL and regardless of whether
the Merger becomes effective, indemnify, defend and hold harmless, and after the
Effective Time, Parent will cause the Surviving Corporation, to the fullest
extent permitted under DGCL, to indemnify, defend and hold harmless, each
Indemnified Party against any and all lawsuits, demands, actions, costs or
expenses (including reasonable attorneys' fees), judgments fines, losses,
claims, damages, liabilities and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation, to the extent that it was
based in whole or in part on the fact that such Indemnified Party is or was a
director or officer of the Company and arising out of actions or omissions or
alleged actions or omissions occurring at or prior to the Effective Time, and in
the event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Company or the Surviving
Corporation, as applicable, shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, promptly as statements therefor are
received and (ii) the Company and the Surviving Corporation will cooperate in
the defense of any such matter; provided, however, that neither the Company nor
the Surviving Corporation will be liable for any settlement effected without its
written consent
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(which consent will not be unreasonably withheld); and provided, further, that
neither the Company nor the Surviving Corporation will be obliged pursuant to
this Section 7.6 to pay the fees and disbursements of more than one counsel for
all Indemnified Parties in any single action except to the extent that, in the
reasonable opinion of the Indemnified Parties, two or more of such Indemnified
Parties have conflicting interests in the outcome of such action.
Nothing in this Agreement will prohibit the Surviving Corporation from
complying with its obligations under the preceding sentence by obtaining
insurance coverage under any policy maintained by Parent or any of its
Subsidiaries. This Section 7.6 will survive the consummation of the Merger.
Parent shall cause Surviving Corporation to reimburse all expenses, including
reasonable attorney's fees and expenses, incurred by any person incurred in
connection with enforcing the obligations of Parent and the Surviving
Corporation under this Section 7.6. Notwithstanding anything else set forth in
the Agreement, this Section 7.6 is intended to be for the benefit of and to
grant third party rights to Indemnified Parties whether or not parties to this
Agreement, and each of the Indemnified Parties will be entitled to enforce the
covenants contained therein. For six years after the Effective Time, the
Surviving Corporation shall maintain or obtain officers' and directors'
liability insurance covering the Indemnified Parties who are currently covered
by the Company's officers and directors liability insurance policy on terms not
less favorable than those in effect on the date hereof in terms of coverage and
amounts.
(b) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person, then and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation assume the obligations set
forth in this Section 7.6; provided, however, that Parent shall remain jointly
and severally liable to the Indemnified Parties hereunder.
Section 7.7 Notices of Breach.
(a) The Company shall give prompt notice to Parent of: (i) any
representation or warranty made by it contained in this Agreement which has
become untrue or inaccurate in any material respect, or (ii) the failure by it
to comply with or satisfy in any material respect any covenant, condition, or
agreement to be complied with or satisfied by it under this Agreement; provided,
however, that such notification shall not excuse or otherwise affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
(b) Parent shall give prompt notice to the Company of: (i) any
representation or warranty made by Parent or Merger Subsidiary contained in this
Agreement which has become untrue or inaccurate in any material respect, or (ii)
the failure by it to comply with or satisfy in any material respect any
covenant, condition, or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that such notification shall not excuse or
otherwise
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affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement.
ARTICLE VIII
Conditions Precedent
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) This Agreement and the transactions contemplated hereby shall
have been approved and adopted by the requisite vote of the holders of
the Company Common Stock;
(b) The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated and any other
material Consents from Governmental Entities which in any case are
required to be received prior to the Effective Time with respect to
the Transactions shall have been received; and
(c) The consummation of the Merger shall not be restrained, enjoined
or prohibited by any order, judgment, decree, injunction or ruling of
a court of competent jurisdiction; provided, however, that the parties
shall comply with the provisions of Section 7.2 and shall further use
their best efforts to cause any such order, judgment, decree,
injunction or ruling to be vacated or lifted.
Section 8.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the additional conditions,
unless waived by the Company, that Parent and Merger Subsidiary shall have
performed in all material respects their respective agreements contained in this
Agreement required to be performed at or prior to the Effective Time and the
representations and warranties of Parent and Merger Subsidiary contained in this
Agreement shall be true when made and (except for representations and warranties
made as of a specified date, which need only be true as of such date) at and as
of the Effective Time as if made at and as of such time, except as contemplated
by this Agreement and except for inaccuracies that in the aggregate do not
constitute a Parent Material Adverse Effect; and the Company shall have received
a certificate of an officer to that effect.
Section 8.3 Conditions to Obligations of Parent and Merger Subsidiary
to Effect the Merger. The obligations of Parent and Merger Subsidiary to effect
the Merger shall be subject to the fulfillment at or prior to the Effective Time
of the additional following conditions, unless waived by Parent:
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(a) (i) The Company shall have performed in all respects its
agreements contained in this Agreement required to be performed at or
prior to the Effective Time, and (ii) the representations and
warranties of the Company contained in this Agreement shall be true
when made and (except for representations and warranties made as of a
specified date, which need only be true as of such date) at and as of
the Effective Time as if made at and as of such time, except with
respect to both (i) and (ii) above: (x) as contemplated by this
Agreement; (y) such changes as will not cause the condition of the
Company or AuntMinnie.com to materially adversely change from that
represented; and (z) such changes as do not result in a Company
Material Adverse Effect and (AA) such changes which are not directly
attributable to the announcement of this Agreement and the
Transactions (including the loss of employees or distributors) and
(BB) such changes which are not the result from the loss of employees
following the announcement of the Transactions; and Parent and Merger
Subsidiary shall have received a certificate of the Chief Executive
Officer of the Company to that effect.
(b) The Stockholders' Agreement shall have been duly authorized,
executed and delivered by the parties thereto other than the Parent
and the Merger Subsidiary and continue in full force and effect.
(c) There shall have been no Company Material Adverse Change since
September 30, 2000, other than changes which are directly attributable
to the announcement of this Agreement and the Transactions (including
the loss of employees or distributors) and which are the result from
the loss of employees following the announcement of the Transactions
not to any action or inaction by the Company or AuntMinnie.com
constituting a breach of any representation, warrant or covenant to be
performed by or on behalf of the Company or AuntMinnie.com, and Parent
shall have received a certificate of the President of the Company to
that effect.
(d) All consents, approvals or other requirements to the consummation
of the Transactions listed in Section 8.3 of the Company Disclosure
Schedule shall have been granted or received.
ARTICLE IX
Termination, Amendment and Waiver
Section 9.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval by the
Stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
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(b) by the Company, upon a material breach of this
Agreement on the part of Parent or Merger Subsidiary which has not
been cured and which would cause the condition set forth in Section
8.2 to be incapable of being satisfied by the Upset Date;
(c) by Parent, upon a material breach of this Agreement on
the part of the Company set forth in this Agreement which has not been
cured and which would cause the conditions set forth in Section 8.3 to
be incapable of being satisfied by Upset Date;
(d) by Parent or the Company if any court of competent
jurisdiction shall have issued, enacted, entered, promulgated or
enforced any order, judgment, decree, injunction or ruling, after
reasonable efforts on the part of Parent and the Company to resist,
resolve or lift, which permanently restrains, enjoins or otherwise
prohibits the Merger and such order, judgment, decree, injunction or
ruling shall have become final and nonappealable;
(e) by either Parent or the Company if the Merger shall not
have been consummated on or before the Upset Date provided the
terminating party is not otherwise in material breach of its
representations, warranties or obligations under this Agreement which
would cause the conditions set forth in Section 8.1 and Section 8.2 or
8.3, as applicable, to be incapable of being satisfied prior to the
Upset Date;
(f) by either Parent or the Company if the Company Special
Meeting (including as it may be adjourned from time to time) shall
have concluded without the Company having obtained the required
stockholder approval of this Agreement and the transactions
contemplated hereby;
(g) by Parent, after receipt by the Company of a Superior
Proposal, if (x) by the end of the seventh calendar day following (but
not including) the day Parent notifies the Company that it wishes the
Board of Directors of the Company to publicly reaffirm its
recommendation to the Company's Stockholders to vote for the Merger,
the Board of Directors of the Company fails to so publicly reaffirm;
or (y) by the later of the end of (A) the tenth business day following
the public announcement of an Acquisition Proposal or (B) the seventh
calendar day following (but not including) the day Parent notifies the
Company that it wishes the Board of Directors of the Company to
publicly reject such publicly announced Acquisition Proposal, the
Board of Directors of the Company fails to publicly reject such
Acquisition Proposal; or (z) the Board of Directors of the Company
shall have changed its recommendation to the Company's Stockholders to
vote in favor of approval of the transactions contemplated hereby; or
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(h) by the Company if it receives a Superior Proposal and
the Company's Board of Directors determines that it would be in
accordance with their fiduciary duties after considering applicable
provisions of state law and taking into account the advice of legal
counsel, to accept the Superior Proposal; provided, however, that: (i)
the Company shall not be permitted to terminate this Agreement
pursuant to this Section 9.1(h) prior to the Special Meeting, provided
that the Company shall be entitled to amend the Company Proxy
Statement to permit its shareholders to consider both the Transactions
and the Superior Proposal and, if necessary to postpone the Company
Special Meeting for such time as may be required to permit the Company
stockholders to consider the amended Company Proxy Statement, and (ii)
the Company shall not be permitted to terminate this Agreement after
the Special Meeting, unless it has complied with the provisions of
Section 6.3 and Section 9.3(b).
Where action is taken to terminate this Agreement pursuant
to this Section 9.1, it shall be sufficient for such action to be
authorized by the Board of Directors of the party taking such action
and, to the extent required by Section 9.3 of this Agreement, shall
only be effective upon payment of the fee described therein.
Section 9.2 Effect of Termination. In the event of termination of
this Agreement by either Parent or the Company, as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of any of the Company, Parent or Merger Subsidiary or their
respective officers or directors except as expressly provided herein and
provided that Sections 9.2, 9.3 and Article X shall survive the termination.
Section 9.3 Fees and Expenses.
(a) Whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses provided,
however, the aggregate fees and expenses incurred in connection with this Merger
and paid or accrued by or due from the Company for transfer agent fees, paying
agent fees, proxy solicitors, accountants, attorneys and the cost of printing
the Company Proxy Statement shall not exceed $550,000 in the aggregate, assuming
that no material Acquisition Proposal is received by the Company between the
date of this Agreement and the date of the Company Special Meeting and that the
SEC does not review the Company Proxy Statement.
(b) In the event that the Company terminates this Agreement pursuant
to Section 9.1(h), the Company shall pay Parent a termination fee of 4% of the
aggregate Merger
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Consideration, in immediately available funds no later than the third business
day after notice of such termination.
In the event that
(i) the Parent shall have terminated this Agreement pursuant to
Section 9.1(e) and the Company is in material breach of its representations
warranties or obligations under this Agreement which has caused the
conditions set forth in Section 8.1 or Section 8.3 not to be satisfied and
(Y) if the Company Special Meeting has been held, Parent has not failed to
exercise its proxy granted under the Stockholders Agreement, and (Z) the
regulatory approvals or waiting periods set forth in Section 8.1(b) have
been received or such waiting period has terminated, as the case may be;
and
(ii) at any time prior to the six-month anniversary of such
termination, the Company enters into an agreement (in principle or
definitive) with respect to an Acquisition Proposal or, if a tender offer,
such Acquisition Proposal is announced, and in either case such transaction
is ultimately consummated.
the Company shall pay Parent a termination fee of 4% of the aggregate Merger
Consideration payable in immediately available funds on the date such agreement
is announced or entered into.
If the Company fails to pay when due the amount due pursuant to
this Section 9.3(b), and, in order to obtain such payment, Parent or Merger
Subsidiary commences a suit which results in a judgment against the Company
for the fee set forth in this Section 9.3(b), the Company shall pay to
Parent or Merger Subsidiary its reasonable costs and expenses (including
attorneys' fees and expenses) in connection with such suit, together with
interest on the amount of the fee at the prime rate from the date such
payment was required to be made.
(c) Notwithstanding anything else set forth in this Agreement, the
parties hereto agree that the provisions of this Section 9.3 shall be the sole
and exclusive remedy for Parent and Merger Subsidiary for any and all claims,
damages, actions, suits, proceedings, demands, costs and expenses or other
liability sustained or incurred by Parent or Merger Subsidiary or their
successors and assigns in connection with this Agreement or the Transactions,
including those arising in contract, tort, breach of warranty or otherwise,
other than claims for fraud or intentional misrepresentation.
Section 9.4 Amendment. This Agreement may be amended by the parties
hereto at any time before or after approval hereof by the Stockholders of the
Company, but, after such approval, no amendment shall be made which (i) changes
the form or decreases the amount of the Merger Consideration, (ii) in any other
way materially adversely affects the rights of the Company's Stockholders or
(iii) under applicable law would require approval of the Company's Stockholders,
in any such case referred to in clauses (i), (ii) and (iii), without the further
approval of such Stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto
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and, with respect to any amendments to Section 7.6 with the consent of a
majority of the Board of Directors of the Company as of the date of this
Agreement.
Section 9.5 Waiver. At any time prior to the Effective Time, the
parties hereto may, to the extent permitted by applicable law, (i) extend the
time for the performance of any of the obligations or other acts of any other
party hereto, (ii) waive any inaccuracies in the representations and warranties
by any other party contained herein or in any documents delivered by any other
party pursuant hereto and (iii) waive compliance with any of the agreements of
any other party or with any conditions to its own obligations contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party.
ARTICLE X
General Provisions
Section 10.1 Notices. All notices or other communications under this
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy (with
confirmation of receipt), or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to the Company:
Lumisys Incorporated
225 Humboldt Court
Sunnyvale, CA 94089
Attn: Chief Financial Officer
Telephone: 408-733-6565
Facsimile: 408-733-6567
With copies to:
Pillsbury Madison & Sutro LLP
2440 Hanover Street
Palo Alto, CA 94304
Attn: Allison Leopold Tilley, Esq.
Telephone: (650) 233-4518
Telecopy: (650) 233-4545
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If to the Parent, to:
Eastman Kodak Company
343 State Street
Rochester, NY 14650-0208
Attn: Kenneth K. Doolittle, Esq.
Telephone: 716-724-1932
Facsimile: 716-724-9448
With a copy to:
Nixon Peabody LLP
P.O. Box 31051
Clinton Square
Rochester, NY 14604-1051
Attn: Deborah McLean Quinn, Esq.
Telephone: 716-263-1307
Facsimile: 716-263-1600
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
Section 10.2 Entire Agreement. This Agreement, the Company Disclosure
Schedule, and the Related Agreements constitute the entire agreement and
supersede all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
Section 10.3 Assignments; Parties in Interest. Neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by any of the parties hereto, whether by operation of law or otherwise,
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and inure solely to the benefit
of each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any person not a party hereto any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement,
including to confer on any third Person beneficiary rights.
Section 10.4 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Delaware, without giving effect to the
provisions thereof relating to conflicts of law. Each of Parent and the Company
hereby waives personal service of any and all process and consents that all such
service of process be made by registered mail directed to the address stated in
Section 10.1 hereof and service so made shall be deemed to be completed upon
actual receipt thereof. Each of the Company, Parent and Merger Subsidiary hereby
consent to the personal jurisdiction of the courts of the State of Delaware and
agree that such courts shall have the exclusive jurisdiction over all such
matters. Each of the Company, Parent and Merger Subsidiary waive any right to a
trial by
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jury with respect to any matter arising under this Agreement and the
Transactions and shall not raise any claim of forum non conveniens or similar
matter in connection with the situs of such matter in the courts of the State of
Delaware.
Section 10.5 Heading. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
Section 10.6 Certain Definitions and Rules of Construction.
(a) As used in this Agreement:
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Acquisition Proposal" has the meaning set forth in Section 6.3.
"Affiliate" as applied to any person, shall mean any other person
directly or indirectly controlling, controlled by, or under common control with,
that person; for purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that person, whether through the ownership of voting securities, by
contract or otherwise.
"AuntMinnie.com" has the meaning set forth in Section 4.3.
"Business" means the business of the Company and AuntMinnie.com as
presently conducted, including the proposed development, sale and shipment of
the Daylight Desktop CR.
"CERCLA" has the meaning set forth in Section 4.24.
"Certificate of Merger" has the meaning set forth in Section 1.3.
"Certificates" has the meaning set forth in Section 3.3(b).
"Code" has the meaning set forth in Internal Revenue Code of 1986, as
amended and the regulations and interpretation issued thereunder.
"Closing Date" has the meaning set forth in Section 1.2.
"Company" has the meaning set forth in the preamble to this Agreement.
"Company Benefit Plans" has the meaning set forth in Section 4.16(a).
"Company Common Stock" has the meaning set forth in Section 3.1(a).
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"Company Disclosure Schedule" means the schedules of disclosures and
exceptions to the Company's representations and warranties delivered to Parent
prior to the date of this Agreement, each of which is numbered to correspond to
the appropriate provisions of Article IV of this Agreement.
"Company Material Adverse Effect" means an event, change in
circumstances, or other matter which is reasonably likely to: (i) have a
material adverse effect on the business, results, financial condition, or
operations of the Company taken as a whole, or (ii) result in: (y) a decline in
the net number of registered users of the AuntMinnie.com website by more than
10% from the number registered on the date of this Agreement, or (z) an
interruption in the operation in the ordinary course of its business of the
AuntMinnie.com website on 30 days or more, either consecutively or cumulatively
in any three month period.
"Company Permits" has the meaning set forth in Section 4.22.
"Company Technology" has the meaning set forth in Section 4.11(b).
"Consents" means any consent by, approval of, or any notice or filing
with any Person required in order to effectuate the Transactions and preserve
the rights of Company in the Surviving Corporation.
"Company Board Approval" has the meaning in Section 4.26.
"Company Proxy Statement" has the meaning in Section 4.6.
"Company SEC Reports" has the meaning in Section 4.5(a).
"Company Special Meeting" has the meaning in Section 4.6.
"Company Stock Option Plans" has the meaning in Section 4.16(d).
"Constituent Corporations" has the meaning set forth in Section 1.4.
"Daylight DesktopCR" means the CR unit currently in the research and
development stage, consisting of (i) a self-contained computed radiography unit
(a phosphor plate reader or "digitizer" and a phosphor plate "eraser"), (ii) an
integrated mechanism to mechanically unload and re-load a single phosphor plate
from a specifically designed light-tight enclosure (i.e. "cassette"), and (iii)
a desktop personal computer with, specific application software for the
operation and control of the device.
"DGCL" has the meaning set forth in Section 1.3.
"Default" has the meaning set forth in Section 4.9.
"Dissenting Share" has the meaning set forth in Section 3.2.
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"ERISA" shall have the meaning set forth in Section 4.16(a).
"ERISA Affiliates" has the meaning set forth in Section 4.16(a).
"Effective Time" has the meaning set forth in Section 1.3.
"Environmental Laws" has the meaning set forth in Section 4.24(d).
"Environmental Permits" has the meaning set forth in Section 4.24(d).
"FDA" has the meaning set forth in Section 4.23.
"FDA Act" has the meaning set forth in Section 4.23.
"GAAP" has the meaning set forth in Section 4.5(b).
"Governmental Entity" means any federal, state or local government or
non-U.S. entity or quasi governmental authority, court or any agency or
instrumentality thereof.
"HSR Act" has the meaning set forth in Section 4.6.
"Hazardous Materials" has the meaning set forth in Section 4.26.
"IP Registrations" has the meaning set forth in Section 4.11(d).
"IP Rights" has the meaning set forth in Section 4.11(d).
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, treaty, writ or order and any enforceable
judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree, judgment, stipulation, injunction, permit,
authorization, policy, opinion, or agency requirement, in each case having the
force and effect of law.
"Material Contracts" has the meaning set forth in Section 4.9.
"Merger" has the meaning set forth in the preamble to this Agreement.
"Merger Consideration" has the meaning set forth in Section 3.1.
"Merger Subsidiary" has the meaning set forth in the preamble to this
Agreement.
"Parent" has the meaning set forth in the preamble to this Agreement.
"Paying Agent" has the meaning set forth in Section 3.3(a).
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"Person" shall include individuals, corporations, partnerships,
limited liability companies, trusts, other entities and groups (which term shall
include a "group" as such term is defined in Section 13(d)(3) of the Exchange
Act).
"Products" has the meaning set forth in Section 4.11(b).
"Quarterly Financial Statements" has the meaning set forth in Section
4.5(c).
"Related Agreements" has the meaning set forth in Section 4.4.
"Superior Proposal" has the meaning set forth in Section 6.3.
"Stockholders' Agreement" has the meaning set forth in the preamble in
this Agreement.
"Surviving Corporation" has the meaning set forth in Section 1.1.
"Tax" shall mean any federal, state, local, foreign or provincial
income, gross receipts, property, sales, service, use, license, lease, excise,
franchise, employment, payroll, withholding, unemployment insurance, workers'
compensation, social security, alternative or added minimum, ad valorem, value
added, stamp, business license, occupation, premium, environmental, windfall
profit, customs, duties, estimated, transfer or excise tax, or any other tax,
custom, duty, premium, governmental fee or other assessment or charge of any
kind whatsoever, together with any interest, penalty or additional tax imposed
by any Governmental Entity.
"Technology" has the meaning set forth in Section 4.11(b).
"Technology-Related Assets" has the meaning set forth in Section
4.11(a).
"Third Person Licenses" has the meaning set forth in Section 4.11(c).
"Third Person Technology" has the meaning set forth in Section
4.11(c).
"Transactions" has the meaning set forth in Section 4.4.
"Upset Date" means January 31, 2001, provided, however, that if
comments are received by the Company from the SEC on the Company Proxy Statement
such date shall be February 28, 2001.
(b) Other Rules of Construction.
(i) References in this Agreement to any gender shall include
references to all genders. Unless the context otherwise requires,
references in the singular include references in the plural and
vice versa. References to a party to this Agreement or to other
agreements described herein means those Persons executing such
agreements.
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(ii) The words "include", "including" or "includes" shall be
deemed to be followed by the phrase "without limitation" or the
phrase "but not limited to" in all places where such words appear
in this Agreement.
(iii) This Agreement is the joint drafting product of Parent and
the Company and each provision has been subject to negotiation
and agreement and shall not be construed for or against either
party as drafter thereof.
(iv) Each case in this Agreement where a contract or agreement
is represented or warranted to be enforceable will be deemed to
include as a limitation to the extent that enforceability may be
subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar Laws affecting the
enforcement of creditors' rights generally and to general
equitable principles, whether applied in equity or at law.
(v) All references in the Agreement to financial terms shall be
deemed to refer to such terms as they are defined under GAAP,
consistently applied.
Section 10.7 Counterparts. This Agreement may be executed in two or
more counterparts which together shall constitute a single agreement.
Section 10.8 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 economics or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon determination that any term or other
provision hereof 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 possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
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IN WITNESS WHEREOF, Parent, Merger Subsidiary and the Company have
caused this Agreement to be signed by their respective officers thereunder duly
authorized all as of the date first written above.
EASTMAN KODAK COMPANY
By /s/ J. Michael McQuade
____________________________
J. Michael McQuade
Senior Vice President
SUNFISH ACQUISITION CORP.
By /s/ Kenneth K. Doolittle
____________________________
Kenneth K. Doolittle
President
LUMISYS INCORPORATED
By /s/ Dean MacIntosh
____________________________
Dean MacIntosh
Executive Vice President
