SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 25, 1999
---------------------------------
(Date of earliest event reported)
Unitrode Corporation
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(Exact name of Registrant as specified in its charter)
Maryland 1-5609 04-2271186
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(State or other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
Seven Continental Boulevard, Merrimack, NH 30354-4334
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(Address of principal executive offices) (Zip Code)
(603) 424-2410
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
Unitrode Corporation, a Maryland corporation (the "Company"),
Texas Instruments Incorporated, a Delaware corporation ("Parent"), and
Unicorn Acquisition Corporation, a Maryland corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), entered into an Agreement and Plan of
Merger, dated as of July 25, 1999 (the "Merger Agreement"), pursuant to
which, and subject to the conditions thereof, the Company will become a
wholly owned subsidiary of Parent through the merger of Merger Sub with
and into the Company.
In connection with the Merger Agreement, the Company and Parent
entered into a Stock Option Agreement, dated as of July 25, 1999 (the
"Stock Option Agreement"), pursuant to which Parent has the right, under
certain circumstances, to purchase up to 6,470,760 shares of the Company's
common stock, par value $0.01 per share, at an exercise price of $38.60.
Copies of the Merger Agreement and the Stock Option Agreement are attached
hereto as Exhibit 2.1 and Exhibit 4.1, respectively. Such Exhibits are
incorporated by reference into this Item 5 and the foregoing description
is qualified in its entirety by reference to such Exhibits.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit No. Description
----------- -----------
2.1 Agreement and Plan of Merger, dated as of July 25, 1999,
among Unitrode Corporation, a Maryland corporation, Texas
Instruments Incorporated, a Delaware corporation, and
Unicorn Acquisition Corporation, a Maryland corporation and
wholly owned subsidiary of Texas Instruments Incorporated.
4.1 Stock Option Agreement, dated as of July 25, 1999, between
Texas Instruments Incorporated, a Delaware corporation and
Unitrode Corporation, a Maryland corporation.
99.1 Press release dated July 26, 1999.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
UNITRODE CORPORATION
By: /s/ Allan R. Campbell
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Name: Allan R. Campbell
Title: Senior V.P, General
Counsel and Secretary
Date: July 27, 1999
EXHIBIT INDEX
Exhibit No. Description
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2.1 Agreement and Plan of Merger, dated as of July 25, 1999,
among Unitrode Corporation, a Maryland corporation, Texas
Instruments Incorporated, a Delaware corporation, and
Unicorn Acquisition Corporation, a Maryland corporation and
wholly owned subsidiary of Texas Instruments Incorporated.
4.1 Stock Option Agreement, dated as of July 25, 1999, between
Texas Instruments Incorporated, a Delaware corporation and
Unitrode Corporation, a Maryland corporation.
99.1 Press release dated July 26, 1999.
===============================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 25, 1999
AMONG
UNITRODE CORPORATION
TEXAS INSTRUMENTS INCORPORATED
AND
UNICORN ACQUISITION CORP.
===============================================================================
TABLE OF CONTENTS
Article I THE MERGER...................................................2
SECTION 1.1 The Merger.................................................2
SECTION 1.2 Effective Time.............................................2
SECTION 1.3 Closing of the Merger......................................2
SECTION 1.4 Effects of the Merger......................................2
SECTION 1.5 Charter and Bylaws.........................................2
SECTION 1.6 Directors..................................................3
SECTION 1.7 Officers...................................................3
Article II CONVERSION OF SECURITIES.....................................3
SECTION 2.1 Conversion of Shares.......................................3
SECTION 2.2 Stock Options..............................................4
SECTION 2.3 Exchange Fund..............................................5
SECTION 2.4 Exchange Procedures........................................6
SECTION 2.5 Distributions with Respect to Unsurrendered Certificates...6
SECTION 2.6 No Further Ownership Rights in Company Common Stock........7
SECTION 2.7 No Fractional Shares of Parent Common Stock................7
SECTION 2.8 Termination of Exchange Fund...............................7
SECTION 2.9 No Liability...............................................7
SECTION 2.10 Investment of the Exchange Fund............................8
SECTION 2.11 Lost Certificates..........................................8
SECTION 2.12 Withholding Rights.........................................8
SECTION 2.13 Stock Transfer Books.......................................8
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................8
SECTION 3.1 Organization and Qualification; Subsidiaries...............9
SECTION 3.2 Capitalization of the Company and Its Subsidiaries.........9
SECTION 3.3 Authority Relative to This Agreement......................10
SECTION 3.4 SEC Reports; Financial Statements.........................11
SECTION 3.5 No Undisclosed Liabilities................................11
SECTION 3.6 Absence of Changes........................................11
SECTION 3.7 Information Supplied......................................13
SECTION 3.8 Consents and Approvals....................................14
SECTION 3.9 No Default................................................14
SECTION 3.10 Real Property.............................................15
SECTION 3.11 Litigation................................................17
SECTION 3.12 Compliance with Applicable Law; Permits...................17
SECTION 3.13 Employee Plans............................................18
SECTION 3.14 Labor Matters.............................................20
SECTION 3.15 Environmental Matters.....................................21
SECTION 3.16 Tax Matters...............................................23
SECTION 3.17 Absence of Questionable Payments..........................24
SECTION 3.18 Material Contracts........................................25
SECTION 3.19 Subsidies.................................................26
SECTION 3.20 Intellectual Property.....................................26
SECTION 3.21 Year 2000.................................................28
SECTION 3.22 Opinion of Financial Advisor..............................29
SECTION 3.23 Brokers...................................................29
SECTION 3.24 Accounting Matters........................................29
SECTION 3.25 Recalls...................................................29
SECTION 3.26 Takeover Statute..........................................29
SECTION 3.27 Company Rights Agreement..................................29
Article IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.....30
SECTION 4.1 Organization..............................................30
SECTION 4.2 Authority Relative to This Agreement......................30
SECTION 4.3 SEC Reports; Financial Statements.........................31
SECTION 4.4 Undisclosed Liabilities...................................31
SECTION 4.5 Capitalization of Parent..................................32
SECTION 4.6 Information Supplied......................................32
SECTION 4.7 Consents and Approvals; No Violations.....................32
SECTION 4.8 No Prior Activities.......................................33
SECTION 4.9 Brokers...................................................33
SECTION 4.10 Accounting Matters........................................33
Article V COVENANTS RELATED TO CONDUCT OF BUSINESS....................33
SECTION 5.1 Conduct of Business of the Company........................33
SECTION 5.2 Conduct of Business of Parent.............................36
SECTION 5.3 Access to Information.....................................37
Article VI ADDITIONAL AGREEMENTS.......................................37
SECTION 6.1 Preparation of S-4 and the Proxy Statement................37
SECTION 6.2 Letter of Accountants.....................................38
SECTION 6.3 Meeting...................................................38
SECTION 6.4 Reasonable Best Efforts...................................39
SECTION 6.5 Acquisition Proposals.....................................40
SECTION 6.6 Public Announcements......................................42
SECTION 6.7 Indemnification...........................................42
SECTION 6.8 Notification of Certain Matters...........................43
SECTION 6.9 Tax-Free Reorganization Treatment.........................43
SECTION 6.10 Employee Matters..........................................43
SECTION 6.11 Company Affiliate Agreements..............................44
SECTION 6.12 SEC and Other Filings.....................................44
SECTION 6.13 Fees and Expenses.........................................44
SECTION 6.14 Obligations of Merger Sub.................................45
SECTION 6.15 Listing of Stock..........................................45
SECTION 6.16 Antitakeover Statutes.....................................45
SECTION 6.17 Termination of Credit Agreement...........................45
SECTION 6.18 Benchmarq.................................................45
Article VII CONDITIONS TO CONSUMMATION OF THE MERGER....................45
SECTION 7.1 Conditions to Each Party's
Obligations to Effect the Merger.........................45
SECTION 7.2 Conditions to the Obligations of Parent and Merger Sub....46
SECTION 7.3 Conditions to the Obligations of the Company..............47
Article VIII TERMINATION; AMENDMENT; WAIVER..............................48
SECTION 8.1 Termination by Mutual Agreement...........................48
SECTION 8.2 Termination by Either Parent or the Company...............48
SECTION 8.3 Termination by the Company................................49
SECTION 8.4 Termination by Parent.....................................49
SECTION 8.5 Effect of Termination and Abandonment.....................50
SECTION 8.6 Amendment.................................................51
SECTION 8.7 Extension; Waiver.........................................51
Article IX MISCELLANEOUS...............................................51
SECTION 9.1 Entire Agreement; Assignment..............................51
SECTION 9.2 Notices...................................................51
SECTION 9.3 Governing Law.............................................53
SECTION 9.4 Descriptive Headings......................................53
SECTION 9.5 Parties in Interest.......................................53
SECTION 9.6 Severability..............................................53
SECTION 9.7 Specific Performance......................................53
SECTION 9.8 Counterparts..............................................53
SECTION 9.9 Interpretation............................................54
SECTION 9.10 Definitions...............................................54
EXHIBITS
Voting Agreement ......... A
Company Affiliate Agreement B
Option Agreement ......... C
GLOSSARY OF DEFINED TERMS
Defined Terms Defined in Section
Acquisition Proposal....................................................6.5(a)
Antitrust Law..............................................................3.8
Articles of Merger.........................................................1.2
Assumed Stock Option....................................................2.2(a)
Average Parent Stock Price..............................................2.1(b)
beneficial ownership...................................................9.10(a)
beneficially own.......................................................9.10(a)
business day...........................................................9.10(b)
Benefit Plans.......................................................3.13(a)(i)
Certificates...............................................................2.4
Closing....................................................................1.3
Closing Date ..............................................................1.3
Code..................................................................Recitals
Company...............................................................Preamble
Company Affiliate Agreements..........................................Recitals
Company Balance Sheet......................................................3.4
Company Balance Sheet Date.................................................3.4
Company Board...........................................................3.3(b)
Company Common Stock....................................................2.1(b)
Company Common Stock Price..............................................2.1(b)
Company Disclosure Schedule........................................Article III
Company Option Plan.....................................................2.2(a)
Company Permits...........................................................3.12
Company Requisite Vote..................................................3.3(b)
Company Rights Agreement..................................................3.27
Company SEC Reports........................................................3.4
Company Securities......................................................3.2(a)
Company Stock Options...................................................2.2(a)
Company Stockholder Meeting................................................6.3
Confidentiality Agreement...............................................5.3(c)
Covered Transactions......................................................3.26
Department.................................................................1.2
DOJ.....................................................................6.4(b)
Effective Time.............................................................1.2
Employee Arrangements..............................................3.13(a)(ii)
Environmental Law...................................................3.15(a)(i)
ERISA...............................................................3.13(a)(i)
Exchange Act...............................................................3.4
Exchange Agent.............................................................2.3
Exchange Fund..............................................................2.3
Exchange Ratio..........................................................2.1(b)
Expenses..................................................................6.13
Financial Advisor.........................................................3.22
Former Facilities......................................................3.10(a)
FTC.....................................................................6.4(b)
GAAP.......................................................................3.4
Governmental Entity........................................................3.8
Hazardous Material.................................................3.15(a)(ii)
HSR Act....................................................................3.8
Indemnified Party(ies)..................................................6.7(a)
Intellectual Property..................................................3.20(a)
IRS....................................................................3.13(b)
know...................................................................9.10(c)
knowledge..............................................................9.10(c)
Law........................................................................3.9
Lien....................................................................3.2(b)
Material Adverse Effect................................................9.10(d)
Material Contracts.....................................................3.18(a)
Merger.....................................................................1.1
Merger Sub............................................................Preamble
MGCL.......................................................................1.1
NYSE....................................................................2.1(b)
Option Agreement......................................................Recitals
Parent................................................................Preamble
Parent Board............................................................4.2(b)
Parent Common Stock...................................................Recitals
Parent Disclosure Schedule..........................................Article IV
Parent SEC Reports.........................................................4.3
person ................................................................9.10(e)
Product................................................................3.25(c)
Proxy Statement............................................................3.7
Real Property Leases................................................3.10(c)(i)
Recalls................................................................3.25(a)
Release...........................................................3.15(a)(iii)
Remedial Action....................................................3.15(a)(iv)
Rights....................................................................3.27
S-4........................................................................3.7
Scheduled Intellectual Property........................................3.20(a)
SEC.....................................................................2.2(a)
Share(s)................................................................2.1(b)
Share Consideration.....................................................2.1(b)
Stock Purchase Plan.....................................................2.2(c)
subsidiary.............................................................9.10(f)
Superior Proposal.......................................................6.5(a)
Surviving Corporation......................................................1.1
Systems................................................................3.21(e)
Takeover Statutes.........................................................3.26
Tax(es)................................................................3.16(a)
Tax Returns............................................................3.16(a)
Termination Date .......................................................8.2(a)
Voting Agreements.....................................................Recitals
WARN...................................................................3.14(d)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 25, 1999, is
among Unitrode Corporation, a Maryland corporation (the "COMPANY"), Texas
Instruments Incorporated, a Delaware corporation ("PARENT"), and Unicorn
Acquisition Corp., a Maryland corporation and a direct wholly owned
subsidiary of Parent ("MERGER SUB"). Certain capitalized and
non-capitalized terms used herein are defined in Section 9.10.
RECITALS
WHEREAS, the Boards of Directors of the Company, Parent and Merger
Sub each have, in light of and subject to the terms and conditions set
forth herein, approved this Agreement and the transactions contemplated
hereby, including the Merger, and the Boards of Directors of the Company
and Merger Sub have declared the Merger advisable on substantially the
terms and conditions set forth herein and fair to, and in the best
interests of, their respective stockholders;
WHEREAS, pursuant to the Merger, among other things, and subject
to the terms and conditions of this Agreement, all of the issued and
outstanding shares of stock of the Company shall be converted into the
right to receive shares of common stock, par value $1.00 per share, of
Parent (together with any associated rights to acquire shares of Cumulative
Preferred Stock of Parent pursuant to the Rights Agreement dated as of June
18, 1998, as amended, between Parent and Harris Trust and Savings Bank, as
Rights Agent) (collectively, "PARENT COMMON STOCK");
WHEREAS, as an inducement to Parent and Merger Sub to enter into
this Agreement, certain stockholders of the Company have concurrently
herewith entered into (i) voting agreements in the form attached hereto as
EXHIBIT A ("VOTING AGREEMENTS") pursuant to which, among other things, such
stockholders have agreed to vote the shares of Company Common Stock (as
hereinafter defined) owned by them in favor of the Merger and (ii) Company
Affiliate Agreements in the form attached hereto as EXHIBIT B ("COMPANY
AFFILIATE AGREEMENTS") pursuant to which, among other things, such
stockholders have agreed to refrain from selling shares of Company Common
Stock or Parent Common Stock during a specified period prior to and
following consummation of the Merger;
WHEREAS, as an inducement to Parent and Merger Sub to enter into
this Agreement, the Company has entered into a stock option agreement in
the form attached hereto as EXHIBIT C ("OPTION AGREEMENT") pursuant to
which the Company has granted to Parent an option to purchase from the
Company, upon the terms and conditions described in the Option Agreement,
Shares (as hereinafter defined);
WHEREAS, for U.S. federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "CODE"), and
that this Agreement shall be, and is hereby, adopted as a plan of
reorganization for purposes of Section 368(a) of the Code;
WHEREAS, for accounting purposes, it is intended that the Merger
shall be accounted for as a "pooling of interests"; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with
the Merger as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Merger Sub
hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. At the Effective Time and upon the terms
and subject to the conditions of this Agreement and in accordance with the
Maryland General Corporation Law (the "MGCL"), Merger Sub shall be merged
with and into the Company (the "MERGER"). Following the Merger, the Company
shall continue as the surviving corporation (the "SURVIVING CORPORATION")
and the separate corporate existence of Merger Sub shall cease.
SECTION 1.2 Effective Time. Subject to the provisions of this
Agreement, Parent, Merger Sub and the Company shall cause the Merger to be
consummated by filing appropriate Articles of Merger (the "ARTICLES OF
MERGER") for record with the State Department of Assessments and Taxation
of Maryland (THE "DEPARTMENT") in such form as required by, and executed in
accordance with, the relevant provisions of the MGCL, as soon as
practicable on or after the Closing Date (as hereinafter defined). The
Merger shall become effective upon acceptance for record of such Articles
of Merger by the Department or at such time thereafter (but not exceeding
30 days after such acceptance for record) as is provided in the Articles of
Merger (the "EFFECTIVE TIME").
SECTION 1.3 Closing of the Merger. The closing of the Merger (the
"CLOSING") will take place at a time and on a date to be specified by the
parties (the "CLOSING DATE"), which shall be no later than the second
business day after satisfaction or waiver of the conditions set forth in
Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions), at the offices of Weil, Gotshal & Manges LLP, 100 Crescent
Court, Suite 1300, Dallas, Texas 75201, or at such other time, date or
place as agreed to in writing by the parties hereto.
SECTION 1.4 Effects of the Merger. The Merger shall have the
effects set forth in the MGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all of the
properties, rights, privileges, powers and franchises of the Company and
Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
SECTION 1.5 Charter and Bylaws. Effective immediately following
the Merger, the charter of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the charter of the Surviving Corporation until
amended in accordance with applicable Law (as hereinafter defined).
Effective immediately following the Merger, the bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation until amended in accordance with applicable Law.
SECTION 1.6 Directors. The directors of Merger Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation and shall hold office from the Effective Time in accordance
with the charter and bylaws of the Surviving Corporation until their
successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal.
SECTION 1.7 Officers. The officers of the Company immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation and shall hold office from the Effective Time in accordance
with the charter and bylaws of the Surviving Corporation until their
successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 Conversion of Shares.
(a) At the Effective Time, each issued and outstanding share of
the common stock, par value $.01 per share, of Merger Sub shall, by virtue
of the Merger and without any action on the part of Parent, Merger Sub or
the Company, be converted into one fully paid and non-assessable share of
common stock of the Surviving Corporation.
(b) At the Effective Time, each share of common stock, par value
$.01 per share, of the Company, including the associated Rights (as
hereinafter defined) ("COMPANY COMMON STOCK"), issued and outstanding
immediately prior to the Effective Time (individually, a "SHARE" and
collectively, the "SHARES") (other than (i) Shares held by the Company and
(ii) Shares held by Parent or Merger Sub) shall, by virtue of the Merger
and without any action on the part of Parent, Merger Sub, the Company or
any holder thereof, be converted into and be exchangeable for the right to
receive the number (rounded to the nearest thousandth) of fully paid and
non-assessable shares of Parent Common Stock, determined by dividing $38.60
(the "COMPANY COMMON STOCK PRICE") by the Average Parent Stock Price (such
quotient being hereinafter referred to as the "EXCHANGE RATIO," and all
such shares of Parent Common Stock issued pursuant to this Section 2.1(b),
together with any cash in lieu of fractional shares of Parent Common Stock
to be paid pursuant to Section 2.7, being referred to herein as the "SHARE
CONSIDERATION"). As used herein, the "AVERAGE PARENT STOCK PRICE" means the
average of the daily high and low sales prices, regular way, of one share
of Parent Common Stock (rounded to the nearest thousandth) on the New York
Stock Exchange ("NYSE") (as reported in the New York City edition of the
Wall Street Journal or, if not reported thereby, another nationally
recognized source) during the 20 consecutive trading day period ending on
the second trading day prior to the Effective Time; provided, however, that
(i) if the Average Parent Stock Price is less than $133.70 the Average
Parent Stock Price for purposes of determining the Exchange Ratio shall be
equal to $133.70 (the "MINIMUM AVERAGE PARENT STOCK PRICE"), and (ii) if
the Average Parent Stock Price is greater than $153.70, the Average Parent
Stock Price for purposes of determining the Exchange Ratio shall be equal
to $153.70 (the "MAXIMUM AVERAGE PARENT STOCK Price").
(c) At the Effective Time (i) each Share of Company Common Stock
owned by Parent shall be contributed to Merger Sub immediately prior to the
Effective Time and (ii) all shares held by Merger Sub, including any shares
so contributed, shall become one share of authorized but unissued stock of
the Surviving Corporation.
(d) If between the date of this Agreement and the Effective Time
Parent changes (or establishes a record date for changing) the outstanding
shares of Parent Common Stock into a different number of shares or a
different class of shares as a result of any stock dividend, subdivision,
reclassification, recapitalization, split (including a reverse split),
combination, exchange of shares or extraordinary dividend (in cash or
otherwise), or any similar event, then the Minimum Average Parent Stock
Price, the Maximum Average Parent Stock Price and the Exchange Ratio and
the Average Parent Stock Price shall be appropriately adjusted to the
extent necessary to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares, extraordinary dividend or such similar event.
SECTION 2.2 Stock Options.
(a) As soon as practicable following the date of this Agreement,
Parent and the Company (or, if appropriate, any committee of the Board of
Directors of the Company administering the Company's 1999 Equity Incentive
Plan (the "COMPANY OPTION PLAN") or any committee of the Board of Directors
administering Parent's option plans) or any other Company stock option
plans shall take such action as may be required to effect the following
provisions of this Section 2.2. As of the Effective Time, each option to
purchase shares of Company Common Stock, including all options granted
pursuant to the Company Option Plan, the Company's 1983 Stock Option Plan,
1986 Non-Employee Director Option Plan and 1992 Employee Stock Option Plan
(each, a "COMPANY STOCK Option") which is then outstanding shall be assumed
by Parent and converted into an option (or a new substitute option shall be
granted) (an "ASSUMED STOCK OPTION") to purchase the number of shares of
Parent Common Stock (rounded up to the nearest whole share) equal to (x)
the number of shares subject to such option multiplied by (y) the Exchange
Ratio, at an exercise price per share of Parent Common Stock (rounded down
to the nearest penny) equal to (A) the former exercise price per share of
Company Common Stock under such option immediately prior to the Effective
Time divided by (B) the Exchange Ratio; provided, however, that in the case
of any Company Stock Option to which Section 421 of the Code applies by
reason of its qualification under Section 422 of the Code, the conversion
formula shall be adjusted, if necessary, to comply with Section 424(a) of
the Code. Except as provided above, each Assumed Stock Option shall be
subject to the same terms and conditions (including expiration date and
vesting) as were applicable to such converted Company Stock Option
immediately prior to the Effective Time. Parent shall use its reasonable
best efforts to promptly prepare and file with the Securities and Exchange
Commission (the "SEC") a registration statement on Form S-8 or other
appropriate form with respect to shares of Parent Common Stock subject to
the Assumed Stock Options and to maintain the effectiveness of such
registration statement or registration statements covering such Assumed
Stock Options (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such Assumed Stock Options
remain outstanding.
(b) Prior to Closing, the Company shall provide all information
reasonably requested by Parent in respect of the Company Stock Options and
shall fully cooperate with Parent to effect the transactions contemplated
by this Section 2.2.
(c) No later than July 30, 1999, the Company shall terminate any
offerings under its 1999 Employee Stock Purchase Plan (the "STOCK PURCHASE
PLAN"), and such plan shall terminate immediately prior to the Effective
Time.
(d) As of the Effective Time, any restricted shares of Company
Common Stock shall be converted into shares of Parent Common Stock equal to
the number of restricted shares of Company Common Stock multiplied by the
Exchange Ratio (and rounded up to the nearest whole share), and such shares
of Parent Common Stock shall otherwise be subject to the same terms as in
effect immediately prior to the Effective Time (including any terms that
would result in the restrictions on such shares lapsing as of the Effective
Time as disclosed in Section 3.13(a) of the Company Disclosure Schedule (as
hereinafter defined)). As of the Effective Time, any stock appreciation
rights ("SAR") with respect to shares of Company Common Stock which are
outstanding as of the Effective Time shall be converted into stock
appreciation rights with respect to the number of shares of Parent Common
Stock equal to: (x) the number of shares subject to such SAR multiplied by
(y) the Exchange Ratio, at a strike price per share of Parent Common Stock
(rounded down to the nearest penny) equal to (A) the former strike price
per share of Company Common Stock under such option immediately prior to
the Effective Time divided by (B) the Exchange Ratio.
(e) The Company Option Plan (including all predecessor plans) and
all Company Stock Options shall terminate (other than with respect to the
right to receive the consideration specified in this Section 2.2) at and as
of the Effective Time. The provisions in any other plan, program or
arrangement providing for the issuance or grant of any Company Stock
Options or similar instruments shall be canceled at and as of the Effective
Time (subject only to the rights to receive the consideration, if any,
specified in this Section 2.2). The Company shall take all action necessary
to ensure that following the Effective Time no participant in the Company
Option Plan, the Stock Purchase Plan or other plans, programs or
arrangements shall have any right thereunder to acquire equity securities
of the Company, the Surviving Corporation or any subsidiary thereof and to
terminate all such plans, programs and arrangements.
SECTION 2.3 Exchange Fund. Prior to the Effective Time, Parent
shall appoint a commercial bank or trust company reasonably acceptable to
the Company to act as exchange agent hereunder for the purpose of
exchanging Shares for the Share Consideration (the "EXCHANGE AGENT"). At or
prior to the Effective Time, Parent shall deposit with the Exchange Agent,
in trust for the benefit of holders of Shares, certificates representing
the Parent Common Stock issuable pursuant to Section 2.1 in exchange for
outstanding Shares. Parent agrees to make available to the Exchange Agent
from time to time as needed, sufficient cash amounts payable in lieu of
fractional shares of Parent Common Stock pursuant to Section 2.7 and any
dividends and other distributions payable pursuant to Section 2.5. Any cash
and certificates of Parent Common Stock, together with any dividends or
distributions with respect thereto, deposited with the Exchange Agent shall
hereinafter be referred to as the "EXCHANGE FUND."
SECTION 2.4 Exchange Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall cause the
Exchange Agent to mail to each holder of a certificate or certificates
which immediately prior to the Effective Time represented outstanding
Shares (the "CERTIFICATES") whose shares were converted pursuant to Section
2.1(b) into Parent Common Stock (i) a letter of transmittal which shall
specify that delivery shall be effective, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent, and which letter shall be in customary form and have such
other provisions as Parent and the Company may reasonably specify; and (ii)
instructions for effecting the surrender of such Certificates in exchange
for the Share Consideration. Upon surrender of a Certificate to the
Exchange Agent together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, and such other
documents as may reasonably be required by the Exchange Agent, the holder
of such Certificate shall be entitled to receive in exchange therefor (A) a
certificate or certificates representing that number of shares of Parent
Common Stock representing, in the aggregate, the whole number of shares
that such holder has the right to receive pursuant to Section 2.1 and (B) a
check in the amount equal to the cash that such holder has the right to
receive pursuant to the provisions of this Article II, including cash in
lieu of any dividends and other distributions made in accordance with
Section 2.5 and cash in lieu of fractional shares pursuant to Section 2.7
and the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or will accrue on any cash payable pursuant to
Section 2.5 or Section 2.7. In the event of a transfer of ownership of
Company Common Stock which is not registered in the transfer records of the
Company, certificates evidencing, in the aggregate, the proper number of
shares of Parent Common Stock, a check in the proper amount of cash in lieu
of any fractional shares of Parent Common Stock pursuant to Section 2.7 and
any dividends or other distributions to which such holder is entitled
pursuant to Section 2.5, may be issued with respect to such Shares to such
a transferee if the Certificate representing such Shares is presented to
the Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and to evidence that any applicable stock transfer
Taxes have been paid.
SECTION 2.5 Distributions with Respect to Unsurrendered
Certificates. No dividends or other distributions declared or made with
respect to shares of Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of Parent Common Stock that such holder would be
entitled to receive upon surrender of such Certificate and no cash payment
in lieu of fractional shares of Parent Common Stock shall be paid to any
such holder pursuant to Section 2.7 until such holder shall surrender such
Certificate in accordance with Section 2.4. Subject to the effect of
applicable Laws, following surrender of any such Certificate, there shall
be paid to such holder of shares of Parent Common Stock issuable in
exchange therefor, without interest, (a) promptly after the time of such
surrender, the amount of any cash payable in lieu of fractional shares of
Parent Common Stock to which such holder is entitled pursuant to Section
2.7 and the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole shares
of Parent Common Stock, and (b) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective
Time but prior to such surrender and a payment date subsequent to such
surrender payable with respect to such shares of Parent Common Stock.
SECTION 2.6 No Further Ownership Rights in Company Common Stock.
All shares of Parent Common Stock issued and cash paid upon conversion of
the Shares in accordance with the terms of Article I and this Article II
(including any cash paid pursuant to Sections 2.5 and 2.7) shall be deemed
to have been issued or paid in full satisfaction of all rights under the
MGCL pertaining to the Shares.
SECTION 2.7 No Fractional Shares of Parent Common Stock.
(a) No certificates or scrip of shares of Parent Common Stock
representing fractional shares of Parent Common Stock or book-entry credit
of the same shall be issued upon the surrender for exchange of Certificates
and such fractional share interests will not entitle the owner thereof to
vote or to have any rights of a stockholder of Parent or a holder of shares
of Parent Common Stock.
(b) Notwithstanding any other provision of this Agreement, each
holder of Shares exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Parent Common Stock
(after taking into account all Certificates delivered by such holder) shall
receive, in lieu thereof, cash (without interest) in an amount equal to the
product of (i) such fractional part of a share of Parent Common Stock
multiplied by (ii) the closing price on the NYSE (as reported in the New
York City edition of the Wall Street Journal or, if not reported thereby,
another nationally recognized source) for a share of Parent Common Stock on
the date of the Effective Time. As promptly as practicable after the
determination of the aggregate amount of cash to be paid to holders of
fractional interests, the Exchange Agent shall notify Parent and Parent
shall cause the Surviving Corporation to deposit such amount with the
Exchange Agent and shall cause the Exchange Agent to forward payments to
such holders of fractional interests subject to and in accordance with the
terms hereof.
SECTION 2.8 Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the holders of Certificates
for twelve months after the Effective Time shall be delivered to the
Surviving Corporation or otherwise on the instruction of the Surviving
Corporation, and any holders of the Certificates who have not theretofore
complied with this Article II shall thereafter look only to the Surviving
Corporation and Parent for the Share Consideration with respect to the
Shares formerly represented thereby to which such holders are entitled
pursuant to Section 2.1 and Section 2.4, any cash in lieu of fractional
shares of Parent Common Stock to which such holders are entitled pursuant
to Section 2.7 and any dividends or distributions with respect to shares of
parent Common Stock to which such holders are entitled pursuant to Section
2.5.
SECTION 2.9 No Liability. None of Parent, Merger Sub, the Company,
the Surviving Corporation or the Exchange Agent, or any directors,
officers, employees or agents of each of the foregoing shall be liable to
any person in respect of any Parent Common Stock, any dividends or
distributions with respect thereto, any cash in lieu of fractional shares
of Parent Common Stock or any cash from the Exchange Fund delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar Law.
SECTION 2.10 Investment of the Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund as directed by Parent
on a daily basis. Any interest and other income resulting from such
investments promptly shall be paid to Parent.
SECTION 2.11 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and,
if required by the Surviving Corporation, the posting by such person of a
bond in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will deliver in exchange for such
lost, stolen or destroyed Certificate the applicable Share Consideration
with respect to the Shares formerly represented thereby, any cash in lieu
of fractional shares of Parent Common Stock and unpaid dividends and
distributions on shares of Parent Common Stock deliverable in respect
thereof, pursuant to this Agreement.
SECTION 2.12 Withholding Rights. Each of the Surviving Corporation
and Parent shall be entitled to deduct and withhold from the Share
Consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as it is required to deduct and withhold with respect
to the making of such payment under the Code and the rules and regulations
promulgated thereunder, or any applicable Law. To the extent that amounts
are so withheld by the Surviving Corporation or Parent, as the case may be,
such withheld amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the Shares in respect to which such
deduction and withholding was made by the Surviving Corporation or Parent,
as the case may be.
SECTION 2.13 Stock Transfer Books. The stock transfer books of the
Company shall be closed immediately upon the Effective Time and there shall
be no further registration of transfers of Shares thereafter on the records
of the Company. On or after the Effective Time, any Certificates presented
to the Exchange Agent or Parent for any reason shall be converted into the
Share Consideration with respect to the Shares formerly represented
thereby, any cash in lieu of fractional shares of Parent Common Stock to
which the holders thereof are entitled pursuant to Section 2.7 and any
dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.5 and the Certificates so presented shall be
cancelled.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the
Company to Parent prior to the execution of this Agreement (the "COMPANY
DISCLOSURE SCHEDULE") (each section of which qualifies the correspondingly
numbered representation and warranty or covenant to the extent specified
therein), the Company hereby represents and warrants to each of Parent and
Merger Sub as follows:
SECTION 3.1 Organization and Qualification; Subsidiaries.
(a) The Company and each of its subsidiaries is a corporation or
legal entity duly organized, validly existing and in good standing under
the applicable Laws of the jurisdiction of its incorporation or
organization and has all requisite corporate, partnership or similar power
and authority to own, lease and operate its properties and to carry on its
businesses as now being conducted.
(b) Section 3.1 of the Company Disclosure Schedule sets forth a
list of all subsidiaries of the Company. Except as listed in Section 3.1 of
the Company Disclosure Schedule, the Company does not own, directly or
indirectly, beneficially or of record, any shares of capital stock or other
securities of any other entity or any other investment in any other entity.
(c) Each of the Company and its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which
the property owned, leased, or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing
is not reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company and its subsidiaries taken as a
whole.
(d) The Company has heretofore delivered to Parent accurate and
complete copies of the charter or articles or certificate of incorporation
and bylaws (or other similar organizational and governing documents), as
currently in effect, of the Company and each of its subsidiaries.
SECTION 3.2 Capitalization of the Company and Its Subsidiaries.
(a) The authorized stock of the Company consists of: (i)
60,000,000 shares of Company Common Stock, of which 32,516,383 shares were
issued and outstanding as of July 13, 1999, and (ii) 1,000,000 shares of
Preferred Stock, par value $.01 per share, of which 300,000 shares are
designated as Series A Junior Participating Preferred Stock, no shares of
which are outstanding. All of the issued and outstanding Shares have been
validly issued, and are duly authorized, fully paid, non-assessable and
free of preemptive rights. As of the date hereof, 6,260,252 Shares are
reserved for issuance and issuable upon or otherwise deliverable in
connection with the exercise of outstanding Company Stock Options. Except
as set forth above and except for the Option Agreement and the Company
Rights Agreement (as hereinafter defined), as of the date hereof, there are
outstanding (i) no shares of stock or other voting securities of the
Company; (ii) no securities of the Company or any of its subsidiaries
convertible into or exchangeable for shares of stock or voting securities
of the Company; (iii) no options or other rights to acquire from the
Company or any of its subsidiaries, and no obligations of the Company or
any of its subsidiaries to issue, any stock, voting securities, or
securities convertible into or exchangeable for stock or voting securities
of the Company; and (iv) no equity equivalents, interests in the ownership
or earnings of the Company, or other similar rights (including stock
appreciation rights) (collectively, "COMPANY SECURITIES"). Except for the
Option Agreement, there are no outstanding obligations of the Company or
any of its subsidiaries to repurchase, redeem or otherwise acquire any
Company Securities. There are no stockholder agreements, voting trusts or
other agreements or understandings to which the Company or any of its
subsidiaries is a party or to which it is bound relating to the voting of
any shares of capital stock of the Company (other than the Voting
Agreement). Section 3.2 of the Company Disclosure Schedule sets forth
information regarding the current exercise price, the date of grant, and
the number of Company Stock Options granted for each holder thereof.
(b) All of the outstanding capital stock of the Company's
subsidiaries is owned by the Company, directly or indirectly, free and
clear of any Lien or any other limitation or restriction (including, any
restriction on the right to vote or sell the same) except as may be
provided as a matter of Law. There are no securities of the Company or its
subsidiaries convertible into or exchangeable for, no options or other
rights to acquire from the Company or its subsidiaries, and no other
contract, understanding, arrangement, or obligation (whether or not
contingent) providing for the issuance or sale, directly or indirectly of,
any capital stock or other ownership interests in, or any other securities
of, any subsidiary of the Company. There are no outstanding contractual
obligations of the Company or its subsidiaries to repurchase, redeem, or
otherwise acquire any outstanding shares of capital stock or other
ownership interests in any subsidiary of the Company. For purposes of this
Agreement, "LIEN" means, in respect of any asset (including any security)
any mortgage, lien, pledge, charge, security interest, or encumbrance of
any kind in respect of such asset.
SECTION 3.3 Authority Relative to This Agreement.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and the Option Agreement and to
consummate the transactions contemplated hereby. No other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby and thereby
(other than, in respect of the Merger and this Agreement, the Company
Requisite Vote (as hereinafter defined)). This Agreement and the Option
Agreement have been duly and validly executed and delivered by the Company
and constitute valid, legal, and binding agreements of the Company,
enforceable against the Company in accordance with their respective terms.
(b) As of the date hereof, the Board of Directors of the Company
(the "COMPANY Board") has, by unanimous vote of those present (who
constituted 100% of the directors then in office), duly and validly
authorized the execution and delivery of this Agreement and the Option
Agreement and approved the consummation of the transactions contemplated
hereby and thereby, taken all corporate actions required to be taken by the
Company Board for the consummation of the transactions, including the
Merger, contemplated hereby and has resolved (i) this Agreement and the
transactions contemplated hereby, including the Merger, taken together, to
be advisable and fair to, and in the best interests of, the Company and its
stockholders; and (ii) to recommend that the stockholders of the Company
approve and adopt the Merger on substantially the terms and conditions set
forth in this Agreement. The Company Board has directed that the Merger on
substantially the terms and conditions set forth in this Agreement be
submitted to the stockholders of the Company for their approval. The
affirmative approval of the holders of Shares representing 662/3% of the
votes that may be cast by the holders of all outstanding Shares (voting as
a single class) as of the record date for the Company (the "COMPANY
REQUISITE VOTE"), are the only votes of the holders of any class or series
of stock of the Company necessary to approve the Merger on substantially
the terms and conditions set forth in this Agreement.
SECTION 3.4 SEC Reports; Financial Statements. The Company has
filed all required forms, reports and documents with SEC since February 1,
1997, each of which complied in all material respects with all applicable
requirements of the Securities Act and the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"), each as in effect on the dates such forms,
reports, and documents were filed. The Company has heretofore delivered or
made available to Parent, in the form filed with the SEC (including, any
amendments thereto), (i) its Annual Report on Form 10-K for each of the
fiscal years ended January 31, 1997, 1998 and 1999; (ii) all definitive
proxy statements relating to the Company's meetings of stockholders
(whether annual or special) held since February 1, 1997; and (iii) all
other reports (including, all Forms 10-Q filed since February 1, 1997) or
registration statements filed by the Company with the SEC since February 1,
1997 (the "COMPANY SEC REPORTS"). None of the Company SEC Reports
contained, when filed, any untrue statement of a material fact or omitted
to state a material fact required to be stated or incorporated by reference
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
consolidated financial statements of the Company included in the Company
SEC Reports complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
in respect thereof and fairly presented, in conformity with generally
accepted accounting principles applied on a consistent basis ("GAAP")
(except as may be indicated in the notes thereto), the consolidated
financial position of the Company and its consolidated subsidiaries, in
each case as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject, in the case
of the unaudited interim financial statements, to normal year-end
adjustments). For purposes of this Agreement, "COMPANY BALANCE SHEET" means
the consolidated balance sheet of the Company as of May 1, 1999, as set
forth in the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended May 1, 1999, and "COMPANY BALANCE SHEET DATE" means May 1, 1999.
Since May 1, 1999, there has not been any change, or any application or
request for any change, by the Company or any of its subsidiaries in
accounting principles, methods or policies for financial accounting or Tax
purposes (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments).
SECTION 3.5 No Undisclosed Liabilities. There are no liabilities
of the Company or any of its subsidiaries of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise which
are required to be reflected in its financial statements (or in the notes
thereto) in accordance with GAAP, other than: (a) liabilities disclosed,
provided for or reserved against in the Company Balance Sheet or in the
notes thereto; (b) liabilities arising in the ordinary course of business
after the date of the Company Balance Sheet; (c) liabilities disclosed in
the Company SEC Reports prior to the date hereof; and (d) liabilities under
this Agreement.
SECTION 3.6 Absence of Changes. Except as contemplated by this
Agreement and except as and to the extent publicly disclosed in the Company
SEC Reports prior to the date hereof, since the Company Balance Sheet Date,
the Company and its subsidiaries have conducted their business in the
ordinary and usual course consistent with past practice and there has not
been:
(a) any event, occurrence or development which is reasonably
expected to have, individually or in the aggregate, a Material Adverse
Effect on the Company and its subsidiaries taken as a whole;
(b) any declaration, setting aside or payment of any dividend or
other distribution in respect of any shares of stock of the Company or any
subsidiary, or any repurchase, redemption or other acquisition by the
Company or any of its subsidiaries of any Company or subsidiary securities;
(c) any amendment of any term of any outstanding security of the
Company or any of its subsidiaries that would materially increase the
obligations of the Company or any such subsidiary under such security;
(d) (i) any incurrence or assumption by the Company or any
subsidiary of any indebtedness for borrowed money other than under existing
credit facilities (or any renewals, replacements or extensions that do not
increase the aggregate commitments thereunder) except (A) in the ordinary
and usual course of business consistent with past practice or (B) in
connection with any acquisition or capital expenditure permitted by Section
5.1, or (ii) any guarantee, endorsement, or other incurrence or assumption
of liability (whether directly, contingently or otherwise) by the Company
or any of its subsidiaries for the obligations of any other person (other
than any wholly owned subsidiary of the Company), other than in the
ordinary and usual course of business consistent with past practice;
(e) any creation or assumption by the Company or any of its
subsidiaries of any Lien on any material asset of the Company or any of its
subsidiaries other than in the ordinary and usual course of business
consistent with past practice;
(f) any making of any loan, advance or capital contribution to or
investment in any person by the Company or any of its subsidiaries other
than (i) any acquisition permitted by Section 5.1, (ii) loans, advances or
capital contributions to or investments in wholly owned subsidiaries of the
Company, (iii) loans or advances to employees of the Company or any of its
subsidiaries or (iv) extensions of credit to customers in the ordinary
course of business consistent with past practice;
(g) (i) any contract or agreement entered into by the Company or
any of its subsidiaries on or prior to the date hereof relating to any
material acquisition or disposition of any assets or business, other than
contracts or agreements in the ordinary and usual course of business
consistent with past practice and those contemplated by this Agreement or
(ii) any modification, amendment, assignment, termination or relinquishment
by the Company or any of its subsidiaries of any contract, license or other
right (including any insurance policy naming it as a beneficiary or a loss
payable payee) that is reasonably expected to have a Material Adverse
Effect on the Company and its subsidiaries taken as a whole;
(h) any material change in any method of accounting or accounting
principles or practice by the Company or any of its subsidiaries, except
for any such change required by reason of a change in GAAP;
(i) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any of its subsidiaries;
(ii) entering into of any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with
any director, officer or employee of the Company or any of its
subsidiaries; (iii) increase in benefits payable under any existing
severance or termination pay policies or employment agreements; or (iv)
increase in compensation, bonus or other benefits payable to directors,
officers or employees of the Company or any of its subsidiaries other than,
in the case of clause (iv) only, increases prior to the date hereof in
compensation, bonus or other benefits payable to employees of the Company
or any of its subsidiaries in the ordinary and usual course of business
consistent with past practice or merit increases in salaries of employees
at regularly scheduled times in customary amounts consistent with past
practices;
(j) any change or amendment of the contracts, salaries, wages or
other compensation of any officer, director, employee, agent or other
similar representative of the Company or any of its subsidiaries whose
annual compensation exceeds $100,000 other than changes or amendments that
do not and will not result in increases of more than five percent in the
salary, wages or other compensation of any such person;
(k) any adoption, entering into, amendment, alteration or
termination of (partially or completely) any Benefit Plan or Employee
Arrangement except as contemplated by this Agreement or to the extent
required by applicable Law or GAAP;
(l) any entering into of any contract with an officer, director,
employee, agent or other similar representative of the Company or any of
its subsidiaries that is not terminable, without penalty or other
liability, upon not more than 60 calendar days' notice; or
(m) any (i) making or revoking of any material election relating
to Taxes, (ii) settlement or compromise of any material claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, or (iii) change to any material methods of
reporting income or deductions for federal income tax purposes.
SECTION 3.7 Information Supplied. None of the information supplied
or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the registration statement on Form S-4 to
be filed with the SEC by Parent in connection with the issuance of Parent
Common Stock as required by the terms of this Agreement pursuant to the
Merger (the "S-4"), at the time the S-4 is filed with the SEC and at the
time it becomes effective under the Securities Act, will contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading, and (ii) the proxy statement relating to the Company
Stockholder Meeting to be held in connection with the Merger (the "PROXY
STATEMENT") will, at the date mailed to stockholders and at the time of the
Company Stockholder Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event in respect of the Company, its
officers and directors or any of its subsidiaries should occur which is
required to be described in an amendment of, or a supplement to, the S-4 or
the Proxy Statement, the Company shall promptly so advise Parent and such
event shall be so described, and such amendment or supplement (which Parent
shall have a reasonable opportunity to review) shall be promptly filed with
the SEC and, as required by Law, disseminated to the stockholders of the
Company. The Proxy Statement, insofar as it relates to the Company
Stockholder Meeting, will comply as to form in all material respects with
the provisions of the Exchange Act and the rules and regulations
thereunder. No representation is made under this Section 3.7 with respect
to any statements made or incorporated by reference in the S-4 or the Proxy
Statement based on information supplied by Parent specifically for
inclusion or incorporation by reference therein.
SECTION 3.8 Consents and Approvals. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Act, state securities or blue
sky Laws, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), or other Antitrust Law, the filing and acceptance
for record of the Articles of Merger as required by the MGCL, and such
other filings, permits, authorizations, consents and approvals which, if
not obtained or made, are not reasonably expected to have a Material
Adverse Effect on the Company and its subsidiaries taken as a whole, no
filing with or notice to, and no permit, authorization, consent or approval
of, any court or tribunal or administrative, governmental or regulatory
body, agency or authority, whether domestic or foreign (a "GOVERNMENTAL
ENTITY") is necessary for the execution and delivery by the Company of this
Agreement or the Option Agreement or the consummation by the Company of the
transactions contemplated hereby or thereby. For purposes of this
Agreement, "ANTITRUST LAW" means the Sherman Act, as amended, the Clayton
Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended,
and all other Laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or
restraint of trade or lessening of competition through merger or
acquisition.
SECTION 3.9 No Default. Neither the Company nor any of its
subsidiaries is in violation of any term of (i) its charter, certificate or
articles of incorporation or bylaws (or other similar organizational or
governing documents), (ii) any agreement or instrument related to
indebtedness for borrowed money or any other agreement to which it is a
party or by which it is bound, or (iii) any domestic or foreign law, order,
writ, injunction, decree, ordinance, award, stipulation, statute, judicial
or administrative doctrine, rule or regulation entered by a Governmental
Entity ("LAW") applicable to the Company, its subsidiaries or any of their
respective assets or properties, the consequence of which violation is
reasonably expected to (A) have, individually or in the aggregate, a
Material Adverse Effect on the Company and its subsidiaries taken as a
whole or (B) prevent or materially delay the performance of this Agreement
by the Company. The execution, delivery and performance of this Agreement
and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby will not (A) result in any violation of or
conflict with, constitute a default under (with or without due notice or
lapse of time or both), require any consent, waiver or notice under any
term of, or result in the reduction or loss of any benefit or the creation
or acceleration of any right or obligation (including any termination
rights) under, (i) the charter, certificate of incorporation or bylaws (or
other similar organizational or governing documents) of the Company or any
of its subsidiaries, (ii) any agreement, note, bond, mortgage, indenture,
contract, lease, Company Permit or other obligation or right to which the
Company or any of its subsidiaries is a party or by which any of the assets
or properties of the Company or any of its subsidiaries is bound, or (iii)
any applicable Law, except in the case of clause (ii) and (iii) where any
of the foregoing is not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company and its subsidiaries
taken as a whole, or (B) result in the creation of (or impose any
obligation on the Company or any of its subsidiaries to create) any Lien
upon any of the material assets or properties of the Company or any of its
subsidiaries pursuant to any such term.
SECTION 3.10 Real Property.
(a) Except as otherwise set forth on the Company Balance Sheet or
in the Company SEC Reports, Section 3.10 of the Company Disclosure Schedule
identifies the address, general use of, and period of ownership or
occupancy of each of the Company's OWNED FACILITIES, defined as all of the
real property owned in fee as of the date hereof by the Company and its
subsidiaries, and the Company's LEASED FACILITIES, defined as all of the
real property the Company and its subsidiaries use or occupy or have the
right to use or occupy, now or in the future, pursuant to any lease,
sublease, or other occupancy agreement. No real property is owned, leased
or used by the Company or its current subsidiaries in the course of their
respective businesses other than the Owned Facilities and Leased
Facilities.
(b) With respect to each Owned Facility and except as set forth on
the Company Balance Sheet or in the SEC Reports:
(i) the Company or its subsidiary has good and marketable
title to Owned Facilities free and clear of all Liens, except (x)
Taxes and general and special assessments not in default and
payable without penalty and interest, and (y) easements, covenants
and other restrictions or imperfections of title that do not
materially impair the current use, occupancy, or value, or the
marketability of title of such Owned Facilities;
(ii) to the Company's knowledge, there are no pending or
threatened condemnation proceedings, lawsuits or administrative
actions relating to any Owned Facility that would materially and
adversely affect the current use, occupancy or value thereof;
(iii) there are no leases, subleases, licenses, concessions or
other agreements, written or oral, granting to any party or parties
the right of use or occupancy of any portion of any Owned Facility;
(iv) there are no outstanding options or rights of first
refusal to purchase any Owned Facility, or any portion thereof or
interest therein;
(v) there are no parties (other than the Company or its
subsidiaries) in possession of any Owned Facility, other than
tenants under any leases disclosed in Section 3.10 of the Company
Disclosure Schedule who are in possession of space to which they
are entitled;
(vi) all facilities located on Owned Facilities are now, and
will be at the time of Closing, in good operating condition and
repair, and structurally sound and free of known defects, with no
material alterations or repairs required thereto (other than
ordinary and routine maintenance and repairs) under applicable
Laws, Company Permits or insurance company requirements. All such
Owned Facilities have been operated and maintained in all material
respects in accordance with applicable Laws and Company Permits.
All such Owned Facilities are supplied with utilities and other
services, including gas, electricity, water, telephone, sanitary
sewer and storm sewer, all of which services are adequate for the
uses to which such Owned Facility is being put.
(c) With respect to each Leased Facility and except as set forth
on the Company Balance Sheet or in the SEC Reports:
(i) the Company has made available to Parent a true, correct,
and complete copy of the lease, sublease or other occupancy
agreement for such Leased Facility (and all modifications,
amendments, and supplements thereto and all side letters to which
Company or any of its subsidiaries is a party affecting the
obligations of any party thereunder) (each such agreement is
referred to herein as a "REAL PROPERTY LEASE");
(ii) to the Company's knowledge, the Company or its subsidiary
has a good and valid leasehold interest in such Leased Facilities,
where the Company or its subsidiaries own fee title to the
improvements thereof, free and clear of all Liens, except (x) Taxes
and general and special assessments not in default and payable
without penalty and interest, and (y) easements, covenants and
other restrictions that do not materially impair the current use,
occupancy or value, or the marketability of the Company's or its
subsidiary's interest in such real property;
(iii) each Real Property Lease constitutes the valid and
legally binding obligation of the parties thereto, enforceable in
accordance with its terms, and is in full force and effect;
(iv) all rent and other sums and charges payable by the
Company or its subsidiary as tenant under the Real Property Lease
covering the Leased Facility are current, no termination event or
condition or uncured default on the part of the tenant or, to the
Company's knowledge, the landlord, exists under any Real Property
Lease. No party to such Real Property Lease has given written
notice to the Company or its subsidiary or made a claim in writing
against the Company or its subsidiary in respect of any breach or
default thereunder;
(v) neither the Company nor its subsidiary has assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered its
leasehold interest in the Leased Facility; and
(vi) the Company's leased facilities located in Singapore are
now, and will be at the time of Closing, in good operating
condition and repair, and structurally sound and free of known
defects, with no material alterations or repairs required thereto
(other than ordinary and routine maintenance and repairs) under
applicable Laws, Company Permits or insurance company requirements.
All such Singapore leased facilities have been operated and
maintained in all material respects in accordance with applicable
Laws and Company Permits. All such facilities are supplied with
utilities and other services, including gas, electricity, water,
telephone, sanitary sewer, and storm sewer, all of which services
are adequate for the uses to which such facilities are being put.
SECTION 3.11 Litigation. Set forth in Section 3.11 of the Company
Disclosure Schedule is (i) a list, as of the date hereof, of each suit,
claim, action, proceeding or, to the Company's knowledge, investigation
pending or, to the Company's knowledge, threatened against the Company or
any of its subsidiaries or any of their respective assets or properties and
(ii) a list of each such suit, claim, action, proceeding or, to the
Company's knowledge, investigation, settled or otherwise resolved since
July 31, 1997. Except as disclosed in the Company Disclosure Schedule
pursuant to clause (i) of the preceding sentence, there is no other suit,
claim, action, proceeding or, to the Company's knowledge, investigation,
pending or, to the Company's knowledge, threatened which is reasonably
expected to have, individually and in the aggregate, a Material Adverse
Effect on the Company and its subsidiaries taken as a whole. Except as
disclosed in Section 3.11 of the Company Disclosure Schedule, none of the
Company or its subsidiaries is subject to any outstanding order, writ,
injunction or decree which is reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company and its
subsidiaries taken as a whole. To the Company's knowledge, there is no
action, suit, proceeding or investigation pending or threatened against any
current or former officer, director, employee or agent of the Company or
any of its subsidiaries (in his or her capacity as such) which is
reasonably expected to give rise to a claim for contribution or
indemnification against the Company or any of its subsidiaries.
Notwithstanding the foregoing, any shareholder litigation or litigation by
any Governmental Entity, in each case brought or threatened against the
Company or any officer, director, employee or agent of the Company in
respect of this Agreement or the transactions contemplated hereby shall not
be deemed to have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole.
SECTION 3.12 Compliance with Applicable Law; Permits. The Company
and its subsidiaries hold all permits, licenses, variances, exemptions,
orders, and approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (the "COMPANY PERMITS"), except for
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which are not reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company and its subsidiaries
taken as a whole. The Company and its subsidiaries are in compliance with
the terms of the Company Permits, except where the failure to comply is not
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company and its subsidiaries taken as a whole. The
businesses and operations of the Company and its subsidiaries comply in all
respects with all Laws applicable to the Company or its subsidiaries,
except where the failure to so comply is not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company
and its subsidiaries taken as a whole. To the Company's knowledge, no
investigation or review by any Governmental Entity in respect of the
Company or its subsidiaries is pending or threatened, nor, to the Company's
knowledge, has any Governmental Entity indicated an intention to conduct
the same; provided that for purposes of this Section 3.12 any such
investigation or review arising after the date hereof shall not be deemed
to have a Material Adverse Effect on the Company and its subsidiaries taken
as a whole if and to the extent such investigation or review (or any
relevant part thereof) is based on this Agreement or the transactions
contemplated hereby.
SECTION 3.13 Employee Plans.
(a) Section 3.13(a) of the Company Disclosure Schedule sets forth
a true, correct, and complete list of:
(i) all "employee benefit plans," as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which the Company or any of its subsidiaries has any
obligation or liability, contingent or otherwise (the "BENEFIT
PLANS"); and
(ii) all employment, consulting, termination, severance,
change of control, individual compensation or indemnification
agreements, and all bonus or other incentive compensation, deferred
compensation, salary continuation, disability, severance, stock
award, stock option, stock purchase, educational assistance, legal
assistance, club membership, employee discount, employee loan,
credit union or vacation agreements, policies or arrangements under
which the Company or any of its subsidiaries has any obligation or
liability (contingent or otherwise) (the "EMPLOYEE ARRANGEMENTS").
(b) In respect of each Benefit Plan and Employee Arrangement, a
complete and correct copy of each of the following documents (if
applicable) has been provided to Parent, except in the case of foreign
Benefit Plans and foreign Employee Arrangements (which shall be provided as
soon as practicable after the date hereof, but in no event later than ten
days after the date hereof): (i) the most recent plan and related trust
documents, and all amendments thereto; (ii) the most recent summary plan
description, and all related summaries of material modifications thereto;
(iii) the most recent Form 5500 (including, schedules and attachments);
(iv) the most recent Internal Revenue Service ("IRS") determination letter;
(v) the forms of stock option grant agreements used to make grants under
the Company Option Plans; (vi) each written employment, consulting or
individual severance or other compensation agreement, and all amendments
thereto; and (vii) the most recent actuarial reports (including for
purposes of Financial Accounting Standards Board report nos. 87, 106 and
112). The Company has provided to Parent a true, correct and complete
summary of the employee payroll deduction elections in effect as of the
date hereof in respect of its stock purchase plans, together with the term
of the current offering period and applicable purchase price at the
beginning of such period.
(c) None of the Benefit Plans or Employee Arrangements is subject
to Title IV of ERISA, constitutes a defined benefit retirement plan or is a
multi-employer plan described in Section 3(37) of ERISA, and the Company
and its subsidiaries do not have any obligation or liability (contingent or
otherwise) in respect of any such plans. The Company and its subsidiaries
are not members of a group of trades or businesses (other than that
consisting of the Company and its subsidiaries) under common control or
treated as a single employer pursuant to Section 414 of the Code.
(d) The Benefit Plans and their related trusts intended to qualify
under Sections 401 and 501(a) of the Code, respectively, so qualify. Any
voluntary employee benefit association which provides benefits to current
or former employees of the Company and its subsidiaries, or their
beneficiaries, is and has been qualified under Section 501(c)(9) of the
Code.
(e) All contributions or other payments required to have been made
by the Company and its subsidiaries to or under any Benefit Plan or
Employee Arrangement by applicable Law or the terms of such Benefit Plan or
Employee Arrangement (or any agreement relating thereto) have been timely
and properly made.
(f) The Benefit Plans and Employee Arrangements have been
maintained and administered in all material respects in accordance with
their terms and applicable Laws. In particular, no individual who has
performed services for the Company or any of its subsidiaries has been
improperly excluded from participation in any Benefit Plan or Employee
Arrangement.
(g) There are no pending or, to the Company's knowledge,
threatened actions, claims, or proceedings against or relating to any
Benefit Plan or Employee Arrangement (other than routine benefit claims by
persons entitled to benefits thereunder), and, to the knowledge of the
Company, there are no facts or circumstances which could form a reasonable
basis for any of the foregoing.
(h) The Company and its subsidiaries do not have any obligation or
liability (contingent or otherwise) to provide post-retirement life
insurance or health benefits coverage for current or former officers,
directors, or employees of the Company or any of its subsidiaries except
(i) as may be required under Part 6 of Title I of ERISA at the sole expense
of the participant or the participant's beneficiary, (ii) a medical expense
reimbursement account plan pursuant to Section 125 of the Code, or (iii)
through the last day of the calendar month in which the participant
terminates employment with the Company or any subsidiary of the Company.
(i) None of the assets of any Benefit Plan is stock of the Company
or any of its affiliates, or property leased to or jointly owned by the
Company or any of its affiliates.
(j) Except as disclosed in Section 3.13(j) of the Company
Disclosure Schedule or in connection with equity compensation, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming
due to any employee (current, former, or retired) of the Company or any of
its subsidiaries, (ii) increase any benefits under any Benefit Plan or
Employee Arrangement, or (iii) result in the acceleration of the time of
payment of, vesting of, or other rights in respect of any such benefits.
(k) Each of the Benefit Plans covering employees outside of the
United States is fully funded through adequate reserves on financial
statements of the Company or its subsidiaries, insurance contracts, annuity
contracts, trust funds or similar arrangements, except where any failure to
be so funded, either individually or in the aggregate, does not exceed
$2,500,000. The benefits and compensation under the Benefit Plans and
Employee Arrangements covering employees outside of the United States are
no more than customary and reasonable for the country in which such
employees work and the industry in which the Company and its subsidiaries
conduct their business.
(l) No employee of the Company or its subsidiaries has any
outstanding option under the Company's 1999 Employee Stock Purchase Plan to
purchase stock.
SECTION 3.14 Labor Matters.
(a) The Company and its subsidiaries are not a party to any labor
or collective bargaining agreement, and no employees of the Company or any
of its subsidiaries are represented by any labor organization. Within the
preceding three years, there have been no representation or certification
proceedings, or petitions seeking a representation proceeding, pending or,
to the Company's knowledge, threatened in writing to be brought or filed
with the National Labor Relations Board or any other labor relations
tribunal or authority. Within the preceding three years, to the Company's
knowledge, there have been no organizing activities involving the Company
or any of its subsidiaries in respect of any group of employees of the
Company or any of its subsidiaries.
(b) There are no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor
disputes pending or threatened in writing against or involving the Company
or any of its subsidiaries. There are no unfair labor practice charges,
grievances or complaints pending or, to the Company's knowledge, threatened
in writing by or on behalf of any employee or group of employees of the
Company or any of its subsidiaries which, if individually or collectively
resolved against the Company or any of its subsidiaries, would reasonably
be expected to have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole, and, to the knowledge of the Company, there
are no facts or circumstances which could form a reasonable basis for any
of the foregoing.
(c) There are no complaints, charges or claims against the Company
or any of its subsidiaries pending or, to the Company's knowledge,
threatened to be brought or filed with any Governmental Entity or
arbitrator based on, arising out of, in connection with, or otherwise
relating to the employment or termination of employment of any individual
by the Company or any of its subsidiaries which, if individually or
collectively resolved against the Company or any of its subsidiaries, would
reasonably be expected to have a Material Adverse Effect on the Company and
its subsidiaries taken as a whole, and, to the knowledge of the Company,
there are no facts or circumstances which could form a reasonable basis for
any of the foregoing.
(d) There has been no "mass layoff" or "plant closing" as defined
by the Worker Adjustment and Retraining Notification Act, as amended
("WARN") in respect of the Company or any of its subsidiaries within the
six months prior to the Effective Time.
(e) All employees of the Company and its subsidiaries possess all
applicable passports, visas, permits and other authorizations required by
all applicable immigration or similar Laws to be employed by and to perform
services for and on behalf of the Company and its subsidiaries. The Company
and its subsidiaries, and their employees, have complied in all material
respects with all applicable immigration and similar Laws.
SECTION 3.15 Environmental Matters.
(a) For purposes of this Agreement:
(i) "ENVIRONMENTAL LAW" means all federal, state, local or
foreign Law, or other legal requirement regulating or prohibiting
Releases of Hazardous Materials into the indoor or outdoor
environment, or pertaining to the protection of natural resources
or wildlife, the environment or public and employee health and
safety or pollution or the exposure to Hazardous Materials,
including the Comprehensive Environmental Response, Compensation,
and Liability Act ("CERCLA") (42 U.S.C. Section 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251
et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. Section 7401 et seq.), the
Atomic Energy Act (42 U.S.C. Section 2014 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136
et seq.), the Communications Act (47 U.S.C. Section 151 et seq.),
and the Occupational Safety and Health Act (29 U.S.C. Section 651
et seq.) ("OSHA"), as such laws or other legal requirements have
been and may be amended or supplemented through the Closing Date;
(ii) "HAZARDOUS MATERIAL" means any substance, material or
waste which is regulated pursuant to any applicable Environmental
Law as a "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous
waste," "contaminant," "toxic waste," "toxic substance," "source
material," "special nuclear material," "byproduct material,"
"high-level radioactive waste," "low-level radioactive waste,"
"spent nuclear material" or "radiofrequency" and includes
petroleum, petroleum products and petroleum by-products and waste;
(iii) "RELEASE" means any release, spill, emission, leaking,
pumping, dumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor
environment, or into or out of any property currently or formerly
owned, operated or leased by the applicable party or its
subsidiaries; and
(iv) "REMEDIAL ACTION" means all actions, including any
capital expenditures, required by a Governmental Entity or required
under or taken pursuant to any Environmental Law, or voluntarily
undertaken to (A) clean up, remove, treat, remediate or address any
Hazardous Materials in the indoor or outdoor environment; (B)
prevent the Release or threat of Release, or minimize the further
Release of any Hazardous Material so it does not endanger or
threaten to endanger the public or employee health or welfare or
the indoor or outdoor environment; (C) perform pre-remedial studies
and investigations or post-remedial monitoring and care pertaining
or relating to a Release.
(b) Except as set forth in Section 3.15 of the Company Disclosure
Schedule:
(i) The operations of the Company and its subsidiaries have
been and are in material compliance with all Environmental Laws,
and the Company is not aware of any facts, circumstances or
conditions, which without significant capital expenditures, would
prevent material compliance in the future;
(ii) To the Company's knowledge, the Company and its
subsidiaries have obtained all Company Permits, required under
applicable Environmental Laws for the continued operations of their
respective businesses; the Company and its subsidiaries have made
all material filings, reports and notices required under any
Environmental Law for the past and future operations of their
respective businesses;
(iii) The Company and its subsidiaries are not subject to any
outstanding written orders or material contracts or agreements with
any Governmental Entity or other person respecting (A)
Environmental Laws, (B) any Remedial Action, (C) any Release or
threatened Release of a Hazardous Material, or (D) an assumption of
responsibility for environmental claims of another person or
entity;
(iv) The Company and its subsidiaries have not received any
written communication alleging, in respect of any such party, the
violation of or liability (real or potential) under any
Environmental Law; or requesting, with respect to any such party,
information with respect to an investigation pursuant to CERCLA, or
any foreign or state counterpart thereto, or any other
Environmental Law;
(v) To the Company's knowledge, neither the Company nor any of
its subsidiaries has any material contingent liability in
connection with any Remedial Action or the Release of any Hazardous
Material (whether on-site or off-site) or employee or third party
exposure to Hazardous Materials;
(vi) To the Company's knowledge, the operations of the Company
and its subsidiaries involving the generation, transportation,
treatment, storage or disposal of Hazardous Materials are in
material compliance with applicable Environmental Laws and, to the
Company's knowledge, there has been no disposal by the Company or
its subsidiaries of any Hazardous Materials on or in any site
listed or formally proposed to be listed on the National Priorities
List promulgated pursuant to CERCLA or any foreign or state
remedial priority list promulgated or maintained pursuant to
comparable foreign or state law, except where such disposal would
not reasonably be expected to create a material adverse liability
for the Company;
(vii) To the Company's knowledge, there is not now nor has
there been in the past, on, in or at any Owned Facility, Leased
Facility, Former Facility (defined as all of the real property
formerly owned, leased or used, other than those used solely for
office or administrative purposes, by the Company or any of its
current or former subsidiaries or corporate predecessors in
interest at any time in the past), or any other facility for which
the Company or its subsidiaries has assumed responsibility for
environmental claims, any of the following: (A) any underground
storage tanks; (B) landfills, dumps or surface impoundments; (C)
any planned, ongoing or completed Remedial Action; (D) any
asbestos-containing materials; or (E) any polychlorinated
biphenyls;
(viii) There is not now, nor to the Company's knowledge, has
there been in the past, on, in or at any Owned Facility, Leased
Facility, Former Facility, or any other facility for which the
Company or its subsidiaries has assumed responsibility for
environmental claims, any site on or nominated for the National
Priority List promulgated pursuant to CERCLA or any foreign or
state remedial priority list promulgated or published pursuant to
any comparable foreign or state law; and
(ix) No judicial or administrative proceedings are pending or,
to the Company's knowledge, threatened against the Company or its
subsidiaries alleging the violation of or seeking to impose
liability pursuant to any Environmental Law and to the Company's
knowledge, there are no investigations pending or threatened
against the Company or any of its subsidiaries under Environmental
Laws.
(c) The Company has made available to Parent copies of all
environmentally related assessments, audits, investigations, or similar
reports (and has provided, upon reasonable specific request, sampling
reports) in its possession or control and which were prepared in the last
five years (and has provided, upon reasonable specific request, earlier
information) relating to the Company or its subsidiaries or any real
property currently or formerly owned, operated or leased by or for the
Company or its subsidiaries, including any Owned Facility, Leased Facility,
or Former Facility.
SECTION 3.16 Tax Matters.
(a) The Company and its Subsidiaries have (A) duly filed (or there
has been filed on their behalf) with the appropriate governmental
authorities all Tax Returns (as defined in Section 3.16(g)) required to be
filed by them on or prior to the date hereof, other than those Tax Returns
the failure of which to file would not, individually or in the aggregate,
have a Material Adverse Effect on the Company and its subsidiaries taken as
a whole, and such Tax Returns are true, correct and complete in all
material respects, and (B) duly paid in full or made provision in
accordance with generally accepted accounting principles (or there has been
paid or provision has been made on their behalf) for the payment of all
Taxes (as defined in Section 3.16(g)) shown to be due with such Tax
Returns.
(b) There is no audit, examination, deficiency, refund litigation,
proposed adjustment or matter in controversy with respect to any Taxes due
and owing by the Company or its subsidiaries.
(c) There are no outstanding requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes or deficiencies against the Company or any of its
subsidiaries, and no power of attorney granted by either the Company or any
of its subsidiaries with respect to any Taxes is currently in force.
(d) Neither the Company nor any of its subsidiaries is a party to
any agreement providing for the allocation or sharing of Taxes.
(e) There are no liens relating to Taxes not yet due and payable.
(f) Neither the Company nor any of its subsidiaries has any
liability under Treasury Regulation Section 1.1502-6 for U.S. federal
income Taxes of any Person other than the Company and its subsidiaries.
(g) For purposes of this Agreement: (A) "Taxes" means any and all
federal, state, local, foreign or other taxes of any kind (together with
any and all interest, penalties, additions to tax and additional amounts
imposed with respect thereto) imposed by any taxing authority, including,
without limitation, taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation or net worth, and taxes or other
charges in the nature of excise, withholding, ad valorem or value added,
and (B) "Tax Return" means any return, report or similar statement
(including the attached schedules) required to be filed with respect to any
Tax, including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
(h) To the Company's knowledge, neither the Company nor any of its
subsidiaries has any material income or gain that has been or continues to
be deferred under Regulations Section 1.1502-13 or Regulations Section
1.1502-13T (or under Regulations Section 1.1502-13, 1.1502-13T, 1.1502-14,
or 1.1502-14T, all as in effect prior to Treasury Decision 8597) and the
Company does not have any material excess loss accounts in a subsidiary
under Regulations Section 1.1502-19.
SECTION 3.17 Absence of Questionable Payments. Neither the Company
nor any of its subsidiaries nor, to the Company's knowledge, any director,
officer, agent, employee or other person acting on behalf of the Company or
any of its subsidiaries, has used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials or
others or established or maintained any unlawful or unrecorded funds in
violation of the Foreign Corrupt Practices Act of 1977, as amended, or any
other domestic or foreign Law. Neither the Company nor any of its
subsidiaries nor, to the Company's knowledge, any director, officer, agent,
employee or other person acting on behalf of the Company or any of its
subsidiaries, has accepted or received any unlawful contributions,
payments, gifts or expenditures.
SECTION 3.18 Material Contracts.
(a) Section 3.18 of the Company Disclosure Schedule sets forth a
list of all Material Contracts. The Company has heretofore made available
to Parent true, correct and complete copies of all written or oral
contracts and agreements (and all amendments, modifications and supplements
thereto and all side letters to which the Company or any of its
subsidiaries is a party affecting the obligations of any party thereunder)
to which the Company or any of its subsidiaries is a party or by which any
of its assets or properties are bound that are of the following type: (i)
to the extent material to the business, assets or properties of the Company
and its subsidiaries taken as a whole, product design or development, or
indemnification contracts (including, any contract to which the Company or
any of its subsidiaries is a party involving employees of the Company);
(ii) merchandising or distribution agreements involving the payment of in
excess of $2,500,000 per year; (iii) to the extent material to the
business, assets or properties of the Company and its subsidiaries taken as
a whole, contracts granting a right of first refusal or first negotiation;
(iv) to the extent material to the business, assets or properties of the
Company and its subsidiaries taken as a whole, partnership or joint venture
agreements; (v) agreements for the acquisition, sale or lease of material
assets or properties of the Company (by merger, purchase or sale of assets
or stock or otherwise) entered into since January 1, 1996 involving in
excess of $1,000,000; (vi) to the extent material to the business, assets
or properties of the Company and its subsidiaries taken as a whole,
contracts or agreements with any Governmental Entity; (vii) loan or credit
agreements, mortgages, indentures or other agreements or instruments
evidencing indebtedness for borrowed money by the Company or any of its
subsidiaries or any such agreement pursuant to which indebtedness for
borrowed money, in each case involving in excess of $1,000,000; (viii) to
the extent material to the business, assets or properties of the Company
and its subsidiaries taken as a whole, agreements that purport to limit,
curtail or restrict the ability of the Company or any of its subsidiaries
to compete in any geographic area or line of business; (ix) to the extent
material to the business, assets or properties of the Company and its
subsidiaries taken as a whole, foundry, wafer manufacturing or fabricating
agreements, (x) supply or second source agreements involving the payment of
in excess of $2,500,000 per year, (xi) agreements with customers relating
to the sale of products involving the payment of in excess of $2,500,000
per year and (xii) commitments and agreements to enter into any of the
foregoing (collectively, together with any such contracts entered into in
accordance with Section 5.1, the "MATERIAL CONTRACTS").
(b) Each of the Material Contracts constitutes the valid and
legally binding obligation of the Company or its subsidiaries, enforceable
in accordance with its terms, and is in full force and effect. There is no
default under any Material Contract so listed either by the Company (or its
subsidiaries) or, to the Company's knowledge, by any other party thereto,
and no event has occurred that with the giving of notice, the lapse of
time, or both would constitute a default thereunder by the Company (or its
subsidiaries) or, to the Company's knowledge, any other party.
(c) No party to any such Material Contract has given notice to the
Company of or made a claim against the Company in respect of any breach or
default thereunder.
SECTION 3.19 Subsidies. Section 3.19 of the Company Disclosure
Schedule sets forth a list of all grants, subsidies and similar
arrangements directly or indirectly between or among the Company or any of
its subsidiaries, on the one hand, and any domestic or foreign Governmental
Entity or any other person, on the other hand. Except as set forth on
Section 3.19 of the Company Disclosure Schedule, neither the Company nor
any of its subsidiaries has requested, sought, applied for or entered into
any grant, subsidy or similar arrangement directly or indirectly from or
with any domestic or foreign Governmental Entity or any other person.
SECTION 3.20 Intellectual Property.
(a) As used herein, the term "SCHEDULED INTELLECTUAL PROPERTY"
means domestic and foreign letters patent, patents, patent applications,
exclusive patent licenses, exclusive know-how licenses, trademark
registrations and applications, service mark registrations and applications
and copyright registrations and applications. Section 3.20(a) of the
Company Disclosure Schedule sets forth all right, title and interest of the
Company and its subsidiaries in and to all of the Scheduled Intellectual
Property owned or used by the Company and its subsidiaries and material to
the operation of their respective businesses. Such Scheduled Intellectual
Property and the goodwill of the Company's and its subsidiaries' respective
businesses associated therewith, together with all copyrights, databases,
non-exclusive patent licenses, software licenses, non-exclusive know-how
licenses, trade names, trademarks, service marks, trade secrets, technical
knowledge, know-how, confidential information, customer lists, proprietary
processes, techniques, formulae, "semiconductor chip product" and "mask
works" (as such terms are defined in 17 U.S.C. 901), and related ownership,
use and other rights (including rights of renewal and rights to sue for
past, present and future infringements or misappropriations thereof), shall
be collectively referred to herein as the "INTELLECTUAL PROPERTY."
(b) To the Company's knowledge or the knowledge of those persons
who have Company responsibility for such matters, and except as are not
reasonably expected to have a Material Adverse Effect on the Company and
its subsidiaries taken as a whole; (i) each item of Scheduled Intellectual
Property is in compliance with applicable legal requirements relating to
the enforceability or maintenance of such item (including payment of
filing, examination and maintenance fees and proofs of working or use, as
applicable) other than any requirement that if, not satisfied, would not
result in a revocation or otherwise materially affect the enforceability of
the item of Scheduled Intellectual Property in question, and the Company
has taken reasonable steps to protect the Intellectual Property; (ii) the
Company and its subsidiaries own or have the right to use, free and clear
of all Liens, all Intellectual Property necessary for the operation of the
businesses of the Company and its subsidiaries as presently conducted and
as presently proposed to be conducted; (iii) each material item of
Intellectual Property owned or used by the Company and its subsidiaries
immediately prior to the Effective Time will be owned or available for use
by Parent and the Surviving Corporation immediately subsequent to the
Effective Time; (iv) the Company and its subsidiaries have taken all action
deemed by the Company or the relevant subsidiary to be necessary or
reasonable, but in no event less than all commercially reasonable action,
to protect and preserve the confidentiality of all technical Intellectual
Property not otherwise protected by patents, patent applications or
copyrights; (v) each employee of the Company and its subsidiaries has
executed a non-disclosure agreement which included an agreement to assign
to the Company or its subsidiaries all rights to Intellectual Property
originated or invented by such employee relating to the business of the
Company and its subsidiaries; and (vi) no trade secret or confidential
know-how material to the business of the Company or any of its subsidiaries
as currently operated has been disclosed or authorized to be disclosed to
any third party, other than pursuant to a non-disclosure agreement that
protects the Company's or such subsidiary's proprietary interests in and to
such trade secrets and confidential know-how.
(c) To the Company's knowledge, neither the Company nor any of its
subsidiaries has interfered with, infringed upon, misappropriated or
otherwise come into conflict with any Intellectual Property rights of third
parties, and neither the Company nor any of its subsidiaries has, within
the three years prior to the date of this Agreement, received any charge,
complaint, claim or notice alleging any such interference, infringement,
misappropriation or violation. No third party has, to the Company's
knowledge, interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property rights of the Company or
its subsidiaries, except where such actions are not reasonably expected to
have a Material Adverse Effect on the Company and its subsidiaries taken as
a whole.
(d) Section 3.20(d) of the Company Disclosure Schedule lists each
license, sublicense, agreement or permission pursuant to which the Company
uses any material item of Scheduled Intellectual Property that any third
party owns and that any of the Company or any of its subsidiaries uses
pursuant to license, sublicense, agreement or permission that either (i) if
such license, sublicense, agreement or permission were denied, would
reasonably be expected to have a Material Adverse Effect on the Company or
its Subsidiaries taken as a whole, or (ii) includes any past due obligation
to pay any royalty amount or any obligation to pay a royalty, whether fixed
or determined based on usage, following the Effective Date.
(e) Except as set forth in Section 3.20(e) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries has
granted (i) any exclusive or non-exclusive licenses (other than implied
patent licenses in the ordinary course of business) in any patents owned by
the Company or any of its subsidiaries or (ii) any exclusive licenses in
any other Intellectual Property owned by the Company or any of its
subsidiaries to any third party.
(f) Except as may have been given in connection with patent
licenses set forth in Section 3.20(e) of the Company Disclosure Schedule or
given in the ordinary course of business within the scope of the Company's
standard terms and conditions of sale, neither the Company nor any of its
subsidiaries has entered into any agreement to indemnify any other person
against any charge of infringement or misappropriation of any Intellectual
Property.
(g) The Company owns or has the right to use all Intellectual
Property incorporated or used in the Company's existing websites.
(h) The execution, delivery and performance by the Company of this
Agreement, and the consummation of the transactions contemplated hereby,
will not (i) result in the loss or impairment of, or give rise to any right
of any third party to terminate or alter, any of the Company's or any of
its subsidiaries' rights to own any of its Intellectual Property except as
are not unreasonably expected to have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole, nor (ii) require the consent
of any Governmental Entity or third party in respect of any such
Intellectual Property.
SECTION 3.21 Year 2000.
(a) Based on a comprehensive assessment of the Systems that are
used or relied on by the Company or by any of its subsidiaries in the
conduct of their respective businesses, neither the Company nor any of its
subsidiaries knows of any such System that will malfunction, will cease to
function, will generate incorrect data or will provide incorrect results
when processing, providing and/or receiving (i) date-related data in, into
or between the twentieth and twenty-first centuries or (ii) date-related
data in connection with any valid date in the twentieth or twenty-first
centuries.
(b) Based on a comprehensive assessment of the products and
services that are or have been sold, licensed, rendered or otherwise
provided or offered by the Company or by any of its subsidiaries in the
conduct of their respective businesses, neither the Company nor any of its
subsidiaries knows of any such products or services which will malfunction,
will cease to function, will generate incorrect data or will produce
incorrect results when processing, providing or receiving (i) date-related
data in, into or between the twentieth and twenty-first centuries or (ii)
date-related data in connection with any valid date in the twentieth or
twenty-first centuries; and, to the knowledge of the Company or any of its
subsidiaries, neither the Company nor any of its subsidiaries is or will be
subject to claims or liabilities arising from any such malfunction,
cessation of function, generation of incorrect data or production of
incorrect results.
(c) Neither the Company nor any of its subsidiaries has made other
representations or warranties regarding the ability of any product or
service that is or has been sold, licensed, rendered or otherwise provided
or offered by the Company or by any of its subsidiaries, or of any of the
Systems used or relied on by the Company or any of its subsidiaries, in the
conduct of their respective businesses to operate without malfunction, to
operate without ceasing to function, to generate correct data or to produce
correct results when processing, providing or receiving (i) date-related
data in, into and between the twentieth and twenty-first centuries or (ii)
date-related data in connection with any valid date in the twentieth and
twenty-first centuries.
(d) Based on a comprehensive inquiry of all material suppliers,
service providers and customers of the Company and its subsidiaries,
neither the Company nor any of its subsidiaries knows of any inability on
the part of any such supplier, service provider or customer to timely
ensure that its own (and its material suppliers' and service providers')
Systems continue to operate without malfunction, to operate without ceasing
to function, to generate correct data and to produce correct results when
processing, providing and/or receiving (i) date-related data in, into and
between the twentieth and twenty-first centuries and (ii) date-related data
in connection with any valid date in the twentieth and twenty-first
centuries.
(e) For the purposes of this Agreement, "SYSTEMS" means, with
respect to a person, any and all material hardware, software and firmware
used by the Company or any of its subsidiaries in the course of their
respective businesses, including (i) any and all source and object code;
(ii) databases and compilations, including any and all data and collections
of data, whether machine readable or otherwise; (iii) billing, reporting
and other management information systems; (iv) all descriptions,
flow-charts and other work product used to design, plan, organize and
develop any of the foregoing; (v) all content contained on any Internet
site(s) maintained by such person or any of its subsidiaries; and (vi) all
documentation, including user manuals and training materials, relating to
any of the foregoing.
SECTION 3.22 Opinion of Financial Advisor. Broadview International
LLC (the "FINANCIAL Advisor") has delivered to the Company Board its
opinion, dated the date of this Agreement, to the effect that, as of such
date, the Exchange Ratio is fair to the stockholders of the Company from a
financial point of view, and such opinion has not been withdrawn or
modified.
SECTION 3.23 Brokers. No broker, finder, investment banker or
other person (other than the Financial Advisor, a true and correct copy of
whose engagement letter has been provided to Parent) is entitled to any
brokerage, finder's or other fee or commission or expense reimbursement in
connection with the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of the Company or any of its affiliates.
SECTION 3.24 Accounting Matters. Neither the Company nor, to the
Company's knowledge, any of its affiliates, has taken or agreed to take any
action or is aware of any fact or circumstance that would prevent the
Merger from qualifying as a "pooling of interests" under APB 16 and the
applicable SEC rules and regulations.
SECTION 3.25 Recalls. There has not been any recall made generally
to customers since December 31, 1998 of any product designed, manufactured,
shipped, sold or otherwise introduced into the stream of commerce by or on
behalf of the Company or any of its past or present subsidiaries
("PRODUCT"), and (ii) to the Company's knowledge, there are currently no
material defects in design, manufacturing, materials or workmanship which
involve any Product that accounts for a material portion of the Company's
sales.
SECTION 3.26 Takeover Statute. The Company has taken all action
required to be taken by it in order to exempt this Agreement, the Option
Agreement and the transactions contemplated hereby and thereby from, and
this Agreement, the Option Agreement and the transactions contemplated
hereby and thereby (the "COVERED TRANSACTIONS") are exempt from, the
requirements of any "moratorium," "control share," "fair price," "affiliate
transaction," "interested stockholder," "business combination" or other
antitakeover Laws of any state (collectively, "TAKEOVER STATUTES").
Subtitle 6 (Sections 3-601 through 3-603) and Subtitle 7 (Sections 3-701
through 3-709) of the MGCL are not applicable to the Covered Transactions.
Holders of Shares do not have dissenters' or appraisal rights in connection
with the Merger.
SECTION 3.27 Company Rights Agreement. The Company Board has taken
all necessary action (including, any amendment thereof) under the Rights
Agreement, dated as of May 2, 1990, between the Company and the First
National Bank of Boston, as Rights Agent (the "COMPANY RIGHTS AGREEMENT"),
so that none of the execution or delivery of this Agreement or the Option
Agreement, the exchange of the shares of Parent Common Stock for the Shares
in accordance with Article II, or any other transaction contemplated hereby
or thereby will cause (i) the rights (the "RIGHTS") issued pursuant to the
Company Rights Agreement to become exercisable under the Company Rights
Agreement, (ii) Parent or Merger Sub to be deemed an "Acquiring Person" (as
defined in the Company Rights Agreement), or (iii) the "Stock Acquisition
Date" or "Distribution Date" (each as defined in the Company Rights
Agreement) to occur upon any such event.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Except as set forth in the disclosure schedule delivered by Parent
to the Company prior to the execution of this Agreement (the "PARENT
DISCLOSURE SCHEDULE") (each section of which qualifies the correspondingly
numbered representation and warranty or covenant to the extent specified
therein), Parent and Merger Sub hereby represent and warrant to the Company
as follows:
SECTION 4.1 Organization.
(a) Each of Parent and Merger Sub is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction of
its incorporation and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its businesses as now
being conducted.
(b) Each of Parent and Merger Sub is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing
is not reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent and its subsidiaries taken as a whole.
(c) Parent has heretofore delivered to the Company accurate and
complete copies of the certificate of incorporation and bylaws of Parent
and the charter and bylaws of Merger Sub as currently in effect.
SECTION 4.2 Authority Relative to This Agreement.
(a) Each of Parent and Merger Sub has all necessary corporate
power and authority to execute and deliver this Agreement and the Option
Agreement and to consummate the transactions contemplated hereby and
thereby. No other corporate proceedings on the part of Parent or Merger Sub
are necessary to authorize this Agreement and the Option Agreement or to
consummate the transactions contemplated hereby or thereby. This Agreement
and the Option Agreement have been duly and validly executed and delivered
by each of Parent and Merger Sub and constitute valid, legal and binding
agreements of each of Parent and Merger Sub, enforceable against each of
Parent and Merger Sub in accordance with their respective terms.
(b) The Board of Directors of Parent (the "PARENT BOARD"), the
Board of Directors of Merger Sub and Parent as the sole stockholder of
Merger Sub have duly and validly authorized the execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby, and taken all corporate actions required to be taken by such Boards
of Directors and Parent as the sole stockholder of Merger Sub for the
consummation of the transactions.
SECTION 4.3 SEC Reports; Financial Statements. Parent has filed
all required forms, reports and documents with the SEC since January 1,
1997, each of which complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, each as in effect
on the dates such forms, reports, and documents were filed. Parent has
heretofore delivered or made available to the Company, in the form filed
with the SEC (including, any amendments thereto), (i) its Annual Report on
Form 10-K each of the fiscal years ended December 31, 1996, 1997 and 1998,
(ii) all definitive proxy statements relating to Parent's meetings of
stockholders (whether annual or special) held since January 1, 1997 and
(iii) all other reports or registration statements filed by Parent with the
SEC since January 1, 1997 (the "PARENT SEC REPORTS"). None of the Parent
SEC Reports contained, when filed, any untrue statement of a material fact
or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
The consolidated financial statements of Parent included in the Parent SEC
Reports complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
in respect thereof and fairly presented, in conformity with GAAP on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of Parent and its consolidated
subsidiaries, in each case as of the dates thereof and their consolidated
results of operations and cash flows for the periods then ended (subject,
in the case of the unaudited interim financial statements, to normal
year-end adjustments). For purposes of this Agreement "PARENT BALANCE
SHEET" means the consolidated balance sheet of Parent as of March 31, 1999,
and "PARENT BALANCE SHEET DATE" means March 31, 1999. Except as and to the
extent disclosed in the Parent SEC Reports, since the Parent Balance Sheet
Date, there has not been any event, occurrence or development which is
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on the Parent and its subsidiaries taken as a whole.
SECTION 4.4 Undisclosed Liabilities. There are no liabilities of
Parent or any of its subsidiaries of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise which are
required to be reflected in its financial statements (or in the notes
thereto) in accordance with GAAP, other than: (a) liabilities disclosed,
provided for or reserved against in the Parent Balance Sheet or in the
notes thereto; (b) liabilities arising in the ordinary course of business
after the date of the Parent Balance Sheet; (c) liabilities disclosed in
the Parent SEC Reports prior to the date hereof and (d) liabilities under
this Agreement.
SECTION 4.5 Capitalization of Parent. The authorized capital stock
of Parent consists of: (i) 500,000,000 shares of Common Stock, par value
$1.00 per share (the "PARENT SHARES"), of which 392,940,778 shares are
issued and outstanding as of July 20, 1999 and 858,938 shares of which are
held in Parent's treasury, and (ii) 10,000,000 shares of Preferred Stock,
par value $25.00 per share, no shares of which are outstanding as of July
20, 1999. All of the issued and outstanding Parent Shares have been validly
issued, and are duly authorized, fully paid, non-assessable and free of
preemptive rights. As of July 23, 1999, 45,800,485 Parent Shares were
available for issuance under Parent's option plans, of which 30,836,160
were issuable upon or otherwise deliverable in connection with the exercise
of options outstanding on such date. Except as set forth above and except
for the Parent Rights Agreement (as hereinafter defined), as of July 23,
1999, there are outstanding (i) no shares of capital stock or other voting
securities of Parent; (ii) no securities of Parent convertible into or
exchangeable for shares of capital stock or voting securities of Parent;
(iii) no options or other rights to acquire from Parent and no obligations
of Parent to issue, any capital stock, voting securities, or securities
convertible into or exchangeable for capital stock or voting securities of
Parent; and (iv) no equity equivalents, interests in the ownership or
earnings of Parent, or other similar rights (including stock appreciation
rights).
SECTION 4.6 Information Supplied. None of the information supplied
or to be supplied by Parent or Merger Sub specifically for inclusion or
incorporation by reference in (i) the S-4 will, at the time the S-4 is
filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading and (ii) the Proxy Statement will, at
the date mailed to stockholders of the Company and at the time of the
Company Stockholder Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event in respect of Parent, its officers
and directors, or any of its subsidiaries should occur which is required to
be described in an amendment of, or a supplement to, the S-4 or the Proxy
Statement, Parent shall promptly so advise the Company and such event shall
be so described, and such amendment or supplement (which the Company shall
have a reasonable opportunity to review) shall be promptly filed with the
SEC. The S-4 will comply as to form in all material respects with the
provisions of the Securities Act and the rules and regulations thereunder.
No representation is made under this Section 4.6 with respect to any
statements made or incorporated by reference in the S-4 or the Proxy
Statement based on information supplied by the Company specifically for
inclusion or incorporation by reference therein.
SECTION 4.7 Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the
Exchange Act, state securities or blue sky Laws, the HSR Act, any other
Antitrust Law, the filing and acceptance for record of the Articles of
Merger as required by the MGCL, as otherwise set forth in Section 4.7 to
the Parent Disclosure Schedule, and such other filings, permits,
authorizations, consents and approvals which, if not obtained or made, are
not reasonably expected to have a Material Adverse Effect on Parent and its
subsidiaries taken as a whole no filing with or notice to, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary
for the execution and delivery by Parent or Merger Sub of this Agreement or
the Option Agreement or the consummation by Parent or Merger Sub of the
transactions contemplated hereby or thereby. The execution, delivery, and
performance of this Agreement and the Option Agreement by Parent or Merger
Sub and the consummation by Parent or Merger Sub of the transactions
contemplated hereby and thereby will not result in any violation of or
conflict with, constitute a default under (with or without due notice or
lapse of time or both), require any consent, waiver or notice under any
term of, or result in the reduction or loss of any benefit or the creation
or acceleration of any right or obligation under, (i) the respective
certificate or articles of incorporation or bylaws of Parent or the charter
and bylaws of Merger Sub, (ii) any agreement, note, bond, mortgage,
indenture, contract, lease, permit or other obligation or right to which
Parent or Merger Sub is a party or by which any of their respective assets
or properties is bound, or (iii) any Law, except in the case of (ii) or
(iii) where any of the foregoing is not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect on Parent and
its subsidiaries taken as a whole.
SECTION 4.8 No Prior Activities. Except for obligations incurred
in connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby,
Merger Sub has neither incurred any obligation or liability nor engaged in
any business or activity of any type or kind whatsoever or entered into any
agreement or arrangement with any person.
SECTION 4.9 Brokers. No broker, finder, investment banker or other
person (other than Morgan Stanley & Co.) is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on
behalf of Parent, Merger Sub or any of their affiliates.
SECTION 4.10 Accounting Matters. Neither Parent nor, to Parent's
knowledge, any of its affiliates, has taken or agreed to take any action or
is aware of any fact or circumstance that would prevent the Merger from
qualifying as a "pooling of interests" under APB 16 and the applicable SEC
rules and regulations.
ARTICLE V
COVENANTS RELATED TO CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business of the Company. Except as set
forth in Section 5.1 of the Company Disclosure Schedule, as consented to by
Parent or as contemplated by this Agreement, during the period from the
date hereof to the Effective Time, the Company will, and will cause each of
its subsidiaries to, conduct its operations in the ordinary and usual
course of business consistent with past practice and use reasonable best
efforts to preserve intact its current business organizations, keep
available the service of its current officers and employees and preserve
its relationships with customers, suppliers and others having business
dealings with it to the end that goodwill and ongoing businesses shall be
unimpaired at the Effective Time. Without limiting the generality of the
foregoing, and except as otherwise expressly provided in this Agreement or
in Section 5.1 of the Company Disclosure Schedule, prior to the Effective
Time, neither the Company nor any of its subsidiaries will, without the
prior written consent of Parent:
(a) amend its charter or bylaws (or other similar organizational
or governing instruments) or amend, modify or terminate the Company Rights
Plan;
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting
of options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities convertible into
or exchangeable for any stock or any equity equivalents (including, any
stock options or stock appreciation rights), except for the issuance or
sale of Shares pursuant to outstanding Company Stock Options;
(c) (i) split, combine or reclassify any shares of its capital
stock; (ii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of its capital stock; (iii) make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or otherwise
make any payments to stockholders in their capacity as such; or (iv)
redeem, repurchase or otherwise acquire any of its securities or any
securities of any of its subsidiaries (including redeeming any Rights);
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries (other than the
Merger);
(e) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership
of any subsidiary of Company;
(f) (i) incur or assume any long-term or short-term debt or issue
any debt securities, except for borrowings under existing lines of credit
in the ordinary and usual course of business consistent with past practice
and in amounts not material to the Company and its subsidiaries taken as a
whole; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person, except in the ordinary and usual course of
business consistent with past practice and in amounts not material to the
Company and its subsidiaries, taken as a whole, and except for obligations
of the wholly owned subsidiaries of the Company; (iii) make any loans,
advances or capital contributions to, or investments in, any other person
(other than to the wholly owned subsidiaries of the Company or customary
loans or advances to employees in the ordinary and usual course of business
consistent with past practice and in amounts not material to the maker of
such loan or advance); (iv) pledge or otherwise encumber shares of capital
stock of the Company or its subsidiaries; or (v) mortgage or pledge any of
its material assets, tangible or intangible, or create or suffer to exist
any material Lien thereupon;
(g) (i) except as set forth in Section 5.1(g) of the Company
Disclosure Schedule and as required under existing agreements, increase in
any manner the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan and arrangement as in
effect as of the date hereof (including, the granting of stock appreciation
rights or performance units) or grant any completion bonuses or change of
control payments in respect of the Merger or that will be affected thereby;
or (ii) promote or change the classification or status of, or except in the
ordinary course of business consistent with past practice, hire any
employee or individual;
(h) acquire, sell, lease or dispose of any material assets outside
the ordinary and usual course of business consistent with past practice or
any assets which in the aggregate are material to the Company and its
subsidiaries taken as a whole, or grant any exclusive distribution rights;
(i) except as may be required as a result of a change in Law or in
GAAP, make any material change in any of the accounting principles or
practices used by it;
(j) revalue in any material respect any of its assets, including,
writing down the value of inventory or writing-off notes or accounts
receivable other than in the ordinary and usual course of business
consistent with past practice or as required by GAAP;
(k) (i) acquire (by merger, consolidation or acquisition of stock
or assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any
material contract or agreement, other than in the ordinary and usual course
of business consistent with past practice, or amend in any material respect
any of the Material Contracts or the agreements referred to in Section
3.18; (iii) authorize any new capital expenditure or expenditures which are
not provided for in the Company's current capital expenditure plan and
which, individually, is in excess of $100,000 or, in the aggregate, are in
excess of $250,000; or (iv) enter into or amend any contract, agreement,
commitment or arrangement providing for the taking of any action that would
be prohibited hereunder;
(l) make or revoke any Tax election, or settle or compromise any
Tax liability, or change (or make a request to any taxing authority to
change) any aspect of its method of accounting for Tax purposes;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary and usual course of business consistent with past practice or in
accordance with their terms of liabilities reflected or reserved against
in, the consolidated financial statements of the Company and its
subsidiaries or incurred since the date of such financial statements or
waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or
any of its subsidiaries is a party;
(n) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby;
(o) take any action (including, any action otherwise permitted by
this Section 5.1) that would prevent or impede the Merger from qualifying
as a "pooling of interests" under APB 16 and the applicable SEC rules and
regulations or as a reorganization under Section 368 of the Code;
(p) enter into any agreement or arrangement that limits or
otherwise restricts the Company or any of its subsidiaries or any successor
thereto or that could, after the Effective Time, limit or restrict the
Surviving Corporation and its affiliates (including Parent) or any
successor thereto, from engaging or competing in any line of business or in
any geographic area;
(q) fail to comply in any material respect with any Law applicable
to the Company, its subsidiaries, or their respective assets;
(r) enter into any direct or indirect arrangements for financial
subsidies;
(s) adopt, enter into, amend, alter or terminate (partially or
completely) any Benefit Plan or Employee Arrangement except as contemplated
by this Agreement or to the extent required by applicable Law;
(t) enter into any contract with an officer, director, employee,
agent or other similar representative of the Company or any of its
subsidiaries that is not terminable, without penalty or other liability,
upon not more than 60 calendar days' notice; or
(u) take, propose to take, or agree in writing or otherwise to
take, any of the actions described in Sections 5.1(a) through 5.1(t) or any
action which would cause the condition set forth in Section 7.2(a) not to
be satisfied.
SECTION 5.2 Conduct of Business of Parent. Except as consented to
by the Company or as contemplated by this Agreement, during the period from
the date hereof to the Effective Time, neither Parent nor any of its
subsidiaries will:
(a) amend Parent's certificate of incorporation or bylaws;
(b) take any action that would or would reasonably be expected to
prevent, impair or materially delay the ability of the Company or Parent to
consummate the transactions contemplated by this Agreement;
(c) take any action (including, any action otherwise permitted by
this Section 5.2) that would prevent or impede the Merger from qualifying
as a "pooling of interests" under APB 16 and the applicable SEC rules and
regulations or as a reorganization under Section 368 of the Code; or
(d) take, propose to take, or agree in writing or otherwise to
take, any of the actions described in Section 5.2(a) through 5.2(c) or any
action which would cause the condition set forth in Section 7.3(a) not to
be satisfied.
SECTION 5.3 Access to Information.
(a) Between the date hereof and the Effective Time and subject to
applicable Law, the Company will give Parent and Merger Sub and their
authorized representatives (including, counsel, financial advisors,
environmental consultants and auditors) reasonable access to all employees,
plants, offices, warehouses and other facilities and to all books and
records of the Company and its subsidiaries, will permit Parent and Merger
Sub to make such inspections as Parent and Merger Sub may reasonably
require, including the right to conduct sampling of surface water,
groundwater, soil and outdoor air quality, and building materials and will
cause the Company's officers and those of its subsidiaries to furnish
Parent and Merger Sub with such financial and operating data and other
information in respect of the business, properties and personnel of the
Company and its subsidiaries as Parent or Merger Sub may from time to time
reasonably request, provided that no investigation pursuant to this Section
5.3(a) shall affect or be deemed to modify any of the representations or
warranties made by the Company.
(b) Between the date hereof and the Effective Time, the Company
shall furnish to Parent and Merger Sub (i) within five business days after
the delivery thereof to management, such monthly financial statements and
data as are regularly prepared for distribution to Company management and
(ii) at the earliest time they are available, such quarterly and annual
financial statements as are prepared for the Company Board, which (in the
case of this clause (ii)) shall be in accordance with the books and records
of the Company.
(c) Each of Parent and the Company will hold and will cause its
authorized representatives to hold in confidence all documents and
information furnished to the other in connection with the transactions
contemplated by this Agreement pursuant to the terms of that certain
Confidentiality Agreement entered into between the Company and Parent dated
May 19, 1999 (the "CONFIDENTIALITY AGREEMENT").
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Preparation of S-4 and the Proxy Statement. Parent and
the Company will, as promptly as practicable, jointly prepare and file with
the SEC the Proxy Statement in connection with the vote of the stockholders
of the Company in respect of the Merger. Parent will, as promptly as
practicable, prepare, following receipt of notification from the SEC that
it has no further comments on the Proxy Statement, and file with the SEC
the S-4 in connection with the registration under the Securities Act of the
shares of Parent Common Stock issuable upon conversion of the Shares and
the other transactions contemplated hereby. Parent and the Company will,
and will cause their accountants and lawyers to, use their reasonable best
efforts to have or cause the S-4 to be declared effective as promptly as
practicable after filing with the SEC, including, causing their accountants
to deliver necessary or required instruments such as opinions, consents and
certificates, and will take any other action required or necessary to be
taken under federal or state securities Laws or otherwise in connection
with the registration process (other than qualifying to do business in any
jurisdiction which it is not now so qualified or filing a general consent
to service of process in any jurisdiction). The Company and Parent shall,
as promptly as practicable after the receipt thereof, provide to the other
party copies of any written comments and advise the other party of any oral
comments, in respect of the Proxy Statement or the S-4 received from the
staff of the SEC. The Company will provide Parent with a reasonable
opportunity to review and comment on any amendment or supplement to the
Proxy Statement prior to filing with the SEC and will provide Parent with a
copy of all such filings with the SEC. Parent will provide the Company with
a reasonable opportunity to review and comment on any amendment or
supplement on the S-4 prior to filing with SEC and will provide the Company
with a copy of all such filings with the SEC. Parent will advise the
Company, promptly after it receives notice thereof, of the time when the
Form S-4 has become effective or any supplement or amendment has been
filed, the issuance of any stop order, the suspension of the qualification
of the Parent Common Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Form S-4 or comments thereon and responses thereto or
requests by the SEC for additional information. The Company will use its
reasonable best efforts to cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable date.
SECTION 6.2 Letter of Accountants.
(a) The Company shall use all reasonable best efforts to cause to
be delivered to Parent a letter of Pricewaterhouse Coopers LLP, the
Company's independent auditors, dated as of the date on which the S-4 shall
become effective and addressed to Parent, in form and substance reasonably
satisfactory to Parent and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the S-4.
(b) Parent shall use all reasonable best efforts to cause to be
delivered to the Company a letter of Ernst & Young LLP, the Parent's
independent auditors, dated as of the date on which the S-4 shall become
effective and addressed to the Company, in form and substance reasonably
satisfactory to the Company and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the S-4.
SECTION 6.3 Meeting. The Company shall take all lawful action to
(i) cause a special meeting of its stockholders (the "COMPANY STOCKHOLDER
MEETING") to be duly called and held as soon as practicable after the date
of this Agreement for the purpose of voting on the approval of the Merger
on substantially the terms and conditions set forth in this Agreement and
(ii) solicit proxies from its stockholders to obtain the Company Requisite
Vote for such approval. Subject to the provisions of Section 6.5(b), the
Company Board shall recommend approval of the Merger by the Company's
stockholders and the Company Board shall not withdraw, amend or modify in a
manner adverse to Parent such recommendation (or announce publicly its
intention to do so).
SECTION 6.4 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each
party will use its reasonable best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws to consummate the Merger and the other
transactions contemplated by this Agreement. In furtherance and not in
limitation of the foregoing, each party hereto shall make an appropriate
filing of a Notification and Report Form pursuant to the HSR Act in respect
of the transactions contemplated hereby as promptly as practicable and in
any event within ten business days of the date hereof and to supply as
promptly as practicable any additional information and documentary material
that may be requested pursuant to the HSR Act and use its reasonable best
efforts to take, or cause to be taken, all other actions consistent with
this Section 6.4 necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable.
(b) Each of Parent and the Company shall, in connection with the
efforts referenced in Section 6.4(a) to obtain all requisite approvals and
authorizations for the transactions contemplated by this Agreement under
the HSR Act, or any other Antitrust Law (as hereinafter defined), use its
reasonable best efforts to (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a
private party; (ii) keep the other party informed in all material respects
of any material communication received by such party from, or given by such
party to, the Federal Trade Commission (the "FTC"), the Antitrust Division
of the Department of Justice (the "DOJ") or any other Governmental Entity
and of any material communication received or given in connection with any
proceeding by a private party, in each case regarding any of the
transactions contemplated hereby; and (iii) permit the other party to
review any material communication given by it to, and consult with each
other in advance of any meeting or conference with, the FTC, the DOJ or any
such other domestic or foreign Governmental Entity or, in connection with
any proceeding by a private party, with any other person, and to the extent
permitted by the FTC, the DOJ or such other applicable domestic or foreign
Governmental Entity or other person, give the other party the opportunity
to attend and participate in such meetings and conferences.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 6.4(a) and (b), each of Parent and the
Company shall use its reasonable best efforts to resolve such objections if
any, as may be asserted by a Governmental Entity or other person in respect
of the transactions contemplated hereby under any Antitrust Law. In
connection with the foregoing, if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by
this Agreement as violative of any Antitrust Law, each of Parent and the
Company shall cooperate in all respects with each other and use its
respective reasonable best efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement.
Notwithstanding the foregoing or any other provision of this Agreement,
nothing in this Section 6.4 shall (i) limit a party's right to terminate
this Agreement pursuant to Section 8.2 so long as such party has up to then
complied in all material respects with its obligations under this Section
6.4, (ii) require Parent to dispose or hold separate any part of its
business or operations or agree not to compete in any geographic area or
line of business or (iii) require Parent to dispose or hold separate any
part of the Company's business or operations or agree to cause the Company
not to compete in any geographic area or line of business which would in
any such case impair in any material respect any of the benefits intended
to be derived by Parent after the Effective Time as a result of the Merger.
(d) The Company agrees that in connection with any litigation
which may be brought against the Company or its directors relating to the
transactions contemplated hereby, the Company will keep Parent, and any
counsel which Parent may retain at its own expense, informed of the course
of such litigation, to the extent Parent is not otherwise a party thereto.
The Company agrees that it will consult with Parent prior to entering into
any settlement or compromise of any such litigation, and that no such
settlement or compromise will be entered into without Parent's prior
written consent, which consent shall not be unreasonably withheld.
SECTION 6.5 Acquisition Proposals.
(a) The Company will not, nor will it permit any of its
subsidiaries to, nor will it authorize or permit any officer, director or
employee of or any investment banker, attorney, accountant or other advisor
or representative of, the Company or any of its subsidiaries to, directly
or indirectly, (i) solicit, initiate or encourage the submission of any
Acquisition Proposal or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any information in respect of, or take
any other action to facilitate, any Acquisition Proposal or any inquiries
or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal provided, however, that
nothing contained in this Section 6.5(a) shall prohibit the Company Board
from furnishing any information to, or entering into discussions or
negotiations with, any person that makes an unsolicited bona fide
Acquisition Proposal if, and only to the extent that (A) the Company
Stockholder Meeting shall not have occurred, (B) the Company Board, after
consultation with independent legal counsel, determines in good faith that
such action is necessary for the Company Board to comply with its duties to
the Company's stockholders under applicable Law, (C) the Company Board
determines in good faith that such Acquisition Proposal, if accepted, is
reasonably likely to be consummated taking into account all legal,
financial, regulatory and other aspects of the proposal and the person
making the proposal, and believes in good faith, after consultation with
its Financial Advisor and after taking into account the strategic benefits
to be derived from the Merger and the long-term prospects of Parent and its
subsidiaries, would, if consummated, result in a transaction more favorable
to the Company's stockholders than the Merger (any such more favorable
Acquisition Proposal being referred to herein as a "SUPERIOR PROPOSAL"),
and (D) prior to taking such action, the Company (x) provides reasonable
notice to Parent to the effect that it is taking such action and (y)
receives from such person an executed confidentiality/standstill agreement
in reasonably customary form and in any event containing terms at least as
stringent as those contained in the Confidentiality Agreement between
Parent and the Company. The Company shall notify Parent of any Acquisition
Proposal (including, the material terms and conditions thereof and the
identity of the person making it) as promptly as practicable (but in no
case later than 24 hours) after its receipt thereof, and shall thereafter
inform Parent on a prompt basis of the status of any discussions or
negotiations with such a third party, and any material changes to the terms
and conditions of such Acquisition Proposal, and shall promptly give Parent
a copy of any information delivered to such person which has not previously
been reviewed by Parent. The Company has ceased and terminated, and has
caused its subsidiaries and affiliates, and their respective officers,
directors, employees, investment bankers, attorneys, accountants and other
agents and representatives to cease and terminate, any existing activities,
discussions or negotiations with any parties conducted heretofore in
respect of any possible Acquisition Proposal. The Company shall take all
necessary steps to promptly inform the individuals or entities referred to
in the first sentence of this Section 6.5 of the obligations undertaken in
this Section 6.5. "ACQUISITION PROPOSAL" means an inquiry, offer or
proposal regarding any of the following (other than the transactions
contemplated by this Agreement) involving the Company or any of its
subsidiaries: (w) any merger, consolidation, share exchange,
recapitalization, business combination or other similar transaction; (x)
any sale, lease, exchange, mortgage, pledge, transfer or other disposition
of all or substantially all the assets of the Company and its subsidiaries,
taken as a whole, in a single transaction or series of related
transactions; (y) any tender offer or exchange offer for 20% or more of the
outstanding Shares or the filing of a registration statement under the
Securities Act in connection therewith; or (z) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
(b) The Company Board will not withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent, its approval or
recommendation of the Merger unless the Company Board after consultation
with independent legal counsel, determines in good faith that such action
is necessary for the Company Board to comply with its duties to the
Company's stockholders under applicable Law; provided, however, that the
Company Board may not approve or recommend (and in connection therewith,
withdraw or modify its approval or recommendation of the Merger) an
Acquisition Proposal unless such an Acquisition Proposal is a Superior
Proposal (and the Company shall have first complied with its obligations
set forth in Section 8.3(a) and the time referred to in the last sentence
of Section 8.3(a) has expired) and unless it shall have first consulted
with independent legal counsel, and have determined that such action is
necessary for the Company Board to comply with its duties to the Company's
stockholders under applicable Law. Nothing contained in this Section 6.5(b)
shall prohibit the Company from taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) promulgated under the Exchange Act
or from making any disclosure to the Company's stockholders which, in the
good faith reasonable judgment of the Company Board, after consultation
with independent legal counsel, is required under applicable Law; provided,
however, that except as otherwise permitted in this Section 6.5(b), the
Company does not withdraw or modify, or propose to withdraw or modify, its
position in respect of the Merger or approve or recommend, or propose to
approve or recommend, an Acquisition Proposal. Notwithstanding anything
contained in this Agreement to the contrary, any action by the Company
Board permitted by, and taken in accordance with, this Section 6.5(b) shall
not constitute a breach of this Agreement by the Company. Nothing in this
Section 6.5(b) shall (i) permit the Company to terminate this Agreement
(except as provided in Article IX hereof) or (ii) affect any other
obligations of the Company under this Agreement.
SECTION 6.6 Public Announcements. Each of Parent, Merger Sub and
the Company will consult with one another before issuing any press release
or otherwise making any public statements in respect of the transactions
contemplated by this Agreement, including, the Merger, and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by applicable Law or by obligations
pursuant to any listing agreement with the NYSE, as determined by Parent,
Merger Sub or the Company, as the case may be.
SECTION 6.7 Indemnification.
(a) From and after the Effective Time, the Surviving Corporation
shall, and Parent shall cause the Surviving Corporation to the fullest
extent permitted by applicable Law to, indemnify, defend, and hold harmless
each person who is now, or has been at any time prior to the date hereof,
or who becomes prior to the Effective Time, a director or officer of the
Company or any subsidiary thereof (each an "INDEMNIFIED PARTY" and,
collectively, the "INDEMNIFIED PARTIES") against all losses, expenses
(including, reasonable attorneys' fees and expenses), claims, damages,
costs or liabilities or, subject to the proviso of the next succeeding
sentence, amounts paid in settlement, arising out of actions or omissions
occurring at or prior to the Effective Time and whether asserted or claimed
prior to, at or after the Effective Time that are in whole or in part (i)
based on, or arising out of the fact that such person is or was a director
or officer of such party or a subsidiary of such party or (ii) based on,
arising out of or pertaining to the transactions contemplated by this
Agreement. Without limiting the foregoing, in the event of any such loss,
expense, claim, damage, cost or liability (whether or not arising before
the Effective Time), (A) the Surviving Corporation shall pay the reasonable
fees and expenses of counsel selected by the Indemnified Parties, which
counsel shall be reasonably satisfactory to the Surviving Corporation,
promptly after statements therefor are received and otherwise advance to
such Indemnified Party upon request for reimbursement of documented
expenses reasonably incurred, in either case to the extent not prohibited
by the MGCL and upon receipt of any affirmation and undertaking required by
the MGCL, (B) the Surviving Corporation will cooperate in the vigorous
defense of any such matter and (C) any determination required to be made in
respect of whether an Indemnified Party's conduct complies with the
standards set forth under the MGCL and the Surviving Corporation's charter
or bylaws shall be made by independent counsel mutually acceptable to the
Surviving Corporation and the Indemnified Party; provided, however, that
the Surviving Corporation shall not be liable for any settlement effected
without its written consent (which consent shall not be unreasonably
withheld). The Indemnified Parties as a group may retain only one law firm
in respect of each related matter except to the extent there is, in the
opinion of counsel to an Indemnified Party, under applicable standards of
professional conduct, a conflict on any significant issue between positions
of any two or more Indemnified Parties.
(b) For a period of six years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the policies
of directors' and officers' liability insurance maintained by the Company
for the benefit of those persons who are covered by such policies at the
Effective Time (or the Surviving Corporation may substitute therefor
policies of at least the same coverage and amounts containing terms not
less advantageous to the insured parties in respect of matters occurring
prior to the Effective Time), to the extent that such liability insurance
can be maintained annually at a cost to the Surviving Corporation not
greater than 200% of the premium for the current Company directors' and
officers' liability insurance; provided, however, that if such insurance
cannot be so maintained or obtained at such costs, the Surviving
Corporation shall maintain or obtain as much of such insurance as can be so
maintained or obtained at a cost equal to 200% of the current annual
premiums of the Company for such insurance.
(c) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person
and shall not be the continuing or surviving corporation or entity or such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in either such case, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation shall assume the obligations set for in this Section 6.7.
(d) To the fullest extent permitted by Law, from and after the
Effective Time, all rights to liability limitation, exculpation or
indemnification now existing in favor of the employees, agents, directors
or officers of the Company and its subsidiaries in respect of their
activities as such prior to the Effective Time, as provided in the
Company's charter or bylaws, in effect on the date thereof or otherwise in
effect on the date hereof, shall survive the Merger (and as of or prior to
the Effective Time, Parent shall cause the bylaws of Merger Sub to reflect
such provisions) and shall continue in full force and effect and shall not
be amended or modified for a period of not less than six years from the
Effective Time.
(e) The provisions of this Section 6.7 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs, and his or her representatives.
SECTION 6.8 Notification of Certain Matters. The Company shall
give prompt notice to Parent and Merger Sub, and Parent and Merger Sub
shall give prompt notice to the Company, of (i) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would
be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate at or prior to the Effective Time so
as to cause the conditions set forth in Article VII hereof to fail to be
satisfied, or (ii) any material failure of the Company, Parent or Merger
Sub, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder so as to
cause the conditions set forth in Article VII hereof to fail to be
satisfied; provided, however, that the delivery of any notice pursuant to
this Section 6.8 shall not cure such breach or non-compliance or limit or
otherwise affect the remedies available hereunder to the party receiving
such notice.
SECTION 6.9 Tax-Free Reorganization Treatment. The parties hereto
intend that the Merger will qualify as a reorganization within the meaning
of Section 368(a) of the Code. Each of the parties hereto shall, and shall
cause its respective subsidiaries to, use its reasonable best efforts to
cause the Merger to so qualify.
SECTION 6.10 Employee Matters.
Except as contemplated by this Agreement, Parent will and will
cause the Surviving Corporation to honor the obligations of the Company or
any of its subsidiaries under the provisions of each Benefit Plan and
Employee Arrangement; provided that the Company shall have the right at any
time to amend or terminate any such Benefit Plan and Employee Arrangement
in accordance with their terms. The employees of the Company will be
eligible to participate in Parent's applicable employee benefit plans, as
such plans may be in effect from time to time, as soon as administratively
convenient (as determined at Parent's sole discretion) after the Effective
Time and, at Parent's sole discretion, will become employees of Parent or
any of its subsidiaries. Until such time as employees of the Company
immediately (the "COMPANY EMPLOYEES") become eligible to participate in
Parent's applicable employee benefit plans (the "BENEFITS INTEGRATION
DATE"), Parent shall cause such employee welfare benefits to be maintained
for such Company Employees that are, in the aggregate, no less favorable
than those provided to such Company Employees immediately prior to the
Effective time. Following the Benefits Integration Date, with respect to
each plan maintained by Parent in which any Company Employee participates
(each, a "PARENT PLAN") that is an "employee benefit plan" as defined in
Section 3(3) of ERISA, for purposes of eligibility to participate, vesting
and, solely with respect to severance and vacation, level of benefit
entitlement (but in no event for purposes of benefits accrual), service
with the Company and its affiliates (or predecessor employers to the extent
the Company and its affiliates provided past service credit) shall be
treated as service with Parent to the same extent such service was counted
under the corresponding Benefit Plan, if any; provided, however, that such
service shall not be recognized to the extent that such recognition would
result in a duplication of benefits. Such service also shall apply for
purposes of satisfying any waiting periods, evident of insurability
requirements, or the application of any preexisting condition limitations.
Each Parent Plan shall waive preexisting condition limitations to the same
extent waived under the corresponding Benefit Plan. Company Employees shall
be given credit under the applicable Parent Plan for amounts paid under a
corresponding Benefit Plan during the same period for though such amounts
had been paid in accordance with the terms and conditions of the Parent
Plan.
SECTION 6.11 Company Affiliate Agreements. Section 6.11 of the
Company Disclosure Schedule sets forth a list of all persons who are, and
all persons who to the Company's knowledge will be at the Closing Date,
"affiliates" of the Company for purposes of Rule 145 under the Securities
Act. The Company will cause such list to be updated promptly through the
Closing Date. Not later than 45 days prior to the date of the Company
Stockholder Meeting, the Company shall cause its "affiliates" to deliver to
Parent a Company Affiliate Agreement substantially in the form attached as
EXHIBIT B.
SECTION 6.12 SEC and Other Filings. Each of Parent and the Company
shall promptly provide the other party (or its counsel) with copies of all
filings made by the other party or any of its subsidiaries with the SEC or
any other state, federal or foreign Governmental Entity in connection with
this Agreement and the transactions contemplated hereby.
SECTION 6.13 Fees and Expenses. Whether or not the Merger is
consummated, all Expenses incurred in connection with this Agreement, the
Option Agreement and the transactions contemplated hereby and thereby shall
be paid by the party incurring such Expenses, except (a) Expenses incurred
in connection with the filing, printing and mailing of the Proxy Statement
and the S-4, which shall be shared equally by the Company and Parent, (b)
the filing fees required under the HSR Act, which shall be shared equally
by the Company and Parent and (c) if applicable, as provided in Section
8.5. As used in this Agreement, "EXPENSES" includes all out-of-pocket
expenses (including all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
affiliates) incurred by a party or on its behalf in connection with, or
related to, the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation, filing, printing and mailing of the Proxy
Statement and the S-4 and the solicitation of stockholder approvals and all
other matters related to the transactions contemplated hereby.
SECTION 6.14 Obligations of Merger Sub. Parent will take all
action necessary to cause Merger Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
SECTION 6.15 Listing of Stock. Parent shall use its reasonable
best efforts to cause the shares of Parent Common Stock to be issued in
connection with the Merger to be approved for listing on the NYSE on or
prior to the Closing Date, subject to official notice of issuance.
SECTION 6.16 Antitakeover Statutes. If any Takeover Statute is or
may become applicable to the Merger or the Option Agreement, each of Parent
and the Company shall take such actions as are necessary so that the
transactions contemplated by this Agreement or the Option Agreement, as
applicable, may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects
of any Takeover Statute on the Merger or the Option Agreement.
SECTION 6.17 Termination of Credit Agreement. Prior to Closing,
the Company shall prepay any amounts outstanding under, and shall use its
reasonable best efforts to terminate, the Loan Agreement dated as of March
19, 1999 between the Company, Fleet National Bank and the other banks party
thereto.
SECTION 6.18 Benchmarq. At the request of Parent, the Company
shall merge or liquidate Benchmarq Microelectronics, Inc., a Delaware
corporation, into the Company on terms and conditions as are satisfactory
to Parent.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party to consummate the
transactions contemplated by this Agreement are subject to the fulfillment
at or prior to the Effective Time of each of the following conditions, any
or all of which may be waived in whole or in part by the party being
benefited thereby, to the extent permitted by applicable Law:
(a) The Merger shall have been approved and adopted by the Company
Requisite Vote.
(b) Any waiting periods applicable to the Merger under the HSR Act
shall have expired or early termination thereof shall have been granted.
(c) There shall not be in effect any Law of any Governmental
Entity of competent jurisdiction restraining, enjoining or otherwise
preventing consummation of the transactions contemplated by this Agreement
and no Governmental Entity shall have instituted any proceeding which
continues to be pending seeking any such Law.
(d) The S-4 shall have been declared effective by the SEC and
shall be effective at the Effective Time, and no stop order suspending
effectiveness shall have been issued and no action, suit, proceeding or
investigation by the SEC to suspend the effectiveness thereof shall have
been initiated and be continuing.
(e) The Parent Common Stock required to be issued hereunder shall
have been approved for listing on the NYSE, subject only to official notice
of issuance.
SECTION 7.2 Conditions to the Obligations of Parent and Merger
Sub. The respective obligations of Parent and Merger Sub to consummate the
transactions contemplated by this Agreement are subject to the fulfillment
at or prior to the Effective Time of each of the following additional
conditions, any or all of which may be waived in whole or part by Parent
and Merger Sub, as the case may be, to the extent permitted by applicable
Law:
(a) The representations and warranties of the Company contained
herein, shall have been true, except where the failure to be true,
individually or in the aggregate, has not had or is not reasonably expected
to have a Material Adverse Effect on the Company and its subsidiaries taken
as a whole, in each case when made and on and as of the Closing Date as
though made on and as of the Closing Date (except for representations and
warranties made as of a specified date, which shall speak only as of the
specified date).
(b) The Company shall have performed or complied in all material
respects with all agreements and conditions contained herein required to be
performed or complied with by it prior to or at the time of the Closing.
(c) The Company shall have delivered to Parent a certificate,
dated the date of the Closing, signed by the President or any Vice
President of the Company (but without personal liability thereto),
certifying as to the fulfillment of the conditions specified in Sections
7.2(a) and 7.2(b).
(d) Parent shall have received an opinion of its tax counsel,
Weil, Gotshal & Manges LLP, dated the Effective Time, to the effect that
the Merger will qualify as a reorganization within the meaning of Section
368(a) of the Code. The issuance of such opinion shall be conditioned on
the receipt by such tax counsel of representation letters from each of the
Parent, Merger Sub and the Company, in each case, in form and substance
reasonably satisfactory to Weil, Gotshal & Manges LLP. Each such
representation letter shall be dated on or before the date of such opinion
and shall not have been withdrawn or modified in any material respect.
(e) All authorizations, consents or approvals of (i) any German
Governmental Entity required under any German Antitrust Laws in connection
with the execution and delivery of this Agreement and the performance of
the obligations hereunder and (ii) any other Governmental Entity (other
than those specified in Section 7.1(b)) required in connection with the
execution and delivery of this Agreement and the performance of the
obligations hereunder shall have been made or obtained, without any
limitation, restriction or condition that is reasonably expected to have a
Material Adverse Effect on the Company and its subsidiaries taken as a
whole (or an effect on Parent and its subsidiaries that, were such effect
applied to the Company and its subsidiaries, is reasonably expected to have
a Material Adverse Effect on the Company), except for such authorizations,
consents or approvals, the failure of which to have been made or obtained
is not reasonably expected to have a Material Adverse Effect on the Company
and its subsidiaries taken as a whole (or an effect on Parent and its
subsidiaries that, were such effect applied to the Company and its
subsidiaries, is reasonably expected to have a Material Adverse Effect on
the Company).
(f) Not later than 45 days prior to the date of the Company
Stockholder Meeting, Parent shall have received from the Company's
"affiliates" a Company Affiliate Agreement substantially in the form
attached as EXHIBIT B.
(g) The Company shall have received and delivered to Parent a
letter from Pricewaterhouse Coopers LLP dated as of the Closing Date,
stating that no conditions exist that would preclude the Company from being
party to a business combination for which the "pooling of interests" method
of accounting would be available. Parent shall have received and (unless
waived by the Company) delivered to the Company a letter from Ernst & Young
LLP, dated as of the date the S-4 is declared effective and dated as of the
Closing Date, stating that accounting of the Merger as a "pooling of
interests" under APB 16 and the applicable SEC rules and regulations is
appropriate if the Merger is consummated as contemplated by this Agreement.
Notwithstanding the foregoing, the satisfaction of this Section 7.2(g)
shall not be a condition to the obligations of Parent and Merger Sub to
effect the Merger if the failure to satisfy this condition results from any
action taken or agreed to be taken by or on behalf of Parent or Merger Sub.
SECTION 7.3 Conditions to the Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated by
this Agreement are subject to the fulfillment at or prior to the Effective
Time of each of the following conditions, any or all of which may be waived
in whole or in part by the Company to the extent permitted by applicable
Law:
(a) The representations and warranties of Parent and Merger Sub
contained herein shall have been true, except where the failure to be true,
individually or in the aggregate, has not had or is not reasonably expected
to have, a Material Adverse Effect on Parent and its subsidiaries taken as
a whole, in each case when made and on and as of the Closing Date as though
made on and as of the Closing Date (except for representations and
warranties made as of a specified date, which shall speak only as of the
specified date).
(b) Parent shall have performed or complied in all material
respects with all agreements and conditions contained herein required to be
performed or complied with by it prior to or at the time of the Closing.
(c) Parent shall have delivered to the Company a certificate,
dated the date of the Closing, signed by the President or any Vice
President of Parent (but without personal liability thereto), certifying as
to the fulfillment of the conditions specified in Sections 7.3(a) and
7.3(b).
(d) The Company shall have received an opinion of its tax counsel,
Skadden, Arps, Slate, Meagher & Flom LLP, dated the Effective Time, to the
effect that the Merger will qualify as a reorganization within the meaning
of Section 368(a) of the Code. The issuance of such opinion shall be
conditioned on the receipt by such tax counsel of representation letters
from each of the Parent, Merger Sub and the Company, in each case, in form
and substance reasonably satisfactory to Skadden, Arps, Slate, Meagher &
Flom LLP. Each such representation letter shall be dated on or before the
date of such opinion and shall not have been withdrawn or modified in any
material respect.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1 Termination by Mutual Agreement. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, whether before or after the approval of the Merger by the
Company Requisite Vote referred to in Section 7.1(a), by mutual written
consent of the Company and Parent by action of their respective Boards of
Directors.
SECTION 8.2 Termination by Either Parent or the Company. This
Agreement may be terminated and the Merger may be abandoned at any time
prior to the Effective Time by action of the Board of Directors of either
Parent or the Company if:
(a) the Merger shall not have been consummated by February 29,
2000, whether such date is before or after the date of approval of the
Merger by the Company Requisite Vote (the "TERMINATION DATE"); provided,
however, that if either Parent or the Company reasonably determines in good
faith that additional time is necessary in connection with obtaining any
consent, registration, approval, permit or authorization required to be
obtained from any Governmental Entity, the Termination Date may be extended
by Parent or the Company from time to time by written notice to the other
party to a date not beyond March 31, 2000;
(b) the Company Requisite Vote shall not have been obtained at the
Company Stockholder Meeting or at any adjournment or postponement thereof;
(c) any Law permanently restraining, enjoining or otherwise
prohibiting consummation of the Merger shall become final and
non-appealable (whether before or after the approval of the Merger by the
Company Requisite Vote); or
(d) any Governmental Entity shall have failed to issue an order,
decree or ruling or to take any other action which is necessary to fulfill
the conditions set forth in Sections 7.1(b), 7.1(d) and 7.2(e), as
applicable, and such denial of a request to issue such order, decree or
ruling or take such other action shall have been final and nonappealable;
provided, however, that the right to terminate this Agreement pursuant to
this Section 8.2 shall not be available to any party that has breached in
any material respect its obligations under this Agreement in any manner
that shall have proximately contributed to the occurrence of the failure of
the Merger to be consummated.
SECTION 8.3 Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, whether before or after the approval of the Merger by the
Company Requisite Vote referred to in Section 7.1(a), by action of the
Company Board:
(a) if (i) the Company is not in breach of Section 6.5, (ii) the
Merger shall not have been approved by the Company Requisite Vote, (iii)
the Company Board authorizes the Company, subject to complying with the
terms of this Agreement, to enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal and the
Company notifies Parent in writing that it intends to enter into such an
agreement, attaching the most current version of such agreement to such
notice, and (iv) during the three business day period after the Company's
notice, (A) the Company shall have negotiated with, and shall have caused
its respective financial and legal advisors to negotiate with, Parent to
attempt to make such commercially reasonable adjustments in the terms and
conditions of this Agreement as would enable the Company to proceed with
the transactions contemplated hereby and (B) the Company Board shall have
concluded, after considering the results of such negotiations, that any
Superior Proposal giving rise to the Company's notice continues to be a
Superior Proposal. The Company may not effect such termination unless
contemporaneously therewith the Company pays to Parent in immediately
available funds the fees required to be paid pursuant to Section 8.5. The
Company agrees (x) that it will not enter into a binding agreement referred
to in clause (iii) above until at least the day following the third
business day after it has provided the notice to Parent required thereby
and (y) to notify Parent promptly if its intention to enter into a written
agreement referred to in its notification shall change at any time after
giving such notification; or
(b) if there is a breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement contained in this Agreement
that cannot be cured and would cause a condition set forth in Section
7.3(a) or 7.3(b) to be incapable of being satisfied as of the Termination
Date.
SECTION 8.4 Termination by Parent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time by Parent, if:
(a) the Company enters into a binding agreement for a Superior
Proposal, or the Company Board shall have withdrawn or adversely modified
its approval or recommendation of the Merger; or
(b) there is a breach by the Company of any representation,
warranty, covenant or agreement contained in this Agreement that cannot be
cured and would cause a condition set forth in Section 7.2(a) or 7.2(b) to
be incapable of being satisfied as of the Termination Date.
SECTION 8.5 Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VIII, this Agreement
(other than this Section 8.5, Sections 5.2(c) and 6.13, and Article IX)
shall become void and of no effect with no liability on the part of any
party hereto (or of any of its directors, officers, employees, agents,
legal and financial advisors, or other representatives); provided, however,
that except as otherwise provided herein, no such termination shall relieve
any party hereto of any liability or damages resulting from any willful
breach of this Agreement.
(b) In the event that (i) a bona fide Acquisition Proposal shall
have been made or any person shall have publicly announced an intention
(whether or not conditional) to make a bona fide Acquisition Proposal in
respect of the Company or any of its subsidiaries and thereafter this
Agreement is terminated by either Parent or the Company pursuant to Section
8.2(b) (provided that within 9 months of the termination of this Agreement
any Acquisition Proposal by a third party is entered into, agreed to, or
consummated by the Company) or (ii) this Agreement is terminated by the
Company pursuant to Section 8.3(a), or (iii) this Agreement is terminated
by Parent pursuant to Section 8.4(a) or Section 8.4(b) as a result of a
material breach by the Company of any of the covenants set forth in Section
6.5 hereof, then the Company shall pay Parent a termination fee of
$41,700,000 in same-day funds, on the date of such termination, in the case
of clause (ii) or (iii), or on the earlier of the date an agreement is
entered into in respect of an Acquisition Proposal or an Acquisition
Proposal is consummated in the case of clause (i), provided, however, that
notwithstanding the foregoing, Parent will not be entitled to a termination
fee pursuant to clause (i) above in the event the Acquisition Proposal
entered into, agreed to or consummated after such termination is an
Acquisition Proposal whereby (A) the Company or any of its subsidiaries
acquires a third party (the "EXEMPT ACQUIRED PERSON") pursuant to a merger,
consolidation, recapitalization, share exchange or similar transaction in
which the Company survives and the shareholders of the Exempt Acquired
Person receive shares of Company Common Stock which, immediately following
consummation of such merger, consolidation, recapitalization, share
exchange or similar transaction, will represent no more than 45% of the
issued and outstanding shares of Company Common Stock (or securities
convertible or exchangeable into, or exercisable for Company Common Stock,
whether upon the passage of time or otherwise) and (B) such Exempt Acquired
Person, or any affiliate or affiliates thereof, was or were not the subject
of an Acquisition Proposal at any time after the date hereof prior to the
termination of this Agreement.
(c) The Company acknowledges that the agreements contained in
Section 8.5(b) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Parent and Merger Sub
would not have entered into this Agreement; accordingly, if the Company
fails to promptly pay the amount due pursuant to Section 8.5(b), and, in
order to obtain such payment, Parent commences a suit which results in a
judgment against the Company for the fee set forth in this Section 8.5, the
Company shall pay to Parent its costs and expenses (including, attorneys'
fees) in connection with such suit, together with interest from the date of
termination of this Agreement on the amounts owed at the prime rate of Bank
of America, N.A., in effect from time to time during such period.
SECTION 8.6 Amendment. This Agreement may be amended by action
taken by the Company, Parent and Merger Sub at any time before or after
approval of the Merger by the Company Requisite Vote but, after any such
approval, no amendment shall be made which requires the approval of such
stockholders under applicable Law without such approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of the
parties hereto.
SECTION 8.7 Extension; Waiver. At any time prior to the Effective
Time, each party hereto (for these purposes, Parent and Merger Sub shall
together be deemed one party and the Company shall be deemed the other
party) may (i) extend the time for the performance of any of the
obligations or other acts of the other party, (ii) waive any inaccuracies
in the representations and warranties of the other party contained herein
or in any document, certificate or writing delivered pursuant hereto, or
(iii) waive compliance by the other party with any of the agreements or
conditions contained herein. Any agreement on the part of either party
hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Entire Agreement; Assignment.
(a) This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement between the parties
hereto in respect of the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, between the
parties in respect of the subject matter hereof, other than the
Confidentiality Agreement (which shall remain in effect).
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by operation of Law (including by
merger or consolidation) or otherwise without the prior written consent of
the other parties. Any assignment in violation of the preceding sentence
shall be null and void. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and permitted assigns.
SECTION 9.2 Notices. All notices, requests, instructions or other
documents to be given under this Agreement shall be in writing and shall be
deemed given, (i) five business days following sending by registered or
certified mail, postage prepaid, (ii) when sent if sent by facsimile;
provided, however, that the facsimile is promptly confirmed by telephone
confirmation thereof, (iii) when delivered, if delivered personally to the
intended recipient, and (iv) one business day following sending by
overnight delivery via a national courier service, and in each case,
addressed to a party at the following address for such party:
if to Merger Sub or to
Parent, to: Texas Instruments Incorporated
7839 Churchill Way, M/S 3995
Dallas, Texas 75251
- or -
P.O. Box 650311, M/S 3995
Dallas, Texas 75265
Attention: Charles D. Tobin
Facsimile No.: (972) 917-3804
with copies to: Texas Instruments Incorporated
8505 Forest Lane, M/S 8658
Dallas, Texas 75243
- or -
P.O. Box 660199, M/S 8658
Dallas, Texas 75266
Attention: Richard J. Agnich, Esq.
Facsimile No.: (972) 480-5061
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attention: R. Scott Cohen, Esq.
Facsimile: (214) 746-7777
if to the Company, to: Unitrode Corporation
7 Continental Boulevard
Merrimack, New Hampshire 03054-4334
Attention: Allan R. Campbell, Esq.
Facsimile: (603) 429-8771
with a copy to: Skadden, Arps, Slate, Meagher
& Flom LLP
One Beacon Street
Boston, Massachusetts 02108
Attention: Margaret Brown, Esq.
Facsimile: (617) 573-4815
or to such other address or facsimile number as the person to whom
notice is given may have previously furnished to the other in
writing in the manner set forth above.
SECTION 9.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Maryland, without
giving effect to the choice of Law principles thereof.
SECTION 9.4 Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
SECTION 9.5 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and its
successors and permitted assigns, and, except as provided in Section 6.7,
nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
SECTION 9.6 Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions
hereof. If any provision of this Agreement, or the application thereof to
any person or any circumstance, is invalid or unenforceable, (a) a suitable
and equitable provision shall be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
invalid or unenforceable provision and (b) the remainder of this Agreement
and the application of such provision to other persons or circumstances
shall not be affected by such invalidity or unenforceability, nor shall
such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction.
SECTION 9.7 Specific Performance. The parties agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of
Maryland or in Maryland state court, this being in addition to any other
remedy to which they are entitled at Law or in equity. In addition, each of
the parties hereto (a) consents to submit itself to the personal
jurisdiction of any federal court located in the State of Maryland or any
Maryland state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a federal or state court
sitting in the State of Maryland.
SECTION 9.8 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 9.9 Interpretation.
(a) The words "hereof," "herein," "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement,
and article, section, paragraph, exhibit, and schedule references are to
the articles, sections, paragraphs, exhibits, and schedules of this
Agreement unless otherwise specified. Whenever the words "include,"
"includes," or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation," the word "or" shall mean
"and/or." All terms defined in this Agreement shall have the defined
meanings contained herein when used in any certificate or other document
made or delivered pursuant hereto unless otherwise defined therein. The
definitions contained in this Agreement are applicable to the singular as
well as the plural forms of such terms and to the masculine as well as to
the feminine and neuter genders of such terms. Any agreement, instrument or
statute defined or referred to herein or in any agreement or instrument
that is referred to herein means such agreement, instrument or statute as
from time to time, amended, qualified or supplemented, including (in the
case of agreements and instruments) by waiver or consent and (in the case
of statutes) by succession of comparable successor statutes and all
attachments thereto and instruments incorporated therein. References to a
person are also to its permitted successors and assigns.
(b) The phrases "the date of this Agreement," "the date hereof,"
and terms of similar import, unless the context otherwise requires, shall
be deemed to refer to July 25, 1999. The phrase "made available" in this
Agreement shall mean that the information referred to has been actually
delivered to the party to whom such information is to be made available.
(c) The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
SECTION 9.10 Definitions. As used herein,
(a) "BENEFICIAL OWNERSHIP" or "BENEFICIALLY OWN" has the meaning
provided in Section 13(d) of the Exchange Act and the rules and regulations
thereunder.
(b) "BUSINESS DAY" shall mean any day other than Saturday, Sunday
or any day on which banks in New York City, New York are required or
authorized by Law to be closed for business.
(c) "KNOW" or "KNOWLEDGE" means, in respect of any party, the
actual knowledge of such party's executive officers, without any
requirement to undertake an independent investigation.
(d) "MATERIAL ADVERSE EFFECT" means in respect of any entity, any
change, circumstance, effect or development that, individually or in the
aggregate with all other changes, circumstances and effects, is or is
reasonably likely to be materially adverse to (i) the assets, properties,
financial condition or results of operations of such entity and its
subsidiaries taken as a whole, other than any change, circumstance, effect
or development (A) relating to the economy in general in any country in
which such entity operates or owns assets, (B) relating to the
semiconductor industry (it being understood that this clause (B) shall not
exclude, in the case of any Material Adverse Effect with respect to the
Company, any change, circumstance, effect or development relating to the
semiconductor industry that disproportionately impacts the Company), (C)
arising out of or resulting from actions contemplated by the parties in
connection with, or which is attributable to, the announcement of this
Agreement and the transactions contemplated hereby (including loss of
customers or suppliers or the delay or cancellation of orders for products,
but excluding in the case of the Company the loss of employees), or (D) any
shareholder litigation or litigation by any Governmental Entity, in each
case brought or threatened against such entity or any member of its board
of directors in respect of this Agreement or the transactions contemplated
hereby; provided that neither (x) any change in the market price or trading
volume of the Company Common Stock or Parent Common Stock nor (y) a failure
by the Company or Parent to meet the revenue or earnings predictions of
equity analysis reflected in the First Call consensus estimate, or any
other revenue or earnings predictions or expectations, for any period
ending on or after the date of this Agreement shall, in and of itself,
constitute a Material Adverse Effect (it being understood that this
proviso, as it relates to (y), shall not exclude any underlying change,
circumstance, effect or development which resulted in such failure to meet
such estimates, predictions or expectations), or (ii) the ability of such
party to consummate the transactions contemplated by this Agreement.
(e) "PERSON" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization,
other entity or group (as defined in the Exchange Act).
(f) "SUBSIDIARY" means, in respect of any party, any corporation,
partnership or other entity or organization, whether incorporated or
unincorporated, of which (i) such other party or any other subsidiary of
such party is a general partner (excluding such partnerships where such
party or any subsidiary of such party does not have a majority of the
voting interest in such partnership) or (ii) at least a majority of the
securities or other interests having by their terms ordinary voting power
to elect a majority of the board of directors or others performing similar
functions in respect of such corporation or other organization is directly
or indirectly owned or controlled by such party or by any one or more of
its subsidiaries, or by such party and one or more of its subsidiaries.
[THE REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be duly executed on its behalf as of the date first above written.
UNITRODE CORPORATION
By: /s/ Robert J. Richardson
____________________________
Name: Robert J. Richardson
Title: Chairman of the Board
and Chief Executive
Officer
TEXAS INSTRUMENTS INCORPORATED
By: /s/ Delbert A. Whitaker
____________________________
Name: Delbert A. Whitaker
Title: Senior Vice President
UNICORN ACQUISITION CORP.
By: /s/ Delbert A. Whitaker
____________________________
Name: Delbert A. Whitaker
Title: President
EXHIBIT A
VOTING AGREEMENT
In consideration of Texas Instruments Incorporated, a Delaware
corporation ("PARENT"), Unicorn Acquisition Corp., a Maryland corporation
("MERGER SUB"), and Unitrode Corporation, a Maryland corporation (the
"COMPANY"), entering into on the date hereof an Agreement and Plan of
Merger, dated as of the date hereof (the "MERGER AGREEMENT") which
provides, among other things, that Merger Sub, upon the terms and subject
to the conditions thereof, will be merged with and into the Company (the
"MERGER") and each outstanding share of Company Common Stock (as defined in
the Merger Agreement) will be converted into the Share Consideration (as
defined in the Merger Agreement) in accordance with the terms of the Merger
Agreement, each of the undersigned holders (each, a "STOCKHOLDER") of
shares of Company Common Stock agrees with each of Parent, Merger Sub and
the Company as follows:
1. Each Stockholder hereby agrees, in person or by proxy, to vote
the shares of Company Common Stock set forth opposite its name in SCHEDULE
A hereto (the "SCHEDULE A SECURITIES") to approve and adopt the Merger and
the transactions contemplated thereby at any meeting or meetings of the
stockholders of the Company, and at any adjournment thereof or pursuant to
action by written consent, at or by which the Merger or such other
transactions, are submitted for the consideration and vote of the
stockholders of the Company.
2. Each Stockholder hereby agrees that such Stockholder shall not
enter into any voting agreement or grant a proxy or power of attorney with
respect to the Schedule A Securities which is inconsistent with the
obligations of such Stockholder under this Agreement.
3. A Stockholder may sell, assign, encumber or otherwise dispose
of, or enter into any contract, option or other arrangement or
understanding in respect of the direct or indirect sale, assignment,
transfer, encumbrance or other disposition of, any Schedule A Securities
during the term of this Agreement provided such Stockholder provides
written notice to Parent and first obtains a written agreement from the
proposed transferee pursuant to which the proposed transferee agrees to be
bound by the terms of this Agreement.
4. Each Stockholder hereby represents and warrants to Parent and
Merger Sub that as of the date hereof:
(a) Such Stockholder (i) owns beneficially all of the shares of
Company Common Stock set forth opposite the Stockholder's name in
SCHEDULE A hereto, (ii) has the legal power, authority and right
to enter into, execute and deliver this Voting Agreement without
the consent or approval of any other person, and (iii) has not
entered into any voting agreement or other similar agreement with
or granted any person any proxy (revocable or irrevocable) in
respect of such shares (other than this Voting Agreement).
(b) Assuming due authorization, execution and delivery by the other
parties hereto, this Voting Agreement is the valid and binding
agreement of such Stockholder.
(c) No investment banker, broker or finder is entitled to a commission
or fee from such Stockholder in respect of this Voting Agreement
based upon any arrangement or agreement made by or on behalf of
the Stockholder.
5. If any provision of this Voting Agreement shall be invalid or
unenforceable under applicable law, such provision shall be ineffective to
the extent of such invalidity or unenforceability only, without in any way
affecting the remaining provisions of this Voting Agreement.
6. This Voting Agreement may be executed in two or more
counterparts each of which shall constitute one and the same instrument.
7. The parties hereto agree that if for any reason any party
hereto shall have failed to perform its obligations under this Voting
Agreement, then the party seeking to enforce this Voting Agreement against
such non-performing party shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto further agree
to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such injunctive relief. This provision
is without prejudice to any other rights or remedies, whether at law or in
equity, that any party hereto may have against any other party hereto for
any failure to perform its obligations under this Voting Agreement.
8. This Voting Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
9. This Agreement shall terminate upon the earlier of (a) the
Effective Time (as defined in the Merger Agreement) or (b) the termination
of the Merger Agreement in accordance with its terms.
10. Parent, Merger Sub and the Company understand and agree that
this Agreement pertains only to each Stockholder and not to any of its
affiliates, if any, or advisers.
11. Neither Parent, Merger Sub nor the Company will enter into any
agreement with any other stockholder of the Company having a purpose or
effect substantially similar to that of this Voting Agreement on financial
terms (in respect of such other stockholder) more favorable than the terms
of this Voting Agreement.
12. Any Stockholder who is also a director or officer of the
Company will not, by execution of this Agreement, be precluded from
exercising his or her duties under applicable law in his or her capacity as
a director with respect to the Company and nothing herein will limit or
affect, or give rise to any liability to a Stockholder by virtue of any
actions taken by such Stockholder in his or her capacity as a director or
officer of the Company.
13. Nothing contained in this Voting Agreement shall be deemed to
vest in Parent, Merger Sub or the Company any direct or indirect ownership
or incidence of ownership of or with respect to any Schedule A Securities.
All rights, ownership and economic benefits of and relating to the Schedule
A Securities shall remain and belong to the applicable Stockholder and
neither Parent, Merger Sub nor the Company shall have any power or
authority to direct any Stockholder in the voting of any Schedule A
Securities or the performance by any Stockholder of its duties or
responsibilities as a stockholder of the Company, except as otherwise
provided herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Voting
Agreement as of July ___, 1999.
TEXAS INSTRUMENTS INCORPORATED
By:__________________________________________________
Name: Delbert A. Whitaker
Title: Senior Vice President
UNICORN ACQUISITION CORP.
By:__________________________________________________
Name: Delbert A. Whitaker
Title: Senior Vice President
UNITRODE CORPORATION
By:__________________________________________________
Name:
Title:
STOCKHOLDERS
_______________________
Dietrich R. Erdmann
_______________________
Robert L. Gable
_______________________
Robert J. Richardson
_______________________
Allan R. Campbell
_______________________
Raymond G. Hawkins
SCHEDULE A
TO
VOTING AGREEMENT
Stockholder Class Number of Shares
- ----------- ----- ----------------
Dietrich R. Erdmann Common 605,212
Robert L. Gable Common 87,000
Robert J. Richardson Common 50,000
Allan R. Campbell Common 119,750
Raymond G. Hawkins Common 6,000
EXHIBIT B
[FORM OF COMPANY AFFILIATE AGREEMENT TO PARENT]
[Date]
Texas Instruments Incorporated
8505 Forest Lane
Dallas, Texas 75266
Dear Sir/Madam:
Reference is made to the provisions of the Agreement and Plan of
Merger, dated as of July 25, 1999 (together with any amendments thereto,
the "Merger Agreement"), among Unitrode Corporation, a Maryland corporation
(the "Company"), Texas Instruments Incorporated, a Delaware corporation
("Parent"), and Unicorn Acquisition Corp., a Maryland corporation and a
direct wholly owned subsidiary of Parent ("Merger Sub"), pursuant to which
Merger Sub will be merged with and into the Company, with the Company
continuing as the surviving corporation (the "Merger"). This letter
constitutes the undertakings of the undersigned contemplated by the Merger
Agreement, and as is being furnished pursuant to Section 6.11 thereto.
I understand that I may be deemed to be an "affiliate" of the
Company, as such term is defined for purposes of paragraphs (c) and (d) of
Rule 145 ("Rule 145") promulgated under the Securities Act of 1933, as
amended (the "Securities Act"). Execution of this letter shall not be
construed as an admission of "affiliate" status nor as a waiver of any
rights that I may have to object to any claim that I am an "affiliate" on
or after the date of this letter.
If in fact I were to be deemed an "affiliate" of the Company under
paragraphs (c) and (d) of Rule 145, my ability to sell, transfer or
otherwise dispose of any shares of the common stock, par value $1.00 per
share, of Parent (the "Parent Shares") received by me in exchange for any
shares of Company Capital Stock (as defined in the Merger Agreement)
pursuant to the Merger may be restricted.
I hereby represent, warrant and covenant to Parent that:
(a) I will not sell, pledge, transfer, or otherwise dispose of any
of the Parent Shares except (i) pursuant to an effective registration
statement under the Securities Act, or (ii) as permitted by, and in
accordance with, Rule 145 or another applicable exemption under the
Securities Act and the rules and regulations promulgated thereunder; and
(b) I will not (i) sell, pledge, transfer, or otherwise dispose of
any Company Shares during the 30-day period prior to the Effective Time (as
defined in the Merger Agreement) or (ii) sell or otherwise reduce my risk
(within the meaning of the Securities and Exchange Commission's Financial
Reporting Release No. 1., "Codification of Financial Reporting Policies,"
Section 201.01 47 F.R. 21028 (April 15, 1982)) relative to any Parent
Shares until after such time as consolidated financial results (including,
combined sales and net income) covering at least 30 days of post-merger
combined operations of Parent and the Company have been published by
Parent, except as permitted by Staff Accounting Bulletin No. 76 issued by
the Securities and Exchange Commission.
Parent will file with the Securities and Exchange Commission in a
timely manner all reports required to be filed pursuant to Sections 12 and
13 of the Securities Exchange Act of 1934, as amended such that the
undersigned's Parent Shares may be sold or disposed of under Rule 145.
Except as otherwise provided in the Merger Agreement or this Letter, Parent
is under no obligation to register the sale, transfer, pledge, or other
disposition of the Parent Shares or to take any other action necessary for
the purpose of making an exemption from registration available.
I understand that Parent will issue stop transfer instructions to
its transfer agents with respect to the Parent Shares and that a
restrictive legend will be placed on certificates delivered to me
evidencing the Parent Shares in substantially the following form:
"This certificate and the shares represented hereby have been
issued pursuant to a transaction governed by Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), and may not be sold or otherwise disposed of unless registered under
the Securities Act pursuant to a Registration Statement in effect at the
time or unless the proposed sale or disposition can be made in compliance
with Rule 145 or without registration in reliance on another exemption
therefrom. Reference is made to that certain letter agreement, dated
__________, 1999, between the holder of this certificate and the issuer of
this security (a copy of which is on file in the principal office of such
issuer) which contains further restrictions on the transferability of the
shares represented hereby."
The term Parent Shares as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but
also any other stock which may be issued in exchange for, in lieu of, or in
addition to, all or any part of such Parent Shares.
I hereby acknowledge that Parent and its independent public
accountants will be relying upon this letter in connection with the
determination that the Merger will qualify and be accounted for as a
"pooling of interests", and that I understand the requirements of this
letter and the limitations imposed upon the transfer, sale or other
disposition of the Company Shares and the Parent Shares.
Very truly yours,
Name:
Countersigned:
TEXAS INSTRUMENTS INCORPORATED
By:
-----------------------------
Name: Delbert A. Whitaker
Title: Senior Vice President
EXHIBIT C
OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 25, 1999 (the "STOCK
OPTION AGREEMENT"), between Texas Instruments Incorporated, a Delaware
corporation ("PARENT"), and Unitrode Corporation, a Maryland corporation
(the "COMPANY").
WHEREAS, Parent, Unicorn Acquisition Corp., a Maryland corporation
and a wholly owned subsidiary of Parent ("MERGER SUB"), and the Company are
parties to that certain Agreement and Plan of Merger, dated as of the date
hereof (the "MERGER AGREEMENT"), which provides, among other things, that
Merger Sub, on the terms and subject to the conditions thereof, will merge
with and into the Company with the Company surviving as a wholly owned
subsidiary of Parent;
WHEREAS, as a condition to its willingness to enter into the
Merger Agreement, Parent has requested that the Company grant to Parent an
option to purchase up to 6,470,760 shares of common stock, par value $0.01
per share ("COMMON STOCK") of the Company, upon the terms and subject to
the conditions hereof; and
WHEREAS, in order to induce Parent to enter into the Merger
Agreement, the Company is willing to grant Parent the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as
follows:
1. The Option; Exercise; Adjustments.
(a) Subject to the other terms and conditions set forth herein,
the Company hereby grants to Parent an irrevocable option (the "OPTION") to
purchase up to 6,470,760 shares of Common Stock (the "SHARES"). The
purchase price per Share (the "PURCHASE PRICE") shall be $38.60. The
Purchase Price and the number of Shares shall be subject to adjustment as
provided in Section 1(c) hereof.
Parent may exercise the Option with respect to any or all of the
Option Shares at any one time or from time to time, subject to the
provisions of Section 1(c) hereof, upon the occurrence of an Exercise Event
(as defined below). Subject to the last sentence of this Section 1(b), the
Option will terminate and be of no further force and effect upon the
earliest to occur of (i) the Effective Time (as defined in the Merger
Agreement), (ii) 120 days after the first occurrence of an Exercise Event,
and (iii) the termination of the Merger Agreement in accordance with its
terms so long as, in the case of this clause (iii), no Exercise Event has
occurred or could still occur under Section 8.5(b) of the Merger Agreement,
in which case the Option will terminate on the later of (x) 120 days
following the time such termination fee becomes unconditionally payable and
(y) the expiration of the period in which an Exercise Event could occur
pursuant to Section 8.5(b) of the Merger Agreement. "Exercise Event" means
any event as a result of which Parent is unconditionally entitled to
receive a termination fee pursuant to Section 8.5(b) of the Merger
Agreement. Notwithstanding the termination of the Option, Parent shall be
entitled to purchase the Shares with respect to which it has exercised the
Option in accordance with the terms hereof prior to the termination of the
Option.
In the event Parent is entitled to and wishes to exercise the
Option, the Parent shall send a written notice to the Company (the "STOCK
EXERCISE NOTICE") specifying a date (subject to the HSR Act (as defined
below)) not later than 20 business days and not earlier than three business
days following the date such notice is given for the closing of such
purchase and specifying the number of Shares Parent wishes to purchase. In
the event of any change in the number of issued and outstanding shares of
Common Stock by reason of any stock dividend, stock split, split-up,
recapitalization, merger or other change in the corporate or capital
structure of the Company, the number of Shares subject to this Option and
the purchase price per Share shall be appropriately adjusted to restore the
Parent to its rights hereunder, including its right to purchase Shares
representing approximately 19.9% of the capital stock or securities
convertible or otherwise exchangeable for capital stock of the Company
entitled to vote generally for the election of the directors of the Company
that are issued and outstanding immediately prior to the exercise of the
Option at an aggregate purchase price equal to the Purchase Price
multiplied by 6,470,760.
At any time the Option is then exercisable pursuant to the terms
of Section 1(b) hereof, Parent may elect, in lieu of exercising the Option
to purchase Shares provided in Section 1(a) hereof, to send a written
notice to the Company (the "CASH EXERCISE NOTICE") specifying a date not
later than 20 business days and not earlier than 10 business days following
the date such notice is given on which date the Company shall pay to Parent
an amount in cash equal to the Spread (as hereinafter defined) multiplied
by all or such portion of the Shares subject to the Option as Parent shall
specify in such Cash Exercise Notice. As used herein "SPREAD" shall mean
the excess, if any, over the Purchase Price of the higher of (i) if
applicable, the highest price per share of Common Stock (including any
brokerage commissions, transfer taxes and soliciting dealers' fees) paid or
proposed to be paid by any person pursuant to a definitive agreement
executed by the Company with respect to an Acquisition Proposal (the
"ALTERNATIVE PURCHASE PRICE") or (ii) the average closing price, for the
five trading days ending on the trading day immediately preceding the date
of the Cash Exercise Notice, per share of Common Stock as reported on the
New York Stock Exchange (the "CLOSING PRICE"). If the Alternative Purchase
Price includes any property other than cash, the Alternative Purchase Price
shall be the sum of (i) the fixed cash amount, if any, included in the
Alternative Purchase Price plus (ii) the fair market value of such other
property. If such other property consists of securities with an existing
public trading market, the average of the closing prices (or the average of
the closing bid and asked prices if closing prices are unavailable) for
such securities in their principal public trading market on the five
trading days ending on the trading day immediately preceding the date of
the Cash Exercise Notice shall be deemed to equal the fair market value of
such property. If such other property consists of something other than cash
or securities with an existing public trading market and, as of the payment
date for the Spread, agreement on the value of such other property has not
been reached between the parties hereto, the Alternative Purchase Price
shall be deemed to equal the Closing Price. Upon exercise of its right to
receive cash pursuant to the exercise of the Option, the obligations of the
Company to deliver Shares pursuant to Section 3 shall be terminated with
respect to such number of Shares for which Parent shall have elected to be
paid the Spread.
2. Conditions to Delivery of Shares. The Company's obligation to
deliver Shares upon exercise of the Option is subject only to the
conditions that:
(i) No preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction in the
United States prohibiting the delivery of the Shares shall be in effect;
and
(ii) Any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT") shall
have expired or been terminated; and
(iii) All consents, approvals, orders, notifications,
filings or authorizations, the failure of which to make or obtain would
have the effect of making the issuance of Shares to Parent illegal ("OTHER
REQUISITE CONSENTS"), shall have been made or obtained.
3. The Closing.
(a) Any closing hereunder shall take place on the date
specified by Parent in its Stock Exercise Notice or Cash Exercise Notice,
as the case may be, at such reasonable time and place as may be indicated
in the Stock Exercise Notice or the Cash Exercise Notice, as applicable, or
at the election of the Company at 10:00 A.M., local time, at the offices of
Weil, Gotshal & Manges LLP, 100 Crescent Court, Suite 1300, Dallas, Texas,
or, if the conditions set forth in Section 2(i), 2(ii) or 2(iii) have not
then been satisfied, on the second business day following the satisfaction
of such conditions, or at such other time and place as the parties hereto
may agree (the "CLOSING DATE"). On the Closing Date, (i) in the event of a
closing pursuant to Section 1(c) hereof, the Company will deliver to Parent
a certificate or certificates, duly endorsed (or accompanied by duly
executed stock powers), representing the Shares in the denominations
designated by Parent in its Stock Exercise Notice and Parent will purchase
such Shares from the Company at a cash price per Share equal to the
Purchase Price or (ii) in the event of a closing pursuant to Section 1(d)
hereof, the Company will deliver to Parent cash in an amount determined
pursuant to Section 1(d) hereof. Any payment made by Parent to the Company,
or by the Company to Parent, pursuant to this Stock Option Agreement shall
be made by wire transfer of immediately available funds to a bank
designated by the party receiving such funds.
(b) The certificates representing the Shares may bear an
appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT").
4. Representations and Warranties of the Company. The Company
represents and warrants to Parent that (a) the Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland and has the requisite corporate power and authority to
enter into and perform this Stock Option Agreement; (b) the execution and
delivery of this Stock Option Agreement by the Company and the consummation
by it of the transactions contemplated hereby have been duly authorized by
the Board of Directors of the Company and this Stock Option Agreement has
been duly and validly executed and delivered by a duly authorized officer
of the Company and will constitute a valid and binding obligation of the
Company subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; (c) the Company has taken all necessary corporate action to
authorize and reserve the Shares issuable upon exercise of the Option and
the Shares, when issued and delivered by the Company upon exercise of the
Option, will be duly authorized, validly issued, fully paid and
non-assessable and free of preemptive rights; (d) except as otherwise
required by the HSR Act or for the Other Requisite Consents, the execution
and delivery of this Stock Option Agreement by the Company and the
consummation by it of the transactions contemplated hereby do not require
the consent, waiver, approval or authorization of or any filing with any
person or public authority and will not violate, result in a breach of or
the acceleration of any obligation under, or constitute a default under,
any provision of any charter or bylaw, indenture, mortgage, lien, lease,
agreement, contract, instrument, order, law, rule, regulation, judgment,
ordinance, or decree, or restriction by which the Company or any of its
subsidiaries or any of their respective properties or assets is bound,
except where the failure to obtain such consent, waiver, approval or
authorization or make such filing, or where such breach, acceleration or
default, is not reasonably expected to have a Material Adverse Effect (as
defined in the Merger Agreement) on the Company and its subsidiaries taken
as a whole or on the ability of the Company to consummate the transactions
contemplated hereby; and (e) no "fair price", "moratorium", "control share
acquisition", "interested stockholder" or other form of antitakeover
statute or regulation (including, without limitation, Subtitle 6 (Sections
3-601 through 3-603) and Subtitle 7 (Sections 3-701 through 3-709) of the
Corporation Law of the State of Maryland) is applicable to the acquisition
of Shares pursuant to this Stock Option Agreement.
5. Representations and Warranties of the Parent. Parent represents
and warrants to the Company that (a) Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to
enter into and perform this Stock Option Agreement; (b) the execution and
delivery of this Stock Option Agreement by Parent and the consummation by
it of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and this Stock Option
Agreement has been duly and validly executed and delivered by a duly
authorized officer of Parent and will constitute a valid and binding
obligation of Parent enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and (c) Parent is acquiring the
Option and, if and when it exercises the Option, will be acquiring the
Shares issuable upon the exercise thereof for its own account and not with
a view to distribution or resale in any manner which would be in violation
of the Securities Act.
6. Listing of Shares; HSR Act Filings; Governmental Consents.
Subject to applicable law and the rules and regulations of the New York
Stock Exchange (or any other national securities exchange or quotation
system on which the Common Stock is then listed) (as applicable, the "STOCK
Exchange"), when the Option becomes exercisable hereunder, the Company will
promptly file an application to list the Shares on the Stock Exchange and
will use all reasonable efforts to effect all necessary filings by the
Company under the HSR Act. Each of the parties hereto will use all
reasonable efforts to obtain consents of all third parties and governmental
authorities (including any Other Requisite Consents), if any, necessary to
the consummation of the transactions contemplated hereby.
7. Registration Rights.
(a) In the event that Parent shall desire to sell any of the
Shares within two years after the purchase of such Shares pursuant hereto,
and such sale requires, in the opinion of counsel to Parent, which opinion
shall be reasonably satisfactory to the Company and its counsel,
registration of such Shares under the Securities Act, the Company will
cooperate with Parent and any underwriters in registering such Shares for
resale, including, without limitation, promptly filing a registration
statement which complies with the requirements of applicable federal and
state securities laws, entering into an underwriting agreement with such
underwriters upon such terms and conditions as are customarily contained in
underwriting agreements with respect to secondary distributions; provided
that the Company shall not be required to have declared effective more than
two registration statements hereunder and shall be entitled to delay the
filing or effectiveness of any registration statement for up to 120 days if
the offering would, in the good faith judgment of the Board of Directors of
the Company, require premature disclosure of any material corporate
development or otherwise interfere with or adversely affect any pending or
proposed offering of securities of the Company or any other material
transaction involving the Company. Parent shall use its reasonable efforts
to cause, and to cause any underwriters of any sale or disposition to
cause, any sale or disposition pursuant to such registration statement to
be effected on a widely disseminated basis so that upon consummation
thereof no purchaser or transferee will own beneficially more than 5.0% of
the then outstanding voting power of the Company.
(b) If the Common Stock is registered pursuant to the
provisions of this Section 7, the Company agrees (i) to furnish copies of
the registration statement and the prospectus relating to the Shares
covered thereby in such numbers as Parent may from time to time reasonably
request and (ii) if any event shall occur as a result of which it becomes
necessary to amend or supplement any registration statement or prospectus,
to prepare and file under the applicable securities laws such amendments
and supplements as may be necessary to keep available for at least 90 days
a prospectus covering the Common Stock meeting the requirements of such
securities laws, and to furnish Parent such numbers of copies of the
registration statement and prospectus as amended or supplemented as may
reasonably be requested. Parent will provide information reasonably
requested by the Company for inclusion in any registration statement to be
filed pursuant to this Section 7. The Company shall bear the cost of the
registration, including, but not limited to, all registration and filing
fees, printing expenses, and fees and disbursements of counsel and
accountants for the Company, except that Parent shall pay the fees and
disbursements of its counsel, and the underwriting fees and selling
commissions applicable to the shares of Common Stock sold by Parent. In
connection with any registration pursuant to this Section 7, Parent and the
Company shall provide each other and each underwriter of the offering with
customary representations, warranties and covenants, including
indemnification and contribution. If a requested registration pursuant to
this Section 7 involves an underwritten offering, the underwriter or
underwriters thereof shall be a nationally recognized firm or firms
selected by the Company, which firm or firms shall be reasonably
satisfactory to Parent.
8. Expenses. Each party hereto shall pay its own expenses incurred
in connection with this Stock Option Agreement.
9. Specific Performance. The Company acknowledges that if the
Company fails to perform any of its obligations under this Stock Option
Agreement immediate and irreparable harm or injury would be caused to
Parent for which money damages would not be an adequate remedy. In such
event, the Company agrees that Parent shall have the right, in addition to
any other rights it may have, to specific performance of this Stock Option
Agreement. Accordingly, if Parent should institute an action or proceeding
seeking specific enforcement of the provisions hereof, the Company hereby
waives the claim or defense that Parent has an adequate remedy at law and
hereby agrees not to assert in any such action or proceeding the claim or
defense that such a remedy at law exists. The Company further agrees to
waive any requirements for the securing or posting of any bond in
connection with obtaining any such equitable relief.
10. Profit Limitation.
(a) Notwithstanding any other provision of this Stock Option
Agreement, in no event shall Parent's Total Profit (as hereinafter defined)
exceed $55,600,000 and, if it otherwise would exceed such amount, Parent,
at its sole election, shall either (a) deliver to the Company for
cancellation Shares previously purchased by Parent, (b) pay cash to the
Company or (c) undertake any combination thereof, so that Parent's Total
Profit shall not exceed $55,600,000 after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this Stock Option
Agreement, this Option may not be exercised for a number of Shares as
would, as of the date of the Stock Exercise Notice, result in a Notional
Total Profit (as defined below) of more than $55,600,000 and, if exercise
of the Option otherwise would exceed such amount, Parent, at its
discretion, may increase the Purchase Price for that number of Shares set
forth in the Stock Exercise Notice so that the Notional Total Profit shall
not exceed $55,600,000; provided, that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any subsequent date
at the Purchase Price set forth in Section 1(a) hereof.
(c) As used herein, the term "TOTAL PROFIT" shall mean the
aggregate amount (before taxes) of the following: (i) the amount of cash
received by Parent pursuant to Section 1(d), (ii) (x) the cash amounts or
the fair market value of any property received by Parent pursuant to the
sale of Shares (or any other securities into which such Shares are
converted or exchanged), less (y) Parent's Purchase Price for such Shares,
and (iii) any fees received pursuant to Section 8.5(b) of the Merger
Agreement.
(d) As used herein, the term "NOTIONAL TOTAL PROFIT" with
respect to any number of Shares as to which Parent may propose to exercise
this Option shall be the Total Profit determined as of the date of the
Stock Exercise Notice assuming that this Option were exercised on such date
for such number of Shares and assuming that such Shares, together with all
other Shares held by Parent and its affiliates as of such date, were sold
for cash at the closing market price for the Common Stock as of the close
of business on the preceding trading day (less customary brokerage
commissions).
11. Transfers. The Shares may not be sold, assigned, transferred,
or otherwise disposed of except (i) in an underwritten public offering as
provided in Section 7 hereof or (ii) to any purchaser or transferee who, to
Parent's knowledge, would immediately following such sale, assignment,
transfer or disposal, beneficially own more than 5.0% of the then
outstanding voting power of the Company; provided, however, that Parent
shall be permitted to sell any Shares if such sale is made pursuant to a
tender or exchange offer.
12. Notice. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have
been fully given if (i) delivered personally; (ii) sent by certified or
registered mail, return receipt requested; (iii) sent by overnight courier
for delivery on the next business day; or (iv) sent by confirmed facsimile,
provided that a hard copy of all such materials is thereafter sent within
24 hours in the manner described in clauses (i), (ii) or (iii), to the
parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:
If to Parent:
Texas Instruments Incorporated
7839 Churchill Way, M/S 3995
Dallas, Texas 75251
- or -
P.O. Box 650311, M/S 3995
Dallas, Texas 75265
Attention: Charles D. Tobin
Facsimile No.: (972) 917-3804
With copies to:
Texas Instruments Incorporated
8505 Forest Lane, M/S 8658
Dallas, Texas 75243
- or -
P.O. Box 660199, M/S 8658
Dallas, Texas 75266
Attention: Richard J. Agnich, Esq.
Facsimile No.: (972) 480-5061
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen
Facsimile No.: (214) 746-7777
If to the Company:
Unitrode Corporation
7 Continental Boulevard
Merrimack, New Hampshire 03054
Attention: Allan R. Campbell, Esq.
Facsimile No.: (603) 429-8771
With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street, 31st Floor
Boston, Massachusetts 02108
Attention: Margaret A. Brown, Esq.
Facsimile No.: (617) 573-4822
Notices provided in accordance with this Section 12 shall be
deemed delivered (i) on the date of personal delivery, (ii) four business
days after deposit in the mail, (ii) one business day after delivery to an
overnight courier, or (iv) on the date of confirmation of the facsimile
transmission, as the case may be.
13. Parties in Interest. This Stock Option Agreement shall inure
to the benefit of and be binding upon the parties named herein and their
respective successors and permitted assigns; provided, however, that such
successor in interest or permitted assigns shall agree to be bound by the
provisions of this Stock Option Agreement. Nothing in this Stock Option
Agreement, express or implied, is intended to confer upon any person other
than the Company or Parent, or their successors or assigns, any rights or
remedies under or by reason of this Stock Option Agreement.
14. Entire Agreement; Amendments. This Stock Option Agreement,
together with the Merger Agreement and the other documents referred to
therein, contains the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, oral or written, with
respect to such transactions. This Stock Option Agreement may not be
changed, amended or modified orally, but may be changed only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
15. Assignment. No party to this Stock Option Agreement may assign
any of its rights or obligations under this Stock Option Agreement without
the prior written consent of the other party hereto.
16. Headings. The section headings herein are for convenience only
and shall not affect the construction of this Stock Option Agreement.
17. Counterparts. This Stock Option Agreement may be executed in
any number of counterparts, each of which, when executed, shall be deemed
to be an original and all of which together shall constitute one and the
same document.
18. Governing Law. This Stock Option Agreement shall be governed
by and construed in accordance with the laws of the State of Maryland,
without giving effect to the choice of law principles thereof.
19. Severability. If any term, provision, covenant or restriction
of this Stock Option Agreement is held by a court of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Stock Option Agreement shall
remain in full force and effect and shall in no way be affected, impaired
or invalidated.
[THIS REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Parent and the Company have caused this
Stock Option Agreement to be duly executed and delivered on the day and
year first above written.
TEXAS INSTRUMENTS INCORPORATED
By: ________________________
Name: Delbert A. Whitaker
Title: Senior Vice President
UNITRODE CORPORATION
By: ________________________
Name:
Title:
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 25, 1999 (the "STOCK
OPTION AGREEMENT"), between Texas Instruments Incorporated, a Delaware
corporation ("PARENT"), and Unitrode Corporation, a Maryland corporation
(the "COMPANY").
WHEREAS, Parent, Unicorn Acquisition Corp., a Maryland
corporation and a wholly owned subsidiary of Parent ("MERGER SUB"), and the
Company are parties to that certain Agreement and Plan of Merger, dated as
of the date hereof (the "MERGER AGREEMENT"), which provides, among other
things, that Merger Sub, on the terms and subject to the conditions
thereof, will merge with and into the Company with the Company surviving as
a wholly owned subsidiary of Parent;
WHEREAS, as a condition to its willingness to enter into the
Merger Agreement, Parent has requested that the Company grant to Parent an
option to purchase up to 6,470,760 shares of common stock, par value $0.01
per share ("COMMON STOCK") of the Company, upon the terms and subject to
the conditions hereof; and
WHEREAS, in order to induce Parent to enter into the Merger
Agreement, the Company is willing to grant Parent the requested option.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, the parties hereto agree
as follows:
1. The Option; Exercise; Adjustments.
(a) Subject to the other terms and conditions set forth
herein, the Company hereby grants to Parent an irrevocable option (the
"OPTION") to purchase up to 6,470,760 shares of Common Stock (the
"SHARES"). The purchase price per Share (the "PURCHASE PRICE") shall be
$38.60. The Purchase Price and the number of Shares shall be subject to
adjustment as provided in Section 1(c) hereof.
(b) Parent may exercise the Option with respect to any
or all of the Option Shares at any one time or from time to time, subject
to the provisions of Section 1(c) hereof, upon the occurrence of an
Exercise Event (as defined below). Subject to the last sentence of this
Section 1(b), the Option will terminate and be of no further force and
effect upon the earliest to occur of (i) the Effective Time (as defined in
the Merger Agreement), (ii) 120 days after the first occurrence of an
Exercise Event, and (iii) the termination of the Merger Agreement in
accordance with its terms so long as, in the case of this clause (iii), no
Exercise Event has occurred or could still occur under Section 8.5(b) of
the Merger Agreement, in which case the Option will terminate on the later
of (x) 120 days following the time such termination fee becomes
unconditionally payable and (y) the expiration of the period in which an
Exercise Event could occur pursuant to Section 8.5(b) of the Merger
Agreement. "Exercise Event" means any event as a result of which Parent is
unconditionally entitled to receive a termination fee pursuant to Section
8.5(b) of the Merger Agreement. Notwithstanding the termination of the
Option, Parent shall be entitled to purchase the Shares with respect to
which it has exercised the Option in accordance with the terms hereof prior
to the termination of the Option.
(c) In the event Parent is entitled to and wishes to
exercise the Option, the Parent shall send a written notice to the Company
(the "STOCK EXERCISE NOTICE") specifying a date (subject to the HSR Act (as
defined below)) not later than 20 business days and not earlier than three
business days following the date such notice is given for the closing of
such purchase and specifying the number of Shares Parent wishes to
purchase. In the event of any change in the number of issued and
outstanding shares of Common Stock by reason of any stock dividend, stock
split, split-up, recapitalization, merger or other change in the corporate
or capital structure of the Company, the number of Shares subject to this
Option and the purchase price per Share shall be appropriately adjusted to
restore the Parent to its rights hereunder, including its right to purchase
Shares representing approximately 19.9% of the capital stock or securities
convertible or otherwise exchangeable for capital stock of the Company
entitled to vote generally for the election of the directors of the Company
that are issued and outstanding immediately prior to the exercise of the
Option at an aggregate purchase price equal to the Purchase Price
multiplied by 6,470,760.
(d) At any time the Option is then exercisable pursuant
to the terms of Section 1(b) hereof, Parent may elect, in lieu of
exercising the Option to purchase Shares provided in Section 1(a) hereof,
to send a written notice to the Company (the "CASH EXERCISE NOTICE")
specifying a date not later than 20 business days and not earlier than 10
business days following the date such notice is given on which date the
Company shall pay to Parent an amount in cash equal to the Spread (as
hereinafter defined) multiplied by all or such portion of the Shares
subject to the Option as Parent shall specify in such Cash Exercise Notice.
As used herein "SPREAD" shall mean the excess, if any, over the Purchase
Price of the higher of (i) if applicable, the highest price per share of
Common Stock (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid or proposed to be paid by any person
pursuant to a definitive agreement executed by the Company with respect to
an Acquisition Proposal (the "ALTERNATIVE PURCHASE PRICE") or (ii) the
average closing price, for the five trading days ending on the trading day
immediately preceding the date of the Cash Exercise Notice, per share of
Common Stock as reported on the New York Stock Exchange (the "CLOSING
PRICE"). If the Alternative Purchase Price includes any property other than
cash, the Alternative Purchase Price shall be the sum of (i) the fixed cash
amount, if any, included in the Alternative Purchase Price plus (ii) the
fair market value of such other property. If such other property consists
of securities with an existing public trading market, the average of the
closing prices (or the average of the closing bid and asked prices if
closing prices are unavailable) for such securities in their principal
public trading market on the five trading days ending on the trading day
immediately preceding the date of the Cash Exercise Notice shall be deemed
to equal the fair market value of such property. If such other property
consists of something other than cash or securities with an existing public
trading market and, as of the payment date for the Spread, agreement on the
value of such other property has not been reached between the parties
hereto, the Alternative Purchase Price shall be deemed to equal the Closing
Price. Upon exercise of its right to receive cash pursuant to the exercise
of the Option, the obligations of the Company to deliver Shares pursuant to
Section 3 shall be terminated with respect to such number of Shares for
which Parent shall have elected to be paid the Spread.
2. Conditions to Delivery of Shares. The Company's obligation
to deliver Shares upon exercise of the Option is subject only to the
conditions that:
(i) No preliminary or permanent injunction or other
order issued by any federal or state court of competent jurisdiction in the
United States prohibiting the delivery of the Shares shall be in effect;
and
(ii) Any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT") shall
have expired or been terminated; and
(iii) All consents, approvals, orders, notifications,
filings or authorizations, the failure of which to make or obtain would
have the effect of making the issuance of Shares to Parent illegal ("OTHER
REQUISITE Consents"), shall have been made or obtained.
3. The Closing.
(a) Any closing hereunder shall take place on the date
specified by Parent in its Stock Exercise Notice or Cash Exercise Notice,
as the case may be, at such reasonable time and place as may be indicated
in the Stock Exercise Notice or the Cash Exercise Notice, as applicable, or
at the election of the Company at 10:00 A.M., local time, at the offices of
Weil, Gotshal & Manges LLP, 100 Crescent Court, Suite 1300, Dallas, Texas,
or, if the conditions set forth in Section 2(i), 2(ii) or 2(iii) have not
then been satisfied, on the second business day following the satisfaction
of such conditions, or at such other time and place as the parties hereto
may agree (the "CLOSING DATE"). On the Closing Date, (i) in the event of a
closing pursuant to Section 1(c) hereof, the Company will deliver to Parent
a certificate or certificates, duly endorsed (or accompanied by duly
executed stock powers), representing the Shares in the denominations
designated by Parent in its Stock Exercise Notice and Parent will purchase
such Shares from the Company at a cash price per Share equal to the
Purchase Price or (ii) in the event of a closing pursuant to Section 1(d)
hereof, the Company will deliver to Parent cash in an amount determined
pursuant to Section 1(d) hereof. Any payment made by Parent to the Company,
or by the Company to Parent, pursuant to this Stock Option Agreement shall
be made by wire transfer of immediately available funds to a bank
designated by the party receiving such funds.
(b) The certificates representing the Shares may bear
an appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT").
4. Representations and Warranties of the Company. The Company
represents and warrants to Parent that (a) the Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland and has the requisite corporate power and authority to
enter into and perform this Stock Option Agreement; (b) the execution and
delivery of this Stock Option Agreement by the Company and the consummation
by it of the transactions contemplated hereby have been duly authorized by
the Board of Directors of the Company and this Stock Option Agreement has
been duly and validly executed and delivered by a duly authorized officer
of the Company and will constitute a valid and binding obligation of the
Company subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; (c) the Company has taken all necessary corporate action to
authorize and reserve the Shares issuable upon exercise of the Option and
the Shares, when issued and delivered by the Company upon exercise of the
Option, will be duly authorized, validly issued, fully paid and
non-assessable and free of preemptive rights; (d) except as otherwise
required by the HSR Act or for the Other Requisite Consents, the execution
and delivery of this Stock Option Agreement by the Company and the
consummation by it of the transactions contemplated hereby do not require
the consent, waiver, approval or authorization of or any filing with any
person or public authority and will not violate, result in a breach of or
the acceleration of any obligation under, or constitute a default under,
any provision of any charter or bylaw, indenture, mortgage, lien, lease,
agreement, contract, instrument, order, law, rule, regulation, judgment,
ordinance, or decree, or restriction by which the Company or any of its
subsidiaries or any of their respective properties or assets is bound,
except where the failure to obtain such consent, waiver, approval or
authorization or make such filing, or where such breach, acceleration or
default, is not reasonably expected to have a Material Adverse Effect (as
defined in the Merger Agreement) on the Company and its subsidiaries taken
as a whole or on the ability of the Company to consummate the transactions
contemplated hereby; and (e) no "fair price", "moratorium", "control share
acquisition", "interested stockholder" or other form of antitakeover
statute or regulation (including, without limitation, Subtitle 6 (Sections
3-601 through 3-603) and Subtitle 7 (Sections 3-701 through 3-709) of the
Corporation Law of the State of Maryland) is applicable to the acquisition
of Shares pursuant to this Stock Option Agreement.
5. Representations and Warranties of the Parent. Parent
represents and warrants to the Company that (a) Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to
enter into and perform this Stock Option Agreement; (b) the execution and
delivery of this Stock Option Agreement by Parent and the consummation by
it of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and this Stock Option
Agreement has been duly and validly executed and delivered by a duly
authorized officer of Parent and will constitute a valid and binding
obligation of Parent enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and (c) Parent is acquiring the
Option and, if and when it exercises the Option, will be acquiring the
Shares issuable upon the exercise thereof for its own account and not with
a view to distribution or resale in any manner which would be in violation
of the Securities Act.
6. Listing of Shares; HSR Act Filings; Governmental Consents.
Subject to applicable law and the rules and regulations of the New York
Stock Exchange (or any other national securities exchange or quotation
system on which the Common Stock is then listed) (as applicable, the "STOCK
EXCHANGE"), when the Option becomes exercisable hereunder, the Company will
promptly file an application to list the Shares on the Stock Exchange and
will use all reasonable efforts to effect all necessary filings by the
Company under the HSR Act. Each of the parties hereto will use all
reasonable efforts to obtain consents of all third parties and governmental
authorities (including any Other Requisite Consents), if any, necessary to
the consummation of the transactions contemplated hereby.
7. Registration Rights.
(a) In the event that Parent shall desire to sell any
of the Shares within two years after the purchase of such Shares pursuant
hereto, and such sale requires, in the opinion of counsel to Parent, which
opinion shall be reasonably satisfactory to the Company and its counsel,
registration of such Shares under the Securities Act, the Company will
cooperate with Parent and any underwriters in registering such Shares for
resale, including, without limitation, promptly filing a registration
statement which complies with the requirements of applicable federal and
state securities laws, entering into an underwriting agreement with such
underwriters upon such terms and conditions as are customarily contained in
underwriting agreements with respect to secondary distributions; provided
that the Company shall not be required to have declared effective more than
two registration statements hereunder and shall be entitled to delay the
filing or effectiveness of any registration statement for up to 120 days if
the offering would, in the good faith judgment of the Board of Directors of
the Company, require premature disclosure of any material corporate
development or otherwise interfere with or adversely affect any pending or
proposed offering of securities of the Company or any other material
transaction involving the Company. Parent shall use its reasonable efforts
to cause, and to cause any underwriters of any sale or disposition to
cause, any sale or disposition pursuant to such registration statement to
be effected on a widely disseminated basis so that upon consummation
thereof no purchaser or transferee will own beneficially more than 5.0% of
the then outstanding voting power of the Company.
(b) If the Common Stock is registered pursuant to the
provisions of this Section 7, the Company agrees (i) to furnish copies of
the registration statement and the prospectus relating to the Shares
covered thereby in such numbers as Parent may from time to time reasonably
request and (ii) if any event shall occur as a result of which it becomes
necessary to amend or supplement any registration statement or prospectus,
to prepare and file under the applicable securities laws such amendments
and supplements as may be necessary to keep available for at least 90 days
a prospectus covering the Common Stock meeting the requirements of such
securities laws, and to furnish Parent such numbers of copies of the
registration statement and prospectus as amended or supplemented as may
reasonably be requested. Parent will provide information reasonably
requested by the Company for inclusion in any registration statement to be
filed pursuant to this Section 7. The Company shall bear the cost of the
registration, including, but not limited to, all registration and filing
fees, printing expenses, and fees and disbursements of counsel and
accountants for the Company, except that Parent shall pay the fees and
disbursements of its counsel, and the underwriting fees and selling
commissions applicable to the shares of Common Stock sold by Parent. In
connection with any registration pursuant to this Section 7, Parent and the
Company shall provide each other and each underwriter of the offering with
customary representations, warranties and covenants, including
indemnification and contribution. If a requested registration pursuant to
this Section 7 involves an underwritten offering, the underwriter or
underwriters thereof shall be a nationally recognized firm or firms
selected by the Company, which firm or firms shall be reasonably
satisfactory to Parent.
8. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Stock Option Agreement.
9. Specific Performance. The Company acknowledges that if the
Company fails to perform any of its obligations under this Stock Option
Agreement immediate and irreparable harm or injury would be caused to
Parent for which money damages would not be an adequate remedy. In such
event, the Company agrees that Parent shall have the right, in addition to
any other rights it may have, to specific performance of this Stock Option
Agreement. Accordingly, if Parent should institute an action or proceeding
seeking specific enforcement of the provisions hereof, the Company hereby
waives the claim or defense that Parent has an adequate remedy at law and
hereby agrees not to assert in any such action or proceeding the claim or
defense that such a remedy at law exists. The Company further agrees to
waive any requirements for the securing or posting of any bond in
connection with obtaining any such equitable relief.
10. Profit Limitation.
(a) Notwithstanding any other provision of this Stock
Option Agreement, in no event shall Parent's Total Profit (as hereinafter
defined) exceed $55,600,000 and, if it otherwise would exceed such amount,
Parent, at its sole election, shall either (a) deliver to the Company for
cancellation Shares previously purchased by Parent, (b) pay cash to the
Company or (c) undertake any combination thereof, so that Parent's Total
Profit shall not exceed $55,600,000 after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this Stock
Option Agreement, this Option may not be exercised for a number of Shares
as would, as of the date of the Stock Exercise Notice, result in a Notional
Total Profit (as defined below) of more than $55,600,000 and, if exercise
of the Option otherwise would exceed such amount, Parent, at its
discretion, may increase the Purchase Price for that number of Shares set
forth in the Stock Exercise Notice so that the Notional Total Profit shall
not exceed $55,600,000; provided, that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any subsequent date
at the Purchase Price set forth in Section 1(a) hereof.
(c) As used herein, the term "TOTAL PROFIT" shall mean
the aggregate amount (before taxes) of the following: (i) the amount of
cash received by Parent pursuant to Section 1(d), (ii) (x) the cash amounts
or the fair market value of any property received by Parent pursuant to the
sale of Shares (or any other securities into which such Shares are
converted or exchanged), less (y) Parent's Purchase Price for such Shares,
and (iii) any fees received pursuant to Section 8.5(b) of the Merger
Agreement.
(d) As used herein, the term "NOTIONAL TOTAL PROFIT"
with respect to any number of Shares as to which Parent may propose to
exercise this Option shall be the Total Profit determined as of the date of
the Stock Exercise Notice assuming that this Option were exercised on such
date for such number of Shares and assuming that such Shares, together with
all other Shares held by Parent and its affiliates as of such date, were
sold for cash at the closing market price for the Common Stock as of the
close of business on the preceding trading day (less customary brokerage
commissions).
11. Transfers. The Shares may not be sold, assigned,
transferred, or otherwise disposed of except (i) in an underwritten public
offering as provided in Section 7 hereof or (ii) to any purchaser or
transferee who, to Parent's knowledge, would immediately following such
sale, assignment, transfer or disposal, beneficially own more than 5.0% of
the then outstanding voting power of the Company; provided, however, that
Parent shall be permitted to sell any Shares if such sale is made pursuant
to a tender or exchange offer.
12. Notice. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have
been fully given if (i) delivered personally; (ii) sent by certified or
registered mail, return receipt requested; (iii) sent by overnight courier
for delivery on the next business day; or (iv) sent by confirmed facsimile,
provided that a hard copy of all such materials is thereafter sent within
24 hours in the manner described in clauses (i), (ii) or (iii), to the
parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:
If to Parent:
Texas Instruments Incorporated
7839 Churchill Way, M/S 3995
Dallas, Texas 75251
- or -
P.O. Box 650311, M/S 3995
Dallas, Texas 75265
Attention: Charles D. Tobin
Facsimile No.: (972) 917-3804
With copies to:
Texas Instruments Incorporated
8505 Forest Lane, M/S 8658
Dallas, Texas 75243
- or -
P.O. Box 660199, M/S 8658
Dallas, Texas 75266
Attention: Richard J. Agnich, Esq.
Facsimile No.: (972) 480-5061
and
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen
Facsimile No.: (214) 746-7777
If to the Company:
Unitrode Corporation
7 Continental Boulevard
Merrimack, New Hampshire 03054
Attention: Allan R. Campbell, Esq.
Facsimile No.: (603) 429-8771
With a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street, 31st Floor
Boston, Massachusetts 02108
Attention: Margaret A. Brown, Esq.
Facsimile No.: (617) 573-4822
Notices provided in accordance with this Section 12 shall be
deemed delivered (i) on the date of personal delivery, (ii) four business
days after deposit in the mail, (ii) one business day after delivery to an
overnight courier, or (iv) on the date of confirmation of the facsimile
transmission, as the case may be.
13. Parties in Interest. This Stock Option Agreement shall
inure to the benefit of and be binding upon the parties named herein and
their respective successors and permitted assigns; provided, however, that
such successor in interest or permitted assigns shall agree to be bound by
the provisions of this Stock Option Agreement. Nothing in this Stock Option
Agreement, express or implied, is intended to confer upon any person other
than the Company or Parent, or their successors or assigns, any rights or
remedies under or by reason of this Stock Option Agreement.
14. Entire Agreement; Amendments. This Stock Option
Agreement, together with the Merger Agreement and the other documents
referred to therein, contains the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
and contemporaneous agreements and understandings, oral or written, with
respect to such transactions. This Stock Option Agreement may not be
changed, amended or modified orally, but may be changed only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge may be sought.
15. Assignment. No party to this Stock Option Agreement may
assign any of its rights or obligations under this Stock Option Agreement
without the prior written consent of the other party hereto.
16. Headings. The section headings herein are for convenience
only and shall not affect the construction of this Stock Option Agreement.
17. Counterparts. This Stock Option Agreement may be executed
in any number of counterparts, each of which, when executed, shall be
deemed to be an original and all of which together shall constitute one and
the same document.
18. Governing Law. This Stock Option Agreement shall be
governed by and construed in accordance with the laws of the State of
Maryland, without giving effect to the choice of law principles thereof.
19. Severability. If any term, provision, covenant or
restriction of this Stock Option Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Stock Option
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
[THIS REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Parent and the Company have caused
this Stock Option Agreement to be duly executed and delivered on the day
and year first above written.
TEXAS INSTRUMENTS INCORPORATED
By: /s/ Delbert A. Whitaker
___________________________
Name: Delbert A. Whitaker
Title: Senior Vice President
UNITRODE CORPORATION
By: /s/ Robert J. Richardson
___________________________
Name: Robert J. Richardson
Title: Chairman of the Board and
Chief Executive Officer
NEWS RELEASE
C-99041
Media Contacts:
Texas Instruments
Kim Quirk 972-480-6878
Otilia Ayats-Mas 972-480-3435
Unitrode
S. Kelley MacDonald 603-429-8767
TI ANNOUNCES PLANS TO ACQUIRE UNITRODE CORPORATION
MOVE STRENGTHENS TI'S PORTFOLIO IN ANALOG PRODUCTS FOR MASS MARKET,
EXTENDS LEADERSHIP POSITION IN GROWING POWER MANAGEMENT MARKET
Dallas (July 26, 1999) -- Texas Instruments (NYSE:TXN) today
announced plans to acquire Unitrode Corporation (NYSE:UTR), a major
designer and supplier of power management components -- the fastest growing
segment of the market for analog semiconductors. The acquisition will be
through a stock-for-stock merger transaction. Based on TI's closing stock
price on July 23, 1999, the company expects to issue about 8.9 million
shares worth approximately $1.2 billion in exchange for all outstanding
shares of Unitrode. This represents approximately $38.60 for each share of
Unitrode.
The acquisition will strengthen TI's analog catalog portfolio of
standard products targeted at a breadth of customers and applications for
the mass market. Unitrode's primary products are power management
components in the areas of power supply control, interface, and battery
management -- a technology increasingly critical for portable devices. All
three product families will fully complement TI's existing analog catalog
offering with virtually no overlap. This will also broaden the company's
selection of high-performance components that can be optimized to operate
with TI's digital signal processor (DSP) portfolio.
According to Dataquest, TI is the world's leading provider of analog
products and is the only major supplier to gain share in each of the last
four years. The total available market for analog in 1998 was $21.6
billion, with a projected growth rate over 15 percent for 1999. Catalog
products are about a third of the analog market. The power management
segment was $2.2 billion in 1998 and is expected to reach $4.1 billion by
2002, per Dataquest.
"We're clear in our objective to grow our analog catalog business
targeting the mass market," said Del Whitaker, TI senior vice president and
manager of Worldwide Analog and Logic Products. "Unitrode brings a strong
reputation in power supply control and battery management that enhances
TI's leadership position and gives us critical mass in rapidly growing
sectors."
TI sees increasing opportunity in the battery management subsegment,
where Unitrode is the recognized leader. In addition to the many mass
market applications, devices such as cellular phones and notebook computers
depend on this technology to effectively and efficiently manage the
charging and monitoring of batteries and extend battery life. In the
future, this technology will be needed in digital cameras, Internet audio
players and other emerging products. Battery management is expected to grow
32 percent per year, according to market analyst Venture Development
Corporation.
The combination of Unitrode's leadership, expertise and strong
systems understanding in power supply control and battery management, with
TI's strength in programmable DSP, process technology and packaging, will
bring customers a more complete solution. Equipment manufacturers can
expect more advanced products that continue to improve battery life and
system performance while reducing design cycle time. Consumers, in turn,
can expect more efficient products with longer battery time and intelligent
controls.
At the same time, the transaction will provide opportunities to
expand Unitrode's products into a broader range of customers and markets.
"TI's reputation, worldwide presence and relationships give us the
fuel we need to get our expertise in front of a large and powerful customer
base," said Robert J. Richardson, chairman, president and CEO of Unitrode.
"We've got a dynamic and knowledgeable team in place, and the combination
provides increased opportunities for our employees. Our synergies with TI
should instantly benefit customers as they will be able to get
across-the-board knowledge from one company."
With headquarters in Merrimack, New Hampshire, Unitrode is
manufacturer of power components. Through a series of acquisitions and
divestitures including its recent merger with Benchmarq, the company is now
focused on offering leading edge power management and interface products,
introducing about 50 new products per year. The company has a test facility
in Singapore and design centers in Dallas, San Jose, Austin and Cary, North
Carolina. Unitrode has approximately 840 employees.
Unitrode will become a wholly owned subsidiary of Texas Instruments
reporting into TI's worldwide analog business and will continue to operate
from its New Hampshire headquarters. The boards of directors of both
companies have approved the acquisition, which is expected to be completed
in the second half of the year. The transaction is intended to qualify as a
pooling of interests for accounting purposes and as a tax-free exchange of
shares under IRS regulations. Under the terms of the agreement, each share
of Unitrode common stock outstanding will be exchanged for a number of
shares of TI common stock equal to $38.60 divided by an average of TI
trading prices over a 20-day trading period prior to closing, but in no
event more than .2887 or less than .2511 of a share of TI common stock.
Consummation of the acquisition is contingent upon approval by
Unitrode stockholders, the termination of the applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act and other customary
conditions.
# # #
NOTE TO EDITORS: Texas Instruments Incorporated is a global semiconductor
company and the world's leading designer and supplier of digital signal
processing and analog technologies, the engines driving the digitization of
electronics. Headquartered in Dallas, Texas, the company's
businesses also include materials and controls, educational and
productivity solutions, and digital imaging. The company has manufacturing
or sales operations in more than 25 countries.
Texas Instruments is traded on the New York Stock Exchange under the symbol
TXN. More information is located on the World Wide Web at http://www.ti.com
Unitrode designs and manufactures analog/linear and mixed-signal integrated
circuits, modules, and non-volatile products, principally to perform power
management, portable power, and interface functions. Its products, branded
under Unitrode and Benchmarq, are sold throughout the world for a variety
of computer, tele- and data- communications, defense/aerospace, industrial,
and automotive applications. Further information about Unitrode may be
found at the company's homepage site: http://www.unitrode.com
