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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
WITH RESPECT TO DIALOGIC CORPORATION
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
DIALOGIC CORPORATION
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(NAME OF ISSUER)
COMMON STOCK, NO PAR VALUE
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(TITLE OF CLASS OF SECURITIES)
25249910-8
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(CUSIP NUMBER)
F. THOMAS DUNLAP, JR.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
INTEL CORPORATION
2200 MISSION COLLEGE BOULEVARD
SANTA CLARA, CALIFORNIA 95052
TELEPHONE: (408) 765-8080
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS)
MAY 31, 1999
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(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP No. 25249910-8
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<TABLE>
<C> <S>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
INTEL CORPORATION
94-1672743
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2 CHECK THE APPROPRIATE BOX IF MEMBER OF A GROUP* (a) [
]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [
]
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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</TABLE>
<TABLE>
<S> <C> <C>
7 SOLE VOTING POWER
3,400,000
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8 SHARED VOTING POWER
5,573,586(1)
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9 SOLE DISPOSITIVE POWER
3,400,000
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10 SHARED DISPOSITIVE POWER
0
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH
</TABLE>
<TABLE>
<C> <S>
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
8,973,586(1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [
]
EXCLUDES CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.8%(1)
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14 TYPE OF PERSON REPORTING*
CO
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</TABLE>
(1) The Reporting Person disclaims beneficial ownership of 5,573,586 shares and
this statement shall not be construed as an admission that the Reporting
Person is the beneficial owner of any such shares.
2
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SCHEDULE 13D
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CUSIP No. 25249910-8
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<TABLE>
<C> <S>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
INTEL LMH ACQUISITION CORPORATION
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2 CHECK THE APPROPRIATE BOX IF MEMBER OF A GROUP* (a) [
]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [
]
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW JERSEY
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</TABLE>
<TABLE>
<S> <C> <C>
7 SOLE VOTING POWER
0
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8 SHARED VOTING POWER
5,573,586(2)
----------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
----------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH
</TABLE>
<TABLE>
<C> <S>
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
5,573,586(2)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [
]
EXCLUDES CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
32.6%(2)
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14 TYPE OF PERSON REPORTING*
CO
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</TABLE>
(2) The Reporting Person disclaims beneficial ownership of all such shares and
this statement shall not be construed as an admission that the Reporting
Person is the beneficial owner of any such shares.
3
<PAGE> 4
SCHEDULE 13D
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CUSIP No. 25249910-8
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ITEM 1. SECURITY AND ISSUER:
(a): The name and address of the issuer is Dialogic Corporation, a New
Jersey corporation (the "Company"), which has its principal
executive offices at 1515 Route 10, Parsippany, New Jersey,
07054.
(b) The title and class of equity securities to which this statement
relates is the common stock, no par value, of the Company (the
"Shares").
The information set forth in "INTRODUCTION" of the Offer to Purchase,
a copy of which is attached hereto as Exhibit A (the "Offer to
Purchase"), is incorporated herein by reference. Capitalized terms
used and not defined herein have the meanings ascribed to them in the
Offer to Purchase.
ITEM 2. IDENTITY AND BACKGROUND:
(a) - (c), (f): This statement is filed by Intel Corporation, a
Delaware corporation ("Intel"), and Intel LMH Acquisition
Corporation, a New Jersey corporation ("Purchaser" and, together
with Intel, the "Reporting Persons").
The information concerning the name, state or other place of
organization, principal business and address of the principal office
of Purchaser and Intel, and the name, business address, present
principal occupation or employment (including the name, principal
business and address of any corporation or other organization in which
such employment or occupation is conducted) set forth in
"INTRODUCTION," "THE TENDER OFFER -- 8. Certain Information Concerning
Purchaser and Intel" and Schedule I ("Directors and Executive Officers
of Intel and Purchaser") of the Offer to Purchase is incorporated
herein by reference.
(d): During the last five years neither Intel, Purchaser nor any
officer or director of Intel or Purchaser has been convicted in
any criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e): During the last five years, neither Intel, Purchaser nor, to
Intel's and Purchaser's knowledge, any officer or director of
Intel or Purchaser has been party to any civil proceeding of a
judicial or administrative body of competent jurisdiction as a
result of which such person would have been subject to any
judgment, decree or final order enjoining future violations of or
prohibiting or mandating activities subject to Federal or State
securities laws or finding any violation with respect to such
laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION:
The information set forth in "THE TENDER OFFER -- 9. Source and Amount
of Funds" and "THE TENDER OFFER -- 12. Purpose of the Offer; The
Merger Agreement -- Stock Option Agreement" in the Offer to Purchase
is hereby incorporated by reference.
In the event that Intel exercises its right to purchase Shares
pursuant to the Stock Option Agreement, dated as of May 31, 1999, by
and between the Company and Intel, a copy of which is attached hereto
as Exhibit C (the "Stock Option Agreement"), Intel intends to use its
available cash on hand.
ITEM 4. PURPOSE OF TRANSACTION:
(a) - (g), (j): The information set forth in "INTRODUCTION," "THE
TENDER OFFER -- 11. Contacts with the Company; Background of the
Offer and the Merger" and "THE TENDER OFFER -- 12. Purpose of
the Offer; The Merger Agreement -- Board Representa-
4
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SCHEDULE 13D
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CUSIP No. 25249910-8
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tion," "-- The Merger," "-- Stock Option Agreement" and
"-- Voting Agreements" of the Offer to Purchase is incorporated
herein by reference.
(h) and (i): The information set forth in "THE TENDER OFFER -- 14.
Effects of the Offer on the Market for Shares; Nasdaq National
Market and Exchange Act Registration" of the Offer to Purchase is
incorporated herein by reference.
Except as disclosed in the Offer to Purchase, the Agreement and Plan
of Merger, dated as of May 31, 1999, by and among the Company, Intel
and Purchaser, a copy of which is attached hereto as Exhibit B (the
"Merger Agreement"), the Stock Option Agreement and the Tender and
Voting Agreements and Irrevocable Proxies, dated as of May 31, 1999,
by and among Purchaser, Intel and certain stockholders of the Company
(the "Proxy Grantors"), copies of which are attached hereto as
Exhibits D through H (the "Voting Agreements"), neither Intel nor
Purchaser has any current plans or proposals that relate to or would
result in any of the events described in clauses (a) through (j) of
the instructions to Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) - (c): The information set forth in "INTRODUCTION," "THE TENDER
OFFER -- 11. Contacts with the Company; Background of the Offer
and the Merger" and "THE TENDER OFFER -- 12. Purpose of the
Offer; The Merger Agreement -- Stock Option Agreement" and
"-- Voting Agreements" of the Offer to Purchase is incorporated
herein by reference.
As a result of Intel's conditional option to purchase certain Shares
pursuant to the Stock Option Agreement, Intel may be deemed to own
beneficially an aggregate of 3,400,000 Shares (representing
approximately 16.6% of the Shares outstanding on May 30, 1999 after
giving effect to the issuance of the Shares upon exercise of the
option).
As a result of Purchaser's obtaining an irrevocable proxy with respect
to certain Shares pursuant to the Voting Agreements, Purchaser and,
indirectly Intel, may be deemed to own beneficially an aggregate of up
to 5,573,586 Shares (representing approximately 32.6% of the Shares
outstanding on May 30, 1999). Each of Purchaser and Intel, however,
disclaims beneficial ownership of such Shares, and this statement
shall not be construed as an admission that Purchaser or Intel is, for
any or all purposes, the beneficial owner of such Shares.
(d): The information set forth in "THE TENDER OFFER -- 12. Purpose of
the Offer; The Merger Agreement -- Voting Agreements" of the
Offer to Purchase is incorporated herein by reference. Until the
acceptance for payment and payment for Shares tendered pursuant
to the Offer, each Proxy Grantor will retain the right to receive
dividends in respect of, and the proceeds from the sale of, the
Shares of such Proxy Grantor subject to the Voting Agreement.
(e): Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER:
The information set forth in "INTRODUCTION," "THE TENDER OFFER -- 9.
Certain Information Concerning Purchaser and Intel," "THE TENDER
OFFER -- 11. Contacts with the Company; Background of the Offer and
the Merger" and "THE TENDER OFFER -- 12. Purpose of the Offer; The
Merger Agreement -- Stock Option Agreement" and "-- Voting Agreements"
of the Offer to Purchase is incorporated herein by reference.
5
<PAGE> 6
SCHEDULE 13D
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CUSIP No. 25249910-8
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS:
<TABLE>
<S> <C>
Exhibit A Offer to Purchase, dated June 7, 1999
Exhibit B Agreement and Plan of Merger, dated as of May 31, 1999, by
and among the Company, Intel and Purchaser
Exhibit C Stock Option Agreement, dated as of May 31, 1999, by and
between the Company and Intel
Exhibit D Tender and Voting Agreement and Irrevocable Proxy, dated as
of May 31, 1999, by and among Nick Zwick, Purchaser and
Intel
Exhibit E Tender and Voting Agreement and Irrevocable Proxy, dated as
of May 31, 1999, by and among James Shinn, Purchaser and
Intel
Exhibit F Tender and Voting Agreement and Irrevocable Proxy, dated as
of May 31, 1999, by and among Masako H. Shinn, as trustee,
Purchaser and Intel
Exhibit G Tender and Voting Agreement and Irrevocable Proxy, dated as
of May 31, 1999, by and among Kenneth J. Burkhardt,
Purchaser and Intel
Exhibit H Tender and Voting Agreement and Irrevocable Proxy, dated as
of May 31, 1999, by and among Joanne Burkhardt, as trustee,
Purchaser and Intel
</TABLE>
6
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SCHEDULE 13D
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CUSIP No. 25249910-8
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
June 7, 1999
INTEL CORPORATION
By: /s/ F. THOMAS DUNLAP, JR.
------------------------------------
Name: F. Thomas Dunlap, Jr.
Title: Vice President, General
Counsel
and Secretary
INTEL LMH ACQUISITION CORPORATION
By: /s/ CARY I. KLAFTER
------------------------------------
Name: Cary I. Klafter
Title: Vice President and Secretary
7
<PAGE> 8
SCHEDULE 13D
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CUSIP No. 25249910-8
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EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit A Offer to Purchase, dated June 7, 1999
Exhibit B Agreement and Plan of Merger, dated as of May 31, 1999, by
and among the Company, Intel and Purchaser
Exhibit C Stock Option Agreement, dated as of May 31, 1999, by and
between the Company and Intel
Exhibit D Tender and Voting Agreement and Irrevocable Proxy, dated as
of May 31, 1999, by and among Nick Zwick, Purchaser and
Intel
Exhibit E Tender and Voting Agreement and Irrevocable Proxy, dated as
of May 31, 1999, by and among James Shinn, Purchaser and
Intel
Exhibit F Tender and Voting Agreement and Irrevocable Proxy, dated as
of May 31, 1999, by and among Masako H. Shinn, as trustee,
Purchaser and Intel
Exhibit G Tender and Voting Agreement and Irrevocable Proxy, dated as
of May 31, 1999, by and among Kenneth J. Burkhardt,
Purchaser and Intel
Exhibit H Tender and Voting Agreement and Irrevocable Proxy, dated as
of May 31, 1999, by and among Joanne Burkhardt, as trustee,
Purchaser and Intel
</TABLE>
8
<PAGE> 1
To the Holders of Common Stock of Dialogic Corporation:
INTRODUCTION
Intel LMH Acquisition Corporation, a New Jersey corporation ("Purchaser"),
which is a newly formed, wholly owned subsidiary of Intel Corporation, a
Delaware corporation ("Intel"), hereby offers to purchase all of the issued and
outstanding shares (the "Shares") of common stock, no par value (the "Company
Common Stock"), of Dialogic Corporation, a New Jersey corporation (the
"Company"), upon the terms and subject to the conditions set forth in this Offer
to Purchase and in the related Letter of Transmittal (which together constitute
the "Offer"), at the purchase price of $44 per Share (the "Offer Price"), net to
the tendering shareholder in cash. NO DISSENTERS' OR APPRAISAL RIGHTS ARE
AVAILABLE TO THE COMPANY'S SHAREHOLDERS IN CONNECTION WITH THE OFFER OR THE
MERGER.
The Offer is being made pursuant to the terms of the Agreement and Plan of
Merger, dated as of May 31, 1999 (the "Merger Agreement"), by and among the
Company, Purchaser and Intel. Among other things, the Merger Agreement provides
for the making of the Offer and that, following the purchase of Shares pursuant
to the Offer and promptly after the satisfaction or waiver of certain other
conditions, Purchaser will be merged with and into the Company (the "Merger").
The Company will continue as the surviving corporation and a wholly owned
subsidiary of Intel after the Merger (the "Surviving Corporation"). At the
effective time of the Merger, each outstanding Share (except for Shares owned by
the Company or Intel, or by any subsidiary of the Company or Intel (the
"Excluded Shares")) will be converted into the right to receive the Offer Price,
net to the holder in cash, without interest.
AT A MEETING HELD ON MAY 31, 1999, THE BOARD OF DIRECTORS OF THE COMPANY
(THE "COMPANY BOARD") UNANIMOUSLY (a) DETERMINED THAT THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE
FAIR, ADEQUATE AND IN THE BEST INTERESTS OF THE SHAREHOLDERS OF THE COMPANY, (b)
ADOPTED AND APPROVED THE MERGER AGREEMENT AND AUTHORIZED THE EXECUTION THEREOF
BY THE COMPANY, AND (c) RECOMMENDED THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT
THE OFFER AND TENDER THEIR SHARES HEREUNDER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE SATISFACTION OR
WAIVER OF CERTAIN CONDITIONS TO THE OBLIGATIONS OF PURCHASER, INTEL AND THE
COMPANY TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT,
INCLUDING (1) THERE BEING VALIDLY TENDERED BY THE EXPIRATION DATE AND NOT
WITHDRAWN A NUMBER OF SHARES REPRESENTING AT LEAST A MAJORITY OF THE SHARES ON A
FULLY-DILUTED BASIS (THE "MINIMUM CONDITION") AND (2) RECEIPT BY PURCHASER,
INTEL AND THE COMPANY OF CERTAIN GOVERNMENTAL AND REGULATORY APPROVALS. SEE "THE
TENDER OFFER -- 18. CERTAIN CONDITIONS OF THE OFFER."
THE OFFER WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 2,
1999, UNLESS EXTENDED.
Consummation of the Merger is subject to receipt of certain regulatory
approvals and satisfaction of a number of other conditions, including approval
by the shareholders of the Company if such approval is required by applicable
law. See "THE TENDER OFFER -- 19. Certain Legal Matters; Regulatory Approvals."
If Purchaser acquires a majority of the outstanding Shares, it will have
sufficient voting power to approve and adopt the Merger Agreement and the Merger
without the vote of any other shareholder of the Company. If Purchaser acquires
at least ninety percent (90%) of the outstanding Shares, Purchaser intends to
approve and consummate the Merger without any action by, or any further prior
notice to, the other shareholders of the Company pursuant to the short-form
merger provisions of the New Jersey Business Corporation Act (the "NJBCA"). In
addition, Intel and the Company have entered into a Stock Option Agreement dated
as of May 31, 1999 (the "Stock Option Agreement") that permits Intel to
purchase, under certain circumstances, up to 3,400,000 shares of Company Common
Stock at an exercise price of $44 per share. Among other circumstances
permitting Intel to exercise its option, Intel may exercise its option to the
extent necessary so that the number of Shares to be acquired pursuant to the
option plus the number of tendered Shares will, upon issuance of the option
shares, equal at least ninety percent (90%) of the issued and outstanding shares
of Company Common Stock. The option is also exercisable upon a termination of
the
1
<PAGE> 2
Merger Agreement in a manner obligating the Company to pay Intel liquidated
damages (see "THE TENDER OFFER -- 13. The Merger Agreement, the Stock Option
Agreement and the Voting Agreements").
Intel and Purchaser have entered into five separate Tender and Voting
Agreements and Irrevocable Proxies (the "Voting Agreements") with the following
five shareholders of the Company (the "Proxy Grantors") who own in the aggregate
5,573,586 Shares, representing approximately 32.6% of the issued and outstanding
Shares: (a) Nicholas Zwick, a director of the Company, who beneficially owns
2,876,899 Shares, (b) James Shinn, a director of the Company, who beneficially
owns 1,070,137 Shares, (c) Masako H. Shinn, as trustee for Kiyoshi H. Shinn and
Hiroshi R. Shinn, who beneficially owns 80,000 Shares, (d) Kenneth J. Burkhardt,
a director of the Company, who beneficially owns 1,443,050 Shares and (e) Joanne
Burkhardt, as trustee for Kenneth John Burkhardt, Christopher L. Burkhardt and
Julianne N. Burkhardt, who beneficially owns 103,500 Shares. Pursuant to the
Voting Agreements, upon the terms and subject to the conditions therein, each
Proxy Grantor has agreed, provided the Merger Agreement has not been terminated,
promptly to tender to Purchaser substantially all Shares beneficially owned by
such Proxy Grantor (except for charitable contributions of up to 5% of such
Shares), has agreed to vote such Shares in favor of approval of the Merger
Agreement and the transactions contemplated thereby and has granted an
irrevocable proxy to Purchaser with respect to such Shares.
Each holder (other than holders of Excluded Shares) of a certificate
representing any Shares will, from and after the consummation of the Merger,
cease to have any rights with respect to such Shares, except the right to
receive the Offer Price. From and after the consummation of the Merger, each
Excluded Share will be canceled and extinguished and cease to exist without any
conversion thereof, and no payment will be made with respect thereto.
HAMBRECHT & QUIST LLC ("HAMBRECHT & QUIST"), FINANCIAL ADVISOR TO THE
COMPANY, HAS DELIVERED A WRITTEN OPINION TO THE COMPANY BOARD, DATED MAY 31,
1999 (THE "HAMBRECHT & QUIST OPINION"), TO THE EFFECT THAT, AS OF THAT DATE, THE
CONSIDERATION TO BE RECEIVED BY THE SHAREHOLDERS OF THE COMPANY PURSUANT TO THE
MERGER AGREEMENT IS FAIR FROM A FINANCIAL POINT OF VIEW. THE FULL TEXT OF THE
HAMBRECHT & QUIST OPINION IS ATTACHED TO THE COMPANY'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 WHICH IS BEING MAILED TO
SHAREHOLDERS OF THE COMPANY HEREWITH. SHAREHOLDERS ARE URGED TO READ SUCH
OPINION CAREFULLY AND IN ITS ENTIRETY FOR ASSUMPTIONS MADE, MATTERS CONSIDERED
AND LIMITS OF THE REVIEW OF HAMBRECHT & QUIST.
The Company has informed Purchaser that as of June 3, 1999 there were
approximately 17,100,000 Shares issued and outstanding and vested options
covering approximately 1,300,000 Shares. As of the date hereof, Intel and its
affiliates beneficially own no Shares. The Minimum Condition should therefore be
satisfied if at least approximately 9,200,000 Shares are validly tendered and
not withdrawn prior to the Expiration Date (up to 5,573,586 Shares will be
tendered to Purchaser pursuant to the Voting Agreements).
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
THE COMPANY'S SHAREHOLDERS. ANY SUCH SOLICITATION WOULD BE MADE ONLY PURSUANT TO
SEPARATE PROXY MATERIALS COMPLYING WITH THE REQUIREMENTS OF SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT").
Tendering shareholders will not be obligated to pay brokerage commissions,
solicitation fees or, subject to Instruction 6 of the Letter of Transmittal,
stock transfer taxes on the sale of Shares pursuant to the Offer. However, any
tendering shareholder or other payee who fails to complete and sign the
Substitute Form W-9 that is included in the Letter of Transmittal may be subject
to a required backup federal income tax withholding of 31% of the gross proceeds
payable to such shareholder or other payee pursuant to the Offer. See "THE
TENDER OFFER -- 5. Certain Federal Income Tax Consequences." Intel will pay all
charges and expenses of Citibank, N.A., as Depositary (in such capacity, the
"Depositary"), and D.F. King & Co., Inc., as Information Agent (in such
capacity, the "Information Agent"), incurred in connection with the Offer. For a
description of the fees and expenses to be paid by Purchaser, see "THE TENDER
OFFER -- 20. Fees and Expenses."
The information contained in this Offer to Purchase concerning the Company
was supplied by the Company. Neither Intel nor Purchaser takes any
responsibility for the completeness or accuracy of such
2
<PAGE> 3
information. The information contained in this Offer to Purchase concerning the
Offer, the Merger, Intel and Purchaser was supplied by Intel and Purchaser. The
Company takes no responsibility for the completeness or accuracy of such
information.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER. ALSO SEE "THE TENDER OFFER -- 21. MISCELLANEOUS" FOR
INFORMATION REGARDING CERTAIN ADDITIONAL DOCUMENTS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") IN CONNECTION WITH THE OFFER.
References herein to Intel will, unless the context indicates otherwise,
include Intel and all of its subsidiaries, including Purchaser.
3
<PAGE> 4
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and pay for all Shares validly
tendered on or prior to the Expiration Date and not theretofore withdrawn in
accordance with the terms set forth in this Offer to Purchase under the caption
"TENDER OFFER -- 3. Withdrawal Rights." The term "Expiration Date" means
midnight, New York City time, on Friday, July 2, 1999, unless and until
Purchaser, subject to restrictions contained in the Merger Agreement, has
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" means the latest time and date at which the Offer, as so
extended by Purchaser, will expire.
Purchaser expressly reserves the right to waive any conditions of the Offer
(except as otherwise provided in the Merger Agreement), to increase the Offer
Price or to make any other changes in the terms and conditions of the Offer,
provided that, unless previously approved by the Company in writing, Purchaser
may not (i) decrease the Offer Price, (ii) change the form of consideration
payable in the Offer, (iii) decrease the number of Shares sought pursuant to the
Offer, (iv) add additional conditions to the Offer, (v) amend the conditions to
the Offer set forth in Annex A to the Merger Agreement to broaden their scope,
(vi) extend the Offer except as permitted by the terms of the Merger Agreement,
or (vii) amend the Minimum Condition.
Purchaser may, without the consent of the Company Board, (i) from time to
time extend the Offer if at the scheduled Expiration Date any conditions of the
Offer have not been satisfied or waived, (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Commission
applicable to the Offer or (iii) extend the Offer for any reason on one or more
occasions for an aggregate period of not more than twenty business days beyond
the latest Expiration Date that would otherwise be permitted under clause (i) or
(ii) of this sentence if, on such Expiration Date, there have not been tendered
at least 90% of the outstanding Shares. In addition, if at the time of any
scheduled Expiration Date any one or more of the conditions to the Offer set
forth on Annex A to the Merger Agreement are not satisfied and none of the
events set forth in paragraphs (a) through (f) of Annex A to the Merger
Agreement that would permit Purchaser not to accept tendered Shares for payment
has occurred and is continuing, then, provided, that such conditions are
reasonably capable of being satisfied and no such event has occurred on or prior
to (and is continuing on) September 15, 1999, Purchaser will extend the Offer
from time to time unless any such condition is no longer reasonably capable of
being satisfied or any such event has occurred. In no event, however, will
Purchaser be required to extend the Offer beyond September 15, 1999. As used in
this Offer to Purchase, "business day" means any day, other than a day on which
the Nasdaq National Market is closed.
Subject to the applicable rules and regulations of the Commission,
Purchaser expressly reserves the right, subject to the terms and conditions of
the Merger Agreement, at any time and from time to time, upon the failure to be
satisfied of any of the conditions to the Offer, to (i) terminate or amend the
Offer, (ii) extend the Offer and postpone acceptance for payment of any Shares
or (iii) waive any condition, by giving oral or written notice of such
termination, amendment, extension or waiver to the Depositary. During any such
extension, all Shares previously tendered and not properly withdrawn will remain
subject to any such extension and will remain tendered, subject to the right of
a tendering shareholder to withdraw such shareholder's Shares. The ability of
Purchaser to delay payment for Shares that it has accepted for payment is
limited by Rule 14e-1(c) under the Exchange Act, which requires that an offeror
either pay the consideration offered or return the tendered securities promptly
after the termination or withdrawal of a tender offer. If Intel or Purchaser
waives any of the conditions set forth in this Offer to Purchase under the
caption "THE TENDER OFFER -- 18. Certain Conditions of the Offer," the
Commission may, if the waiver is deemed to constitute a material change to the
information previously provided to Company shareholders, require that the Offer
remain open for an additional period of time and/or that Purchaser disseminate
information concerning such waiver.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition to the Offer,
Purchaser will disseminate additional tender offer materials
4
<PAGE> 5
(including by public announcement as set forth above) and extend the Offer to
the extent required by Rules 14d-4(c), 14d-6(d) and l4e-1 under the Exchange
Act. These rules generally provide that the minimum period during which a tender
offer must remain open following a material change in the terms of the offer or
information concerning the offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the changes in the terms or information.
In the Commission's view, an offer should remain open for a minimum of five
business days from the date a material change is first published, sent or given
to securityholders, and, if material changes are made with respect to
information that approaches the significance of price and share levels, a
minimum of ten business days may be required to allow for adequate dissemination
and investor response. With respect to a change in price or a change in
percentage of securities sought, a minimum ten-business day period is generally
required to allow for adequate dissemination to shareholders and for investor
response.
Any extension, amendment or termination of the Offer will be followed as
promptly as practicable by public announcement in accordance with the public
announcement requirements of Rule 14e-l(d) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to shareholders in connection with the Offer be promptly disseminated to
them in a manner reasonably designed to inform shareholders of such change), and
without limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser has no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
The Company has provided Purchaser with the Company shareholder list, a
nonobjecting beneficial owners list and security position listings for the
purpose of disseminating the Offer to holders of Shares. This Offer to Purchase
and the Letter of Transmittal and other relevant materials will be mailed to
record holders of Shares and furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. PROCEDURE FOR ACCEPTING THE OFFER AND TENDERING SHARES
Valid Tender of Shares
For a shareholder to validly tender Shares pursuant to the Offer, either:
(a)(i) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or an
Agent's Message (as defined herein) in connection with a book-entry delivery of
Shares, and any other required documents, must be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase, and
(ii) either certificates for tendered Shares ("Share Certificates") must be
received by the Depositary at one of such addresses or such tendered Shares must
be delivered pursuant to the procedure for book-entry transfer described below
(and a Book-Entry Confirmation (as defined herein) received by the Depositary),
in each case prior to the Expiration Date; or (b) the tendering shareholder must
comply with the guaranteed delivery procedures described below.
Book-Entry Transfers
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer Facility
may make book-entry delivery of the Shares by causing the book-entry transfer
system to transfer such Shares into the Depositary's account at the Book-Entry
Transfer Facility in accordance with such Book-Entry Transfer Facility's
procedure for such transfer. Although delivery of Shares may be effected through
book-entry transfer at the Book-Entry Transfer Facility, a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees, or an Agent's Message (as defined herein) in
connection with a book-entry transfer, and any other required documents, must,
in any case, be transmitted to, and received by, the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase
5
<PAGE> 6
prior to the Expiration Date, or the tendering shareholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-entry
transfer of Shares into the Depositary's account at the Book-Entry Transfer
Facility as described above is referred to herein as a "Book-Entry
Confirmation." DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH ITS BOOK-ENTRY PROCEDURES DOES NOT CONSTITUTE VALID DELIVERY TO
THE DEPOSITARY.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares, that such participant has received the
Letter of Transmittal and agrees to be bound by the terms of the Letter of
Transmittal and that Purchaser may enforce such agreement against such
participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND SOLE RISK OF THE TENDERING
SHAREHOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED AT THE
DEPOSITARY. IF DELIVERY IS BY MAIL, THEN INSURED OR REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees
No signature guarantee on the Letter of Transmittal is required if (i) the
Letter of Transmittal is signed by the registered holder of the Shares (which
term, for purposes of this Section, includes any participant in the Book-Entry
Transfer Facility system whose name appears on a security position listing as
the owner of the Shares) tendered therewith and such registered holder has not
completed either the box entitled "Special Delivery Instructions" or the box
entitled "Special Payment Instructions" on such Letter of Transmittal or (ii)
such Shares are tendered for the account of a bank, broker, dealer, credit
union, savings association or other entity that is a member in good standing of
the Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an "Eligible Institution"). In all other cases, all signatures on the
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal. If the Share Certificates are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made to, or Share Certificates not validly
tendered, not accepted for payment or not purchased are to be issued or returned
to, a person other than the registered holder of the Share Certificates, the
tendered Share Certificates must be endorsed in blank or accompanied by
appropriate stock powers, signed exactly as the name of the registered holder
appears on the Share Certificates with the signature on such Share Certificates
or stock powers guaranteed by an Eligible Institution. See Instructions 1 and 5
to the Letter of Transmittal.
Guaranteed Delivery
If a shareholder desires to tender Shares pursuant to the Offer and such
shareholder's Share Certificates are not immediately available or the procedures
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date, such Shares may nevertheless be tendered provided that all of the
following guaranteed delivery procedures are duly complied with:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives (by hand, mail, telegram or facsimile
transmission) on or prior to the Expiration Date, a properly completed and
duly executed Notice of Guaranteed Delivery, substantially in the form
provided by Purchaser; and
(c) the Share Certificates representing all tendered Shares, in proper
form for transfer (or Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other documents required by the Letter of
Transmittal, are received by the Depositary within three Nasdaq trading
days after the date of such
6
<PAGE> 7
Notice of Guaranteed Delivery. A "Nasdaq trading day" is any day on which
securities are traded on the Nasdaq National Market.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by telegram, facsimile transmission or mail, to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
Notwithstanding anything else described in this Offer to Purchase, payment
for Shares accepted for payment pursuant to the Offer will in all cases be made
only after timely receipt by the Depositary of (i) Share Certificates for (or a
timely Book-Entry Confirmation with respect to) such Shares, (ii) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) or, in
the case of book-entry transfer, an Agent's Message and (iii) any other
documents required by the Letter of Transmittal. Accordingly, tendering
shareholders may be paid at different times depending upon when Share
Certificates, Book-Entry Confirmations and such other documents are actually
received by the Depositary. Under no circumstances will interest be paid by
Purchaser on the purchase price of the Shares to any tendering shareholders,
regardless of any extension of the Offer or any delay in making such payment.
Determination of Validity
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for payment of any tender of Shares will be determined
by Purchaser in its sole discretion, which determination will be final and
binding. Purchaser reserves the absolute right to reject any or all tenders of
Shares that it determines are not in proper form or the acceptance for payment
of or payment for which may, in the opinion of Purchaser's counsel, be unlawful.
Purchaser also reserves the absolute right to waive any of the conditions of the
Offer or any defect or irregularity in the tender of any Shares with respect to
any particular shareholder, whether or not similar defects or irregularities are
waived in the case of other shareholders. Neither Purchaser, Intel, the
Depositary, the Information Agent nor any other person will be under any duty to
give notice of any defects or irregularities in tenders or incur any liability
for failure to give any such notice. Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
Other Requirements
By executing the Letter of Transmittal, a tendering shareholder irrevocably
appoints designees of Purchaser as such shareholder's proxies, each with full
power of substitution, in the manner set forth in the Letter of Transmittal, to
the full extent of such shareholder's rights with respect to the Shares tendered
by such shareholder and accepted for payment by Purchaser (and with respect to
any and all other Shares or other securities or rights issued or issuable in
respect of such Shares on or after the Expiration Date), effective when, if and
to the extent that Purchaser accepts such Shares for payment pursuant to the
Offer. All such proxies will be considered coupled with an interest in the
tendered Shares. Upon such acceptance for payment, all prior proxies given by
such shareholder with respect to such Shares accepted for payment or other
securities or rights will, without further action, be revoked, and no subsequent
proxies may be given. Such designees of Purchaser will, with respect to such
Shares for which the appointment is effective, be empowered to exercise all
voting and other rights of such shareholder as they in their sole discretion may
deem proper in respect of any annual or special meeting of the Company's
shareholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. Purchaser reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon
Purchaser's payment for such Shares, Purchaser must be able to exercise full
voting rights with respect to such Shares.
Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described herein will constitute a binding agreement between the
tendering shareholder and Purchaser upon the terms and subject to the conditions
of the Offer.
7
<PAGE> 8
Backup Federal Income Tax Withholding
To prevent backup federal income tax withholding on payments of cash
pursuant to the Offer, a shareholder tendering Shares in the offer must provide
the Depositary with such shareholder's correct taxpayer identification number
("TIN") on a Substitute Form W-9 and certify under penalties of perjury that
such TIN is correct and that such shareholder is not subject to backup
withholding. If a shareholder does not provide its correct TIN or fails to
provide the certification described herein, under federal income tax laws, the
Depositary will be required to withhold 31% of the amount of any payment made to
such shareholder pursuant to the Offer. All shareholders tendering Shares
pursuant to the Offer should complete and sign the Substitute Form W-9 included
as a part of the Letter of Transmittal to provide the information and
certification necessary to avoid backup withholding. Noncorporate foreign
shareholders should complete and sign a Form W-8, Certificate of Foreign Status,
a copy of which may be obtained from the Depositary, in order to avoid backup
withholding. See Instruction 10 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Tendered Shares may be withdrawn at any time prior to the Expiration Date
only by following the procedures described below.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn as set forth on such Share
Certificates if different from the name of the person who tendered such Shares.
If Share Certificates have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such Share Certificates, the
serial numbers shown on such Share Certificates must be furnished to the
Depositary and, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedures
for book-entry transfer described in Section 2 above, any notice of withdrawal
must specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with such withdrawn Shares and otherwise comply with
such Book-Entry Transfer Facility's procedures for withdrawal, in which case a
notice of withdrawal will be effective if delivered to the Depositary by any
method of delivery described in the first sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser in its sole discretion,
and its determination will be final and binding. Neither Purchaser, the
Depositary, the Information Agent nor any other person will be obligated to give
notice of any defects or irregularities in any notice of withdrawal, nor will
any of them incur any liability for failure to give any such notice.
Withdrawals of tendered Shares may not be rescinded, and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be retendered by following one of
the procedures described in Section 2 above at any time on or prior to the
Expiration Date.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), promptly after the Expiration Date Purchaser will accept for
payment, and will pay for, any and all Shares validly tendered on or prior to
the Expiration Date and not properly withdrawn in accordance with Section 3
above. Subject to applicable rules of the Commission and the terms and
conditions of the Merger Agreement, Purchaser expressly reserves the right, in
its sole discretion, to delay acceptance for payment of, or payment for, Shares
in order to comply in whole or in part with any applicable law or government
regulation.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
Share Certificates for such Shares (or timely Book-Entry
8
<PAGE> 9
Confirmation of the book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures described
in Section 2 above), (ii) the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer and
(iii) any other documents required by the Letter of Transmittal.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered to Purchaser and not
properly withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares. In all cases,
upon the terms and subject to the conditions of the Offer, payment for Shares so
accepted for payment will be made by the deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering shareholders for the
purpose of receiving payment from Purchaser and transmitting payment to validly
tendering shareholders. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY
PURCHASER ON THE PURCHASE PRICE OF SHARES TENDERED PURSUANT TO THE OFFER,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
Upon the deposit of funds with the Depositary for the purpose of making payments
to tendering shareholders, Purchaser's obligation to make such payments will be
satisfied and tendering shareholders must thereafter look solely to the
Depositary for payment of amounts owed to them by reason of Purchaser's
acceptance for payment of Shares. Purchaser will pay any stock transfer taxes
with respect to the transfer and sale to it or on its order pursuant to the
Offer, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, as well as any charges and expenses of the Depositary and the
Information Agent.
If Purchaser is delayed in its acceptance for payment of, or payment for,
tendered Shares or is unable to accept for payment or pay for such Shares
pursuant to the Offer for any reason, then, without prejudice to Purchaser's
rights under the Offer (but subject to Purchaser's obligations under Rule
14e-l(c) under the Exchange Act to pay for or return the tendered Shares
promptly after the termination or withdrawal of the Offer), the Depositary may,
nevertheless, retain tendered Shares on behalf of Purchaser, and such Shares may
not be withdrawn except to the extent tendering shareholders are entitled to
exercise, and duly exercise, withdrawal rights as described under Section 3
above.
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or for any other reason, Share Certificates for any such
Shares will be returned, without expense, to the tendering shareholder (or, in
the case of Shares delivered by book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedures described in Section 2 above, such Shares will be credited to an
account maintained at such Book-Entry Transfer Facility) as promptly as
practicable following the expiration or termination of the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The summary of federal income tax consequences set forth below is for
general information only and is based on Purchaser's understanding of the law as
currently in effect. The tax consequences to each shareholder will depend in
part upon such shareholder's particular situation. Special tax consequences not
described herein may be applicable to particular classes of taxpayers, such as
financial institutions, broker-dealers, persons who are not citizens or
residents of the United States, tax exempt organizations, persons who acquired
their shares as part of a straddle, hedge or other integrated instrument, and
shareholders who acquired their Shares through the exercise of an employee stock
option or otherwise as compensation. ALL SHAREHOLDERS SHOULD CONSULT WITH THEIR
OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE
MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE
MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS AND OF
CHANGES IN SUCH TAX LAWS.
The receipt of cash for Shares pursuant to the Offer (or the Merger) will
be a taxable transaction for federal income tax purposes and may also be a
taxable transaction under applicable state, local or foreign tax laws.
Generally, a shareholder who receives cash for Shares pursuant to the Offer (or
the Merger) will recognize gain or loss for federal income tax purposes equal to
the difference between the amount of cash received in exchange for the Shares
sold and such shareholder's adjusted tax basis in such Shares. Provided that the
Shares constitute capital assets in the hands of the shareholder, such gain or
loss will be capital gain or
9
<PAGE> 10
loss, and will be long-term capital gain or loss if the holder has held the
Shares for more than one year at the time of sale. Gain or loss will be
calculated and characterized separately for each block of Shares (i.e., a group
of Shares with the same tax basis and holding period) tendered pursuant to the
Offer. The maximum federal income tax rate applicable to non-corporate taxpayers
on long-term capital gain is 20%, and the use of capital losses to offset other
income is subject to limitations.
A shareholder (other than certain exempt shareholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Shares may be subject to 31% backup withholding unless the shareholder
provides its TIN and certifies that such number is correct or properly certifies
that it is awaiting a TIN, or unless an exemption applies. A shareholder that
does not furnish its TIN may be subject to a penalty imposed by the Internal
Revenue Service (the "IRS"). See Section 2.
If backup withholding applies to a shareholder, the Depositary is required
to withhold 31% from payments to such shareholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS on a
timely basis. If backup withholding results in an overpayment of tax, a refund
can be obtained by the shareholder upon filing an appropriate income tax return
on a timely basis.
6. PRICE RANGE OF THE SHARES
The Shares are traded on the Nasdaq National Market under the symbol
"DLGC". The following table sets forth, for the periods indicated, the high and
low sales prices of Company Common Stock as reported on the Nasdaq National
Market:
<TABLE>
<CAPTION>
TRADING
----------------
HIGH LOW
------ ------
<S> <C> <C>
Fiscal Year ended December 31, 1997:
First Quarter............................................... $36.75 $19.38
Second Quarter.............................................. $29.25 $16.06
Third Quarter............................................... $43.00 $26.87
Fourth Quarter.............................................. $49.87 $36.25
Fiscal Year ended December 31, 1998:
First Quarter............................................... $47.00 $31.75
Second Quarter.............................................. $44.38 $26.25
Third Quarter............................................... $37.69 $26.25
Fourth Quarter.............................................. $26.75 $17.88
Fiscal Year ended December 31, 1999:
First Quarter............................................... $35.81 $19.50
Second Quarter (through May 28, 1999)....................... $34.88 $27.22
</TABLE>
On May 28, 1999, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, according to published
sources, the last reported sale price of Company Common Stock on the Nasdaq
National Market was $33.38 per Share. On June 4, 1999, the last full day of
trading before the commencement of the Offer, according to published sources,
the last reported sale price of Company Common Stock on the Nasdaq National
Market was $ 43.47 per Share. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET
QUOTATION FOR COMPANY COMMON STOCK.
7. CERTAIN INFORMATION CONCERNING THE COMPANY
General
The Company is a New Jersey corporation with its principal offices located
at 1515 Route 10, Parsippany, New Jersey, 07054.
10
<PAGE> 11
The Company designs, manufactures and markets hardware and software
enabling technologies for "computer telephony" systems. "Computer telephony"
(CT) is a term used to encompass a wide variety of technologies and applications
that use the information processing capabilities of a computer (often a server)
to add intelligence to telephone functions and to combine these functions with
data processing. The Company's products are used in voice, fax, data, voice
recognition, speech synthesis and call center management CT applications. The
Company's products are sold globally primarily to original equipment
manufacturers, value-added resellers, systems integrators, applications
developers and service providers through both a direct sales force and
distributors. The Company also licenses the use of various stand-alone software
products. The Company also provides various products which include third party
provided technology embedded in Company boards.
Available Information
The Shares are registered under the Exchange Act. Accordingly, the Company
is subject to the informational filing requirements of the Exchange Act and, in
accordance therewith, is required to file periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. Certain information, as of particular dates,
concerning the Company's directors and officers (including their remuneration,
stock options granted to them and shares held by them), the principal holders of
the Company's securities, and any material interest of such persons in
transactions with the Company is required to be disclosed in proxy statements
and annual reports distributed to the Company's shareholders and filed with the
Commission. These reports, proxy statements and other information are available
for inspection and copying at the public reference facilities of the Commission
located in Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and at the regional offices of the Commission located in Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World
Trade Center, Suite 1300, New York, New York 10048. Copies of this material may
also be obtained by mail, upon payment of the Commission's customary fees from
the Commission's principal office at 450 Fifth Street. N.W., Washington, D.C.
20549. The Commission also maintains an Internet site on the World Wide Web at
<http://www.sec.gov> that contains reports, proxy statements and other
information. In addition, such material should also be available for inspection
at The Nasdaq Stock Market, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
Copies of some of the Company's periodic reports and proxy statements may also
be obtained from the Company's Internet site on the World Wide Web at
<http://www.dialogic.com>.
Summary Financial Information
Set forth below is certain selected consolidated financial information with
respect to the Company and its consolidated subsidiaries contained in the
Company's 1998 Annual Report on Form 10-K (the "Company 1998 Annual Report") and
the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999 (the "Company 1999 10-Q") and March 31, 1998 (the "Company First Quarter
1998 10-Q"). More comprehensive financial information is included in the Company
1998 Annual Report, the Company 1999 10-Q and the Company First Quarter 1998
10-Q and other documents filed by the Company with the Commission, and the
following summary is qualified in its entirety by reference to the Company 1998
Annual Report, the Company 1999 10-Q and the Company First Quarter 1998 10-Q and
such other documents and all the financial information (including any related
notes) contained therein. The Company 1998 Annual Report, the Company 1999 10-Q
and the Company First Quarter 1998 10-Q are available for inspection as
described below under "Available Information."
11
<PAGE> 12
THE COMPANY AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
---------------------- --------------------------------------------
MARCH 31, MARCH 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997 1996
--------- --------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Statement of Income Data:
Revenues..................... $ 72,348 $66,388 $293,525 $261,310 $213,604
Cost of goods sold........... 25,477 24,657 108,567 98,329 84,764
-------- ------- -------- -------- --------
Gross profit................. 46,871 41,731 184,958 162,981 128,840
Research and development
expense................... 17,613 13,759 65,350 51,530 40,666
Selling, general and
administrative expenses... 22,235 18,975 80,228 79,098 60,052
Asset impairment............. -- 5,297 5,297 -- --
-------- ------- -------- -------- --------
Operating income............. 7,023 3,700 34,083 32,353 28,122
Interest income -- net....... 820 647 3,099 1,637 2,440
Net realized (losses) gains
on available for sale
securities................ -- -- 32 (4) 9,175
Gain on sale of subsidiary... -- 23,384 23,384 -- --
Income before provision for
income taxes.............. 7,843 27,731 60,598 33,986 39,737
Provision for income taxes... 2,823 12,158 23,990 12,234 14,189
-------- ------- -------- -------- --------
Net income................... 5,020 15,573 36,608 21,752 25,548
Income per share:
Basic........................ 0.31 0.97 2.29 1.37 1.63
Diluted...................... 0.30 0.93 2.21 1.31 1.56
Shares used in the calculation
of pro forma income per
share:
Basic........................ 16,252 16,061 16,010 15,931 15,654
Diluted...................... 16,899 16,825 16,558 16,598 16,417
Balance Sheet Data:
Working capital.............. 174,781 144,237 139,559 119,920 103,909
Total assets................. 250,180 214,138 216,983 182,404 147,270
Long-term obligations, net of
current maturities........ 7,394 2,376 2,475 2,481 2,926
Shareholders' equity......... 207,637 163,977 175,677 144,865 124,842
</TABLE>
Except as otherwise noted in this Offer to Purchase, all of the information
with respect to the Company set forth in this Offer to Purchase has been derived
from publicly available information. Although Intel and Purchaser have no
knowledge that any of such information is untrue, neither Intel nor Purchaser
takes any responsibility for the accuracy or completeness of information
contained in this Offer to Purchase with respect to the Company or for any
failure by the Company to disclose events which may have occurred or may affect
the significance or accuracy of any such information.
8. CERTAIN INFORMATION CONCERNING INTEL AND PURCHASER
General
Intel is a Delaware corporation with its principal office located at 2200
Mission College Boulevard, Santa Clara, California 95052-8119. Intel and its
subsidiaries operate mainly in one industry segment. Intel designs, develops,
manufactures and markets microcomputer components and related products at
various levels of integration. Intel's principal components consist of
silicon-based semiconductors etched with complex patterns
12
<PAGE> 13
of transistors. Each one of these integrated circuits can perform the functions
of thousands -- some even millions -- of individual transistors, diodes,
capacitors and resistors.
Purchaser is a New Jersey corporation with its principal executive offices
located at 2200 Mission College Boulevard, Santa Clara, California 95052-8119.
Purchaser is a wholly owned subsidiary of Intel which was organized to acquire
the Company and has not conducted any unrelated activities since its
organization.
Summary Financial Information
Set forth below is certain selected consolidated financial information with
respect to Intel and its subsidiaries contained in Intel's 1998 Annual Report to
Stockholders (the "Intel 1998 Annual Report") and Intel's Quarterly Report on
Form 10-Q for the quarter ended March 27, 1999 (the "Intel 1999 l0-Q"). More
comprehensive financial information is included in the Intel 1998 Annual Report,
the Intel 1999 10-Q and other documents filed by Intel with the Commission, and
the following summary is qualified in its entirety by reference to the Intel
1998 Annual Report, the Intel 1999 10-Q and such other documents and all the
financial information (including any related notes) contained therein. The Intel
1998 Annual Report, the Intel 1999 l0-Q and such other documents are available
for inspection as described below under "Available Information."
INTEL CORPORATION AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
---------------------- --------------------------------------------
MARCH 27, MARCH 28, DECEMBER 26, DECEMBER 27, DECEMBER 26,
1999 1998 1998 1997 1996
--------- --------- ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Summary of Earnings Data:
Net revenues............... $7,103 $6,001 $26,273 $25,070 $20,847
Operating income........... 2,637 1,781 8,379 9,887 7,553
Net income................. 1,999 1,273 6,068 6,945 5,157
Basic Earnings per common
share................... 0.60 0.39 1.82 2.12 1.57
Diluted earnings per common
share................... 0.57 0.36 1.73 1.93 1.45
Weighted average common
shares outstanding...... 3,324 3,281 3,336 3,271 3,290
Weighted average common
shares outstanding,
assuming dilution....... 3,478 3,549 3,517 3,540 3,551
</TABLE>
<TABLE>
<CAPTION>
AT AT AT
MARCH 27, DECEMBER 26, DECEMBER 27,
1999 1998 1997
----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Balance Sheet Data:
Total assets........................................ $33,093 $31,471 $28,880
Total current liabilities........................... 6,216 5,804 6,020
Total liabilities................................... 8,367 8,094 9,585
Total stockholders' equity.......................... 24,726 23,377 19,295
</TABLE>
Available Information
Intel is subject to the information reporting requirements of the Exchange
Act and, in accordance therewith, files reports and other information with the
Commission. Information, as of particular dates, concerning Intel's directors
and officers, their remuneration, stock options and other matters, the principal
holders of Intel's securities and any material interest of such persons in
transactions with Intel is required to be disclosed in proxy statements
distributed to Intel's stockholders and filed with the Commission. These
reports,
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<PAGE> 14
proxy statements and other information should be available for inspection at the
Commission and copies thereof should be obtainable from the Commission and from
the Nasdaq Stock Market in the same manner as is described for the Company in
Section 7. Copies of some of Intel's periodic reports and proxy statements may
also be obtained from Intel's Internet site on the World Wide Web at
<http://www.intel.com>.
Directors and Officers
The name, business address, citizenship, present principal occupation or
employment and five-year employment history of each of the executive officers of
Intel and Purchaser are set forth in Schedule I hereto.
Except as described in this Offer to Purchase, (i) neither Intel nor
Purchaser nor, to the best of Intel's and Purchaser's knowledge, any of the
persons listed in Schedule I hereto, or any associate or subsidiary of Intel,
beneficially owns or has any right to acquire directly or indirectly any Shares
or has any contract, arrangement, understanding or relationship with any other
person with respect to any Shares, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any Shares, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss, or the giving or withholding of
proxies, and (ii) neither Intel nor Purchaser nor, to the best of Intel's and
Purchaser's knowledge, any of the other persons referred to above, or any of the
respective directors, executive officers or subsidiaries of any of the
foregoing, has effected any transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, since June 7, 1994, neither
Intel, Purchaser nor, to the best of Intel's and Purchaser's knowledge, any of
the persons listed on Schedule I hereto, has had any transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
June 7, 1994 there have been no contracts, negotiations or transactions between
Intel, any of its subsidiaries or, to the best of Intel's and Purchaser's
knowledge, any of the persons listed in Schedule I to this Offer to Purchase, on
the one hand, and the Company or its affiliates, on the other hand, concerning a
merger, consolidation or acquisition; a tender offer for or other acquisition of
securities of any class of the Company; an election of directors of the Company;
or a sale or other transfer of a material amount of assets of the Company or any
of its subsidiaries.
9. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Purchaser to purchase the Shares will
be approximately $780 million. Purchaser plans to obtain all funds needed for
the Offer through a capital contribution, which will be made by Intel to
Purchaser at the time the Shares tendered pursuant to the Offer are accepted for
payment. Intel intends to use its available cash on hand to make this capital
contribution. Neither the Offer nor the Merger is conditioned on obtaining
financing.
10. CERTAIN TRANSACTIONS BETWEEN INTEL AND THE COMPANY
Except as set forth in this Offer to Purchase, since January 1, 1998, none
of Intel or Purchaser or, to the best knowledge of Intel and Purchaser, any of
the persons listed on Schedule I hereto, has engaged in any transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, since
January 1, 1998 there have been no contracts, negotiations or transactions
between Intel, or any of its subsidiaries or, to the best knowledge of Intel and
Purchaser, any of the persons listed in Schedule I to this Offer to Purchase, on
the one hand, and the Company or any of its affiliates, on the other hand,
concerning a merger, consolidation or acquisition; a tender offer for or other
acquisition of securities of any class of the Company; an election of directors
of the Company; or a sale or other transfer of a material amount of assets of
the Company or any of its subsidiaries.
On February 17, 1999, Intel and the Company entered into a Confidential
Non-Disclosure Agreement (the "CNDA") pursuant to which they agreed to keep
confidential each party's business strategy and
14
<PAGE> 15
marketing plans. On May 20, 1999, Intel and the Company entered into a CNDA
(supplemented on May 21, 1999) in contemplation of exchange of information
relating to potential merger negotiations.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER AND THE MERGER
Over a period of years, the Company has discussed from time to time with
Intel various potential strategic relationships.
In the Fall of 1998, Anant Das, Strategic Manager in Intel's Enterprise
Server Group ("ESG"), called Howard Bubb, CEO of the Company, to discuss
possible relationships between the two companies. In October 1998, Mr. Bubb and
John Landau, Strategic Marketing VP of the Company, met in Portland, Oregon,
with John Miner, Vice President and General Manager of ESG, Scott Richardson,
Director, Communication and Internet Server Division of ESG, Mr. Das and Elliot
Swan, Director of Business Development for ESG. At this meeting, Messrs. Bubb
and Landau presented an overview of the Company and its business. Messrs. Bubb
and Miner then discussed relationships between the companies in general terms,
including the possibility of either a development or strategic relationship
agreement, with a possible strategic minority investment by Intel in the
Company.
In early February of 1999, Mr. Miner telephoned Mr. Bubb and suggested
additional meetings to discuss possible relationships between Intel and the
Company.
On February 17, 1999, Messrs. Bubb and Landau met with Messrs. Miner and
Swan at the Dallas airport. At this meeting, Messrs. Miner and Swan raised the
possibility of Intel's acquiring the Company. Mr. Bubb noted that, in order to
proceed, he would expect that the Company needed to satisfy itself as to
strategic compatibility, cultural fit and fair economic value. The parties
agreed to further discussions. That same day the parties entered into the CNDA
in contemplation of the exchange of information.
Between February 17, 1999 and March 4, 1999, the parties held a number of
telephone conferences covering high level discovery and due diligence issues.
Participants included Messrs. Tom Amato, CFO of the Company, Swan, Landau and
Guy Anthony, Assistant Treasurer of Intel.
On March 4, 1999, Mr. Miner spoke with Mr. Bubb by telephone about the
process within Intel for pursuing an acquisition. On March 11 and 12, Mr. Amato
and Steve Krupinski, Human Resources VP of the Company, met with Messrs. Swan,
Anthony, Richardson, Adam Lane, Finance Manager of ESG, Arun Chetty, Senior
Treasury Manager of Intel, and Sean Fitzgerald, ESG Senior Counsel of Intel, in
Portland, Oregon. Theodore Weitz, VP and General Counsel of the Company,
participated by telephone on March 12.
On March 12, 1999, during a scheduled internal meeting at Intel involving
Messrs. Arvind Sodhani, VP and Treasurer of Intel, Miner, Anthony, Swan,
Richardson, Les Vadasz, Senior VP of Intel, Craig Barrett, Chief Executive
Officer of Intel, Andy Grove, Chairman of Intel, and Andy Bryant, CFO of Intel,
agreement was reached to continue discussions with the Company and to seek Intel
board approval for an acquisition.
On March 16, 1999, Mr. Bubb met with Mr. Miner at Newark Airport in New
Jersey to further discuss strategic and cultural issues, and on March 17 Mr.
Bubb met with Mr. Barrett in Washington, D.C. That afternoon, Mr. Anthony
visited the Company in New Jersey and met with Messrs. Bubb, Amato and Weitz and
began to discuss valuation. Mr. Anthony stated that the results of the
discounted cash flow analysis and stock market comparable analysis performed by
Intel indicated a value of mid to upper $30 per Share. On March 18, 1999, Mr.
Amato called Mr. Anthony and reported that this value was insufficient to
present to the Company Board, but indicated a willingness to continue
discussions.
On March 19, 1999, Messrs. Anthony and Sodhani called Mr. Amato and
suggested a value of $41 per Share, in cash, contingent on due diligence,
negotiation of definitive agreements and Intel board approval.
On March 24, 1999, Messrs. Bubb, Amato and Landau met by telephone with
Messrs. Miner, Swan, Sodhani, Chetty and David Johnson, Treasury Manager of
Intel, and presented the Company's view of strategic synergies and value.
15
<PAGE> 16
On March 25, 1999, a presentation was made by Intel management to Intel's
Board of Directors proposing an acquisition of the Company. The board approved a
resolution authorizing an acquisition for either cash or stock within specified
parameters.
On March 26, Mr. Anthony called Mr. Amato to communicate that the Intel
board had approved proceeding with the acquisition discussions, contingent on
due diligence. Mr. Amato called Mr. Anthony back the same day and indicated that
the Company Board considered a value of $41 per share to be insufficient. Mr.
Anthony and Mr. Amato agreed to continue their discussions.
On March 30, 1999, Messrs. Anthony, Richardson, Lane, Swan and Johnson
called Messrs. Bubb, Amato and Landau to give the Company feedback concerning
valuation at the March 24, 1999 conference call.
On March 31, 1999, Messrs. Anthony and Sodhani met with Mr. Amato by
telephone to further discuss valuation. Mr. Amato indicated that the Company
Board was unwilling to engage in formal negotiations at a $41 valuation by
Intel, but that they might consider a valuation in the high $40's.
On April 2, 1999, Messrs. Bubb, Amato and Landau met by telephone with
Messrs. Miner, Swan, Lane, Anthony and Roger Erwin, ESG HR Manager of Intel, to
further discuss synergy, value and management retention issues in a possible
acquisition.
On April 9, the Company Board discussed the status of negotiations.
From April 9 through 24, valuation discussions continued by telephone, led
primarily by Mr. Amato for the Company and Messrs. Sodhani and Anthony for
Intel, and with some participation by Messrs. Weitz, Bubb and Swan. Intel
continued to express unwillingness to consider a higher valuation, and the
Company expressed its unwillingness to move lower. The Company Board was kept
apprised of events through regular updates.
On April 24, 1999, Messrs. Anthony and Sodhani called Messrs. Amato and
Bubb and indicated a willingness to consider an acquisition of the Company for
Intel stock, but at a value of $37 per Share rather than $41 per Share.
On May 1, 1999, Messrs. Anthony and Sodhani called Mr. Amato and advised
him that Intel would consider a valuation of $41 per Share for either a cash or
stock acquisition.
On May 3 and 4, 1999, Messrs. Anthony and Sodhani held several discussions
with Messrs. Amato and Bubb about the alternative merits of a cash versus stock
transaction.
After a discussion at a Company Board meeting on May 6, 1999, the Company
Board authorized management to retain Hambrecht & Quist as investment bankers to
assist in valuation discussions. Messrs. Amato and Weitz spoke to Mark Zanoli of
Hambrecht & Quist on May 6 1999, completed an agreement with Hambrecht & Quist
on May 7, 1999, and that afternoon Mr. Amato informed Mr. Anthony that Mr.
Zanoli would be acting on the Company's behalf in the transaction.
On May 7, 1999, during a scheduled internal meeting at Intel involving
Messrs. Sodhani, Miner, Anthony, Vadasz, Barrett, Grove, Bryant and Suzan
Miller, senior attorney at Intel, the status of negotiations with the Company
was discussed.
On May 10, Mr. Zanoli presented the Company's position to Messrs. Anthony
and Sodhani. Discussions continued almost daily among Messrs. Sodhani, Anthony,
Zanoli, Amato and Weitz over the next week and, on May 17, Mr. Zanoli conveyed
the information to Messrs. Anthony and Sodhani that the Company would consider
reducing its valuation to $44 per Share for a transaction involving Intel stock.
On May 18, Messrs. Anthony and Sodhani informed Mr. Zanoli that Intel would
be willing to consider an increase in its proposed valuation to $44 per Share
for an all-cash tender offer. That proposal was presented to the Company Board
in a special telephonic board meeting on May 18, 1999 attended by all board
members, and Messrs. Weitz, Amato and Zanoli, at which Mr. Zanoli analyzed
Intel's proposal, reviewed the
16
<PAGE> 17
discussions with Intel to date and generally advised the Company Board that he
believed Hambrecht & Quist could render its fairness opinion at that level and
that he did not expect alternative bidders at a higher price.
On May 19, in a telephone conversation involving Messrs. Bubb, Amato,
Weitz, Zanoli, Sodhani, Miner and Anthony, the parties agreed to discuss the
detailed terms of a transaction based on the latest all-cash valuation, subject
to signing a definitive agreement, due diligence and no change in market
conditions.
The parties immediately began intensive due diligence and the negotiation
of a definitive agreement. Between May 25 and May 31, 1999, numerous meetings
were held by telephone and at the offices of Gibson, Dunn & Crutcher LLP,
outside counsel to Intel, in New York, New York, among representatives of Intel,
the Company, Gibson, Dunn & Crutcher LLP, Lowenstein Sandler PC, outside counsel
to the Company, and Winthrop Stimson Putnam & Roberts, special outside counsel
to the Company, to negotiate the Merger Agreement and related agreements.
On May 29, 1999, the Company Board reviewed the then-current draft of the
definitive Merger Agreement in a special telephonic meeting, all board members
having received the contract draft prior to the meeting. This meeting was
attended by all Company Board members, and Messrs. Zanoli (by telephone), Bubb,
Amato, Weitz, Ronald Prague, Esq. corporate counsel at the Company, Peter
Ehrenberg, Esq. and Alan Wovsaniker, Esq. of Lowenstein Sandler PC, and Stephen
R. Rusmisel, Esq. of Winthrop Stimson Putnam & Roberts. Mr. Zanoli expressed his
view that Hambrecht & Quist would be able to render its fairness opinion
assuming successful completion of the negotiation of certain open issues.
Counsel performed a detailed analysis of the agreements and negotiations to
date, and discussed the specific terms of the proposed Merger Agreement and the
proposed Stock Option Agreement, and the agreements from certain shareholders on
which, in part, Intel's offer was conditioned. The Company Board requested that
the Company's representatives continue negotiations, and focus particularly on
removing impediments to the Company's ability to consider alternative
transactions consistent with the Company Board's fiduciary responsibilities.
The parties negotiated intensively through May 29, 30 and 31.
On May 30, 1999, the status of negotiations was reviewed with Messrs.
Vadasz, Barrett and Miner by Messrs. Sodhani, Anthony, Swan, Peter Cizik,
Business Development Manager of Intel, and Ms. Miller and Kirby Dyess, Vice
President and Director, New Business Development at Intel. Dr. Barrett approved
the current Intel position in the negotiations within specified parameters.
The Company Board met telephonically at 7:00 p.m. on Monday, May 31, 1999.
All board members attended, as did Messrs. Zanoli, Bubb, Amato, Weitz, Prague,
Ehrenberg, Wovsaniker and Rusmisel. The Company Board was apprised of the
progress since the prior meeting, given a detailed analysis of the changes in
the proposed Merger Agreement, the proposed Stock Option Agreement and the
agreements from certain shareholders, including improvements in the "fiduciary
out" provisions, a reduction in the proposed breakup fee, and the fact that
those restrictions that remained were conditions of the transaction that Intel
would not remove. Mr. Zanoli then rendered Hambrecht & Quist's opinion that the
transaction is fair to shareholders of the Company from a financial point of
view. Next, counsel analyzed certain legal aspects of the transaction. The
Company Board then adjourned as final negotiations continued.
The Company Board reconvened at approximately midnight on May 31, and
unanimously (a) determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, are fair, adequate,
and in the best interests of the Company's shareholders, (b) adopted and
approved the Merger Agreement and authorized the execution thereof by the
Company, and (c) recommended that the Company's shareholders accept the Offer
and tender their Shares hereunder.
12. PURPOSE OF THE OFFER AND THE MERGER AGREEMENT
The purpose of the Offer is for Intel to acquire, indirectly, the entire
equity interest in the Company. The purpose of the Merger is for Intel to
acquire all of the equity interest in the Company not acquired pursuant to the
Offer. Upon consummation of the Merger, the Company will become a direct, wholly
owned subsidiary of Intel. The acquisition of the entire equity interest in the
Company has been structured as a cash tender offer
17
<PAGE> 18
followed by a cash merger in order to provide a prompt transfer of ownership of
the equity interest in the Company from the Company's shareholders to Intel and
to provide them with cash for all of their Shares.
Under the NJBCA, the approval of the Company Board and, under certain
circumstances, the affirmative vote of the holders of a majority of the Shares
present at a duly constituted meeting are required to approve and adopt the
Merger Agreement and the transactions contemplated thereby. If a vote of the
shareholders is required, the Company has agreed in the Merger Agreement to take
all actions necessary to convene and hold a meeting of its shareholders (the
"Shareholders' Meeting"), as promptly as practicable after the acceptance for
payment of Shares pursuant to the Offer, to consider and vote upon the adoption
and approval of the Merger Agreement and the transactions contemplated thereby.
A proxy statement containing detailed information concerning the Merger will be
furnished to shareholders of the Company in connection with any Shareholders'
Meeting. Notwithstanding the foregoing, if Intel, Purchaser and/or any other
subsidiary of Intel has acquired at least 90% of the outstanding Shares, the
parties will take all necessary and appropriate actions to cause the Merger to
become effective as soon as practicable after the expiration of the Offer
without a Shareholders' Meeting in accordance with Section 14A:10-5.1 of the
NJBCA.
At a meeting held on May 31, 1999, the Company Board unanimously (a)
determined that the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, are fair, adequate, and in the best
interests of the Company's shareholders, (b) adopted and approved the Merger
Agreement and authorized the execution thereof by the Company and (c)
recommended that the Company's shareholders accept the Offer and tender their
shares hereunder. As described above, the only remaining corporate action of the
Company that may be required is the approval and adoption of the Merger
Agreement and the transactions contemplated thereby by the holders of a majority
of the Shares. If the Minimum Condition is satisfied, Intel will have sufficient
voting power to cause the approval and adoption of the Merger Agreement and the
transactions contemplated thereby without the affirmative vote of any other
shareholder of the Company. Under the Merger Agreement, Intel has agreed to
vote, or cause to be voted, at any such meeting all Shares owned by it,
Purchaser or any other subsidiary of Intel in favor of the Merger. If Intel
acquires at least 90% of the Shares in the Offer, under the NJBCA, it will be
able to consummate the Merger without a vote of the Company's shareholders.
Furthermore, the Stock Option Agreement permits Intel to purchase up to
3,400,000 shares of Company Common Stock at an exercise price of $44 per share
under certain specified circumstances. Among other circumstances permitting
Intel to exercise its option, Intel may exercise its option to the extent
necessary so that the number of shares to be acquired pursuant to the option
plus the number of tendered Shares will, upon issuance of the option shares,
equal at least ninety percent (90%) of the issued and outstanding Shares of the
Company. The purchase of Shares pursuant to its option may, under certain
circumstances, allow Intel to increase its ownership of Shares above 90% in
order to consummate the Merger without a vote of the shareholders of the
Company. The option is also exercisable upon a termination of the Merger
Agreement in a manner obligating the Company to pay Intel $25 million as
liquidated damages (see "THE TENDER OFFER -- 13. The Merger Agreement, the Stock
Option Agreement and the Voting Agreements"). In addition, Intel reserves the
right to purchase additional Shares in the open market.
13. THE MERGER AGREEMENT, THE STOCK OPTION AGREEMENT AND THE VOTING AGREEMENTS
THE MERGER AGREEMENT
The following is only a summary of certain provisions of the Merger
Agreement. Company shareholders should read the Merger Agreement in its
entirety. A copy of the Merger Agreement is filed with the Commission as an
exhibit to Intel's and Purchaser's Tender Offer Statement on Schedule 14D-l.
The Offer. The Merger Agreement provides for the making of the Offer.
Pursuant to the Offer, each tendering shareholder will receive the Offer Price
for each Share tendered in the Offer. Purchaser's obligation to accept for
payment or pay for Shares is subject to the satisfaction of the conditions that
are described in "THE TENDER OFFER -- 18. Certain Conditions of the Offer,"
including the Minimum Condition. Pursuant to the Merger Agreement, Purchaser
expressly reserves the right to waive any of the conditions to
18
<PAGE> 19
the Offer (except as otherwise provided in the Merger Agreement), and to make
any change in the terms or conditions of the Offer; provided that, without the
written consent of the Company, Purchaser may not (i) decrease the Offer Price,
(ii) change the form of consideration payable in the Offer, (iii) decrease the
number of Shares sought pursuant to the Offer, (iv) add additional conditions to
the Offer, (v) amend the conditions to the Offer set forth in Annex A to the
Merger Agreement to broaden their scope, (vi) extend the Offer except as
permitted by the terms of the Merger Agreement, or (vii) amend the Minimum
Condition.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company Board, (i) from time to time extend the Offer if at the scheduled
Expiration Date of the Offer any conditions to the Offer shall not have been
satisfied or waived, (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Commission applicable to the Offer
and (iii) extend the Offer for any reason on one or more occasions for an
aggregate period of not more than twenty business days beyond the latest
Expiration Date that would otherwise be permitted under clauses (i) or (ii) of
this sentence if on such Expiration Date there shall not have been tendered at
least 90% of the outstanding Shares. In addition, if at the time of any
scheduled Expiration Date any one or more of the conditions to the Offer set
forth on Annex A to the Merger Agreement are not satisfied and none of the
events set forth in paragraphs (a) through (f) of Annex A to the Merger
Agreement that would permit Purchaser not to accept tendered Shares for payment
has occurred and is continuing, then, provided, that such conditions are
reasonably capable of being satisfied and no such event has occurred on or prior
to (and is continuing on) September 15, 1999, Purchaser will extend the Offer
from time to time unless any such condition is no longer reasonably capable of
being satisfied or any such event has occurred. In no event, however, will
Purchaser be required to extend the Offer beyond September 15, 1999.
Board Representation. Promptly upon the purchase by Purchaser of the Shares
pursuant to the Offer and if the Minimum Condition has been met, Intel will be
entitled to designate such number of directors, rounded up to the next whole
number, on the Company Board as is equal to the product of the total number of
directors on the Company Board (determined after giving effect to the directors
elected pursuant to this sentence) and the percentage that the aggregate number
of Shares so purchased bears to the total number of Shares then outstanding on a
fully diluted basis. Notwithstanding the foregoing, the Company will use its
best efforts to ensure that three of the members of the Company Board as of May
31, 1999 (the "Continuing Directors") will remain members of the Company Board
until the effective time of the Merger (the "Effective Time"). If a Continuing
Director resigns from the Company Board, Intel, Purchaser and the Company will
permit the remaining Continuing Director or Directors to appoint the resigning
Director's successor who will be deemed to be a Continuing Director. Following
the election or appointment of Intel's designees to the Company Board pursuant
to the Merger Agreement and prior to the Effective Time, if there are any
Continuing Directors, any amendment of the Merger Agreement, any termination of
the Merger Agreement by the Company, any extension by the Company of the time
for the performance of any of the obligations or other acts of Intel or
Purchaser or any waiver of any of the Company's rights under the Merger
Agreement or any other determination with respect to any action to be taken or
not to be taken by the Company relating to the Merger Agreement, will require
the concurrence of a majority of such Continuing Directors. The Company's
obligation to appoint designees of Intel to the Company Board will be subject to
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
The Merger. As soon as practicable after the satisfaction or waiver of the
conditions to the Merger, Purchaser will be merged with and into the Company, as
a result of which the separate corporate existence of Purchaser will cease and
the Company will continue as the Surviving Corporation and a wholly owned
subsidiary of Intel. The Effective Time will occur at the date and time that a
certificate of merger in such form as is required by the NJBCA (the "Certificate
of Merger") is filed with the Department of Treasury, Division of Commercial
Recording of the State of New Jersey, or such later time as Intel and the
Company may agree upon and as may be set forth in the Certificate of Merger. The
Surviving Corporation will continue its corporate existence under the laws of
the State of New Jersey. The Certificate of Incorporation of Purchaser in effect
at the Effective Time will be the Certificate of Incorporation of the Surviving
Corporation. The bylaws of Purchaser in effect at the Effective Time will be the
bylaws of the Surviving Corporation. The directors of Purchaser at the Effective
Time will be the directors of the Surviving Corporation until their
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<PAGE> 20
successors are duly elected and qualified, and the officers of Purchaser at the
Effective Time will be the officers of the Surviving Corporation until their
successors are duly elected and qualified.
Consideration to be Paid in the Merger. In the Merger, each outstanding
Share (except for Shares owned by the Company or Intel or by any subsidiary of
the Company or Intel, which will be canceled and retired without any payment
with respect thereto) will be converted into the right to receive the Offer
Price, without interest thereon (the "Merger Consideration"). Each share of
common stock of Purchaser issued and outstanding immediately prior to the
Effective Time will be converted into one share of common stock of the Surviving
Corporation.
Options. At the Effective Time, options to purchase Shares under the
Company's Amended and Restated 1997 Incentive Benefit Plan, 1988 Incentive
Compensation Plan, the Company's Employee Stock Purchase Plan, the GammaLink
Stock Option Plans assumed by the Company, the Spectron Microsystems, Inc. Stock
Option Plan assumed by the Company and the DianaTel Corporation Stock Plan
assumed by the Company (collectively, the "Option Plans"), which are then
outstanding and unexercised, will be converted automatically into options to
purchase shares of common stock, par value $.001 per share, of Intel ("Intel
Common Stock") and Intel will assume each such Option Plan, subject to the terms
of the applicable Option Plans. In each case, the number of shares of Intel
Common Stock purchasable upon exercise of an assumed option will be equal to the
number of Shares that were purchasable under such assumed option immediately
prior to the Effective Time multiplied by the Exchange Ratio (as defined below),
and rounded down to the nearest whole share. Further, the per share exercise
price under each such assumed option will be adjusted by dividing the per share
exercise price of each such assumed option by the Exchange Ratio, and rounding
up to the nearest cent. The terms of each assumed option will, in accordance
with its terms, be subject to further adjustment as appropriate to reflect any
stock split, stock dividend, recapitalization or other similar transaction with
respect to Intel Common Stock on or subsequent to the Effective Time. The
"Exchange Ratio" shall be equal to the ratio obtained by dividing the Offer
Price by the closing price of one share of Intel Common Stock on the Nasdaq
National Market on the trading day immediately preceding the closing date of the
Merger.
Pursuant to the Merger Agreement, the beneficiaries of the Company's 1993
Non-Employee Director Stock Option Plan and the Company's 1997 Director Stock
Election/Deferral Plan will receive all economic benefits thereunder. Consistent
with the terms of the Company's Common Stock and Warrant Purchase Agreement with
Microsoft Corporation ("Microsoft") dated as of March 1, 1999, the Merger
Agreement recognizes the right of Microsoft, upon exercise of the warrant in
accordance with its terms, to receive an amount in cash equal to the Merger
Consideration multiplied by the number of Shares immediately theretofore
purchasable upon exercise of the warrant, as if such Shares were outstanding
immediately prior to the Effective Time, as set forth in Section 5.15 of the
Merger Agreement.
Representations and Warranties. The Merger Agreement contains
representations and warranties by the Company, on the one hand, and Intel and
Purchaser, on the other hand. These include:
- due organization, existence, good standing and qualification to do
business and, in the case of the Company, its subsidiaries and its equity
investments.
- corporate power and authority to enter into the Merger Agreement and
perform its obligations under the Merger Agreement and, in the case of
the Company, the stock option agreement; proper execution, delivery and
enforceability of the Merger Agreement and, in the case of the Company,
the stock option agreement.
- accuracy of the information about the Company in the proxy statement and
accuracy of the information about Intel and Purchaser in the offer
documents and the proxy statement.
- governmental and third-party approvals.
- compliance of the Merger Agreement with each party's charter documents,
material agreements and applicable law.
- absence of material legal proceedings and injunctions.
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- absence of broker's fees arising from the transactions contemplated by
the Merger Agreement.
- in the case of Intel and Purchaser, that they will have the funds
necessary to acquire the Shares and that, as of May 31, 1999, neither of
them owned any shares of Company Common Stock.
The Merger Agreement contains additional representations and warranties of
the Company. These include:
- capitalization of the Company and its subsidiaries.
- approval of the Merger and the stock option agreement by the Company
Board.
- absence of existing defaults under its charter documents, material
agreements and applicable law.
- filings with the Commission and accuracy of financial statements.
- absence of undisclosed liabilities of the Company and its subsidiaries
and since March 31, 1999, absence of material changes in the business of
the Company and its subsidiaries.
- the Company's and its subsidiaries' compliance with applicable laws.
- employee benefit plans, labor, employment and related matters.
- absence of material environmental liabilities.
- payment of taxes and filing of tax returns.
- intellectual property.
- "Year 2000" capability.
- foundry agreements.
- insurance.
- certain business practices.
- product warranties and guaranties.
- customers.
No representations or warranties made by the Company, Intel or Purchaser
will survive beyond the Effective Time.
Conduct of Business Before the Merger. Each of the Company, Intel and
Purchaser has agreed to do certain things before the Merger occurs. These
include the Company and its subsidiaries each:
- conducting its business in the ordinary course.
- using all commercially reasonable efforts to preserve intact its business
organization.
- using all commercially reasonable efforts to keep available the services
of its current officers and employees.
- using all commercially reasonable efforts to preserve its relationships
with customers, suppliers, distributors, lessors, creditors, employees,
contractors and others having business dealings with it.
Intel and the Company have also agreed to:
- cooperate with each other and use all reasonable efforts to make all
filings, and to obtain consents and approvals of all third parties and
governmental authorities, necessary to complete the transactions
contemplated by the Merger Agreement, and to comply with the terms and
conditions of all these consents and approvals.
- not issue any press release or make any other public statements without
the prior approval of the other party.
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- promptly tell the other party about any events or circumstances that
would cause any representations or warranties to not be true or any
obligations not to have been fulfilled.
Subject to certain agreed exceptions, the Company has agreed for itself and
on behalf of its subsidiaries not to:
- amend its charter documents.
- issue or agree to issue any stock of any class or any other securities or
equity equivalents, except for shares of the Company's Common Stock
issued under options granted prior to the date of the Merger and grants
of options in the ordinary course of its business consistent with past
practice.
- split, combine or reclassify any shares of its capital stock or declare,
set aside or pay any dividend or other distribution of any kind in
respect of its capital stock.
- adopt a plan of complete or partial liquidation, dissolution, merger or
other reorganization other than the Merger.
- alter any subsidiary's corporate structure or ownership.
- incur or assume any debt, except under existing lines of credit in the
ordinary course of business or materially change the terms of any
existing debt.
- become responsible for the obligations of any other person except for
third party guarantees and lease agreements not to exceed $500,000 in the
aggregate, and obligations of the Company's subsidiaries incurred in the
ordinary course of business.
- make any loans to or investments in any other person, except its
subsidiaries or for customary loans or advances to employees in the
ordinary course of business consistent with its past practices.
- encumber its capital stock.
- mortgage or pledge any of its material assets or create or permit any
material lien on these assets.
- except as required by law, enter into, adopt, modify or terminate any
employee compensation, benefit or similar plan or increase in any
compensation or fringe benefits.
- grant any severance or termination pay, except as required by law or by
any written agreements existing on May 31, 1999.
- voluntarily accelerate the vesting of any stock options.
- sell, license or dispose of any assets in any single transaction or
series of related transactions having a fair market value in excess of
$300,000 in the aggregate, except for sales of its products and licenses
of its software in the ordinary course of business consistent with its
past practices.
- enter into any exclusive license, distribution, marketing, sales or other
agreements.
- license any source code to any third party.
- except as required as a result of a change in law or in generally
accepted accounting principles, change any of its accounting principles,
practices or methods.
- revalue in any material respect any of its assets other than in the
ordinary course of business.
- acquire any other business or entity.
- enter into any material agreement.
- modify or waive any material right under any material contracts.
- modify its standard product warranty terms or modify any existing product
warranties in any material and adverse manner.
- authorize any new or additional capital expenditure(s) in excess of
$500,000.
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- authorize any new or additional manufacturing capacity expenditure or
expenditures for any manufacturing capacity contracts or arrangements.
- acquire any other asset or related group of assets in a single
transaction or series of related transactions with a cost in excess of
$300,000 or permit all such acquisitions taken together to exceed
$1,000,000.
- make any material tax election or settle or compromise any material
income tax liability.
- permit any insurance policy naming it as a beneficiary or loss payable to
expire, be canceled or be terminated, except if a comparable insurance
policy is obtained and in effect.
- fail to file any tax returns when due or fail to cause such tax returns
when filed to be complete and accurate in all material respects.
- fail to pay any taxes or other material debts when due.
- settle or compromise any legal proceeding that relates to the Merger
Agreement, involves more than $300,000 or would otherwise be material to
the Company, or relates to any intellectual property matters.
- take or fail to take any action that could reasonably be expected to
limit the use of any net operating losses, built-in losses, tax credits
or other similar items.
- take or fail to take any action that could reasonably be expected to
cause any transaction intended by the Company or its subsidiaries to be a
reorganization under Section 368(a) under the Internal Revenue Code to
fail to qualify as such a reorganization.
- take or agree in writing or otherwise to take any of the actions
described above.
The Company also has agreed that it will:
- provide Intel with reasonable access to the Company's employees to, among
other things, deliver offers of continued employment and provide
information to the employees about Intel.
- provide Intel with reasonable access to the Company's books and records,
offices and facilities.
- take all necessary action to amend, merge, freeze or terminate all of its
compensation and benefit plans, effective at the closing date of the
Merger, as requested in writing by Intel.
- provide Intel with periodic financial information.
- obtain a "Letter of Non-Applicability" from the New Jersey Department of
Environmental Protection (the "NJDEP") that the transactions contemplated
by the Merger Agreement are exempt from the requirements of the New
Jersey Industrial Site Recovery Act ("ISRA") or attain compliance with
the requirements of the ISRA.
Acquisition Proposals.
The term "Third Party Acquisition" is used herein to mean any of the
following:
- an acquisition of the Company by anyone other than Intel, Purchaser or
any of their affiliates.
- the acquisition of any material portion (which includes 15% or more) of
the assets of the Company and its subsidiaries, other than the sale of
its products in the ordinary course of business consistent with its past
practices.
- an acquisition of 15% or more of the outstanding shares of Company Common
Stock.
- the Company's adoption of a plan of liquidation or declaration or payment
of an extraordinary dividend.
- the Company's or any of its subsidiary's repurchase of more than 10% of
the outstanding Shares.
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- the Company's or any of its subsidiary's acquisition of any interest or
investment in any business whose annual revenue, net income or assets is
equal to or greater than 10% of the annual revenue, net income or assets
of the Company.
The Company has agreed that it will:
- cease any discussions or negotiations with any other persons with respect
to any Third Party Acquisition.
- request each person that has executed a confidentiality agreement in
connection with its consideration of acquiring the Company or any of its
subsidiaries to return all confidential information heretofore furnished
to such person by or on behalf of the Company or any of its subsidiaries.
- not encourage, solicit, participate or initiate discussions with, or
provide any information to anyone except Intel and Purchaser concerning,
any Third Party Acquisition; provided, however, that if the Company Board
determines in good faith, after consultation will legal counsel, that it
is necessary to do so in order to comply with its fiduciary obligations
to the Company's shareholders under the NJBCA, the Company may, in
response to a proposal or offer for a Third Party Acquisition that was
not solicited and that the Company Board determines, based on
consultation with Hambrecht & Quist or another financial advisor of
nationally-recognized standing, is from a third party that is capable of
consummating a Superior Proposal and only for so long as the Company
Board so determines that its actions are likely to lead to a Superior
Proposal, (i) furnish information only of the type and scope with respect
to the Company that the Company provided to Intel prior to May 31, 1999
to any such person pursuant to a customary confidentiality agreement as
was executed by Intel, and (ii) participate in the discussions and
negotiations regarding such proposal or offer. In addition, the Merger
Agreement does not prohibit the Company Board from taking and disclosing
to Company shareholders a position contemplated by Rules 14d-9 and 14e-2
under the Exchange Act with regard to a tender or exchange offer made by
someone other than Intel or any of its subsidiaries.
- notify Intel if the Company or any of its subsidiaries receives any
communication regarding a Third Party Acquisition.
- provide a copy of any written agreements, proposals, or other materials
the Company receives about a Third Party Acquisition.
- advise Intel from time to time of the status and any developments
concerning any Third Party Acquisition.
Except as described below, the Company Board may not withdraw or modify its
recommendation of the Offer or the Merger. It also may not approve, recommend,
cause or permit the Company to enter into any agreement or obligation relating
to any Third Party Acquisition. However, if the Company Board determines in its
good faith judgment, after consultation with and based upon the advice of legal
counsel, that its fiduciary duties require it to do so, the Company Board may
withdraw its recommendation of the Offer or the Merger or approve or recommend
any bona fide proposal:
- to acquire, directly or indirectly, solely for cash and/or securities,
all Company Common Stock then outstanding, or all or substantially all of
the Company's assets; and
- that is fully financed or is financeable and contains terms that the
Company Board by a majority vote determines in good faith, based as to
the financial terms, on the written advice of the Company's financial
advisor or another financial advisor of nationally recognized reputation,
to be more favorable to the Company's shareholders than the Merger; and
- that the Company Board by a majority vote determines in its good faith
judgment (following and based on consultation with the company financial
adviser or another financial advisor of nationally recognized reputation
and its legal or other advisers) to be reasonably capable of being
completed (taking into account all legal, financial, regulatory and other
aspects of the proposal and the person making the proposal; and
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- that does not contain a right of first refusal or right of first offer
with respect to any proposal that Intel may make; and
- that does not contain any "due diligence" condition.
An offer that has all of these characteristics is sometimes referred to
herein as a "Superior Proposal."
The Company Board may only withdraw its recommendation of the Offer or the
Merger or approve or recommend any Superior Proposal (a) after providing written
notice to Intel advising Intel that the Company Board has received a Superior
Proposal, specifying the material terms and conditions and identifying the
person making the Superior Proposal, and (b) if Intel does not, within five
business days of receipt of such proposal, make an offer that the Company Board
by a majority vote determines in good faith, based on the written advice of a
financial advisor of nationally recognized reputation, to be at least as
favorable to the Company shareholders as the Superior Proposal. If Intel fails
to make this offer, the Company may enter into an agreement with respect to the
Superior Proposal only if the Merger Agreement is concurrently terminated in
accordance with its terms and the Company has paid all of the $25 million
liquidated damages and any expense reimbursement due to Intel under the Merger
Agreement (as described below under "-- Termination of the Merger
Agreement -- Liquidated Damages and Expenses").
Conditions to the Merger. The obligation of each of the Company, Intel and
Purchaser to consummate the Merger is subject to the satisfaction of each of the
following conditions:
- the Merger Agreement has been approved and adopted by the requisite vote
of the Company's shareholders, if such vote is required by applicable
law.
- no law or order by any United States federal or state court or
governmental authority prohibits, enjoins or restricts the Merger.
- the parties have obtained all governmental approvals or other
requirements necessary to complete the Merger and to operate the
Company's business after the Merger as it was operated prior to the
Merger (other than under the Hart-Scott-Rodino Antitrust Improvements
Act).
- the proxy statement, if required to be prepared and disseminated to the
Company's shareholders, has been cleared by the SEC and is not the
subject of any stop order.
The Company will not be required to complete the Merger unless:
- Intel's and Purchaser's representations and warranties in the Merger
Agreement are true on the closing date of the Merger (except to the
extent that the aggregate of all breaches thereof do not materially and
adversely affect the ability of Intel and/or Purchaser to consummate the
Offer or the Merger).
- Intel and Purchaser have performed in all material respects each of its
covenants and obligations to be performed before the Merger is to occur.
Intel and Purchaser will not be required to complete the Merger unless:
- the Company's representations and warranties in the Merger Agreement are
true on the closing date of the Merger (except to the extent that the
aggregate of all breaches thereof do not, or are not reasonably likely in
the foreseeable future to be, materially adverse to the operations,
financial condition, earnings or results of operations, or the business
(financial or otherwise), of the Company and its subsidiaries, taken as a
whole (a "Material Adverse Effect on the Company"); provided, however,
that none of the following will be deemed, either alone or in
combination, to constitute a Material Adverse Effect on the Company: (i)
a change in the market price or trading volume of Company Common Stock,
(ii) conditions affecting the computer-related communications equipment
and services industry as a whole, or (iii) a failure by the Company to
meet internal earnings or revenue projections or the earnings or revenue
projections of equity analysts, provided that clause (iii) does not
exclude any underlying change, effect, event, occurrence, state of facts
or developments that resulted in such failure to meet such projections).
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- the Company has performed in all material respects each of its covenants
and obligations to be performed before the Merger is to occur.
- since March 31, 1999, there have been no events, individually or in the
aggregate, with respect to the Company or its subsidiaries that
constitute a Material Adverse Effect on the Company.
- in connection with complying with any applicable law or obtaining any
requisite consent, Intel will not be required to sell or divest any
assets or business or to restrict any business operations or prohibited
from owning any material portion of the Company's business or assets.
Assurances cannot be given that all of the conditions to completing the
Merger will be satisfied.
Termination. The Merger Agreement may be terminated and the Merger
abandoned at any time prior to the completion of the Merger, before or after it
has been approved by the Company's shareholders. This termination may occur in
the following ways:
- Intel, Purchaser and the Company mutually agree to terminate it.
- Intel and Purchaser, or the Company, decides to terminate it because:
1. any state or federal court or other governmental authority has issued
a non-appealable, final ruling prohibiting the Merger; or
2. the Merger is not completed by December 15, 1999, unless the failure
to complete it by that date is due to the failure of the party
seeking to terminate the Merger Agreement to perform its agreements
in the Merger Agreement.
- The Company decides to terminate it because:
1. Intel's and Purchaser's representations or warranties in the Merger
Agreement are untrue such that the conditions to the Company's
obligation to complete the Merger could not be satisfied by December
15, 1999, so long as the Company has not seriously breached its own
obligations under the Merger Agreement;
2. Intel or Purchaser fails to perform its agreements in the Merger
Agreement, and this failure has a Material Adverse Effect on
Purchaser or materially adversely affects (or materially delays) the
ability of the Company to consummate the Merger, and Intel and
Purchaser, as the case may be, has not cured such breach within 5
business days after notice by the Company thereof and provided that
the Company has not seriously breached its own obligations in the
Merger Agreement;
3. the Company has failed to obtain its shareholders' approval of the
Merger Agreement;
4. the Company Board has received a Superior Proposal and responded in a
way that permitted termination of the Merger Agreement, including the
payment of liquidated damages and expenses to Intel; or
5. Purchaser fails to pay for Shares pursuant to the Offer by December
15, 1999; so long as such failure does not result from the Company
breaching in any material respect its obligations in the Merger
Agreement.
- Intel or Purchaser decides to terminate it because:
1. the Company's representations or warranties in the Merger Agreement
are untrue such that the conditions to Intel's and Purchaser's
obligations to complete the Merger could not be satisfied by December
15, 1999, so long as neither Intel nor Purchaser has seriously
breached its own obligations in the Merger Agreement;
2. the Company has failed to perform its agreements in the Merger
Agreement, and this failure has a Material Adverse Effect on the
Company or the ability of Intel, Purchaser or the Company to
consummate the Merger, and the Company has not cured such breach
within 5 business days
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after notice by Intel or Purchaser thereof and provided that neither
Intel nor Purchaser has seriously breached its own obligations in the
Merger Agreement;
3. the Company Board has recommended a Superior Proposal to the
Company's shareholders;
4. the Company Board has withdrawn or adversely modified its
recommendation of the Merger;
5. the Company Board has stopped using all reasonable efforts to hold a
shareholders' meeting to vote on the Merger;
6. the Company convened a meeting of the Company shareholders to vote on
the Merger but did not obtain their approval of the Merger; or
7. Purchaser has terminated the Offer because of the occurrence of any
of the events, or the failure to be satisfied of any of the
conditions, described below in "THE TENDER OFFER -- 18. Certain
Conditions of the Offer"; so long as such termination does not result
from Intel's or Purchaser's seriously breaching its own obligations
in the Merger Agreement.
Effect of Termination. Even after the Merger Agreement has been terminated,
its confidentiality and fees and expenses provisions will remain in effect.
Also, termination will not relieve either party from liability for any breach by
it of the Merger Agreement before it was terminated. However, no representations
or warranties made by the Company, Intel or Purchaser shall survive beyond a
termination of the Merger Agreement.
Liquidated Damages and Expenses. The Company has agreed to pay Intel $25
million as liquidated damages if the Merger Agreement is terminated as follows:
- It is terminated by the Company because the Company Board received a
Superior Proposal and responded in a way that permitted its termination.
- It is terminated by Intel and Purchaser because the Company Board
recommended that Company shareholders approve a Superior Proposal; the
Company Board withdrew or adversely modified its recommendation of the
Offer or the Merger; or if, after Purchaser's acceptance for payment of
shares tendered pursuant to the Offer, the Company Board stops using all
reasonable efforts to convene a shareholders meeting to approve the
Merger.
- It is terminated by Intel and Purchaser because of a significant breach
by the Company of its representations, warranties or agreements, and, (a)
an offer by a third party to consummate a Third Party Acquisition is
outstanding or has been publicly announced (and not withdrawn), and such
Third Party Acquisition occurs, or (b) within a year after termination,
the Company enters into an agreement with respect to a Third Party
Acquisition or such an acquisition otherwise occurs.
- It is terminated by either the Company or Intel and Purchaser because the
Company held a shareholders meeting and failed to obtain the required
vote for the Merger and, at the time of the meeting, an offer by a third
party to consummate a Third Party Acquisition is outstanding or has been
publicly announced.
In addition, the Company has agreed to pay Intel up to $3 million as
reimbursement of its fees and expenses if the Merger Agreement is terminated as
follows:
- It is terminated by the Company because either:
1. the Company held a shareholders meeting to vote on the Merger but did
not obtain shareholder approval; or
2. the Company Board received a Superior Proposal and responded in a way
that permitted its termination.
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- It is terminated by Intel and Purchaser for any of the following reasons:
1. The Company's representations or warranties in the Merger Agreement
are untrue such that the conditions to Intel's obligations to
complete the Merger could not be satisfied by December 15, 1999 so
long as neither Intel nor Purchaser has seriously breached its own
obligations under the Merger Agreement.
2. The Company failed to perform its agreements in the Merger Agreement,
and this failure has a Material Adverse Effect on the Company or
materially adversely affects (or materially delays) the ability of
Purchaser to consummate the Offer or the ability of Intel, Purchaser
or the Company to consummate the Merger, and the Company has not
cured such breach within five (5) business days after notice by Intel
or Purchaser thereof, so long as neither Intel nor Purchaser has
seriously breached its own obligations in the Merger Agreement.
3. The Company Board recommended that Company shareholders approve a
Superior Proposal.
4. The Company Board withdrew or adversely modified its recommendation
of the Offer or the Merger.
5. If, after Purchaser's acceptance for payment of shares tendered
pursuant to the Offer, the Company stopped using all reasonable
efforts to hold a shareholders' meeting to vote on the Merger.
6. The Company held a shareholders meeting to vote on the Merger but did
not obtain shareholder approval.
Further, Intel has agreed to pay the Company up to $3 million as
reimbursement of its fees and expenses if the Merger Agreement is terminated by
the Company because:
- Intel's and Purchaser's representations or warranties in the Merger
Agreement are untrue such that the conditions to the Company's obligation
to complete the Merger could not be satisfied by December 15, 1999, so
long as the Company has not seriously breached its own obligations under
the Merger Agreement.
- Intel or Purchaser fails to perform its agreements in the Merger
Agreement, and this failure has a Material Adverse Effect on Purchaser or
materially adversely affects the ability of the Company to complete the
Merger, so long as the Company has not seriously breached its own
obligations in the Merger Agreement.
Except as described above, whether or not the Merger occurs, the parties to
the Merger Agreement have agreed to pay their own fees and expenses incurred in
connection with the Merger Agreement.
Extension and Waiver. At any time prior to the Merger, Intel, Purchaser and
the Company may agree to:
- extend the time for the performance of any of the obligations or other
acts of the other party.
- waive any inaccuracies in the other's representations and warranties.
- waive the other's compliance with any of the agreements or conditions in
the Merger Agreement.
Amendment. The Merger Agreement may be changed by the parties at any time
before or after the Company's shareholders approve the Merger. However, any
change which by law requires the approval of the Company's shareholders will
require their subsequent approval to be effective.
DISSENTERS' RIGHTS IN THE MERGER
No dissenters' or appraisal rights are available in connection with the
Offer or the Merger.
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STOCK OPTION AGREEMENT
The following is only a summary of certain provisions of the Stock Option
Agreement. Company shareholders should read the Stock Option Agreement in its
entirety. A copy of the Stock Option Agreement is filed with the Commission as
an exhibit to Intel's and Purchaser's Tender Offer Statement on Schedule 14D-l.
The Stock Option Agreement permits Intel to purchase up to 3,400,000 shares
of Company Common Stock at an exercise price of $44 per share. The total number
of shares issuable upon exercise of the option represents approximately 19.99%
of Company Common Stock outstanding on April 30, 1999 (and approximately 16.6%
of the shares of Company Common Stock after exercise of such option).
Intel may exercise the option, in whole or in part, upon the earlier to
occur of (a) termination of the Merger Agreement in a manner obligating the
Company to pay Intel the $25 million liquidated damages (see "-- Termination of
the Merger Agreement -- Liquidated Damages and Expenses"), and (b) the date on
which Purchaser has accepted tendered Shares for payment, so long as the number
of shares to be acquired pursuant to the option plus the number of tendered
Shares will, upon issuance of the option shares, equal at least ninety percent
(90%) of the issued and outstanding shares of the Company. Such option expires
upon the earlier of (a) the Effective Time and (b) the one year anniversary of
the date on which the Merger Agreement has been terminated.
If after the option becomes exercisable and before the option expires, any
third party acquires 15% or more of the outstanding shares of Company Common
Stock, or the Company enters into an agreement with any person other than Intel
providing for an acquisition of the Company or any significant part of its
assets, then Intel, instead of exercising the option, will have the right to
receive in cancellation of the option, cash equal to the lesser of:
(a) an amount determined as follows:
1. the excess over $44 of the greater of:
- the last sale price of a share of Company Common Stock on the
trading day preceding exercise and
- the highest price per share paid in connection with a third party
acquisition, or the fair market value equivalent of a share of
Company Common Stock in connection with a third party acquisition
of the Company's assets
2. multiplied by the number of shares of Company Common Stock covered by
the option and
(b) $5,000,000.
If Intel has acquired Company Common Stock upon exercise of the option and
no third party has acquired or agreed to acquire 15% or more of the outstanding
shares of Company Common Stock, nor has the Company entered into an agreement
with any person other than Intel and Purchaser providing for an acquisition of
the Company or any significant part of its assets on or before May 31, 2000,
then, at any time during the period that begins on June 30, 2000 and ends 19
months after the exercise by which Intel acquired its Company Common Stock, the
Company may require Intel to sell to the Company any of these shares still held
by Intel. The per share purchase price will be the exercise price of the option,
less any dividends paid on the option shares to be repurchased by the Company.
Intel may request that the Company register under the Securities Act of
1933, as amended (the "Securities Act"), the offering and sale of the shares of
Company Common Stock that have been acquired by or are issuable to Intel upon
exercise of the option, if requested by Intel within two years after an event
permitting exercise of the option. Any registration request must be for at least
20% of the option shares or, if for less than 20% of the originally issuable
option shares, all of Intel's remaining option shares. Intel may make up to two
demands for registration. Intel's registration rights terminate when Intel
becomes entitled to sell all of its option shares under Rule 144(k) of the
Securities Act. The Company may include any other securities in any registration
demanded by Intel only with Intel's prior written consent. The Company will use
all
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reasonable efforts to cause each registration statement to become effective and
remain so for 90 days and to obtain all consents or waivers required from third
parties. The Company's obligation to file a registration statement and to
maintain its effectiveness may be suspended for up to 90 days if the Company
Board determines this registration would seriously and adversely affect the
Company, or financial statements required to be included in the registration
statement are not yet available. If the Company proposes to register the
offering and sale of the Company Common Stock for cash for itself or any other
Company shareholder in an underwriting, it will generally allow Intel to
participate in the registration so long as Intel agrees to participate in the
underwriting.
The expenses of preparing and filing any registration statement for these
shares of Company Common Stock and any sale covered by it will generally be paid
by the Company, except for underwriting discounts or commissions or brokers'
fees, and the fees and disbursements of Intel's counsel.
For each registration of option shares, the Company and Intel have agreed
to customary indemnification provisions for losses and liabilities under the
Securities Act and otherwise. However, Intel will not be required to indemnify
the Company beyond Intel's proceeds from the offering of its option shares.
Upon the issuance of option shares, the Company will promptly list the
shares on the Nasdaq National Market or on any other exchange on which the
Company Common Stock is then listed.
Because the rights and obligations of Intel and the Company under the
option agreement are subject to compliance with the Hart-Scott-Rodino Act, Intel
will include in its merger notifications to be filed with the Department of
Justice and Federal Trade Commission a description of its rights under the
option agreement. See "-- Regulatory Approvals Required for the Merger."
VOTING AGREEMENTS
The following is only a summary of certain provisions of the Tender and
Voting Agreements and Irrevocable Proxy (the "Voting Agreements"). Company
shareholders should read the Voting Agreements in their entirety. Copies of the
Voting Agreements are filed with the Commission as an exhibit to Intel's and
Purchaser's Tender Offer Statement on Schedule 14D-l.
Tender of Shares. In connection with the execution of the Merger Agreement,
Intel and Purchaser have entered into the Voting Agreements with the following
five shareholders of the Company (the "Proxy Grantors") who own in the aggregate
5,573,586 Shares, representing approximately 32.6% of the issued and outstanding
Shares: (a) Nicholas Zwick, a director of the Company, who beneficially owns
2,876,899 Shares, (b) James Shinn, a director of the Company, who beneficially
owns 1,070,137 Shares, (c) Masako H. Shinn, as trustee for Kiyoshi H. Shinn and
Hiroshi R. Shinn, who beneficially owns 80,000 Shares, (d) Kenneth J. Burkhardt,
a director of the Company, who beneficially owns 1,443,050 Shares and (e) Joanne
Burkhardt, as trustee for Kenneth John Burkhardt, Christopher L. Burkhardt and
Julianne N. Burkhardt, who beneficially owns 103,500 Shares. Pursuant to the
Voting Agreements, upon the terms and subject to the conditions therein, each
Proxy Grantor has agreed, provided the Merger Agreement has not been terminated,
to promptly after the date of commencement of the Offer (but in all events not
later than five (5) business days thereafter) tender to Purchaser substantially
all Shares beneficially owned by such Proxy Grantor (except for charitable
contributions of up to 5% of such Shares).
Voting of Shares. Each Proxy Grantor has also agreed, provided the Merger
Agreement has not been terminated, to vote all of the Shares beneficially owned
by such Proxy Grantor (except for charitable contributions of up to 5% of such
Shares) in accordance with the Voting Agreement, including (i) in favor of
approval of the Merger Agreement, the transactions contemplated by the Merger
Agreement, and any actions required in furtherance thereof and hereof (including
the election of designees of Intel as directors of the Company); (ii) against
any action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement; and (iii) except as otherwise agreed to in
writing in advance by Intel, against: (A) any Third Party Acquisition, (B) any
change in a majority of the individuals who, as of May 31, 1999, constitute the
Company Board (other than as contemplated by the Merger Agreement), (C) any
extraordinary corporate
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transaction, such as a merger, consolidation or other business combination
involving the Company or any of its subsidiaries and any Third Party, (D) a
sale, lease, transfer or disposition of any assets of the Company's or any of
its subsidiaries' business outside the ordinary course of business, (E) any
change in the present capitalization of the Company or any amendment of the
Company's Certificate of Incorporation or bylaws, (F) any other material change
in the Company's corporate structure or affecting its business, or (G) any other
action which is intended, or could reasonably be expected, to impede, interfere
with, delay, postpone or materially adversely affect the Offer, the Merger or
any of the other transactions contemplated by the Merger Agreement, the Stock
Option Agreement, or the Voting Agreement.
Irrevocable Proxy. Each Proxy Grantor has also, provided the Merger
Agreement has not been terminated, appointed Purchaser and certain designees of
Purchaser, in their respective capacities as designees of Purchaser, as such
Proxy Grantor's true and lawful irrevocable (until the Termination Date) proxy
and attorney-in-fact to vote all of the Shares beneficially owned by such Proxy
Grantor (except for charitable contributions of up to 5% of such Shares) at any
Shareholders' Meeting called for purposes of considering whether to approve the
Merger Agreement, the Merger or any of the other transactions contemplated by
the Merger Agreement, or any Third Party Acquisition, or to execute a written
consent of shareholders in lieu of any such meeting.
Restriction on Transfer, Proxies and Non-Interference. Each Proxy Grantor
has agreed not to, directly or indirectly: (i) except as contemplated by the
Voting Agreements, offer for sale, sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for sale,
sale, transfer, tender, pledge, encumbrance, assignment or other disposition of,
any or all of such Proxy Grantor's Shares or any interest therein; (ii) grant
any proxies or powers of attorney, deposit any Shares into a voting trust or
enter into a voting agreement with respect to any Shares; or (iii) take any
action that would make any representation or warranty made by such Proxy Grantor
untrue or incorrect or have the effect of preventing or disabling such Proxy
Grantor from performing such Proxy Grantor's obligations under the applicable
Voting Agreement. Notwithstanding the foregoing, each Proxy Grantor has the
right to transfer, assign, pledge or otherwise dispose of any or all of its
option shares to a corporation duly and validly organized and existing under the
laws of the United States and controlled by such Proxy Grantor (a "Permitted
Transferee"), provided such Permitted Transferee executes an agreement
substantially similar to the Voting Agreement.
Other Potential Acquirers. Each Proxy Grantor (i) is required to
immediately cease any existing discussions or negotiations with any parties with
respect to any acquisition of all or any material portion of the assets of, or
any equity interest in, the Company or any of its subsidiaries or any business
combination with the Company or any of its subsidiaries, in his, her or its
capacity as such; (ii) has agreed, from and after the date of the Voting
Agreements until termination of the Merger Agreement, in such capacity, directly
or indirectly, not to initiate, solicit or knowingly encourage (including by way
of furnishing non-public information or assistance), or take any other action to
facilitate knowingly, any inquiries or the making of any Third Party
Acquisition; and (iii) has agreed to promptly notify Intel of any proposals for,
or inquiries with respect to, a potential Third Party Acquisition received by
the Proxy Grantor or of which such Proxy Grantor otherwise has knowledge.
Representations and Warranties. The Proxy Agreements contain certain
customary representations and warranties of the parties thereto, including,
without limitation, representations and warranties by the Proxy Grantors as to
ownership of Shares and power and authority.
Termination. Generally, the Voting Agreements expire upon the earlier of
(a) the date on which the Merger Agreement terminates in accordance with its
terms, (b) the date on which Purchaser has accepted tendered shares for payment,
and (c) June 30, 2000.
14. INTERESTS OF CERTAIN PERSONS IN THE MERGER
Employment Agreement. At the time it entered into the Merger Agreement,
Intel, the Company, and Howard G. Bubb, the President and Chief Executive
Officer of the Company, also entered into an employment agreement with Howard
Bubb (the "New Agreement") which replaces an earlier employment
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agreement. The New Agreement is for an initial one-year term, commencing on the
closing of the Merger, and is automatically renewed for an additional one-year
period. The New Agreement is terminable by either party upon not less than
three-months' notice prior to the first anniversary of the closing of the
Merger. From the closing of the Merger through December 31, 1999 (the
"Transition Period"), Mr. Bubb will receive a base salary of $315,000. Beginning
January 1, 2000, Mr. Bubb will receive a base salary of $200,000, subject to
annual increase. During the Transition Period, Mr. Bubb is entitled to receive
cash bonuses under his current bonus schedule based on the Company's and his
individual performance. Beginning January 1, 2000, Mr. Bubb will be eligible for
a bonus under Intel's Employee Bonus and Employee Cash Bonus Plans. Mr. Bubb
also receives acceleration of all unvested restricted stock awards and stock
options under the Company's incentive compensation plans, a lump sum cash
payment of $315,000 plus one year's bonus payment calculated under his prior
employment agreement with the Company, a lump sum cash payment of $40,481,
representing fringe benefits that would have been payable under his prior
agreement and a performance bonus of up to $350,000 based on the achievement of
the Company of certain metrics, in each of 2000 and 2001, provided Mr. Bubb is
employed by the Company on December 31 of such year. The New Agreement also
provides for a two-year non-solicitation of customers in the event Mr. Bubb is
no longer working for the Company, for which Mr. Bubb will receive a monthly
payment of $42,083 for up to two years.
Indemnification; Directors' and Officers' Insurance. Pursuant to the Merger
Agreement, the Surviving Corporation (or any successor) will, to the fullest
extent permitted by law and to the extent not covered by insurance, indemnify
the present and former officers and directors of the Company and its
subsidiaries who suffer liabilities or losses from any threatened or actual
claim or proceeding based on the fact that the person was a director or officer
of the Company or one of its subsidiaries or based on the Merger Agreement. The
Merger Agreement further provides that Intel will cause the Surviving
Corporation to fulfill and honor in all respects the obligations of the Company
pursuant to any indemnification agreements between the Company and its directors
and officers as of or prior to May 31, 1999 (or indemnification agreements in
the Company's customary form for directors joining the Company Board prior to
the Effective Time) and any indemnification provisions under the Company's
certificate of incorporation or bylaws as in effect immediately prior to the
Effective Time. The Surviving Corporation's aggregate obligation to indemnify
and hold harmless all indemnified persons for all matters to which such
indemnified persons may be entitled to be indemnified or held harmless as
described above shall in no event exceed the Company's net worth as of March 31,
1999. In addition, for not less than six years after the Effective Time, Intel
or the Surviving Corporation will maintain the Company's existing officers' and
directors' liability insurance (subject to certain maximum premium payments) or
Intel may, subject to certain limitations, cause coverage to be provided under
any policy maintained for the benefit of Intel or any of its subsidiaries.
15. GOING PRIVATE TRANSACTIONS
The Merger must comply with any applicable Federal law at the time of its
consummation. Rule 13e-3 under the Exchange Act is applicable to certain "going
private" transactions. Intel and Purchaser do not believe that Rule 13e-3 will
be applicable to the Merger unless the Merger is consummated more than one year
after the Offer. If applicable, Rule 13e-3 requires, among other things, that
certain financial information concerning the Company and certain information
relating to the fairness of the Merger and the consideration offered to minority
shareholders be filed with the Commission and disclosed to minority shareholders
prior to the consummation of the Merger.
16. DIVIDENDS AND DISTRIBUTIONS
According to the Company's 1998 Annual Report on Form 10-K, the Company has
not paid cash dividends since its initial public offering and intends to retain
any future earnings for use in its business. Pursuant to the terms of the Merger
Agreement, the Company is not permitted, without the prior written consent of
Intel, to split, combine or reclassify the outstanding Shares or declare, set
aside or pay any dividend payable in cash, stock or property with respect to the
Shares, or redeem or otherwise acquire any of the Shares or any securities of
any of its subsidiaries.
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17. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; NASDAQ NATIONAL MARKET AND
EXCHANGE ACT REGISTRATION
POSSIBLE EFFECTS OF THE OFFER ON THE MARKET FOR THE SHARES
The purchase of Shares by Purchaser pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and the number of holders
of Shares, and could thereby adversely affect the liquidity and market value of
the remaining publicly held Shares. It is expected that, following the Offer, a
large percentage of the Shares will be owned by Purchaser. Purchaser cannot
predict whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Shares or whether it would cause future market prices to be
greater or less than the Offer Price therefor.
STOCK QUOTATION
Depending upon the number of Shares purchased pursuant to the offer, the
Shares may no longer meet the requirements of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion on the Nasdaq
National Market. The maintenance for continued inclusion requires the Company to
substantially meet one of two maintenance standards. The Company must have
either (a)(i) at least 750,000 publicly held shares, (ii) at least 400
shareholders of round lots, (iii) a market value of at least $5 million, (iv) a
minimum bid price per Share of $1.00, (v) at least two registered and active
market makers for its Shares and (vi) net tangible assets of at least $4
million, or (b)(i) at least, 1,100,000 publicly held shares, (ii) at least 400
shareholders of round lots, (iii) a market value of at least $15 million, and
(v) either (x) a market capitalization of at least $50 million or (y) total
assets and total revenue of at least $50 million each for the most recently
completed fiscal year or two of the last three most recently completed fiscal
years, (v) a minimum bid price per Share of $5.00 and (vi) at least four
registered and active market makers. Shares held directly or indirectly by
directors, officers or beneficial owners or more than 10% of the Shares are not
considered as being publicly held for this purpose.
If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the NASD for continued
inclusion in the Nasdaq National Market or in any other tier of the Nasdaq Stock
Market, and the Shares are, in fact, no longer included in the Nasdaq National
Market or in any other tier of the Nasdaq Stock Market, the market for Shares
could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for continued inclusion in any tier of the Nasdaq Stock Market, it may be
possible that the Shares would continue to trade in the over-the-counter market
and that price quotations would be reported by other sources. The extent of the
public market for the Shares and the availability of such quotations would,
however, depend upon the number of the holders of Shares remaining at such time,
the interest in maintaining a market in Shares on the part of the securities
firms, the possible termination of registration of the Shares under the Exchange
Act, as described below, and other factors.
EXCHANGE ACT REGISTRATION
The Shares are currently registered under the Exchange Act. Registration
under the Exchange Act may be terminated upon application by the Company to the
Commission if the Shares are not listed on a national securities exchange and
there are fewer than 300 record holders. Termination of the Exchange Act
registration of the Shares would substantially reduce the information required
to be furnished by the Company to holders of Shares and to the Commission and
would make certain provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b), the requirements of furnishing a
proxy statement in connection with shareholders' meetings and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions, no longer applicable to the Shares. In addition, "affiliates" of
the Company and persons holding "restricted securities" of the Company may be
deprived of the ability to dispose of such securities pursuant to Rule 144
promulgated under the Securities Act. If registration of the Shares under the
Exchange Act were terminated, the Shares would no longer be "margin securities"
or be eligible for Nasdaq market reporting. Intel currently intends to seek to
cause the Company to terminate the registration of
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the Shares under the Exchange Act as soon after consummation of the Offer as the
requirements for termination of registration are met.
MARGIN REGULATIONS
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of such Shares for the purpose of buying, carrying or trading
in securities ("Purpose Loans"). Depending upon factors similar to those
described above regarding the continued listing, public trading and market
quotations of the Shares, it is possible that, following the purchase of the
Shares pursuant to the Offer, the Shares would no longer constitute "margin
securities" for the purposes of the margin regulations of the Federal Reserve
Board and therefore could no longer be used as collateral for Purpose Loans made
by brokers.
18. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer or the Merger Agreement,
and subject to any applicable rules and regulations of the Commission, including
Rule 14e-1(c) relating to Intel's obligation to pay for or return tendered
Shares after termination of the Offer, Intel will not be required to accept for
payment or pay for any Shares, may delay the acceptance for payment of any
Shares pursuant to Section 1.1(b) of the Merger Agreement, may extend the Offer
by one or more times, and may terminate the Offer at any time after September
15, 1999 if (a) the Minimum Condition is not satisfied by the Expiration Date,
(b) any applicable waiting period under the HSR Act has not expired or
terminated prior to the Expiration Date, (c) approval of all necessary
government officials and agencies have not been obtained on terms and conditions
reasonably satisfactory to Intel, or (d) at any time after May 31, 1999 and
before acceptance for payment of any Shares, any of the following events has
occurred and is continuing:
(a)(1) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued or deemed applicable to the Offer or the Merger which
directly or indirectly prohibits or makes illegal consummation of the Offer
or the Merger or the other transactions contemplated by the Merger
Agreement, renders Intel unable to accept for payment, pay for or purchase
some or all of the Shares, imposes material limitations on the ability of
Intel effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased on
all matters properly presented to the Company's shareholders, or otherwise
has a Material Adverse Effect on the Company, or (2) in connection with
complying with any applicable law or obtaining any requisite consent, Intel
will be required to sell or divest any assets or business or prohibited
from owning any material portion of the Company's business or assets;
(b)(i) the representations and warranties of the Company set forth in
the Merger Agreement are not true and correct (except to the extent that
the aggregate of all breaches thereof do not constitute a Material Adverse
Effect on the Company) as of the date of the Merger Agreement and as of
consummation of the Offer, (ii) the Company has failed to perform in all
material respects its covenants and agreements under the Merger Agreement
or (iii) there has occurred since March 31, 1999, any events or changes
which constitute a Material Adverse Effect on the Company;
(c) it shall have been publicly disclosed or Intel shall have
otherwise learned that (i) any person or "group" (as defined in Section
13(d)(3) of the Exchange Act) shall have acquired or entered into a
definitive agreement or agreement in principle to acquire beneficial
ownership of more than 20% of the Shares or any other class of capital
stock of the Company, through the acquisition of stock, the formation of a
group or otherwise, or has been granted any option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of more than 20%
of the Shares, and (ii) such person or group has not tendered such Shares
pursuant to the Offer;
(d) the Company Board has withdrawn, modified or changed in a manner
adverse to Intel (including by amendment of the Schedule 14D-9) its
recommendation of the Offer, the Merger
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Agreement, or the Merger, or recommended another proposal or offer, or the
Company Board has resolved to do any of the foregoing;
(e) the Merger Agreement has been terminated in accordance with its
terms; or
(f) there has occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange or the
Nasdaq National Market, for a period in excess of 24 hours, (ii) the
commencement of a war, armed hostilities or other national or international
calamity directly or indirectly involving the United States that
constitutes a Material Adverse Effect on the Company or materially
adversely affects or delays the consummation of the Offer, (iii) the
average of the closing prices of the Standard & Poor's 500 Index for any
twenty (20) consecutive trading days shall be 25% or more below the closing
price of such index on any trading day on or after the date hereof that
precedes the commencement of such 20-trading day period, or (iv) in the
case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof;
which in the good faith judgement of Intel, in any such case and regardless of
the circumstances giving rise to such condition, makes it inadvisable to proceed
with the Offer or the acceptance for payment of the Shares.
The foregoing conditions (the "Offer Conditions"), other than the Minimum
Condition, are for the benefit of Intel and Purchaser and may be waived by Intel
and Purchaser, in whole or in part at any time and from time to time in the sole
discretion of Intel and Purchaser. The failure by Intel or Purchaser at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
19. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
General
Except as described below, neither Intel nor Purchaser is aware of any
license or regulatory permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely affected
by the acquisition of Shares pursuant to the Offer, or of any approval or other
action by any governmental, administrative or regulatory agency or authority or
public body, domestic or foreign, that would be required for the acquisition or
ownership of Shares pursuant to the Offer (except from the NJDEP under ISRA).
Should any such approval or other action be required, it is presently
contemplated that such approval or action would be sought except as described
below in this Section under "State Takeover Statutes." While, except as
otherwise expressly described herein, Purchaser does not currently intend to
delay acceptance for payment of Shares tendered pursuant to the Offer pending
the outcome of any such matter, there can be no assurance that any such approval
or other action, if needed, would be obtained without substantial conditions or
that adverse consequences might not result to the Company's business or that
certain parts of the Company's business might not have to be disposed of in the
event that such approvals were not obtained or such other actions were not taken
or in order to obtain any such approval or other action, any of which could
cause Intel to decline to accept for payment or pay for any Shares tendered.
Intel's obligation under the Offer to accept for payment and pay for Shares is
subject to the Offer Conditions, including conditions relating to legal matters
discussed in this Section 19.
Antitrust
Under the HSR Act and the rules that have been promulgated thereunder by
the Federal Trade Commission ("FTC"), certain acquisition transactions may not
be consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the FTC and
certain waiting period requirements have been satisfied. The acquisition of
Shares pursuant to the Offer is subject to these requirements.
Intel expects to file a Notification and Report Form with respect to the
Offer under the HSR Act as soon as practicable following commencement of the
Offer. The waiting period under the HSR Act with respect to the Offer will
expire at 11:59 p.m., Washington, D.C. time, on the 15th day after the date such
form is filed, unless early termination of the waiting period is granted. In
addition, the Antitrust Division or the FTC may
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extend such waiting period by requesting additional information or documentary
material from Intel. If such a request is made with respect to the Offer, the
waiting period related to the Offer will expire at 11:59 p.m., Washington, D.C.
time, on the 10th day after substantial compliance by Intel with such request.
With respect to each acquisition, the Antitrust Division or the FTC may issue
only one request for additional information. In practice, complying with a
request for additional information or material can take a significant amount of
time. In addition, if the Antitrust Division or the FTC raises substantive
issues in connection with a proposed transaction, the parties may engage in
negotiations with the relevant governmental agency concerning possible means of
addressing those issues and may agree to delay consummation of the transaction
while such negotiations continue. Expiration or termination of applicable
waiting periods under the HSR Act is a condition to Purchaser's obligation to
accept for payment and pay for Shares tendered pursuant to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed purchase of the Shares
pursuant to the Offer. At any time before or after such purchase, the Antitrust
Division or the FTC could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
transaction or seeking divestiture of the Shares so acquired or divestiture of
substantial assets of Intel or the Company. Litigation seeking similar relief
could be brought by private parties.
Intel does not believe that consummation of the Offer and the other
transactions contemplated by the Merger Agreement will result in the violation
of any applicable antitrust laws. However, there can be no assurance that a
challenge to the Offer and the other transactions contemplated by the Merger
Agreement on antitrust grounds will not be made, or if such a challenge is made,
what the result will be. See Section 18 of this Offer to Purchase for certain
conditions to the purchase of the Shares pursuant to the Offer, including
conditions with respect to litigation and certain governmental actions.
State Takeover Statutes
The Company is incorporated under the laws of the State of New Jersey. In
general, Section 14A:10A-4 of the NJBCA prevents an "interested stockholder"
(generally, a person who owns or has the right to acquire 10% or more of a
corporation's outstanding voting stock, or an affiliate or associate thereof)
from engaging in a "business combination" (defined to include mergers and
certain other transactions) with a New Jersey corporation for a period of five
years following the date such person became an interested stockholder unless
prior to such date the board of directors of the corporation approved the
business combination. Neither Intel nor Purchaser is an interested stockholder
and the Company Board has approved both the Offer and the Merger. Accordingly,
Section 14A:10A-4 is inapplicable to the Offer and the Merger.
A number of states have adopted "takeover" statutes that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal executive
offices or places of business in such states.
In Edgar v. MITE Corporation, the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Act, which,
as a matter of state securities law, made takeovers of corporations meeting
certain requirements more difficult. However, in CTS Corp. v. Dynamics Corp. of
America, the Supreme Court held that a state may, as a matter of corporate law
and, in particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquirer from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided that
such laws were applicable only under certain conditions, in particular, that the
corporation has a substantial number of stockholders in the state and is
incorporated there.
Based on information supplied by the Company, Intel and Purchaser do not
believe that any state takeover statutes (other than Section 14A:10A-4 of the
NJBCA) purport to apply to the Offer or the Merger. Neither Purchaser nor Intel
has currently complied with any other state takeover statute or regulation.
Intel reserves the right to challenge the applicability or validity of any other
state law purportedly applicable to the Offer or the Merger and nothing in this
Offer to Purchase or any action taken in connection with the Offer or the Merger
is intended as a waiver of such right. If it is asserted that any other state
takeover statute is
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applicable to the Offer or the Merger and if an appropriate court does not
determine that it is inapplicable or invalid as applied to the Offer or the
Merger, Intel might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and Intel might be unable to
accept for payment or pay for Shares tendered pursuant to the Offer, or be
delayed in consummating the Offer or the Merger. In such case, Intel may not be
obliged to accept for payment or pay for any shares tendered pursuant to the
Offer.
20. FEES AND EXPENSES
Intel has retained D.F. King & Co., Inc. to act as the Information Agent
and Citibank, N.A. to serve as the Depositary in connection with the Offer. The
Information Agent and the Depositary each will receive reasonable and customary
compensation for their services and be reimbursed for certain reasonable out-of-
pocket expenses. Intel has also agreed to indemnify the Information Agent and
the Depositary against certain liabilities and expenses in connection with the
Offer, including certain liabilities under the federal securities laws.
Intel will not pay any fees or commissions to any broker or dealer or any
other person for soliciting tenders of Shares pursuant to the Offer (other than
to the Information Agent). Brokers, dealers, commercial banks, trust companies
and other nominees will, upon request, be reimbursed by Intel for customary
mailing and handling expenses incurred by them in forwarding offering materials
to their customers.
21. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the securities,
blue sky or other laws of such jurisdiction. Purchaser may, in its discretion,
however, take such action as it may deem necessary to make the Offer in any
jurisdiction and extend the Offer to holders of Shares in any such jurisdiction.
Except for the Depositary's authorization to enter into agreements or
arrangements with the Book-Entry Transfer Facility, no person has been
authorized to give any information or to make any representation on behalf of
Purchaser or Intel not contained herein or in the Letter of Transmittal and, if
given or made, such information or representation must not be relied upon as
having been authorized by Intel and Purchaser. Neither the delivery of this
Offer to Purchase nor any purchase pursuant to the Offer shall, under any
circumstances, create any implication that there has been no change in the
affairs of Purchaser, Intel or the Company since the date as of which
information is furnished or the date of this Offer to Purchase.
Purchaser and Intel have filed with the Commission a Tender Offer Statement
on Schedule 14D-l, together with exhibits, pursuant to Rule 14d-3 under the
Exchange Act, furnishing certain additional information with respect to the
Offer. In addition, the Company has filed with the Commission a Solicitation/
Recommendation Statement on Schedule 14D-9, together with exhibits, pursuant to
Rule 14d-9 under the Exchange Act, setting forth the recommendations of the
Company Board with respect to the Offer and the reasons for such recommendations
and furnishing certain additional related information. Such Schedules and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained from the Commission in the manner set forth in Section 7 of this Offer
to Purchase (except that they will not be available at the regional offices of
the Commission).
INTEL LMH ACQUISITION CORPORATION
June 7, 1999
37
<PAGE> 38
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF INTEL AND PURCHASER
The following table sets forth the name, age, business or residence
address, principal occupation or employment at the present time and during the
last five years, and the name of any corporation or other organization in which
such employment is conducted or was conducted of each executive officer or
director of Intel. Except as otherwise indicated, all of the persons listed
below are citizens of the United States of America. Each occupation set forth
opposite a person's name, unless otherwise indicated, refers to employment with
Intel. Unless otherwise indicated, the principal business address of each
director or executive officer is Intel Corporation, 2200 Mission College
Boulevard, Santa Clara, California 95052.
<TABLE>
<CAPTION>
NAME, AGE, CITIZENSHIP AND OTHER MATERIAL POSITIONS
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT HELD DURING THE PAST FIVE YEARS
-------------------------- -------------------------------- -------------------------------
<S> <C> <C>
Craig R. Barrett, 59 President since 1997; Chief Chief Operating Officer from
Executive Officer since 1998; 1993-1998; Executive Vice
Director -- Intel since 1992 President from 1990-1997;
Director -- Komag, Incorporated
from 1990-1999; Director --
U.S. West, Inc. since 1998
John Browne, 51 Group Chief Executive -- BP Director -- SmithKline Beecham
British Citizenship Amoco p.l.c. (formerly the since 1996; Trustee -- British
BP Amoco p.l.c. British Petroleum Company p.l.c. Museum since 1995; Director --
Britannic House since 1995; Director -- Intel Redland PLC from 1993-1996
1 Finsbury Circus since 1997
London EC2M 7BA England
Winston H. Chen, 57 Chairman -- Paramitas Foundation President, Chief Executive
Paramitas Foundation since 1992; Director -- Intel Officer and
3945 Freedom Circle, since 1993 Chairman -- Solectron
Suite 760 Corporation from 1978-1994;
Santa Clara, CA 95054 Director -- Solectron
Corporation since 1978; Member
of Board of
Trustees -- Stanford University
since 1994; Member of Board of
Trustees -- Santa Clara
University since 1992;
Director -- Edison
International since 1994
Andrew S. Grove, 62 Chairman since 1997; Chief Executive Officer from
Director -- Intel since 1974 1987-1998; President from
1979-1997
D. James Guzy, 63 Chairman -- The Arbor Company Director -- Cirrus Logic, Inc.
The Arbor Company since 1969; Director -- Intel since 1984; Director -- Micro
P.O. Box 128 since 1969 Component Technology, Inc.
Glenbrook, NV 89413 since 1993; Director
-- Novellus Systems, Inc.
since 1990; Director -- Davis
Selected Group of Mutual Funds
since 1980;
Director -- Alliance Capital
Management Technology Fund;
Chairman, President and Chief
Executive Officer -- SRC
Computers Inc. since 1997;
Director -- PLX Technology,
Inc. since 1986
</TABLE>
I-1
<PAGE> 39
<TABLE>
<CAPTION>
NAME, AGE, CITIZENSHIP AND OTHER MATERIAL POSITIONS
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT HELD DURING THE PAST FIVE YEARS
-------------------------- -------------------------------- -------------------------------
<S> <C> <C>
Gordon E. Moore, 70 Chairman Emeritus -- Intel since Chairman from 1979 to 1997;
1997; Director -- Intel since Director -- Gilead Sciences,
1968 Inc. since 1996; Director --
Transamerica Corporation since
1996; Chairman, Board of
Trustees -- California
Institute of Technology since
1994; Director -- Conservation
International since 1990
David S. Pottruck, 50 President and Co-Chief Executive Director -- McKesson
Officer -- The Charles Schwab Corporation;
Corporation; Director -- Intel Director -- Preview Travel,
since 1998 Inc.; Director -- Bay Area
Sports Organizing Committee;
Director -- U.S. Ski and
SnowBoard Team Foundation;
Trustee -- University of
Pennsylvania
Jane E. Shaw, 60 Chairman and Chief Executive Founder -- The Stable Network
1310 Orleans Drive Officer -- AeroGen, Inc. since since 1995; President and Chief
Sunnyvale, CA 94089 1998; Director -- Intel since Operating Officer -- ALZA
1993 Corporation from 1987 to 1994;
Chairman of the Board --
IntraBiotics Pharmaceuticals
since 1995; Director -- Aviron
since 1995;
Director -- McKesson
Corporation since 1992;
Director -- Boise Cascade
Corporation since 1994;
Director -- Point Biomedical
Corporation since 1996
Leslie L. Vadasz, 62 Senior Vice President, Corporate N/A
Business Development since 1991;
Director -- Intel since 1988
David B. Yoffie, 44 Professor of Business Director -- Bion, Inc. since
Harvard Business School Administration -- Harvard 1994
Morgan Hall 215 Business School since 1990 (Max
Boston, MA 02163 and Doris Starr Professor of
International Business
Administration since 1993);
Director -- Intel since 1989
Charles E. Young, 67 Chancellor Chancellor -- University of
296 W. Stafford Road, Emeritus -- University of California, Los Angeles from
Thousand Oaks, CA 91361 California, Los Angeles since 1968 to 1997; Chairman of the
1997; Director -- Intel since Board of Governors
1974 Foundation -- International
Exchange of Scientific and
Cultural Information by
Telecommunications since 1987;
Trustee -- Nicholas-Applegate
Mutual Funds from 1991 to 1997;
Director -- Nicholas-Applegate
Fund, Inc. from 1993-1997;
Director -- Canada/United
States Fulbright Commission
since 1996; Director
-- University Net since 1998
</TABLE>
I-2
<PAGE> 40
<TABLE>
<CAPTION>
NAME, AGE, CITIZENSHIP AND OTHER MATERIAL POSITIONS
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT HELD DURING THE PAST FIVE YEARS
-------------------------- -------------------------------- -------------------------------
<S> <C> <C>
Arthur Rock, 72 Principal -- Arthur Rock & Director -- AirTouch
Arthur Rock & Company Company since 1969; Director -- Communications, Inc. since
One Maritime Plaza, Intel 1968-1999; Director 1994; Director -- Echelon
Suite 1220 Emeritus -- Intel since 1999 Corporation since 1989;
San Francisco, CA 94111 Trustee -- California Institute
of Technology since 1988;
Member -- Board of Governors of
NASD since 1998
Paul S. Otellini, 48 Executive Vice President; Executive Vice President from
General Manager, Intel 1996 to 1998; Vice President
Architecture Business Group from 1992 to 1996
since 1998
Gerhard H. Parker, 55 Executive Vice President, Executive Vice President and
General Manager, New Business General Manager, Technology and
Group since 1998 Manufacturing Group from 1996
to 1998; Senior Vice President
and General Manager, Technology
and Manufacturing Group from
1992-1996
Sean M. Maloney, 42 Senior Vice President, Director, Vice President, Sales and
Sales and Marketing Group since General Manager, Asia-Pacific
1998 Operations from 1995-1998;
Technical Assistant to the
Chairman and Chief Executive
Officer from 1992-1995
Albert Y.C. Yu, 58 Senior Vice President and Director -- Power One since
General Manager, Microprocessor 1997
Products Group since 1993
Andy D. Bryant, 49 Senior Vice President since Vice President, Intel Products
1999; Chief Financial Officer Group from 1990-1994
since 1994
F. Thomas Dunlap, Jr., 48 Vice President, General Counsel N/A
and Secretary since 1987
Arvind Sodhani, 45 Vice President and Treasurer N/A
since 1988
Michael R. Splinter, 48 Senior Vice President from 1999 N/A
to current; General Manager,
Technology and Manufacturing
Group since 1998
Max Palevsky, 74 Self-employed Director from 1968-1997;
Director Emeritus since 1997
Richard Hodgson, 82 Self-employed Director from 1974-1993;
Director Emeritus from
1993-1999
Sanford Kaplan, 83 Self-employed Director from 1974-1993;
Director Emeritus from
1993-1999
</TABLE>
I-3
<PAGE> 41
The following table sets forth the name, age business or residence address,
principal occupation or employment at the present time and during the last five
years, and the name of any corporation or other organization in which such
employment is conducted or was conducted of each executive officer or director
of Purchaser. Except as otherwise indicated, all of the person listed below are
citizens of the United States of America. Each occupation set forth opposite a
person's name, unless otherwise indicated, refers to employment with Intel.
Unless otherwise indicated, the principal business address of each director or
executive officer is Intel Corporation, 2200 Mission College Boulevard, Santa
Clara, California 95052.
<TABLE>
<CAPTION>
NAME, AGE, CITIZENSHIP AND MATERIAL POSITIONS HELD
CURRENT BUSINESS ADDRESS PRESENT OCCUPATION OR EMPLOYMENT DURING THE PAST FIVE YEARS
- -------------------------- -------------------------------- --------------------------
<S> <C> <C>
Cary I. Klafter, 50 Director of Corporate Affairs Partner, Morrison & Foerster from
since 1996; Vice President, prior to 1994 to 1996.
Secretary and Director -- Intel
LMH Acquisition Corporation since
1999
Suzan A. Miller, 35 Senior Counsel since 1999; Senior N/A
Attorney from 1991-1999;
President and Director -- Intel
LMH Acquisition Corporation since
1999
Arvind Sodhani, 45 Vice President and Treasurer N/A
since 1988; Vice President and
Treasurer -- Intel LMH
Acquisition Corporation since
1999
</TABLE>
I-4
<PAGE> 42
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for Shares should be sent or
delivered by each shareholder of the Company or his broker, dealer, commercial
bank or trust company to the Depositary at one of its addresses set forth below:
The Depositary for the Offer is:
CITIBANK, N.A.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
Citibank, N.A.
Citibank, N.A. Corporate Trust Window
P.O. Box 685 Citibank, N.A. 111 Wall Street, 5th
Old Chelsea Station 915 Broadway, 5th Floor Floor
New York, New York 10113 New York, New York 10010 New York, New York 10043
</TABLE>
<TABLE>
<S> <C>
By Facsimile Transmission: Confirm Receipt of Facsimile
(For Eligible Institutions Only) by Telephone Only:
(212) 505-2248 (800) 270-0808
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth below. Requests for
additional copies of this Offer to Purchase and the Letter of Transmittal may be
directed to the Information Agent or the Depositary. Shareholders may also
contact their brokers, dealers, commercial banks or trust companies for
assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
Bankers and Brokers Call Collect: (212) 425-1685
All Others Call Toll-Free: (800) 758-5378
<PAGE> 1
------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 31, 1999
AMONG
DIALOGIC CORPORATION,
INTEL CORPORATION
AND
INTEL LMH ACQUISITION CORPORATION
------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 THE OFFER............................................................. 1
SECTION 1.1. The Offer................................................... 1
SECTION 1.2. Company Actions............................................. 2
SECTION 1.3. Boards of Directors and Committees; Section 14(f) of
Exchange Act................................................ 4
ARTICLE 2 THE MERGER............................................................ 4
SECTION 2.1. The Merger.................................................. 4
SECTION 2.2. Effective Time.............................................. 4
SECTION 2.3. Closing of the Merger....................................... 5
SECTION 2.4. Effects of the Merger....................................... 5
SECTION 2.5. Certificate of Incorporation and Bylaws..................... 5
SECTION 2.6. Directors................................................... 5
SECTION 2.7. Officers.................................................... 5
SECTION 2.8. Conversion of Shares........................................ 5
SECTION 2.9. Dissenters' Rights.......................................... 5
SECTION 2.10. Exchange of Certificates.................................... 5
SECTION 2.11. Assumed Stock Options....................................... 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................... 7
SECTION 3.1. Organization and Qualification; Subsidiaries; Investments... 7
SECTION 3.2. Capitalization of the Company and its Subsidiaries.......... 8
SECTION 3.3. Authority Relative to this Agreement; Recommendation........ 9
SECTION 3.4. SEC Reports; Financial Statements........................... 9
SECTION 3.5. Information Supplied........................................ 10
SECTION 3.6. Consents and Approvals; No Violations....................... 10
SECTION 3.7. No Default.................................................. 10
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes.............. 11
SECTION 3.9. Litigation.................................................. 11
SECTION 3.10. Compliance with Applicable Law.............................. 12
SECTION 3.11. Employee Benefits........................................... 12
SECTION 3.12. Labor and Employment Matters................................ 15
SECTION 3.13. Environmental Laws and Regulations.......................... 15
SECTION 3.14. Taxes....................................................... 16
SECTION 3.15. Intellectual Property....................................... 17
SECTION 3.16. Insurance................................................... 21
SECTION 3.17. Certain Business Practices.................................. 21
SECTION 3.18. Product Warranties.......................................... 21
SECTION 3.19. Suppliers and Customers..................................... 22
SECTION 3.20. Vote Required............................................... 22
SECTION 3.21. Opinion of Financial Adviser................................ 22
SECTION 3.22. Brokers..................................................... 22
SECTION 3.23. Takeover Statutes........................................... 22
SECTION 3.24. Representations Complete.................................... 22
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION.............. 22
SECTION 4.1. Organization................................................ 22
SECTION 4.2. Authority Relative to this Agreement........................ 23
SECTION 4.3. Information Supplied........................................ 23
SECTION 4.4. Consents and Approvals; No Violations....................... 23
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 4.5. Litigation.................................................. 23
SECTION 4.6. Brokers..................................................... 24
SECTION 4.7. Financing................................................... 24
SECTION 4.8. Ownership of the Company.................................... 24
ARTICLE 5 COVENANTS............................................................. 24
SECTION 5.1. Conduct of Business of the Company.......................... 24
SECTION 5.2. No Solicitation or Negotiation.............................. 26
SECTION 5.3. Meeting of Stockholders..................................... 28
SECTION 5.4. Access to Information....................................... 28
SECTION 5.5. Certain Filings; Reasonable Efforts......................... 29
SECTION 5.6. Public Announcements........................................ 29
SECTION 5.7. Indemnification and Directors' and Officers' Insurance...... 30
SECTION 5.8. Notification of Certain Matters............................. 31
SECTION 5.9. Additions to and Modification of Company Disclosure
Schedule.................................................... 31
SECTION 5.10. Certain Employee Matter..................................... 31
SECTION 5.11. Company..................................................... 31
SECTION 5.12. Takeover Statutes........................................... 31
SECTION 5.13. Company Stock Options....................................... 31
SECTION 5.14. ISRA........................................................ 32
SECTION 5.15. Certain Rights of Warrant Holder............................ 32
ARTICLE 6 CONDITIONS TO CONSUMMATION OF THE MERGER.............................. 33
SECTION 6.1. Conditions to Each Party's Obligations to Effect the
Merger...................................................... 33
SECTION 6.2. Conditions to the Obligations of the Company................ 33
SECTION 6.3. Conditions to the Obligations of Parent and Acquisition..... 33
ARTICLE 7 TERMINATION; AMENDMENT; WAIVER........................................ 34
SECTION 7.1. Termination................................................. 34
SECTION 7.2. Effect of Termination....................................... 35
SECTION 7.3. Fees and Expenses........................................... 35
SECTION 7.4. Amendment................................................... 37
SECTION 7.5. Extension; Waiver........................................... 37
ARTICLE 8 MISCELLANEOUS.................................................... 38
SECTION 8.1. Nonsurvival of Representations and Warranties............... 38
SECTION 8.2. Entire Agreement; Assignment................................ 38
SECTION 8.3. Validity.................................................... 38
SECTION 8.4. Notices..................................................... 38
SECTION 8.5. Governing Law and Venue; Waiver of Jury Trial............... 39
SECTION 8.6. Descriptive Headings........................................ 40
SECTION 8.7. Parties in Interest......................................... 40
SECTION 8.8. Certain Definitions......................................... 40
SECTION 8.9. Personal Liability.......................................... 40
SECTION 8.10. Specific Performance........................................ 41
SECTION 8.11. Counterparts................................................ 41
ANNEX A CONDITIONS OF THE OFFER
</TABLE>
ii
<PAGE> 4
TABLE OF EXHIBITS
<TABLE>
<S> <C>
Exhibit A................... Form of Certificate of Merger
</TABLE>
TABLE OF CONTENTS
TO
COMPANY DISCLOSURE SCHEDULE
[THE COMPANY AGREES TO FURNISH SUPPLEMENTALLY TO THE
SECURITIES AND EXCHANGE COMMISSION COPIES OF ANY OF THE
FOLLOWING OMITTED SCHEDULES UPON REQUEST OF THE COMMISSION]
<TABLE>
<S> <C>
SECTION 1.3(a)............... Exceptions Relating to Subsidiary Boards
SECTION 3.1(a)............... Subsidiaries
SECTION 3.1(c)............... Equity Investments
SECTION 3.2(a)............... Company Securities
SECTION 3.2(b)............... Certain Capitalization and Other Matters
SECTION 3.4.................. Company SEC Reports
SECTION 3.6.................. Consents and Approvals
SECTION 3.7.................. Defaults
SECTION 3.8.................. Undisclosed Liabilities; Absence of Changes
SECTION 3.9.................. Litigation
SECTION 3.11(a).............. Employee Plans
SECTION 3.11(b).............. Employment and Related Agreements
SECTION 3.11(c).............. Employee Benefits Affected by this Transaction
SECTION 3.11(d).............. Employee Benefits to Former Employees
SECTION 3.11(e).............. Employee Matters
SECTION 3.11(h).............. Stock Options
SECTION 3.11(j).............. No Events Under Compensation and Benefit Plans
SECTION 3.11(k).............. Foreign Plans
SECTION 3.11(l).............. Amendments and Actions under ERISA and other Applicable Law
SECTION 3.11(r).............. Retroactive Premiums or Payments
SCHEDULE 3.12................ Employment Matters
SECTION 3.12(b).............. Labor Strikes, Disputes, Slow Downs and Stoppages
SCHEDULE 3.12(d)............. Names and Compensation of Officers
SECTION 3.12(f).............. Withholdings
SECTION 3.14(b).............. Delinquent or Inaccurate Tax Returns
SECTION 3.14(c).............. All Taxes Paid
SECTION 3.14(d).............. Tax Claims
SECTION 3.14(e).............. Excess Parachute Payments
SECTION 3.14(f).............. Tax Sharing Agreements
SECTION 3.14(g).............. Limitations on Use of NOLs
SECTION 3.14(h).............. Section 481 Adjustments
SECTION 3.15(a).............. Intellectual Property
SECTION 3.15(b)(iii)......... Trademarks
SECTION 3.15(e)(i)........... Inbound License Agreements
SECTION 3.15(e)(ii).......... Outbound License Agreements
SECTION 3.15(h).............. No Infringement by the Company
SECTION 3.15(i).............. Pending and Threatened Infringement Claims
SECTION 3.15(j).............. Infringement Matters
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
SECTION 3.15(k).............. Change in Control
SECTION 3.15(l).............. Non-Company Intellectual Property Rights
SECTION 3.15(m).............. Existing and Currently Manufactured Software
SECTION 3.15(o).............. Year 2000 Compliance
SECTION 3.15(p).............. Foundry Relationships
SECTION 3.16................. Insurance
SECTION 3.18................. Product Warranties
SECTION 3.19................. Suppliers
SECTION 5.1.................. Conduct of Business
SECTION 5.4(a)............... Access to Information
SECTION 6.3(e)............... Third Party Consents
</TABLE>
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
CROSS REFERENCE
TERM IN AGREEMENT PAGE
---- --------------- ----
<S> <C> <C>
Acquisition................................................. Preamble.............. 1
affiliate................................................... Section 8.8(a)........ 57
Agreement................................................... Preamble.............. 1
Applicable Law.............................................. Section 8.8(b)........ 57
Assumed Option Plan......................................... Section 2.11.......... 9
business day................................................ Section 8.8(c)........ 57
Business System............................................. Section 3.15(o)(i).... 29
capital stock............................................... Section 8.8(d)........ 57
Certificate of Merger....................................... Section 2.2........... 6
Certificates................................................ Section 2.10(b)....... 8
Closing Date................................................ Section 2.3........... 7
Closing..................................................... Section 2.3........... 7
Commonly Controlled Entity.................................. Section 3.11(a)....... 17
Company Board............................................... Section 1.1(b)........ 2
Company Disclosure Schedule................................. Article 3............. 10
Company Permits............................................. Section 3.10.......... 17
Company Plans............................................... Section 8.8(e)........ 57
Company..................................................... Preamble.............. 1
Company SEC Reports......................................... Section 3.4(a)........ 13
Company Securities.......................................... Section 3.2(a)........ 11
Company Stock Option........................................ Section 3.2........... 11
Compensation and Benefit Plans.............................. Section 3.11(a)....... 17
Copyrights.................................................. Section 3.15(a)....... 25
Department of Treasury.............................................................. 6
Effective Time.............................................. Section 2.2........... 7
Environmental Laws.......................................... Section 3.13(a)....... 22
ERISA....................................................... Section 3.11(a)....... 17
ESPP........................................................ Section 2.11.......... 9
Exchange Agent.............................................. Section 2.10(a)....... 8
Exchange Fund............................................... Section 2.10(a)....... 8
Exchange Ratio.............................................. Section 2.11.......... 9
Final Date.................................................. Section 7.1(b)........ 49
Foreign Plans............................................... Section 3.11(l)....... 19
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
CROSS REFERENCE
TERM IN AGREEMENT PAGE
---- --------------- ----
<S> <C> <C>
Governmental Entity......................................... Section 3.6........... 14
Hazardous Material.......................................... Section 3.13(a)....... 22
HSR Act..................................................... Section 3.6........... 14
Inbound License Agreements.................................. Section 3.15(e)....... 26
include..................................................... Section 8.8(g)........ 58
Indemnified Liabilities..................................... Section 5.7(a)........ 43
Indemnified Persons......................................... Section 5.7(a)........ 43
Insurance Policies.......................................... Section 3.16.......... 30
Insured Parties............................................. Section 5.7(c)........ 44
Intellectual Property....................................... Section 3.15(a)....... 25
ISRA........................................................ Section 3.6........... 14
knowledge or known.......................................... Section 8.8(f)........ 57
Lien........................................................ Section 3.2(b)........ 12
Material Adverse Effect on Parent........................... Section 4.1(b)........ 33
Material Adverse Effect on the Company...................... Section 3.1(b)........ 10
Meeting..................................................... Section 5.3(c)........ 40
Merger Consideration........................................ Section 2.8(a)........ 7
Merger...................................................... Section 2.1........... 6
NJDEP....................................................... Section 5.14.......... 46
Notice of Superior Proposal................................. Section 5.2(b)........ 39
Other Interests............................................. Section 3.1(c)........ 11
Outbound License Agreements................................. Section 3.15(e)....... 27
Parent Common Stock......................................... Section 2.11.......... 9
Parent...................................................... Preamble.............. 1
Patents..................................................... Section 3.15(a)....... 25
Pension Plans............................................... Section 3.11(a)....... 17
person...................................................... Section 8.8(h)........ 58
Proxy Statement............................................. Section 3.5........... 14
SEC......................................................... Section 3.4(a)........ 13
Securities Act.............................................. Section 3.4(a)........ 13
Software.................................................... Section 3.15(l)....... 28
Stock Option Agreement...................................... Section 8.8(i)........ 58
subsidiary or subsidiaries.................................. Section 8.8(j)........ 58
Superior Proposal........................................... Section 5.2(c)........ 39
Supply Contracts............................................ Section 3.15(p)....... 30
Surviving Corporation....................................... Section 2.1........... 6
Tax or Taxes................................................ Section 3.14(a)(i).... 23
Tax Return.................................................. Section 3.14(a)(ii)... 23
Third Party Acquisition..................................... Section 5.2(c)........ 39
Third Party................................................. Section 5.2(c)........ 39
Trade Secrets............................................... Section 3.15(a)....... 25
Trademarks.................................................. Section 3.15(a)....... 25
Year 2000 Capable........................................... Section 3.15(o)(i).... 29
</TABLE>
v
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 31,
1999, is by and among Dialogic Corporation, a New Jersey corporation (the
"Company"), Intel Corporation, a Delaware corporation ("Parent"), and Intel LMH
Acquisition Corporation, a New Jersey corporation and a wholly owned subsidiary
of Parent ("Acquisition"). Initially capitalized and certain other terms not
otherwise defined herein shall have the meanings ascribed to such terms in
Section 8.8 of this Agreement.
WHEREAS, the Boards of Directors of the Company, Parent and Acquisition
have each (i) determined that the Merger (as defined below) is advisable and
fair and in the best interests of their respective stockholders and (ii)
approved the Merger upon the terms and subject to the conditions set forth in
this Agreement; and
WHEREAS, in furtherance thereof, it is proposed that Acquisition shall,
within five (5) business days after the public announcement hereof, commence a
tender offer (the "Offer") to acquire all of the outstanding shares (the
"Shares") of common stock, no par value, of the Company (the "Company Common
Stock"), at a price of Forty-Four Dollars ($44.00) per Share, net to the seller
in cash, less any required withholding taxes (such amount, or any greater amount
per share paid pursuant to the Offer, being hereinafter referred to as the
"Offer Price"), in accordance with the terms and subject to the conditions
provided herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Acquisition hereby
agree as follows:
ARTICLE 1
THE OFFER
SECTION 1.1. The Offer.
(a) Provided that this Agreement shall not have been terminated and
subject to the terms hereof, as promptly as practicable, but in no event later
than five (5) business days after the public announcement of the execution
hereof by the parties, Acquisition shall (and Parent shall cause Acquisition to)
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), the Offer for any and all of the Shares,
at the Offer Price. The obligation of Acquisition to accept for payment and to
pay for any Shares tendered (and the obligation of Parent to cause Acquisition
to accept for payment and to pay for any Shares tendered) shall be subject only
to (i) the condition that at least a majority of Shares on a fully-diluted basis
(including for purposes of such calculation all Shares issuable upon exercise of
all vested Company Stock Options (as defined in Section 3.2(a)) and unvested
Company Stock Options that vest prior to the Final Date, but excluding any
Shares held by the Company or any of its subsidiaries) be validly tendered (the
"Minimum Condition"), and (ii) the other conditions set forth in Annex A.
Acquisition expressly reserves the right to increase the Offer Price or to make
any other changes in the terms and conditions of the Offer; provided, however,
that unless previously approved by the Company in writing, no change may be made
that (i) decreases the Offer Price, (ii) changes the form of consideration to be
paid in the Offer, (iii) reduces the maximum number of Shares to be purchased in
the Offer, (iv) imposes conditions to the Offer in addition to those set forth
in Annex A, (v) amends the conditions set forth in Annex A to broaden the scope
of such conditions, (vi) extends the Offer except as provided in Section 1.1(b),
or (vii) amends the Minimum Condition. It is agreed that the conditions set
forth in Annex A are for the sole benefit of Parent and Acquisition and may be
waived by Parent and Acquisition, in whole or in part at any time and from time
to time, in their sole discretion, other than the Minimum Condition, as to which
prior written Company approval is required. The failure by Parent and
Acquisition at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, and each such right shall be deemed an
ongoing right that may be asserted at any time and from time to time. The
Company agrees that no Shares held by the Company or any of its subsidiaries
will be tendered in the Offer.
<PAGE> 8
(b) Subject to the terms and conditions thereof, the Offer shall expire
at midnight, New York City time, on the date that is twenty (20) business days
after the date the Offer is commenced; provided, however, that without the
consent of the Company's Board of Directors (the "Company Board"), Acquisition
may (i) from time to time extend the Offer, if at the scheduled expiration date
of the Offer any of the conditions to the Offer shall not have been satisfied or
waived, until such time as such conditions are satisfied or waived; (ii) extend
the Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer; or (iii) extend the Offer for any reason on one
or more occasions for an aggregate period of not more than twenty (20) business
days beyond the latest expiration date that would otherwise be permitted under
clause (i) or (ii) of this sentence if on such expiration date there shall not
have been tendered at least 90% of the outstanding Shares. Parent and
Acquisition agree that, if any one or more of the conditions to the Offer set
forth on Annex A are not satisfied and none of the events set forth in
paragraphs (a) through (f) of Annex A that would permit Acquisition not to
accept tendered Shares for payment has occurred and is continuing at the time of
any scheduled expiration date of the Offer, then, provided, that such conditions
are reasonably capable of being satisfied and no such event has occurred on or
prior to (and is continuing on) September 15, 1999, Acquisition shall extend the
Offer from time to time unless any such condition is no longer reasonably
capable of being satisfied or any such event has occurred; provided, however,
that in no event shall Acquisition be required to extend the Offer beyond
September 15, 1999. Subject to the terms and conditions of the Offer and this
Agreement, Acquisition shall (and Parent shall cause Acquisition to) accept for
payment, and pay for, all Shares validly tendered and not withdrawn pursuant to
the Offer, as promptly as practicable after the expiration of the Offer.
(c) As soon as practicable on the date the Offer is commenced, Parent
and Acquisition shall file with the SEC a Tender Offer Statement on Schedule
14D-1 (together with all amendments and supplements thereto, and including all
exhibits thereto, the "Schedule 14D-1") with respect to the Offer. The Schedule
14D-1 shall contain as an exhibit or incorporate by reference the Offer to
Purchase (or portions thereof) and forms of the related letter of transmittal
and summary advertisement. Parent and Acquisition agree that they shall cause
the Schedule 14D-1, the Offer to Purchase and all amendments or supplements
thereto (which together constitute the "Offer Documents") to comply in all
material respects with the Exchange Act and the rules and regulations thereunder
and other Applicable Laws. Parent and Acquisition further agree that the Offer
Documents, on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation or warranty is made by
Parent or Acquisition with respect to information supplied by the Company or any
of its stockholders in writing specifically for inclusion or incorporation by
reference in the Offer Documents. The Company agrees that the information
provided by the Company in writing specifically for inclusion or incorporation
by reference in the Offer Documents shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of Parent,
Acquisition and the Company agrees promptly to correct any information provided
by it for use in the Offer Documents if and to the extent that such information
shall have become false or misleading in any material respect, and Parent and
Acquisition further agree to take all steps necessary to cause the Schedule
14D-1 as so corrected to be filed with the SEC and the other Offer Documents as
so corrected to be disseminated to the Company's stockholders, in each case as
and to the extent required by applicable federal securities laws. The Company
and its counsel shall be given reasonable opportunity to review and comment on
the Offer Documents prior to the filing thereof with the SEC. Parent and
Acquisition agree to provide in writing the Company and its counsel with any
comments Parent, Acquisition or their counsel may receive from the SEC or its
staff with respect to the Offer Documents promptly after receipt of such
comments.
SECTION 1.2. Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents that the Company Board, at a meeting duly called and held, has,
subject to the terms and conditions set forth herein, (i) after evaluating the
Merger, determined that this Agreement and the transactions contemplated hereby,
including
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<PAGE> 9
the Offer and the Merger, taken together, are at a price and on terms that are
adequate and are otherwise in the best interests of the Company and its
stockholders; (ii) approved this Agreement and the transactions contemplated
hereby, including the Offer and the Merger, in all respects and such approval
constitutes approval of the Offer, this Agreement and the Merger for purposes of
(x) Sections 14A:10A-4 and 14A:10A-5 of the New Jersey Business Corporation Act
(the "NJBCA") and (y) similar provisions of any other New Jersey statutes that
might be deemed applicable to the transactions contemplated hereby; and (iii)
resolved to recommend that the stockholders of the Company accept the Offer,
tender their Shares thereunder to Acquisition and approve and adopt this
Agreement and the Merger. The Company consents to the inclusion of such
recommendation and approval in the Offer Documents. The Company also represents
that the Company Board has received the opinion of Hambrecht & Quist LLC,
financial advisor to the Company Board (the "Financial Advisor"), that, as of
May 31, 1999, the consideration to be received pursuant to this Agreement is
fair to the stockholders of the Company from a financial point of view (the
"Fairness Opinion"). The Company has been authorized by the Financial Advisor to
permit, subject to the prior review and consent by the Financial Advisor (such
consent not to be unreasonably withheld), the inclusion of the Fairness Opinion
(or a reference thereto) in the Offer Documents, the Schedule 14D-9 and the
Proxy Statement.
(b) The Company shall file with the SEC, concurrently with the filing of
the Schedule 14D-1, a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto, and including all
exhibits thereto, the "Schedule 14D-9") containing the recommendations described
in Section 1.2(a) and shall mail the Schedule 14D-9 to the stockholders of the
Company promptly after the commencement of the Offer. The Company agrees that it
shall cause the Schedule 14D-9 to comply in all material respects with the
Exchange Act and the rules and regulations thereunder and other Applicable Laws.
The Company further agrees that the Schedule 14D-9, on the date first published,
sent or given to the Company's stockholders, shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation or warranty is made by the Company with respect to information
supplied by Parent or Acquisition in writing specifically for inclusion or
incorporation by reference in the Schedule 14D-9. Parent and Acquisition agree
that the information provided by them specifically in writing for inclusion or
incorporation by reference in the Schedule 14D-9 shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Each of the
Company, Parent and Acquisition agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 or the Offer Documents if and to
the extent that such information shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and be
disseminated to the Company's stockholders, in each case as and to the extent
required by applicable federal securities laws. Parent and its counsel shall be
given reasonable opportunity to review and comment on the Schedule 14D-9 prior
to the filing thereof with the SEC. The Company agrees to provide in writing to
Parent and its counsel any comments the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt
of such comments.
(c) In connection with the Offer, the Company shall, or shall cause its
transfer agent, promptly following a request by Parent, to furnish Parent with
such information, including updated lists of the stockholders of the Company,
mailing labels and updated lists of security positions, and such assistance as
Parent or its agents may reasonably request in communicating the Offer to the
record and beneficial holders of Shares. Subject to the requirements of
Applicable Law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Parent and Acquisition and their agents shall hold in confidence the information
contained in any such labels, listings and files, will use such information only
in connection with the Offer and the Merger and, if this Agreement shall be
terminated, will deliver, and will use their reasonable efforts to cause their
agents to deliver, to the Company all copies and any extracts or summaries from
such information then in their possession or control.
(d) Solely in connection with the tender and purchase of Shares pursuant
to the Offer and the consummation of the Merger, the Company hereby waives any
and all rights of first refusal it may have with
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<PAGE> 10
respect to Shares owned by, or issuable to, any person, other than rights to
repurchase unvested shares, if any, that may be held by persons following
exercise of employee stock options.
SECTION 1.3. Boards of Directors and Committees; Section 14(f) of Exchange
Act.
(a) Promptly upon the purchase by Acquisition of Shares pursuant to the
Offer and from time to time thereafter, if the Minimum Condition has been met,
and subject to the second to last sentence of this Section 1.3(a), Parent shall
be entitled to designate up to such number of directors, rounded up to the next
whole number, on the Company Board as will give Parent representation on the
Company Board equal to the product of the number of directors on the Company
Board (giving effect to any increase in the number of directors pursuant to this
Section 1.3) and the percentage that such number of Shares so purchased bears to
the total number of outstanding Shares on a fully-diluted basis, and the Company
shall use its best efforts to, upon request by Parent, promptly, at the
Company's election, either increase the size of the Company Board or secure the
resignation of such number of directors as is necessary to enable Parent's
designees to be elected to the Company Board and to cause Parent's designees to
be so elected. At such times, and subject to the second to last sentence of this
Section 1.3(a), the Company shall use its best efforts to cause the individuals
designated by Parent to constitute the same percentage as is on the Company
Board of (i) each committee of the Company Board (other than any committee of
the Company Board established to take action under this Agreement), (ii) each
Board of Directors of each subsidiary of the Company (subject to Applicable Law
and except to the extent described in Section 1.3(a) of the Company Disclosure
Schedule) and (iii) each committee of each such Board of Directors.
Notwithstanding the foregoing, the Company shall use its best efforts to ensure
that three of the members of the Company Board as of the date hereof (the
"Continuing Directors") shall remain members of such Board until the Effective
Time. If a Continuing Director resigns from the Company Board, Parent,
Acquisition and the Company shall permit the remaining Continuing Director or
Directors to appoint the resigning Director's successor who shall be deemed to
be a Continuing Director.
(b) The Company's obligation to appoint designees to the Company Board
shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Company shall promptly take all action required pursuant to such
Section and Rule in order to fulfill its obligations under this Section 1.3 and
shall include in the Schedule 14D-9 such information with respect to the Company
and its officers and directors as is required under such Section and Rule in
order to fulfill its obligations under this Section 1.3. Parent shall supply to
the Company in writing and be solely responsible for any information with
respect to itself and its nominees, officers, directors and affiliates required
by such Section and Rule.
(c) Following the election or appointment of Parent's designees to the
Company Board pursuant to this Section 1.3 and prior to the Effective Time, if
there shall be any Continuing Directors, any amendment of this Agreement, any
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or Acquisition or any waiver of any of the Company's rights hereunder or any
other determination with respect to any action to be taken or not to be taken by
the Company relating to this Agreement, will require the concurrence of a
majority of such Continuing Directors.
ARTICLE 2
THE MERGER
SECTION 2.1. The Merger. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and in accordance with the NJBCA,
Acquisition 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 Acquisition
shall cease. Parent, as the sole stockholder of Acquisition, hereby approves the
Merger and this Agreement.
SECTION 2.2. Effective Time. Subject to the terms and conditions set forth
in this Agreement, on the Closing Date, (a) a Certificate of Merger
substantially in the form of Exhibit A (the "Certificate of Merger") shall be
duly executed and acknowledged by Acquisition and the Company and thereafter
delivered for filing
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<PAGE> 11
to the Department of Treasury, Division of Commercial Recording of the State of
New Jersey (the "Department of Treasury") pursuant to Section 14A:10-4.1 or 5.1
of the NJBCA; and (b) the parties shall make such other filings with any
government office of the State of New Jersey as shall be necessary to effect the
Merger. The Merger shall become effective at such time as a properly executed
copy of the Certificate of Merger is duly filed with the Department of Treasury
in accordance with Section 14A:10-4.1 or 5.1 of the NJBCA, or such later time as
Parent and the Company may agree upon and as may be set forth in the Certificate
of Merger (the time the Merger becomes effective being referred to herein as the
"Effective Time").
SECTION 2.3. Closing of the Merger. The closing of the Merger (the
"Closing") will take place at a time and on a date (the "Closing Date") to be
specified by the parties, which shall be no later than the second business day
after satisfaction (or waiver) of the latest to occur of the conditions set
forth in Article 6, at the offices of Gibson, Dunn & Crutcher LLP, One
Montgomery Street, San Francisco, California 94104, unless another time, date or
place is agreed to in writing by the parties hereto.
SECTION 2.4. Effects of the Merger. The Merger shall have the effects set
forth in the NJBCA. Without limiting the generality of the foregoing and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of the Company and Acquisition shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Acquisition shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 2.5. Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of Acquisition in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until amended in
accordance with Applicable Law. The bylaws of Acquisition in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with Applicable Law.
SECTION 2.6. Directors. The directors of Acquisition at the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and bylaws of the Surviving
Corporation until such director's successor is duly elected or appointed and
qualified.
SECTION 2.7. Officers. The officers of Acquisition at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
SECTION 2.8. Conversion of Shares.
(a) At the Effective Time, each Share issued and outstanding immediately
prior to the Effective Time (other than (i) Shares held in the Company's
treasury or by any of the Company's subsidiaries and (ii) Shares held by Parent,
Acquisition or any other subsidiary of Parent) shall, by virtue of the Merger
and without any action on the part of Acquisition, the Company or the holder
thereof, be converted into and shall become the right to receive an amount in
cash equal to the Offer Price, without interest (the "Merger Consideration").
(b) At the Effective Time, each outstanding share of the common stock of
Acquisition shall be converted into one share of common stock of the Surviving
Corporation.
(c) At the Effective Time, each Share held in the treasury of the
Company and each Share held by Parent, Acquisition or any subsidiary of Parent,
Acquisition or the Company immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of Acquisition, the
Company or the holder thereof, be canceled, retired and cease to exist, and no
Merger Consideration shall be delivered with respect thereto.
SECTION 2.9. Dissenters' Rights. In accordance with Section 14A:11-1 of the
NJBCA, the holders of the Shares shall not be entitled to dissenters' or
appraisal rights.
SECTION 2.10. Exchange of Certificates.
(a) From time to time following the Effective Time, Parent shall deliver
to its transfer agent, or a depository or trust institution of recognized
standing selected by Parent and Acquisition and reasonably
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satisfactory to the Company (the "Exchange Agent"), for the benefit of the
holders of Shares for exchange in accordance with this Article 2, an amount of
cash equal to the aggregate Merger Consideration then payable pursuant to
Section 2.8 (such amount of cash is hereinafter referred to as the "Exchange
Fund"), in exchange for outstanding Shares.
(b) Promptly after the Effective Time, the Exchange Agent shall mail to
each holder of record of a certificate or certificates that immediately prior to
the Effective Time represented outstanding Shares (the "Certificates") and whose
shares were converted into the right to receive Merger Consideration pursuant to
Section 2.8: (i) a letter of transmittal (which shall specify that delivery
shall be effected and risk of loss and title to the Certificates shall pass only
upon delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Parent and the Company may reasonably
specify) and (ii) instructions for use in effecting surrender of the
Certificates in exchange for Merger Consideration; provided, however, that such
letter of transmittal shall be substantially in the form and substance of a
letter of transmittal and instructions approved by the Company at or before the
Closing, such approval not to be unreasonably withheld. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor a check representing the Merger Consideration, and
the Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, a check representing the proper amount of Merger Consideration
may be issued to 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 by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.10, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration.
(c) In the event that any Certificate for Shares shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange therefor upon
the making of an affidavit of that fact by the holder thereof the Merger
Consideration; provided, however, that Parent or the Exchange Agent may, in its
discretion, require the delivery of a suitable bond or indemnity.
(d) If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article 2.
(e) Any portion of the Exchange Fund that remains undistributed to the
stockholders of the Company upon the expiration of one hundred eighty (180) days
after the Effective Time shall be delivered to Parent upon demand and any
stockholders of the Company who have not theretofore complied with this Article
2 shall thereafter look only to Parent as general creditors for payment of their
claims for Merger Consideration.
(f) Neither Parent nor Acquisition nor the Company shall be liable to
any holder of Shares for any amount of cash from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar Applicable Law.
SECTION 2.11. Assumed Stock Options. At the Effective Time, options to
purchase shares under the Company's Amended and Restated 1997 Incentive Benefit
Plan (the "1997 Plan"), 1988 Incentive Compensation Plan (the "1988 Plan"), the
Company's Employee Stock Purchase Plan (the "ESPP"), the GammaLink Stock Option
Plans assumed by the Company (the "GammaLink Plans"), the Spectron Microsystems,
Inc. Stock Option Plan assumed by the Company (the "Spectron Plan") and the
DianaTel Corporation Stock Plan assumed by the Company (the "DianaTel Plan", and
together with the 1997 Plan, 1988 Plan, the ESPP, Spectron Plan and GammaLink
Plans, the "Assumed Option Plans" and individually as an "Assumed Option Plan"),
which are then outstanding and unexercised, shall cease to represent a right to
acquire Shares and shall be converted automatically into options to purchase
shares of common stock, par value $.001 per share, of Parent ("Parent Common
Stock"), and Parent shall assume each such option (hereinafter, an "Assumed
Option") subject to the terms of the applicable Assumed Option Plan, in each
case as heretofore amended or restated, as the case may be, and the agreement
evidencing grants thereunder of such Assumed Option; provided, however, that
from and after the Effective Time, (i) the number of shares of
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Parent Common Stock purchasable upon exercise of such Assumed Option shall be
equal to the number of Shares that were purchasable under such Assumed Option
immediately prior to the Effective Time multiplied by the Exchange Ratio (as
defined below), and rounded down to the nearest whole share, and (ii) the per
share exercise price under each such Assumed Option shall be adjusted by
dividing the per share exercise price of each such Assumed Option by the
Exchange Ratio, and rounding up to the nearest cent. The terms of each Assumed
Option shall, in accordance with its terms, be subject to further adjustment as
appropriate to reflect any stock split, stock dividend, recapitalization or
other similar transaction with respect to Parent Common Stock on or subsequent
to the Effective Time. The "Exchange Ratio" shall be equal to the ratio obtained
by dividing the Offer Price by the closing price of one share of Parent Common
Stock on the Nasdaq National Market on the trading day immediately preceding the
Closing Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent and
Acquisition, subject to the exceptions set forth in the Disclosure Schedule (the
"Company Disclosure Schedule") delivered by the Company to Parent in accordance
with Section 5.9 (which exceptions shall specifically identify a Section or
subsection, as applicable, to which such exception relates) that:
SECTION 3.1. Organization and Qualification; Subsidiaries; Investments.
(a) Section 3.1(a) of the Company Disclosure Schedule sets forth a true
and complete list of all the Company's directly and indirectly owned
subsidiaries and branch offices, together with the jurisdiction of incorporation
of each subsidiary and the percentage of each subsidiary's outstanding capital
stock or other equity interests owned by the Company or another subsidiary of
the Company. Each of the Company and its subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization 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. The Company has heretofore delivered to
Parent accurate and complete copies of the Certificate of Incorporation and
bylaws (or similar governing documents), as currently in full force and effect,
of the Company and each of its subsidiaries. Section 3.1(a) of the Company
Disclosure Schedule specifically identifies each subsidiary of the Company that
contains any material assets or through which the Company conducts any material
operations. Except as set forth in Section 3.1(a) of the Company Disclosure
Schedule, the Company has no operating subsidiaries other than those
incorporated in a state of the United States.
(b) The Company and its subsidiaries are duly qualified or licensed and
in good standing to do business in each jurisdiction in which the property
owned, leased or operated by them or the nature of the business conducted by
them makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect on the Company. When used in connection with the Company or its
subsidiaries, the term "Material Adverse Effect on the Company" means any
circumstance, change in, or effect on the Company and its subsidiaries, taken as
a whole, that is, or is reasonably likely in the foreseeable future to be,
materially adverse to the operations, financial condition, earnings or results
of operations, or the business (financial or otherwise), of the Company and its
subsidiaries, taken as a whole, provided that neither of the following shall be
deemed, either alone or in combination, to constitute a Material Adverse Effect
on the Company: (i) a change in the market price or trading volume of the
Company Common Stock, (ii) conditions affecting the computer-related
communications equipment and services industry as a whole, or (iii) a failure by
the Company to meet internal earnings or revenue projections or the earnings or
revenue projections of equity analysts, provided that this Section 3.1(b)(iii)
shall not exclude any underlying change, effect, event, occurrence, state of
facts or developments that resulted in such failure to meet such projections.
(c) Section 3.1(c) of the Company Disclosure Schedule sets forth a true
and complete list of each equity investment in an amount of One Hundred Thousand
Dollars ($100,000) or more or that represents a five percent (5%) or greater
ownership interest in the subject of such investment made by the Company or any
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of its subsidiaries in any person other than the Company's subsidiaries ("Other
Interests"). The Other Interests are owned by the Company, by one or more of the
Company's subsidiaries or by the Company and one or more of its subsidiaries, in
each case free and clear of all Liens (as defined below).
SECTION 3.2. Capitalization of the Company and its Subsidiaries.
(a) The authorized capital stock of the Company consists of 60,000,000
Shares, of which, as of the close of business on April 30, 1999, 17,002,649
Shares were issued and outstanding and 10,000,000 shares of preferred stock, no
shares of which are outstanding. All of the outstanding Shares have been validly
issued and are fully paid, nonassessable and free of preemptive rights. As of
the close of business on April 30, 1999, approximately 4,566,445 Shares were
reserved for issuance and, as of the close of business on April 30, 1999,
3,125,364 were issuable upon or otherwise deliverable in connection with the
exercise of outstanding Company Stock Options. For purposes hereof, "Company
Stock Option" means any option, warrant or other right to purchase Shares.
Between the close of business on April 30, 1999 and the date hereof, no shares
of the Company's capital stock have been issued other than pursuant to Company
Stock Options already in existence on such date and, between the close of
business on April 30, 1999 and the date hereof, no stock options have been
granted, except as set forth in Section 3.2(a) of the Company Disclosure
Schedule. Except as set forth above or in Section 3.2(a) of the Company
Disclosure Schedule, as of the date hereof, there are outstanding (i) no shares
of capital stock or other voting securities of the Company, (ii) no securities
of the Company or any of its subsidiaries convertible into or exchangeable or
exercisable for shares of capital stock or other securities of the Company,
(iii) no options, preemptive or other rights to acquire from the Company or any
of its subsidiaries, and, except as described in the Company SEC Reports (as
defined below), no obligations of the Company or any of its subsidiaries to
issue, any capital stock, voting securities or securities convertible into or
exchangeable or exercisable for capital stock or other securities of the Company
and (iv) no equity equivalent interests in the ownership or earnings of the
Company or its subsidiaries or other similar rights (collectively "Company
Securities"). As of the date hereof, there are no outstanding rights or
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any Company Securities. Except as set forth in Section 3.2(a)
of the Company Disclosure Schedule, there are no stockholder agreements, voting
trusts or other agreements or understandings to which the Company is a party or
by which it is bound relating to the voting or registration of any shares of
capital stock of the Company. The Company has not voluntarily accelerated the
vesting of any Company Stock Options as a result of the Offer or the Merger or
any other change in control of the Company.
(b) Except as set forth in Section 3.2(b) of the Company Disclosure
Schedule, 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 a matter of Applicable Law). Except as set forth in
Section 3.2(b) of the Company Disclosure Schedule, any directors qualifying
shares issued by a foreign subsidiary of the Company to any director of such
subsidiary are beneficially owned by the Company or another subsidiary of the
Company. Except as set forth in Section 3.2(b) of the Company Disclosure
Schedule, there are no securities of the Company or any of its subsidiaries
convertible into or exchangeable or exercisable for, or other rights to acquire
from the Company or any of its subsidiaries, any capital stock or other
ownership interests in or any other securities of any subsidiary of the Company,
and there exists no other contract, understanding, arrangement or obligation
(whether or not contingent) providing for the issuance or sale, directly or
indirectly, of any such capital stock. Except as set forth in Section 3.2(b) of
the Company Disclosure Schedule, 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. With respect to any exception to
ownership set forth in Section 3.2(b) of the Company Disclosure Schedule, the
schedule completely and correctly identifies the record and the beneficial owner
of any such shares, whether such record or beneficial owner is an employee,
agent or affiliate of the Company, and any agreement, arrangement or
understanding, whether written or oral, with respect to such ownership. With
respect to any exception to the contractual obligations of the Company set forth
in Section 3.2(b) of the Company Disclosure Schedule, the schedule completely
and correctly identifies the parties to such obligations and the nature of any
relationship of such party or any third party beneficiary of such obligations to
the Company and
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any agreement, arrangement or understanding, whether written or oral, with
respect to such relationship. For purposes of this Agreement, "Lien" means, with
respect to any asset (including any security), any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset;
provided, however, that the term "Lien" shall not include (i) statutory liens
for Taxes that are not yet due and payable or are being contested in good faith
by appropriate proceedings and are disclosed in Section 3.14 of the Company
Disclosure Schedule or that are otherwise not material, (ii) statutory or common
law liens to secure obligations to landlords, lessors or renters under leases or
rental agreements confined to the premises rented, (iii) deposits or pledges
made in connection with, or to secure payment of, workers' compensation,
unemployment insurance, old age pension or other social security programs
mandated by Applicable Law, (iv) statutory or common law liens in favor of
carriers, warehousemen, mechanics and materialmen, to secure claims for labor,
materials or supplies and other like liens, and (v) restrictions on transfer of
securities imposed by applicable state and federal securities laws.
(c) The Shares constitute the only class of equity securities of the
Company or its subsidiaries registered or required to be registered under the
Exchange Act.
SECTION 3.3. Authority Relative to this Agreement; Recommendation.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and the Stock Option Agreement, to perform
its obligations under this Agreement and the Stock Option Agreement, and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the Stock Option Agreement, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by the Company Board, and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or the Stock Option
Agreement, or to consummate the transactions contemplated hereby or thereby,
except the approval of this Agreement by the holders of a majority of the
outstanding Shares. This Agreement and the Stock Option Agreement have been duly
and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Acquisition, constitute the
valid, legal and binding agreements of the Company, enforceable against the
Company in accordance with their terms, subject to any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights generally or to general principles of
equity.
(b) Without limiting the generality of the foregoing, the Board of
Directors of the Company has unanimously (i) approved this Agreement, the Stock
Option Agreement, the Offer, the Merger and the other transactions contemplated
hereby, (ii) resolved to recommend approval and adoption of this Agreement, the
Merger and the other transactions contemplated hereby by the Company's
stockholders, and (iii) has not withdrawn or modified such approval or
resolution to recommend (except as otherwise permitted in this Agreement).
SECTION 3.4. SEC Reports; Financial Statements.
(a) The Company has filed all required forms, reports and documents (the
"Company SEC Reports") with the SEC since January 1, 1998, each of which
complied at the time of filing in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the Exchange Act, each law as in effect on the dates such forms, reports and
documents were filed, except as set forth in Section 3.4 of the Company
Disclosure Schedule. None of such Company SEC Reports, including any financial
statements or schedules included or incorporated by reference therein, contained
when filed any untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein in light of the circumstances
under which they were made not misleading, except to the extent superseded by a
Company SEC Report filed subsequently and prior to the date hereof. The audited
consolidated financial statements of the Company included in the Company SEC
Reports fairly present, in conformity in all material respects with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated in the notes thereto), the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended. Notwithstanding the foregoing, the Company shall not be
deemed to be in breach of any of the
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<PAGE> 16
representations or warranties in this Section 3.4(a) as a result of any changes
to the Company SEC Reports that the Company may make in response to comments
received from the SEC on the Proxy Statement.
(b) The Company has heretofore made, and hereafter will make, available to
Acquisition or Parent a complete and correct copy of any amendments or
modifications that are required to be filed with the SEC but have not yet been
filed with the SEC to agreements, documents or other instruments that previously
had been filed by the Company with the SEC pursuant to the Exchange Act.
SECTION 3.5. Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in the
proxy statement relating to the meeting of the Company's stockholders to be held
in connection with the Merger (the "Proxy Statement") will, at the date mailed
to stockholders of the Company and at the time of the meeting of stockholders of
the Company to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein in light of
the circumstances under which they are made not misleading. The Proxy Statement
insofar as it relates to the meeting of the Company's stockholders to vote on
the Merger will comply as to form in all material respects with the provisions
of the Exchange Act and the rules and regulations thereunder. Notwithstanding
the foregoing, the Company makes no representation, warranty or covenant with
respect to any information supplied or required to be supplied by Parent or
Acquisition that is contained in or omitted from the Proxy Statement.
SECTION 3.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under
applicable requirements of the Securities Act, the Exchange Act, state
securities or blue sky laws, and the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), any filings under similar merger
notification laws or regulations of foreign Governmental Entities and the filing
and recordation of the Certificate of Merger as required by the NJBCA, and any
filings, authorizations, consents and approvals as may be required under the New
Jersey Industrial Site Recovery Act, 13:1K, et seq. ("ISRA"), no material filing
with or notice to and no material permit, authorization, consent or approval of
any United States (federal, state or local) or foreign court or tribunal, or
administrative, governmental or regulatory body, agency or authority (a
"Governmental Entity") is necessary for the execution and delivery by the
Company of this Agreement or the Stock Option Agreement or the consummation by
the Company of the transactions contemplated hereby or thereby. Neither the
execution, delivery and performance of this Agreement or the Stock Option
Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby or thereby, will (a) conflict with or result in
any breach of any provision of the respective Certificate of Incorporation or
bylaws (or similar governing documents) of the Company or any of its
subsidiaries, (b) except as set forth in Section 3.6 of the Company Disclosure
Schedule, result in a violation or breach of or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or Lien) under any of the
terms, conditions or provisions of any material note, bond, mortgage, indenture,
lease, license, contract (including any material Supply Contract), agreement or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which any of them or any of their respective properties and
assets is bound or (c) except as set forth in Section 3.6 of the Company
Disclosure Schedule, violate any material order, writ, injunction, decree, law,
statute, rule or regulation applicable to the Company or any of its subsidiaries
or any of their respective properties or assets.
SECTION 3.7. No Default. Except as set forth in Section 3.7 of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is in
material breach, default or violation (and no event has occurred that with
notice or the lapse of time or both would constitute a material breach, default
or violation) of any term, condition or provision of (i) its Certificate of
Incorporation or bylaws (or similar governing documents), (ii) any material
note, bond, mortgage, indenture, lease, license, contract (including any
material Supply Contract), agreement or other instrument or obligation to which
the Company or any of its subsidiaries is now a party or by which it or any of
its properties and assets is bound or (iii) any material order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any of its subsidiaries or any of its properties or assets.
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<PAGE> 17
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes. Except as and
to the extent publicly disclosed by the Company in the Company SEC Reports or as
set forth in Section 3.8 of the Company Disclosure Schedule, neither the Company
nor any of its subsidiaries has any material liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be required
by generally accepted accounting principles to be reflected on a consolidated
balance sheet of the Company (including the notes thereto), other than
liabilities or obligations incurred after March 31, 1999 in the ordinary course
of business no one or group of which taken together constitutes a Material
Adverse Effect on the Company. Except as publicly disclosed by the Company in
the Company SEC Reports or as set forth in Section 3.8 of the Company Disclosure
Schedule, since March 31, 1999, there have been no events, changes or effects
with respect to the Company or its subsidiaries that, individually or in the
aggregate, constitute a Material Adverse Effect on the Company. Without limiting
the generality of the foregoing, except as and to the extent publicly disclosed
by the Company in the Company SEC Reports or as set forth in Section 3.8 of the
Company Disclosure Schedule, since March 31, 1999, the Company and its
subsidiaries have conducted their respective businesses in all material respects
only in, and have not engaged in any material transaction other than according
to, the ordinary and usual course of such businesses consistent with past
practices, and there has not been any (i) material damage, destruction or other
casualty loss with respect to any material asset or property owned, leased or
otherwise used by the Company or any of its subsidiaries, not covered by
insurance; (ii) declaration, setting aside or payment of any dividend or other
distribution in respect of the capital stock of the Company or any of its
subsidiaries (other than wholly-owned subsidiaries) or any repurchase,
redemption or other acquisition by the Company or any of its subsidiaries of any
outstanding shares of capital stock or other securities of, or other ownership
interests in, the Company or any of its subsidiaries; (iii) amendment of any
material term of any outstanding security of the Company or any of its
subsidiaries; (iv) incurrence, assumption or guarantee by the Company or any of
its subsidiaries of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with past
practices; (v) creation or assumption by the Company or any of its subsidiaries
of any Lien on any material asset other than in the ordinary course of business
consistent with past practices; (vi) loan, advance or capital contributions made
by the Company or any of its subsidiaries to, or investment in, any person other
than (x) loans or advances to employees in connection with business-related
expenses incurred in the ordinary course of business consistent with past
practices, (y) loans made to employees consistent with past practices that are
not in the aggregate in excess of Fifty Thousand Dollars ($50,000), and (z)
loans, advances or capital contributions to or investments in wholly-owned
subsidiaries, and in each case made in the ordinary course of business
consistent with past practices; (vii) transaction or commitment made, or any
contract or agreement entered into, by the Company or any of its subsidiaries
relating to its assets or business (including the acquisition (by sale, license
or otherwise) or disposition (by sale, license or otherwise) of any assets) or
any relinquishment by the Company or any of its subsidiaries of any contract,
agreement or other right, in any such case, material to the Company and its
subsidiaries, taken as a whole; (viii) any exclusive license, distribution,
marketing, sales or other agreement entered into or any agreement to enter into
any exclusive license, distribution, marketing, sales or other agreement; or
(ix) change by the Company or any of its subsidiaries in any of its accounting
principles, practices or methods. Since March 31, 1999, except as disclosed in
the Company SEC Reports filed prior to the date hereof or in Section 3.8 of the
Company Disclosure Schedule or increases in the ordinary course of business
consistent with past practices, there has not been any increase in the
compensation payable or that could become payable by the Company or any of its
subsidiaries to (a) officers of the Company or any of its subsidiaries or (b)
any employee of the Company or any of its subsidiaries whose annual cash
compensation is One Hundred Thousand Dollars ($100,000) or more.
SECTION 3.9. Litigation. Except as publicly disclosed by the Company in the
Company SEC Reports or as set forth in Section 3.9 of the Company Disclosure
Schedule, there is no suit, claim, action, arbitration, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries or any of their respective properties or
assets before any Governmental Entity or brought by any person that is material
to the Company and its subsidiaries taken as a whole, or would reasonably be
expected to prevent or delay the consummation of the transactions contemplated
by this Agreement beyond the Final Date. Except as publicly disclosed by the
Company in the Company SEC Reports, neither the Company nor any of its
subsidiaries is subject to any outstanding order, writ, injunction or decree
that would
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reasonably be expected to be material or would reasonably be expected to prevent
or delay the consummation of the transactions contemplated hereby.
SECTION 3.10. Compliance with Applicable Law. Except as publicly disclosed
and specifically identified by the Company in the Company SEC Reports, the
Company and its subsidiaries hold all material permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities necessary for the
lawful conduct of their respective businesses (the "Company Permits"). Except as
publicly disclosed and specifically identified by the Company in the Company SEC
Reports, the Company and its subsidiaries are in material compliance with the
terms of the Company Permits. Except as publicly disclosed and specifically
identified by the Company in the Company SEC Reports, the businesses of the
Company and its subsidiaries have been and are being conducted in material
compliance with all material Applicable Laws. Except as publicly disclosed by
the Company in the Company SEC Reports, no investigation or review by any
Governmental Entity with respect to the Company or any of its subsidiaries is
pending or, to the knowledge of the Company, threatened, nor, to the knowledge
of the Company, has any Governmental Entity indicated an intention to conduct
the same.
SECTION 3.11. Employee Benefits.
(a) For purposes of this Agreement, "Compensation and Benefit Plans"
means, collectively, each written bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, employment, termination,
severance, compensation, medical, health, or other plan, agreement, policy or
arrangement, that covers employees or directors of the Company or any of its
subsidiaries, or pursuant to which former employees or directors of the Company
or any of its subsidiaries are entitled to current or future benefits. To the
knowledge of the Company, there are no oral Compensation and Benefit Plans to
which the Company is a party. The Company has made available to Parent copies of
all "employee pension benefit plans" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as "Pension Plans"), "employee welfare benefit plans" (as
defined in Section 3(l) of ERISA) and all other Compensation and Benefit Plans
maintained, or contributed to, by the Company or of its subsidiaries or any
person that, together with the Company and its subsidiaries, is treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code (the Company
and each such other person, a "Commonly Controlled Entity") for the benefit of
any current employees, officers or directors of the Company or any of its
subsidiaries. The Company has also made available to Parent true, complete and
correct copies of (i) the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Compensation and Benefit Plan (if
any such report was required), (ii) the most recent summary plan description for
each Compensation and Benefit Plan for which such summary plan description is
required and (iii) each trust agreement and group annuity contract related to
any Compensation and Benefit Plan. Each Compensation and Benefit Plan has been
administered in all material respects in accordance with its terms. Neither the
Company nor any Commonly Controlled Entity maintains or has ever maintained a
"defined benefit plan" (as defined in Section 415 of the Code). Each of
Company's subsidiaries and all the Compensation and Benefit Plans are all in
compliance with applicable provisions of ERISA and the Code. Section 3.11(a)
sets forth a complete and correct list of all Compensation and Benefit Plans.
(b) Except as otherwise provided in Section 3.11(b) of the Company
Disclosure Schedule, the Company and its subsidiaries have performed in all
material respects their obligations under each Compensation and Benefit Plan;
each Compensation and Benefit Plan and each trust or other funding medium, if
any, established in connection therewith has at all times been established,
maintained and operated in material compliance with its terms and the
requirements prescribed by Applicable Law, including ERISA and the Code.
(c) With respect to those Pension Plans that are intended to be
qualified under Section 401(a) of the Code, except as set forth in Section
3.11(c) of the Company Disclosure Schedule, each such Pension Plan has been the
subject of a determination letters from the Internal Revenue Service to the
effect that such Pension Plans are qualified and exempt from Federal income
taxes under Sections 401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked nor has any event occurred since
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<PAGE> 19
the date of its most recent determination letter or application therefor that
would materially adversely affect its qualification or materially increase its
costs.
(d) At all times on and after the effective date of ERISA, neither
Company nor any of its subsidiaries nor any entity which is under "common
control" with the Company (within the meaning of Section 4001 of ERISA) has
maintained, contributed to or otherwise had any obligation with respect to any
"multiemployer plan" (as defined in Section 3(37) of ERISA).
(e) Except as disclosed in Section 3.11(e) of the Company Disclosure
Schedule, there are no suits, actions, disputes, claims (other than routine
claims for benefits), arbitrations, administrative or other proceedings pending
or, to the knowledge of Company, threatened, anticipated or expected to be
asserted with respect to any Compensation and Benefits Plan or any related trust
or other funding medium thereunder or with respect to Company or its
subsidiaries, as the sponsor or fiduciary thereof or with respect to any other
fiduciary thereof.
(f) No Compensation and Benefit Plan maintained by Company or its
subsidiaries or any related trust or other funding medium thereunder or any
fiduciary thereof is, to the knowledge of Company, the subject of a material
audit, investigation or examination by an governmental or quasi-governmental
agency.
(g) Except as provided in Section 3.11(g) of the Company Disclosure
Schedule, (i) no "reportable event" (as such term is used in Section 4043 of
ERISA) or "prohibited transaction" (as such term is used in Section 4975 of the
Code and/or Section 406 of ERISA), has occurred with respect to any Compensation
and Benefit Plan established or maintained by Company or its subsidiaries
primarily for the benefit of participants employed within the United States;
(ii) neither Company nor its subsidiaries has any commitment, intention or
understanding to create, terminate or adopt any Compensation and Benefit Plan
that would result in any additional liability to Parent, the Company or its
subsidiaries; and (iii) since the beginning of the current fiscal year of any
Compensation and Benefit Plan, no event had occurred and no condition or
circumstance has existed that could result in a material increase in the
benefits under or the expense of maintaining such Compensation and Benefit Plan
maintained by Company, and its subsidiaries from the level of benefits or
expense incurred for the most recently completed fiscal year of such
Compensation and Benefit Plan.
(h) Section 3.11(h) of the Company Disclosure Schedule lists all
outstanding Stock Options as of the date hereof, identifying for each such
option: (i) the number of shares issuable, (ii) the number of vested shares,
(iii) the date of expiration and (iv) the exercise price.
(i) All contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof have been timely made.
(j) Except as provided by this Agreement or in Section 3.11(j) of the
Company Disclosure Schedule, the execution of, and performance of the
transactions contemplated by, this Agreement will not (either along with or upon
the occurrence of any additional or subsequent events) constitute an event under
any Compensation and Benefit Plan or agreement that will or may reasonably be
expected to result in any payment (whether severance pay or otherwise),
acceleration, vesting or increase in benefits with respect to any employee,
former employee or director of the Company, or its subsidiaries, whether or not
any such payment would be an "excess parachute payment" (within the meaning of
Section 280G of the Code).
(k) With respect to each Compensation and Benefit Plan required to be
maintained or contributed to by the law or applicable custom or rule of the
relevant jurisdiction outside of the United States (the "Foreign Plans"), are
listed on Section 3.11(k) of the Company Disclosure Schedule. As regards each
such Foreign Plan:
(i) Each of the Foreign Plans is in compliance in all material
respects with the provisions of the laws of each jurisdiction in which each such
Foreign Plan is maintained, to the extent those laws are applicable to the
Foreign Plans;
(ii) All contributions to, and payments from, the Foreign Plans which
may have been required to be made in accordance with the terms of any such
Foreign Plan, and, when applicable, the law of the jurisdiction in which such
Foreign Plan is maintained, have been timely made or shall be made by the
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<PAGE> 20
Effective Date. All such contributions to the Foreign Plans, and all payments
under the Foreign Plans, for any period ending before the Closing Date that are
not yet, but will be, required to be made, are reflected as an accrued liability
on the balance sheet included in the most recently filed Company SEC Report;
(iii) All material reports, returns and similar documents, if any,
with respect to any Foreign Plan required to be filed with any governmental body
or distributed to any Foreign Plan participant have been duly and timely filed
or distributed or will be filed or distributed by the Closing Date, and all of
the Foreign Plans have obtained from the governmental body having jurisdiction
with respect to such plans any required determinations, if any, that such
Foreign Plans are in compliance with the laws of the relevant jurisdiction if
such determinations are required in order to give effect to the Foreign Plan;
(iv) Each of the Foreign Plans has been administered at all times,
and in all material respects, in accordance with its terms. To the knowledge of
Company, there are no pending investigations by any governmental body involving
the Foreign Plans, and no pending claims (except for claims for benefits payable
in the normal operation of the Foreign Plans), suits or proceedings against any
Foreign Plan or asserting any rights or claims to benefits under any Foreign
Plan; and
(v) The consummation of the transactions contemplated by this
Agreement will not by itself create or otherwise result in any material
liability with respect to any Foreign Plan other than the triggering of payment
to participants.
(l) Each Compensation and Benefit Plan complies in all material respects
with all applicable requirements of (i) the Age Discrimination in Employment Act
of 1967, as amended, and the regulations thereunder and (ii) Title VII of the
Civil Rights Act of 1964, as amended, and the regulations thereunder and all
other applicable laws. All amendments and actions required to bring each of the
Compensation and Benefit Plans into conformity with all of the applicable
provisions of ERISA and other applicable laws have been made or taken except to
the extent that such amendments or actions are not required by law to be made or
taken until a date after the Effective Time and are disclosed Section 3.11(l) of
the Company Disclosure Schedule or will be provided to Parent within fourteen
(14) days of the date hereof.
(m) Each group medical plan sponsored by the Company or its subsidiaries
materially complies with the Medicare Secondary Payor Provisions of Section 1826
(b) of the Social Security Act, and the regulations promulgated thereunder.
(n) Except as set forth on Section 3.11(n) of the Company Disclosure
Schedule, Parent, the Surviving Corporation, the Company and its subsidiaries
may terminate or amend any Compensation and Benefit Plan maintained by the
Company or its subsidiaries or may cease contributions to any such Compensation
and Benefit Plans without incurring any material liability other than a benefit
liability accrued in accordance with the terms of such Compensation and Benefit
Plan immediately prior to such amendment, termination or ceasing of
contributions.
(o) Neither the Company nor any of its subsidiaries maintained any
Compensation and Benefit Plan which is a "group health plan" (as such term is
defined in Section 5000(b)(1) of the Code) that has not been administered and
operated in all respects in compliance with the applicable requirements of
Section 601 of ERISA and section 4980B(b) of the Code and the Company and its
subsidiaries are not subject to any liability, including without limitation,
additional contributions, fines, penalties or loss of tax deduction as a result
of such administration and operation.
(p) Neither the Company nor any of its subsidiaries has incurred, nor
does the Company reasonably expect either it or any subsidiary to incur, any
liability for any tax imposed under Sections 4971 through 4980B of the Code or
civil liability under Section 501(i) or (1) of ERISA;
(q) Neither the Company nor any of its subsidiaries has incurred any
liability for any tax, excise tax, penalty or fee with respect to any
Compensation and Benefit Plan, including, but not limited to, taxes arising
under Section 4971, 4977, 4978, 4878B, 4979, 4980 or 4980B of the Code, and no
event has occurred and no circumstance has existed that could give rise to any
such liability.
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(r) Except as provided in Section 3.11(r) of the Company Disclosure
Schedule, no insurance policy nor any other contract or agreement affecting any
Compensation and Benefit Plan requires or permits a retroactive increase in
premiums or payments due thereunder.
SECTION 3.12. Labor and Employment Matters. Except as set forth on Section
3.12(b) and (f) of the Company Disclosure Schedule:
(a) No collective bargaining agreement exists that is binding on the
Company or any of its subsidiaries, and the Company has not been officially
apprised that any petition has been filed or proceeding instituted by an
employee or group of employees of the Company, or any of its subsidiaries, with
the National Labor Relations Board seeking recognition of a bargaining
representative.
(b) (i) To the Company's knowledge, there is no labor strike, dispute,
slow down or stoppage pending or threatened against the Company or any of its
subsidiaries; and
(ii) Neither the Company nor any of its subsidiaries has received any
demand letters, civil rights charges, suits or drafts of suits with respect to
claims made by any of their respective employees.
(c) All individuals who are performing consulting or other services for
the Company or any of its subsidiaries are or were correctly classified by the
Company as either "independent contractors" or "employees" as the case may be,
and, at the Closing Date, will qualify for such classification.
(d) Section 3.12(d) of the Company Disclosure Schedule contains a list
of the name of each officer, employee and consultant of the Company or any of
the Company's subsidiaries, together with such person's position or function,
annual base salary or wages and any incentives or bonus arrangement with respect
to such person. As of the date hereof, the Company has not received any
information that would lead it to believe that any such person will or may cease
to be engaged by the Company or such subsidiary for any reason, including
because of the consummation of the transactions contemplated by this Agreement.
(e) The Company and each of its subsidiaries is in compliance in all
material respects with all applicable foreign, federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
employees.
(f) The Company and each of its subsidiaries has in all material
respects withheld and reported all amounts required by law or by agreement to be
withheld and reported with respect to wages, salaries and other payments to
employees.
(g) To the Company's knowledge, there are no pending or threatened
claims or actions against the Company or any of its subsidiaries under any
worker's compensation policy or long-term disability policy.
SECTION 3.13. Environmental Laws and Regulations.
(a) The term "Environmental Laws" means any applicable federal, state,
local or foreign law, statute, treaty, ordinance, rule, regulation, policy,
permit, consent, approval, license, judgment, order, decree or injunction
relating to: (i) Releases (as defined in 42 U.S.C. sec. 9601(22)) or threatened
Releases of Hazardous Material (as hereinafter defined) into the environment,
(ii) the generation, treatment, storage, disposal, use, handling, manufacturing,
transportation or shipment of Hazardous Material, (iii) the health or safety of
employees in the workplace, (iv) protecting or restoring natural resources or
(e) the environment. The term "Hazardous Material" means (1) hazardous
substances (as defined in 42 U.S.C. sec. 9601(14)), including "hazardous waste"
as defined in 42 U.S.C. sec. 6903, (2) petroleum, including crude oil and any
fractions thereof, (3) natural gas, synthetic gas and any mixtures thereof, (4)
asbestos and/or asbestos containing materials, (5) PCBs or materials containing
PCBs, (6) any material regulated as a medical waste, (7) lead containing paint,
(8) radioactive materials and (9) "Hazardous Substance" or "Hazardous Material"
as those terms are defined in any indemnification provision in any contract,
lease, or agreement to which the Company or any of its subsidiaries is a party.
(b) During the period of ownership or operation by the Company and its
subsidiaries of any of their current or previously owned or leased properties,
there have been no Releases of Hazardous Material by the Company or any of its
subsidiaries in, on, under or affecting such properties or any surrounding site,
and
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neither the Company nor any of its subsidiaries has disposed of any Hazardous
Material in a manner that has led, or could reasonably be anticipated to lead to
a Release, except in each case for those which, individually or in the
aggregate, would not have a Material Adverse Effect on the Company. There have
been no Releases of Hazardous Material by the Company or any of its subsidiaries
in, on, under or affecting their current or previously owned or leased
properties or any surrounding site at times outside of such periods of
ownership, operation or lease, except in each case for those which, individually
on in the aggregate, would not have a Material Adverse Effect on the Company.
Since January 1, 1995, neither the Company nor any of its subsidiaries has
received any written notice of, or entered into any order, settlement or decree
relating to: (i) any violation of any Environmental Laws or the institution or
pendency of any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with any alleged violation
of Environmental Laws or (ii) the response to or remediation of Hazardous
Material at or arising from any of the Company's properties or any subsidiary's
properties. There have been no violations of any Environmental Laws by the
Company or any subsidiary which violations, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on the Company.
(c) There are no past or present events, conditions, circumstances,
activities, practices, incidents, actions, omissions or plans that constitute a
violation by the Company or any of its subsidiaries of, or are reasonably likely
to prevent or interfere with the Company's or any of its subsidiaries' future
compliance with, any Environmental Laws, other than any of the foregoing that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company.
SECTION 3.14. Taxes.
(a) Definitions. For purposes of this Agreement:
(i) the term "Code" means the Internal Revenue Code of 1986, as
amended;
(ii) the term "Tax" (including "Taxes") means (1) all federal, state,
local, foreign and other net income, gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties or other taxes, fees, assessments or
charges of any kind whatsoever, whether disputed or not, together with any
interest and any penalties, additions to tax or additional amounts with respect
thereto, (2) any liability for payment of amounts described in clause (1)
whether as a result of transferee liability, of being a member of an affiliated,
consolidated, combined or unitary group for any period, or otherwise through
operation of law, and (3) any liability for the payment of amounts described in
clauses (1) or (2) as a result of any tax sharing, tax indemnity or tax
allocation agreement or any other express or implied agreement to indemnify any
other person; and
(iii) the term "Tax Return" means any return, declaration, report,
statement, information statement and other document filed or required to be
filed with respect to Taxes.
(b) Except as set forth in Section 3.14(b) of the Company Disclosure
Schedule, the Company and its subsidiaries have duly and timely filed all Tax
Returns required to be filed; and such Tax Returns are complete and accurate and
correctly reflect the Tax liability required to be reported thereon. Such Tax
Returns do not contain a disclosure statement under Section 6662 of the Code (or
any predecessor provision or comparable provision of state, local or foreign
law).
(c) The Company and its subsidiaries have paid or adequately provided in
the financial statements included in the SEC Reports for all Taxes (whether or
not shown on any Tax Return) accrued through the date of such Company SEC
Reports; all Taxes the Company and its subsidiaries accrued following the end of
the most recent period covered by the Company SEC Report have been accrued in
the ordinary course of business of the Company and each such subsidiary and have
been paid when due in the ordinary course of business; and no material election
has been made with respect to Taxes of the Company or its subsidiaries in any
Tax Returns that have not been provided to Parent.
(d) Except as set forth in Section 3.14(d) of the Company Disclosure
Schedule, no material claim for assessment or collection of Taxes is presently
being asserted against the Company or its subsidiaries and
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neither the Company nor any of its subsidiaries is a party to any pending
action, proceeding, or investigation by any governmental taxing authority nor
does the Company have knowledge of any such threatened action, proceeding or
investigation.
(e) Except as set forth in Section 3.14(e) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
individually or in the aggregate, in connection with this Agreement or any
change of control of the Company or any of its subsidiaries, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code.
(f) Except as set forth in Section 3.14(f) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to or bound
by any obligation under any Tax sharing, Tax allocation, Tax indemnity or
similar agreement or arrangement.
(g) Except as set forth in Section 3.14(g) of the Company Disclosure
Schedule, there is currently no limitation on the utilization of net operating
losses, built-in losses, tax credits or other similar items of the Company or
its subsidiaries under Section 382, 383, 384 or 1502 of the Code and the
Treasury Regulations thereunder.
(h) Except as set forth in Section 3.14(h) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries has agreed to, or is
required to make, any adjustment under Section 481 of the Code by reason of a
change in accounting method.
(i) Neither the Company nor any of its subsidiaries are "consenting
corporations" within the meaning of Section 341(f)(1) of the Code.
SECTION 3.15. Intellectual Property.
(a) Section 3.15(a) of the Company Disclosure Schedule sets forth, for
the Intellectual Property owned, in whole or in part, including jointly with
others, by the Company or any of its subsidiaries, a complete and accurate list
of all United States and foreign (i) patents and patent applications; (ii)
Trademark registrations and applications and material unregistered Trademarks;
and (iii) copyright registrations and applications, indicating for each, the
applicable jurisdiction, registration number (or application number) and date
issued (or date filed). For purposes of this Agreement, "Intellectual Property"
means: trademarks and service marks (whether registered or unregistered), trade
names and designs, together with all goodwill related to the foregoing
(collectively, "Trademarks"); patents (including any continuations,
continuations in part, renewals and applications for any of the foregoing)
(collectively "Patents"); copyrights (including any registrations and
applications therefor and whether registered or unregistered) (collectively,
"Copyrights"); computer software; databases; works of authorship; mask works;
technology; trade secrets and other confidential information, know-how,
proprietary processes, formulae, algorithms, models, user interfaces, customer
lists, inventions, discoveries, concepts, ideas, techniques, methods, source
codes, object codes, methodologies and, with respect to all of the foregoing,
related confidential data or information (collectively, "Trade Secrets").
(b) Trademarks.
(i) All Trademark registrations are currently in compliance in all
material respects with all legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications) other than any requirement that, if not satisfied, would not
result in a cancellation of any such registration or otherwise materially affect
the priority and enforceability of the Trademark in question.
(ii) No registered Trademark has been within the last three (3) years
or is now involved in any opposition or cancellation proceeding in the United
States Patent and Trademark Office. To the Company's knowledge, no such action
has been threatened in writing within the one (1)-year period prior to the date
of this Agreement.
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(iii) To the Company's knowledge, except as set forth in Section
3.15(b)(iii) of the Company Disclosure Schedule, there has been no prior use of
any material Trademark by any third party that confers upon said third party
superior rights in any such Trademark.
(iv) The Company and its subsidiaries have adequately policed the
material Trademarks against third party infringement, and the material
Trademarks registered in the United States have been continuously used by the
Company or one of its subsidiaries since the date set forth in, the form
appearing in, and in connection with the goods and services listed in, their
respective registration certificates or renewal certificates, as the case may
be.
(c) Patents.
(i) All Patents are currently in compliance with legal requirements
(including payment of filing, examination, and maintenance fees and proofs of
working or use) other than any requirement that, if not satisfied, would not
result in a revocation or otherwise materially affect the enforceability of the
Patent in question.
(ii) No Patent has been or is now involved in any interference,
reissue, reexamination or opposing proceeding in the United States Patent and
Trademark Office. To the Company's knowledge, except as set forth in Section
3.15(c)(ii) of the Company Disclosure Schedule, no such action has been
threatened within the one (1)-year period prior to the date of this Agreement.
(iii) To the knowledge of the Company, there is no patent or patent
application of any person that conflicts in any material respect with any Patent
or invalidates any claim the Company or any of its subsidiaries has in any
Patent.
(d) Trade Secrets.
(i) The Company and each of its subsidiaries have taken reasonable
steps in accordance with normal industry practice to protect their respective
rights in confidential information and Trade Secrets.
(ii) Without limiting the generality of Section 3.15(d)(i) and except
as would not be materially adverse to the Company and its subsidiaries, taken as
a whole, or its business, the Company and each of its subsidiaries enforces a
policy of requiring each relevant employee, consultant and contractor to execute
proprietary information, confidentiality and assignment agreements substantially
in the Company's standard forms that assign to the Company or such subsidiary,
as the case may be, all rights to any Intellectual Property relating to the
Company's or such subsidiary's business that is developed by the employee,
consultant or contractor, as applicable, in the course of his or her activities
for the Company or any of its subsidiaries or is developed during working hours
using the resources of the Company or any such subsidiary, and, except under
confidentiality obligations, to the knowledge of the Company, there has been no
disclosure by the Company or any subsidiary of material confidential information
or Trade Secrets.
(e) License Agreements.
Section 3.15(e)(i) of the Company Disclosure Schedule sets forth a
complete and accurate list of all license agreements granting to the Company or
any of its subsidiaries any material right to use or practice any rights under
any Intellectual Property other than software commercially available on
reasonable terms to any person for a license fee of no more than One Hundred
Thousand Dollars ($100,000) (collectively, the "Inbound License Agreements"),
indicating for each the title and the parties thereto and the amount of any
future royalty or license fee payable thereunder. Section 3.15(e)(ii) of the
Company Disclosure Schedule sets forth a complete and accurate list of all
license agreements under which the Company or any of its subsidiaries licenses
software or grants other rights in to use or practice any rights under any
Intellectual Property, excluding licenses with customers that in the
twelve-month period prior to the date hereof have purchased or licensed products
for which the total payments to the Company and its subsidiaries did not exceed
One Hundred Thousand Dollars ($100,000) and otherwise are not material to the
Company (collectively, the "Outbound License Agreements"), indicating for each
the title and the parties thereto. Except as set forth in Section 3.15(e) of the
Company Disclosure Schedule, there is no material outstanding
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or, to the Company's knowledge, threatened dispute or disagreement with respect
to any Inbound License Agreement or any Outbound License Agreement.
(f) Ownership; Sufficiency of IP Assets. The Company or one of its
subsidiaries owns or possesses adequate licenses or other rights to use, free
and clear of Liens, orders and arbitration awards, all of its Intellectual
Property used in its business. The Intellectual Property identified in Section
3.15(a) of the Company Disclosure Schedule, together with the Company's and its
subsidiaries' unregistered copyrights and the Company's and such subsidiaries'
rights under the licenses granted to the Company or any of its subsidiaries
under the Inbound License Agreements, constitute all the material Intellectual
Property rights used in the operation of the Company's and its subsidiaries'
businesses as they are currently conducted and are all the Intellectual Property
rights necessary to operate such businesses after the Effective Time in
substantially the same manner as such businesses have been operated by the
Company and its subsidiaries prior thereto.
(g) Protection of IP. The Company has taken reasonable steps to protect
the Intellectual Property of the Company and its subsidiaries.
(h) No Infringement by the Company. To the knowledge of the Company,
except as set forth on Section 3.15(h) of the Company Disclosure Schedule, the
products used, manufactured, marketed, sold or licensed by the Company and its
subsidiaries, and all Intellectual Property used in the conduct of the Company's
and its subsidiaries' businesses as currently conducted, do not infringe upon,
violate or constitute the unauthorized use of any valid and enforceable rights
owned or controlled by any third party, including any Intellectual Property of
any third party. The Company's products do not include, incorporate or otherwise
use any proprietary information (including software) that may have been provided
by Professor B.S. Manjunath or any member of his research group as part of a
collaborative agreement with Spectron Microsystems, Inc.
(i) No Pending or Threatened Infringement Claims. Except and to the
extent publicly disclosed in the Company SEC Reports or in Section 3.15(i) of
the Company Disclosure Schedule, no litigation is now or, within the three (3)
years prior to the date of this Agreement, was pending and, to the Company's
knowledge, no notice or other claim in writing has been received by the Company
within the one (1) year prior to the date of this Agreement, (i) alleging that
the Company any of its subsidiaries has engaged in any activity or conduct that
infringes upon, violates or constitutes the unauthorized use of the Intellectual
Property rights of any third party or (ii) challenging the ownership, use,
validity or enforceability of any Intellectual Property owned or exclusively
licensed by or to the Company. Except as specifically disclosed in one or more
subsections of this Section 3.15 of the Company Disclosure Schedules, no
Intellectual Property (x) that is owned by the Company or any of its
subsidiaries is subject to any outstanding order, judgment, decree, stipulation
or agreement restricting the use thereof by the Company or any such subsidiary,
except as may be specifically provided in any such Inbound License Agreement,
(y) that is the subject of an Outbound License Agreement is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting the
sale, transfer, assignment or licensing thereof by the Company or any of its
subsidiaries to any person or (z) that is the subject of an Inbound License
Agreement is, to the knowledge of the Company, subject to any outstanding
judgment, decree, stipulation or agreement restricting the use thereof by the
Company or any of its subsidiaries.
(j) No Infringement by Third Parties. Except as and to the extent
publicly disclosed in the Company SEC Reports or as set forth in Section 3.15(j)
of the Company Disclosure Schedule, to the knowledge of the Company, no third
party is misappropriating, infringing, diluting or violating any Intellectual
Property owned or exclusively licensed by the Company or any of its
subsidiaries, and no such claims have been brought against any third party by
the Company or any of its subsidiaries.
(k) Assignment; Change of Control. Except as set forth in Section 3.15
(k) of the Company Disclosure Schedule, the execution, delivery and performance
by the Company of this Agreement, and the consummation of the transactions
contemplated hereby, will not 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 or their
respective rights under any Inbound License Agreement or
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Outbound License Agreement, nor require the consent of any Governmental
Authority or third party in respect of any such Intellectual Property.
(l) Software. The Software owned or purported to be owned by the Company
or any of its subsidiaries, was either (i) developed by employees of the Company
or any of its subsidiaries within the scope of their employment; (ii) developed
by independent contractors who have assigned their rights to the Company or any
of its subsidiaries pursuant to written agreements; or (iii) otherwise acquired
by the Company or a subsidiary from a third party. Except as set forth in
Section 3.15(l) of the Company Disclosure Schedule, the Software does not
contain any programming code, documentation or other materials or development
environments that embody Intellectual Property rights of any person other than
the Company or any of its subsidiaries, except for such materials or development
environments obtained by the Company or any of its subsidiaries from other
persons who make such materials or development environments generally available
on non-discriminatory commercial terms. For purposes of this Section 3.15(l),
"Software" means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, schematics, flow-charts and other work product used to design,
plan, organize and develop any of the foregoing, and (iv) all documentation,
including user manuals and training materials, relating to any of the foregoing.
(m) Performance of Existing Software Products; No Real-Time Operating
Systems Software Products or Stand-Alone Products. The Company's and its
subsidiaries' existing and currently manufactured and marketed Software products
listed and described on Section 3.15(m) of the Company Disclosure Schedule
perform in all material respects, free of significant bugs, viruses or
programming errors, the functions described in any agreed specifications or end
user documentation or other information provided to customers of the Company or
any of its subsidiaries on which such customers relied when licensing or
otherwise acquiring such products. Neither the Company nor any of its
subsidiaries currently, directly or indirectly, owns, manages, operates,
controls or participates in the ownership, management, operation or control of
any business, whether in corporate, proprietorship or partnership form or
otherwise, engaged in the design, manufacturing or marketing of real time
operating systems software products as stand-alone products.
(n) Documentation. The Company and its subsidiaries have taken all
actions customary in the software industry to document the Software and its
operation, such that the materials comprising the Software, including the source
code and documentation, have been written in a clear and professional manner so
that they may be understood, modified and maintained in an efficient manner by
reasonably competent programmers.
(o) Year 2000 Capability.
(i) Except as set forth in Section 3.15(o) of the Company Disclosure
Schedule, all of the Company's and its subsidiaries' material products
(including products currently under development) will record, store, process and
calculate and present calendar dates falling on and after December 31, 1998, and
will calculate any information dependent on or relating to such dates in the
same manner and with the same functionality, data integrity and performance as
the products record, store, process, calculate and present calendar dates on or
before December 31, 1998, or calculate any information dependent on or relating
to such dates (collectively, "Year 2000 Capable"). Except as set forth in
Section 3.15(o) of the Company Disclosure Schedule, (i) all of the Company's and
its subsidiaries' material products will lose no significant functionality with
respect to the introduction of records containing dates falling on or after
December 31, 1998; and (ii) all of the Company's and its subsidiaries' internal
computer systems comprised of software, hardware, databases or embedded control
systems (microprocessor controlled, robotic or other device) related to the
Company's and its subsidiaries' businesses (collectively, a "Business System"),
that constitutes any material part of, or is used in connection with the use,
operation or enjoyment of, any material tangible or intangible asset or real
property of the Company and its subsidiaries, including its accounting systems,
are Year 2000 Capable. Except as set forth on Section 3.15(o) of the Company
Disclosure Schedule, the current versions of the Company's and its subsidiaries'
software and all other Intellectual Property may be used prior to, during and
after December 31, 1998, such that such Software and Intellectual Property will
operate prior to, during and after
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such time period without error caused by date data that represents or references
different centuries or more than one century.
(ii) Except as set forth on Section 3.15(o) of the Company Disclosure
Schedule, the Company's material products and the conduct of the Company's
business with its material customers and suppliers will not be materially
adversely affected by the advent of the year 2000, the advent of the
twenty-first century or the transition from the twentieth century through the
year 2000 and into the twenty-first century. Except as set forth on Section
3.15(o) of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is reasonably likely to incur material expenses arising from or
relating to the failure of any of its Business Systems or any products
(including all products sold on or prior to the date hereof) as a result of the
advent of the year 2000, the advent of the twenty-first century or the
transition from the twentieth century through the year 2000.
(p) Foundry Relationships. Section 3.15(p) of the Company Disclosure
Schedule sets forth a complete and correct description of each and every (i)
foundry relationship, wafer or digital signal processor manufacturing and
fabricating agreement, understanding or commitment, and (ii) integrated circuit
die or device purchase, supply or service agreement, understanding or
commitment, used by or in connection with the Company's business, in whole or in
part, whether written or oral (the "Supply Contracts"). The Company has
delivered to Parent a correct and complete copy of each written Supply Contract
and provided a written summary of each material oral Supply Contract. There are
no fees, penalties, price uplifts, shortfall payments, bill backs or other
amounts outstanding under such Supply Contracts. The quantities available for
purchase under each written Supply Contract are as stated on the face of such
Supply Contract and are summarized in Section 3.15(p) of the Company Disclosure
Schedule. Each manufacturing or service site that requires qualification under
the terms of a Supply Contract is qualified, and no unresolved differences with
respect to product or process specifications remains outstanding. All
manufacturing or service terms and conditions are as they appear to be on the
face of the written Supply Contracts. The Company has not received any written
or oral notice from the other party to any Supply Contract, or from any other
supplier to the Company, to the effect that such party will not accept purchase
orders from the Company on such terms, conditions and quantities consistent with
past practices. Prices required to be paid for products or services under such
Supply Contract are summarized on Section 3.15(p) of the Company Disclosure
Schedule. No condition exists that permit a termination or a material change of
such Supply Contracts by the other party under such Supply Contract.
SECTION 3.16. Insurance. Except as set forth in Section 3.16 of the Company
Disclosure Schedule, each of the Company and its subsidiaries maintains
insurance policies (the "Insurance Policies") against all risks of a character
and in such amounts as are customarily insured against by similarly situated
companies in the same or similar businesses. Each Insurance Policy is in full
force and effect and is valid, outstanding and enforceable, and all premiums due
thereon have been paid in full. None of the Insurance Policies will terminate or
lapse (or be affected in any other materially adverse manner) by reason of the
transactions contemplated by this Agreement. Each of the Company and its
subsidiaries has complied in all material respects with the provisions of each
Insurance Policy under which it is the insured party. No insurer under any
Insurance Policy has canceled or generally disclaimed liability under any such
policy or, to the Company's knowledge, indicated any intent to do so or not to
renew any such policy. All material claims under the Insurance Policies have
been filed in a timely fashion.
SECTION 3.17. Certain Business Practices. None of the Company, any of its
subsidiaries or, to the Company's knowledge, any directors, officers, agents or
employees of the Company or any of its subsidiaries has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) made any other unlawful payment.
SECTION 3.18. Product Warranties. Section 3.18 of the Company Disclosure
Schedule sets forth complete and accurate copies of the written warranties and
guaranties by the Company or any of its subsidiaries currently in effect with
respect to its products. There have not been any material deviations from
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such warranties and guaranties, and neither the Company, any of its subsidiaries
nor any of their respective salesmen, employees, distributors and agents is
authorized to undertake obligations to any customer or to other third parties
materially in excess of such warranties or guaranties. Neither the Company nor
any of its subsidiaries has made any material oral warranty or guaranty with
respect to its products not described on such schedule.
SECTION 3.19. Suppliers and Customers. Section 3.19 of the Company
Disclosure Schedule sets forth the names of the twenty (20) largest customers of
the Company and its subsidiaries during the three (3) month period ended March
31, 1999. Since March 31, 1999 the Company has received no notices of
termination or written threats of termination from any of such customers of the
Company and its subsidiaries.
SECTION 3.20. Vote Required. The affirmative vote of the holders of a
majority of the votes cast by the holders of Shares at a duly constituted
meeting with a quorum present is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve and adopt this
Agreement and the Merger.
SECTION 3.21. Opinion of Financial Adviser. The Fairness Opinion has not
been withdrawn, revoked or modified. A true and complete copy of such opinion
has been delivered to Parent.
SECTION 3.22. Brokers. No broker, finder or investment banker (other than
the Financial Adviser, a true and correct copy of whose engagement agreement has
been provided to Parent) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
SECTION 3.23. Takeover Statutes. No "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute or regulation under
the laws of the State of New Jersey (each a "Takeover Statute") is applicable to
the Company, the Shares, the Offer, the Merger or any of the other transactions
contemplated by this Agreement. The Company Board has approved the Offer, the
Merger and this Agreement, and such approval is sufficient to render
inapplicable to the Offer, the Merger, this Agreement, and the Stock Option
Agreement the transactions contemplated by this Agreement and the Stock Option
Agreement the provisions of Sections 14A:10A-4 and 14A:10A-5 of the NJBCA to the
extent, if any, such Sections are applicable to the Offer, the Merger, this
Agreement, the Stock Option Agreement or any of the transactions contemplated by
this Agreement and the Stock Option Agreement.
SECTION 3.24. Representations Complete. None of the representations or
warranties made by the Company in this Agreement nor any statement made in any
Schedule or certificate furnished by the Company pursuant to this Agreement, or
furnished in or in connection with documents mailed or delivered to the
stockholders of the Company in connection with soliciting their proxy or consent
to this Agreement and the Merger, contains or will contain at the Effective
Time, any untrue statement of a material fact, or omits or will omit at the
Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the Company as
follows:
SECTION 4.1. Organization.
(a) Each of Parent and Acquisition is duly organized, validly existing
and in good standing under the laws of the State of Delaware and the State of
New Jersey, respectively, and has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. Parent has heretofore made available to the Company accurate and
complete copies of the Certificates of Incorporation and bylaws as currently in
full force and effect, of Parent and Acquisition. Parent owns all of the issued
and outstanding capital stock of Acquisition.
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(b) Each of Parent and Acquisition 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 in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not
have a Material Adverse Effect on Parent. When used in connection with Parent or
Acquisition the term "Material Adverse Effect on Parent" means any circumstance,
change in, or effect on (or circumstance, change in, or effect involving a
prospective change on) Parent and its subsidiaries, taken as a whole, that
materially and adversely affects the ability of Parent and/or Acquisition to
consummate the Offer or the Merger.
SECTION 4.2. Authority Relative to this Agreement. Each of Parent and
Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the boards of directors of Parent and
Acquisition and by Parent as the sole stockholder of Acquisition, and no other
corporate proceedings on the part of Parent or Acquisition are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of
Parent and Acquisition and constitutes, assuming the due authorization,
execution and delivery hereof by the Company, a valid, legal and binding
agreement of each of Parent and Acquisition enforceable against each of Parent
and Acquisition in accordance with its terms, subject to any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally or to general
principles of equity.
SECTION 4.3. Information Supplied. None of the information supplied or to
be supplied by Parent or Acquisition for inclusion or incorporation by reference
in the Offer Documents and the Proxy Statement will at the date mailed to
stockholders and at the times of the meeting or meetings of stockholders of the
Company to be held in connection with the Merger 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. Notwithstanding the
foregoing, neither Parent nor Acquisition makes any representation, warranty or
covenant with respect to any information supplied or required to be supplied by
the Company that is contained in or omitted from the Proxy Statement.
SECTION 4.4. 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, and any filings under similar merger
notification laws or regulations of foreign Governmental Entities and the filing
and recordation of the Certificate of Merger as required by the NJBCA, no
material filing with or notice to, and no material permit, authorization,
consent or approval of any Governmental Entity is necessary for the execution
and delivery by Parent or Acquisition of this Agreement or the consummation by
Parent or Acquisition of the transactions contemplated hereby. Neither the
execution, delivery and performance of this Agreement by Parent or Acquisition
nor the consummation by Parent or Acquisition of the transactions contemplated
hereby will (a) conflict with or result in any breach of any provision of the
respective Certificates of Incorporation or bylaws (or similar governing
documents) of Parent or Acquisition, (b) result in a violation or breach of or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration
or Lien) under any of the terms, conditions or provisions of any material note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which Parent or Acquisition or any of Parent's other
subsidiaries is a party or by which any of them or any of their respective
properties and assets is bound or (c) violate any material order, writ,
injunction, decree, law, statute, rule or regulation applicable to Parent or
Acquisition or any of Parent's other subsidiaries or any of their respective
properties or assets.
SECTION 4.5. Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Parent threatened, against Parent
or any of its subsidiaries or any of their respective properties or assets
before any Governmental Entity that could reasonably be expected to prevent or
delay the consummation of the transactions contemplated by this Agreement beyond
the Final Date. Neither Parent nor any of its
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subsidiaries is subject to any outstanding order, writ, injunction or decree
that could reasonably be expected to prevent or delay the consummation of the
transactions contemplated hereby.
SECTION 4.6. Brokers. No broker finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Acquisition.
SECTION 4.7. Financing. At the expiration of the Offer and at the Effective
Time, Parent and Acquisition will have available all the funds necessary for the
acquisition of all Shares and to perform their respective obligations under this
Agreement, including the payment in full for all Shares validly tendered or
outstanding as of the Effective Time.
SECTION 4.8. Ownership of the Company. As of the date hereof, neither
Parent nor Acquisition, nor any subsidiary of Parent, is the beneficial owner of
any shares of Company Common Stock.
ARTICLE 5
COVENANTS
SECTION 5.1. Conduct of Business of the Company. Except as contemplated by
this Agreement or as described in Section 5.1 of the Company Disclosure
Schedule, during the period from the date hereof to the Effective Time, the
Company will and will cause each of its subsidiaries to (a) conduct its
operations in the ordinary course of business consistent with past practice and,
to the extent consistent therewith, with no less diligence and effort than would
be applied in the absence of this Agreement, and (b) use all commercially
reasonable 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, distributors, lessors, creditors,
employees, contractors and others having business dealings with it with the
intention that its goodwill and ongoing businesses shall be unimpaired at the
Effective Time. Without limiting the generality of the foregoing, 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 shall, without the prior written consent of Parent:
(a) amend its Certificate of Incorporation or bylaws (or other similar
governing instrument);
(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 debt or equity securities or equity equivalents
(including any stock options or stock appreciation rights) except for the
issuance and sale of Shares pursuant to the DSE/DP, Company Stock Options
outstanding on the date hereof and grants of shares of Company Stock Options
consistent with Section 5.13;
(c) split, combine or reclassify any shares of its capital stock,
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,
make any other actual, constructive or deemed distribution in respect of its
capital stock or otherwise make any payments to stockholders in their capacity
as such, or redeem or otherwise acquire any of its securities or any securities
of any of its subsidiaries, except as may be required under the terms of any
Company Stock Option;
(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
any other fashion the corporate structure of any subsidiary;
(f) (i) incur or assume any long-term or short-term debt or issue any
debt securities except, in each case, for borrowings under existing lines of
credit in the ordinary course of business consistent with past practice, or
modify or agree to any material amendment of the terms of any of the foregoing;
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for
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the obligations of any other person except for obligations of subsidiaries of
the Company incurred in the ordinary course of business consistent with past
practice, other than third-party guarantees and lease agreements not to exceed
$500,000 in the aggregate; (iii) make any loans, advances or capital
contributions to or investments in any other person (other than in accordance
with Section 5.1(m)(vii) and to subsidiaries of the Company or customary loans
or advances to employees in each case in the ordinary course of business
consistent with past practice); (iv) pledge or otherwise subject to any Lien
shares of capital stock of the Company or any of 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) except as may be required by Applicable Law, enter into, adopt or
amend or terminate any bonus, special remuneration, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock purchase agreement,
pension, retirement, deferred compensation, employment, health, life, or
disability insurance, dependent care, severance or other employee benefit plan,
agreement, trust, fund or other arrangement for the benefit or welfare of any
director, officer, employee or consultant in any manner or 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), except in accordance with Section 5.13;
(h) grant any severance or termination pay to any director, officer,
employee or consultant, except payments made pursuant to written agreements
outstanding on the date hereof or the current severance policies of the Company
described on Section 3.11(a) of the Company Disclosure Schedule, the terms of
which are in all material respects completely and correctly disclosed in Section
5.1(h) of the Company Disclosure Schedule or as required by applicable federal,
state or local law or regulations;
(i) exercise its discretion or otherwise voluntarily accelerate the
vesting of any Company Stock Option as a result of the Merger, any other "change
in control" of the Company (as defined in the Company Plans) or otherwise.
(j) except as set forth in Section 5.1(j) of the Company Disclosure
Schedule (i) sell, lease, license, transfer or otherwise dispose of any material
assets in any single transaction or series of related transactions (including in
any transaction or series of related transactions having a fair market value in
excess of $300,000 in the aggregate), other than sales of its products and
licenses of software in the ordinary course of business consistent with past
practices, (ii) enter into any exclusive license, distribution, marketing, sales
or other agreement or sell, transfer or otherwise dispose of any Intellectual
Property, or (iii) license any source code to any third party;
(k) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles, practices or methods used by it;
(l) 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 course of business consistent with past practice or as
required by generally accepted accounting principles;
(m) (i) except as set forth in Section 5.1(m)(i) of the Company
Disclosure Schedule, acquire (by merger, consolidation or acquisition of stock
or assets) any corporation, partnership or other person or division thereof or
any equity interest therein; (ii) enter into any contract or agreement that
would be material to the Company and its subsidiaries, taken as a whole; (iii)
amend, modify or waive any material right under any material contract of the
Company or any of its subsidiaries; (iv) modify its standard warranty terms for
its products or amend or modify any product warranties in effect as of the date
hereof in any material manner that is adverse to the Company or any of its
subsidiaries; (v) authorize any new capital expenditure or expenditures that are
not set forth in Section 5.1(m)(v) of the Company Disclosure Schedule and that
in the aggregate are in excess of $500,000 (vi) authorize any new or additional
manufacturing capacity expenditure or expenditures for any manufacturing
capacity contracts or arrangements; or (vii) acquire any other asset or related
group of assets, or make any investment, in a single transaction or series of
related transactions with a cost in
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excess of $300,000, provided that in no event shall the aggregate of all
acquisitions and investments exceed $1,000,000;
(n) make any material tax election or settle or compromise any material
income tax liability or permit any insurance policy naming it as a beneficiary
or loss-payee to expire, or to be canceled or terminated, unless a comparable
insurance policy reasonably acceptable to Parent is obtained and in effect;
(o) fail to file any Tax Returns when due (or, alternatively, fail to
file for available extensions) or fail to cause such Tax Returns when filed to
be complete and accurate in all material respects;
(p) fail to pay any Taxes or other material debts when due;
(q) settle or compromise any pending or threatened suit, action or claim
that (i) relates to the transactions contemplated hereby or (ii) the settlement
or compromise of which would involves more than $300,000 or that would otherwise
be material to the Company or that relates to any Intellectual Property matters;
(r) take any action or fail to take any action that could reasonably be
expected to (i) limit the utilization of any of the net operating losses,
built-in losses, tax credits or other similar items of the Company or its
subsidiaries under Section 382, 383, 384 or 1502 of the Code and the Treasury
Regulations thereunder, or (ii) cause any transaction in which the Company or
any of its subsidiaries was a party that was intended to be treated as a
reorganization under Section 368(a) of the Code to fail to qualify as a
reorganization under Section 368(a) of the Code; or
(s) take or agree in writing or otherwise to take any of the actions
described in Sections 5.1(a) through 5.1(r) (and it shall use all reasonable
efforts not to take any action that would make any of the representations or
warranties of the Company contained in this Agreement untrue or incorrect in any
material respect).
SECTION 5.2. No Solicitation or Negotiation.
(a) The Company, its subsidiaries and other affiliates (as reasonably
determined by the Company) and their respective officers and other employees
with managerial responsibilities, directors, representatives (including the
Financial Advisor or any other investment banker and any attorneys and
accountants) and agents shall immediately cease any discussions or negotiations
with any other persons with respect to any Third Party Acquisition. The Company
also agrees promptly to request each person that has heretofore executed a
confidentiality agreement in connection with its consideration of acquiring
(whether by merger, acquisition of stock or assets or otherwise) the Company or
any of its subsidiaries, if any, to return all confidential information
heretofore furnished to such person by or on behalf of the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries and other
affiliates shall, nor shall the Company authorize or permit any of its or their
respective officers, directors, employees, representatives or agents to,
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with or provide any information to any person or
group (other than Parent and Acquisition or any designees of Parent and
Acquisition) concerning any Third Party Acquisition; provided, however,that if
the Board of Directors of the Company determines in good faith, after
consultation with legal counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's stockholders under the NJBCA,
the Company may, in response to a proposal or offer for a Third Party
Acquisition that was not solicited and that the Board of Directors of the
Company determines, based on consultation with the Company Financial Advisor, is
from a Third Party that is capable of consummating a Superior Proposal and only
for so long as the Board of Directors so determines that its actions are likely
to lead to a Superior Proposal, (i) furnish information only of the type and
scope with respect to the Company that the Company provided to Parent prior to
the date hereof to any such person pursuant to a customary confidentiality
agreement as was executed by Parent prior to the execution of this Agreement and
(ii) participate in the discussions and negotiations regarding such proposal or
offer; provided, further, nothing herein shall prevent the Company Board from
taking and disclosing to the Company's stockholders a position contemplated by
Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard to any
tender or exchange offer. The Company shall promptly (and in any event within
one business day after becoming aware thereof) (i) notify Parent in the event
the Company
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or any of its subsidiaries and other affiliates or any of their respective
officers, directors, employees and agents receives any proposal or inquiry
concerning a Third Party Acquisition, including the terms and conditions thereof
and the identity of the party submitting such proposal, and any request for
confidential information in connection with a potential Third Party Acquisition,
(ii) provide a copy of any written agreements, proposals or other materials the
Company receives from any such person or group (or its representatives), and
(iii) advise Parent from time to time of the status, at any time upon Parent's
request, and promptly following any developments concerning the same.
(b) Except as set forth in this Section 5.2(b), the Company Board shall
not withdraw or modify its recommendation of the transactions contemplated
hereby or approve or recommend, or cause or permit the Company to enter into any
agreement or obligation with respect to, any Third Party Acquisition.
Notwithstanding the foregoing, if the Company Board by a majority vote
determines in its good faith judgment, after consultation with and based upon
the advice of legal counsel, that it is required to do so in order to comply
with its fiduciary duties, the Company Board may withdraw its recommendation of
the transactions contemplated hereby or approve or recommend a Superior
Proposal, but in each case only (i) after providing written notice to Parent (a
"Notice of Superior Proposal") advising Parent that the Company Board has
received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal and identifying the person or group making such Superior
Proposal and (ii) if Parent does not, within five (5) business days after
Parent's receipt of the Notice of Superior Proposal, make an offer that the
Company Board by a majority vote determines in its good faith judgment (based on
the written advice of the Financial Advisor or another financial advisor of
nationally recognized reputation) to be at least as favorable to the Company's
stockholders as such Superior Proposal; provided, however, that the Company
shall not be entitled to enter into any agreement with respect to a Superior
Proposal unless and until this Agreement is terminated pursuant to Section 7.1
and the Company has paid all amounts due to Parent pursuant to Section 7.3. Any
disclosure that the Company Board may be compelled to make with respect to the
receipt of a proposal for a Third Party Acquisition or otherwise in order to
comply with its fiduciary duties or Rule 14d-9 or 14e-2 will not constitute a
violation of this Agreement; provided, however, that such disclosure states that
no action will be taken by the Company Board in violation of this Section
5.2(b).
(c) For purposes of this Agreement, "Third Party Acquisition" means the
occurrence of any of the following events: (i) the acquisition of the Company by
merger or otherwise by any person (which includes a "person" as such term is
defined in Section 13(d)(3) of the Exchange Act) other than Parent, Acquisition
or any affiliate thereof (a "Third Party"); (ii) the acquisition by a Third
Party of any material portion (which shall include fifteen percent (15%) or
more) of the assets of the Company and its subsidiaries, taken as a whole, other
than the sale of its products in the ordinary course of business consistent with
past practices; (iii) the acquisition by a Third Party of fifteen percent (15%)
or more of the outstanding Shares; (iv) the adoption by the Company of a plan of
liquidation or the declaration or payment of an extraordinary dividend; (v) the
repurchase by the Company or any of its subsidiaries of more than ten percent
(10%) of the outstanding Shares; or (vi) the acquisition (or any group of
acquisitions) by the Company or any of its subsidiaries by merger, purchase of
stock or assets, joint venture or otherwise of a direct or indirect ownership
interest or investment in any business (or businesses) whose annual revenues,
net income or assets is equal or greater than ten percent (10%) of the annual
revenues, net income or assets of the Company, respectively. For purposes of
this Agreement, a "Superior Proposal" means any bona fide proposal (1) to
acquire, directly or indirectly, for consideration consisting solely of cash
and/or securities, all of the Shares then outstanding, or all or substantially
all the assets, of the Company, (2) that is fully-financed or financeable and
contains terms that the Company Board by a majority vote determines in its good
faith judgment (based, as to the financial terms, on the written advice of the
Financial Advisor or another financial advisor of nationally recognized
reputation) to be more favorable to the Company's stockholders than the Merger,
(3) that the Company Board by a majority vote determines in its good faith
judgment (following and based on consultation with the Financial Adviser or
another financial advisor of nationally recognized reputation and its legal and
other advisors) to be reasonably capable of being completed (taking into account
all legal, financial, regulatory and other aspects of the proposal and the
person making the proposal), (4) that does not contain a "right of first
refusal" or "right of first offer" with respect to any counter-proposal that
Parent might make and (5) that does not contain any "due diligence" condition.
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SECTION 5.3. Meeting of Stockholders.
(a) The Company shall, following the acceptance for payment of Shares by
Acquisition pursuant to the Offer, take all actions necessary in accordance with
the NJBCA and its Certificate of Incorporation and bylaws to duly call, give
notice of, convene and hold a meeting of its stockholders as promptly as
practicable to consider and vote upon the adoption and approval of this
Agreement and the transactions contemplated hereby (the "Meeting"). The
stockholder vote required for the adoption and approval of the transactions
contemplated by this Agreement shall be the vote required by the NJBCA and the
Company's Certificate of Incorporation and bylaws. The Company will, through the
Company Board, recommend to its stockholders approval of such matters subject to
the provisions of Section 5.2(b). The Company shall, promptly after payment for
the tendered shares by Acquisition pursuant to the Offer, prepare and file with
the SEC the Proxy Statement for the solicitation of a vote of the holders of
Shares approving the Merger, which, subject to the provisions of Section 5.2(b),
shall include the recommendation of the Company Board that stockholders of the
Company vote in favor of the approval and adoption of this Agreement and the
written opinion of the Financial Advisor that the consideration to be received
by the stockholders of the Company pursuant to this Agreement is fair to such
stockholders from a financial point of view. The Company shall use all
reasonable efforts to have the Proxy Statement cleared by the SEC as promptly as
practicable after such filing, and promptly thereafter mail the Proxy Statement
to the stockholders of the Company. Whenever any event occurs which is required
to be set forth in an amendment or supplement to the Proxy Statement, the
Company will promptly inform Parent of such occurrence and cooperate in filing
with the SEC or its staff or any other government officials, and/or mailing to
stockholders of the Company, such amendment or supplement. Notwithstanding
anything to the contrary contained in this Agreement, the Company may adjourn or
postpone (i) the Meeting to the extent necessary to ensure that any necessary
supplement or amendment to the Proxy Statement is provided to the Company's
stockholders in advance of a vote on the Merger and this Agreement or (ii) the
time for which the Meeting is originally scheduled (as set forth in the Proxy
Statement), if there are insufficient Shares represented, either in person or by
proxy, to constitute a quorum necessary to conduct the business of the Meeting.
Notwithstanding the foregoing, if Parent, Acquisition and/or any other
subsidiary of Parent shall acquire at least 90% of the outstanding Shares, the
parties shall take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the expiration of the Offer
without a Meeting in accordance with Section 14A:10-5.1 of the NJBCA.
(b) Each of Parent and Acquisition agrees to (and Parent shall cause
Acquisition to) vote in favor of the Merger all Shares purchased pursuant to the
Offer and all other Shares owned by Parent or any other subsidiary of Parent.
SECTION 5.4. Access to Information.
(a) Between the date hereof and the Effective Time, upon reasonable
notice and except as set forth on Section 5.4 of the Company Disclosure Schedule
and subject in each instance to the requirements of Applicable Law, the Company
will give Parent and its authorized representatives reasonable access to all
employees, plants, offices, warehouses and other facilities and to all books and
records and personnel files of current employees of the Company and its
subsidiaries as Parent may reasonably require, and will cause its officers and
those of its subsidiaries to furnish Parent with such financial and operating
data and other information with respect to the business and properties of the
Company and its subsidiaries as Parent may from time to time reasonably request.
Between the date hereof and the Effective Time, Parent shall make available to
the Company, as reasonably requested by the Company, a designated officer of
Parent to answer questions and make available such information regarding Parent
and its subsidiaries as is reasonably requested by the Company taking into
account the nature of the transactions contemplated by this Agreement.
(b) Between the date hereof and the Effective Time, the Company shall
furnish to Parent (i) within two (2) business days following preparation thereof
(and in any event within twenty (20) business days after the end of each
calendar month, commencing with June 1999), an unaudited balance sheet as of the
end of such month and the related statements of earnings, stockholders' equity
and cash flows, without notes to such financial statements, (ii) within two (2)
business days following preparation thereof (and in any event within twenty (20)
business days after the end of each fiscal quarter) an unaudited balance sheet
as of the end
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of such quarter and the related statements of earnings, stockholders' equity and
cash flows for the quarter then ended, with condensed notes to such financial
statements, and (iii) within two (2) business days following preparation thereof
(and in any event within ninety (90) calendar days after the end of each fiscal
year) an audited balance sheet as of the end of such year and the related
statements of earnings, stockholders' equity (deficit) and cash flows, all of
such financial statements referred to in clauses (i), (ii) and (iii) to be
prepared in accordance with generally accepted accounting principles in
conformity with the practices consistently applied by the Company with respect
to such financial statements. All the foregoing shall be in accordance with the
books and records of the Company and shall fairly present its financial position
(taking into account the differences between the monthly, quarterly and annual
financial statements prepared by the Company in conformity with its past
practices) as of the last day of the period then ended.
(c) Each of the parties hereto will hold, and will cause its consultants
and advisers to hold, in confidence all documents and information furnished to
it by or on behalf of another party to this Agreement in connection with the
transactions contemplated by this Agreement pursuant to the terms of that
certain Corporate Nondisclosure Agreement No. 2387365 entered into between the
Company and Parent and Addendum No. 1 thereto dated May 21, 1999.
SECTION 5.5. Certain Filings; Reasonable Efforts.
(a) Subject to the terms and conditions herein provided, including
Section 5.2(b), each of the parties hereto agrees to use all reasonable efforts
to take or cause to be taken all action and to do or cause to be done all things
reasonably necessary, proper or advisable under Applicable Law to consummate and
make effective the transactions contemplated by this Agreement, including using
all reasonable efforts to do the following, (i) cooperate in the preparation and
filing of the Proxy Statement and any amendments thereto, any filings that may
be required under the HSR Act and any filings under similar merger notification
laws or regulations of foreign Governmental Entities; (ii) obtain consents of
all third parties and Governmental Entities necessary, proper, advisable or
reasonably requested by Parent or the Company, for the consummation of the
transactions contemplated by this Agreement; (iii) contest any legal proceeding
relating to the Merger; and (iv) execute any additional instruments necessary to
consummate the transactions contemplated hereby. Subject to the terms and
conditions of this Agreement, Parent and Acquisition agree to use all reasonable
efforts to cause the Effective Time to occur as soon as practicable after the
Company stockholder vote with respect to the Merger or the purchase by
Acquisition of 90% or more of the outstanding Shares pursuant to the Offer. The
Company agrees to use all reasonable efforts to encourage its employees to
accept any offers of employment extended by Parent. If at any time after the
Effective Time any further action is necessary to carry out the purposes of this
Agreement the proper officers and directors of each party hereto shall take all
such necessary action.
(b) Parent and the Company will consult and cooperate with one another,
and consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, letters, white papers, memoranda, briefs,
arguments, opinions or proposals made or submitted by or on behalf of any party
hereto in connection with proceedings under or relating to the HSR Act or any
other foreign, federal, or state antitrust, competition, or fair trade law. In
this regard but without limitation, each party hereto shall promptly inform the
other of any material communication between such party and the Federal Trade
Commission, the Antitrust Division of the United States Department of Justice,
or any other federal, foreign or state antitrust or competition Governmental
Entity regarding the transactions contemplated herein.
SECTION 5.6. Public Announcements. Neither Parent, Acquisition nor the
Company shall issue any press release or otherwise make any public statements
with respect to the transactions contemplated by this Agreement, including the
Merger, or any Third Party Acquisition, without the prior consent of Parent and
Acquisition (in the case of the Company) or the Company (in the case of Parent
or Acquisition), except (i) as may be required by Applicable Law, or by the
rules and regulations of, or pursuant to any agreement with, the Nasdaq National
Market, (ii) following a change, if any, of the Company Board's recommendation
of the Merger (in accordance with Section 5.2(b)) or (iii) only in the case of a
release or statement relating to a Third Party Acquisition, if the Company Board
has been advised by outside legal counsel that a press release or other public
statement is required by Applicable Law. The first public announcement of this
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Agreement, the Offer and the Merger shall be a joint press release agreed upon
by Parent, Acquisition and the Company.
SECTION 5.7. Indemnification and Directors' and Officers' Insurance.
(a) From and after the Effective Time, Parent shall cause the Surviving
Corporation to indemnify, defend and hold harmless (and shall also cause the
Surviving Corporation to advance expenses as incurred to the fullest extent
permitted under Applicable Law to), to the extent not covered by insurance, each
person who is now or has been prior to the date hereof or who becomes prior to
the Effective Time an officer or director of the Company or any of the Company's
subsidiaries (the "Indemnified Persons") against (i) all losses, claims,
damages, costs, expenses (including counsel fees and expenses), settlement,
payments or liabilities arising out of or in connection with any claim, demand,
action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was an
officer or director of the Company or any of its subsidiaries, whether or not
pertaining to any matter existing or occurring at or prior to the Effective Time
and whether or not asserted or claimed prior to or at or after the Effective
Time ("Indemnified Liabilities"); and (ii) all Indemnified Liabilities based in
whole or in part on or arising in whole or in part out of or pertaining to this
Agreement, the Stock Option Agreement or the transactions contemplated hereby or
thereby, in each case to the fullest extent required or permitted under
Applicable Law. Nothing contained herein shall make Parent, Acquisition, the
Company or the Surviving Corporation, an insurer, a co-insurer or an excess
insurer in respect of any insurance policies which may provide coverage for
Indemnified Liabilities, nor shall this Section 5.7 relieve the obligations of
any insurer in respect thereto. The parties hereto intend, to the extent not
prohibited by Applicable Law, that the indemnification provided for in this
Section 5.7 shall apply without limitation to negligent acts or omissions by an
Indemnified Person. Each Indemnified Person is intended to be a third party
beneficiary of this Section 5.7 and may specifically enforce its terms. This
Section 5.7 shall not limit or otherwise adversely affect any rights any
Indemnified Person may have under any agreement with the Company or under the
Company's Certificate of Incorporation or bylaws as presently in effect.
(b) From and after the Effective Time, Parent shall cause the Surviving
Corporation to fulfill and honor in all respects the obligations of the Company
pursuant to any indemnification agreements between the Company and its directors
and officers as of or prior to the date hereof (or indemnification agreements in
the Company's customary form for directors joining the Company Board prior to
the Effective Time) and any indemnification provisions under the Company's
certificate of incorporation or bylaws as in effect immediately prior to the
Effective Time. The Surviving Corporation's aggregate obligation to indemnify
and hold harmless all Indemnified Persons for all matters to which such
Indemnified Persons may be entitled to be indemnified or held harmless under
subsections (a) and (b) of this Section 5.7 shall in no event exceed the
Company's net worth as of March 31, 1999.
(c) For a period of six years after the Effective Time, Parent will
maintain or cause the Surviving Corporation to maintain in effect, if available,
directors' and officers' liability insurance covering those persons who, as of
immediately prior to the Effective Time, are covered by the Company's directors'
and officers' liability insurance policy (the "Insured Parties") on terms no
less favorable to the Insured Parties than those of the Company's present
directors' and officers' liability insurance policy; provided, however, that in
no event shall Parent or the Company be required to expend on an annual basis in
excess of 200% of the annual premium currently paid by the Company for such
coverage (or such coverage as is available for 200% of such annual premium);
provided further, that, in lieu of maintaining such existing insurance as
provided above, Parent, at its election, may cause coverage to be provided under
any policy maintained for the benefit of Parent or any of its subsidiaries, so
long as the terms are not materially less advantageous to the intended
beneficiaries thereof than such existing insurance.
(d) Neither Parent nor any of its affiliates shall be obligated to
guarantee the payment or performance of the Company's obligations under
subsection (a) or (b) of this Section 5.7, so long as the Surviving Corporation
honors such obligations to the extent of the Company's net worth at March 31,
1999. In no event, however, shall Parent or any such affiliate have any
liability or obligation to any Indemnified Person arising from the Company's
breach of, or inability to perform its obligations under, subsection (a) or (b)
of
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this Section 5.7 in excess of the difference between the net worth of the
Company at March 31, 1999 and the aggregate of all amounts paid by the Company
in satisfaction of such obligation. The provisions of this Section 5.7 are
intended to be for the benefit of, and will be enforceable by, each person
entitled to indemnification hereunder and the heirs and representatives of such
person. Parent will not permit the Company to merge or consolidate with any
other Person unless the Company will ensure that the surviving or resulting
entity assumes the obligations imposed by this Section 5.7.
SECTION 5.8. Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which has caused or would be likely to cause any representation or warranty
contained in this Agreement by such first party to be untrue or inaccurate in
any material respect at or prior to the Effective Time and (ii) any material
failure by such first party to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 5.8 shall not cure such breach or non-compliance or limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
SECTION 5.9. Additions to and Modification of Company Disclosure
Schedule. Concurrently with the execution and delivery of this Agreement, the
Company has delivered a Company Disclosure Schedule that includes all of the
information required by the relevant provisions of this Agreement. In addition,
the Company shall deliver to Parent and Acquisition such additions to or
modifications of any Sections of the Company Disclosure Schedule necessary to
make the information set forth therein true, accurate and complete in all
material respects as soon as practicable after such information is available to
the Company after the date of execution and delivery of this Agreement;
provided, however, that such disclosure shall not be deemed to constitute an
exception to its representations and warranties under Article 3, nor limit the
rights and remedies of Parent and Acquisition under this Agreement for any
breach by the Company of such representation and warranties.
SECTION 5.10. Access to Company Employees. The Company agrees to provide
Parent with, and to cause each of its subsidiaries to provide Parent with,
reasonable access to its employees during normal working hours following the
date of this Agreement, to among other things, deliver offers of continued
employment and to provide information to such employees about Parent.
SECTION 5.11. Company Compensation and Benefit Plans. The Company agrees to
take all actions necessary to amend, merge, freeze or terminate all compensation
and benefit plans, effective at the Closing Date, as requested in writing by
Parent.
SECTION 5.12. Takeover Statutes. If any Takeover Statute or any similar
statute, law, rule or regulation in any State of the United States (including
under the NJBCA or any other law of the State of New Jersey) is or may become
applicable to the Offer, the Merger or any of the other transactions
contemplated by this Agreement or the Stock Option Agreement, the Company and
the Company Board shall promptly grant such approvals and use all reasonable
efforts to take such lawful actions as are necessary so that such transactions
may be consummated as promptly as practicable on the terms contemplated by this
Agreement or the Stock Option Agreement, as the case may be, or by the Offer or
the Merger, as the case may be, and use all reasonable efforts to otherwise take
such lawful actions to eliminate or minimize the effects of such statute, law,
rule or regulation, on such transactions.
SECTION 5.13. Company Stock Options.
(a) The Company agrees that, from and after the date hereof, it will not
take any action or refrain from taking any action, that (i) will prevent or is
inconsistent with Parent assuming any of the Assumed Options or any of the
Assumed Option Plans, (ii) results in the acceleration of the vesting or
exercisability of any Assumed Option or (iii) causes the transactions
contemplated by this Agreement to result in or cause the acceleration of the
vesting or exercisability of any Assumed Option.
(b) From and after the date hereof, the Company agrees that with respect
to each restricted stock grant and each grant of a Company Option in connection
with an offer of employment for a new employee, such grant will not include or
be subject to any change of control provisions (including the change in control
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provisions of the 1997 Plan or 1988 Plan) and will not be in an amount in excess
of such grants made to new employees of a similar grade, consistent with past
practice, and will be within the ranges set forth in the "At-Hire Grant
Guidelines" approved by Parent and set forth in Section 5.13 of the Company
Disclosure Schedule.
(c) From and after the date hereof, the Company agrees that, with
respect to each restricted stock grant and each grant of a Company Option
granted to a continuing employee after May 25, 1999, such grant will not include
or be subject to any change in control provisions (including the change in
control provisions of the 1997 Plan or 1988 Plan), will not be in an amount in
excess of such grants made to continuing employees of a similar grade,
consistent with past practice, and will otherwise be within the ranges set forth
in the "Add-On Grant Guidelines" approved by Parent and set forth in Section
5.13 of the Company Disclosure Schedule, and the aggregate number of shares
covered by such grants shall not exceed Six Hundred Sixty Thousand (660,000).
(d) The Company agrees to cause the Company Board to adopt all
resolutions reasonably necessary or appropriate to further the purposes of
subsections (a), (b) and (c) of this Section 5.13 and provide that all options
outstanding under each Assumed Option Plan can be assumed by Parent.
(e) The Company will provide the notice described in clause II of
Section 12 of the Company's 1993 Non-Employee Director Stock Option Plan and
will take all actions necessary to effect the procedures described therein.
(f) In the event that a "DSE/DP Participant" ceases to be a member of
the Company Board as a result of the Merger, Parent shall assure that such
DSE/DP Participant receives the same benefits that he would have received had
his service on the Company Board been terminated immediately prior to the
Effective Time and had he then received shares of Company Common Stock pursuant
to the Company's 1997 Director Stock Election/Deferral Plan (the "DSE/DP") prior
to the Effective Time. The term "DSE/DP Participant" shall mean a participant in
the DSE/DP, but only to the extent that such participant has elected to receive
deferred fees in the form of Company Common Stock.
(g) The Company's actual new hires prior to Closing shall be consistent
with and within the ranges set forth in the 1999 hiring plan set forth in
Schedule 5.13.
SECTION 5.14. ISRA. The Company agrees that it shall, at its sole cost and
expense, either: (a) obtain from the New Jersey Department of Environmental
Protection (the "NJDEP") a "Letter of Non-Applicability" that the transactions
contemplated by this Agreement are exempt from the requirements of ISRA; or (b)
attain compliance with the requirements of ISRA by obtaining from the NJDEP (i)
approval of a proposed "Negative Declaration", as such term is defined at
N.J.S.A. 13:1K-8, (ii) a "no further action letter", as such term is defined at
N.J.S.A. 13:1K-8, or (iii) an equivalent final written approval of the
implementation of a "Remedial action workplan", as that term is defined at
N.J.S.A. 58:10B-1, which is acceptable to the NJDEP and Parent, such acceptance
by Parent not to be unreasonably withheld. The Company further agrees that, as
required by the NJDEP, it shall obtain and maintain a "Remediation funding
source," as such term is defined at N.J.S.A. 58:10B-1 in an amount and form
acceptable to the NJDEP. The Company shall provide Parent a reasonable
opportunity to review and comment on all proposed filings and correspondence by
the Company under this Section 5.14 prior to filing with the NJDEP, and shall
provide a copy of all filings and correspondence by the Company under this
Section 5.14 no later than two (2) business days after being filed or delivered
to the NJDEP. The Company shall provide to Parent copies of all written
correspondence received from the NJDEP promptly following receipt and shall
promptly advise Parent of any oral, electronic or other communications from the
NJDEP.
SECTION 5.15. Certain Rights of Warrant Holder. The holder of the Warrant
(as defined herein) shall have the right, on and after the Effective Time, to
purchase and receive upon the basis and upon the terms and conditions specified
in the Warrant, upon exercise of the Warrant in accordance with its terms, and
in lieu of the "Warrant Shares" (as such term is defined in the Warrant)
immediately theretofore purchasable and receivable upon the exercise of the
rights represented thereby, such amount of cash as may be payable pursuant to
the terms of this Agreement with respect to or in exchange for the number of
shares of Company
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Common Stock immediately theretofore purchasable upon the exercise of the rights
represented by the Warrant as if such shares were outstanding immediately prior
to the Effective Time. For purposes of this Section 5.15, the term "Warrant"
shall mean the Dialogic Common Stock Purchase Warrant delivered to Microsoft
Corporation pursuant to Dialogic's Common Stock and Warrant Purchase Agreement
with Microsoft Corporation dated as of March 1, 1999.
ARTICLE 6
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1. Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of each party hereto to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been approved and adopted by the requisite
vote of the stockholders of the Company, if required by Applicable Law;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States federal or state court or United States federal or state
Governmental Entity that prohibits, restrains, enjoins or restricts the
consummation of the Merger;
(c) any governmental or regulatory notices, approvals or other
requirements necessary to consummate the transactions contemplated hereby and to
operate the Business after the Effective Time in all material respects as it was
operated prior thereto (other than under the HSR Act) shall have been given,
obtained or complied with, as applicable; and
(d) the Proxy Statement, if required to be prepared and disseminated to
the Company's stockholders, shall have been cleared by the SEC and shall not be
the subject of any stop order.
SECTION 6.2. Conditions to the Obligations of the Company. The obligation
of the Company to effect the Merger is subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(a) the representations and warranties of Parent and Acquisition
contained in this Agreement shall be true and correct (except to the extent that
the aggregate of all breaches thereof do not constitute a Material Adverse
Effect on Parent) at and as of the Effective Time with the same effect as if
made at and as of the Effective Time (except to the extent such representations
specifically relate to an earlier date, in which case such representations shall
be true and correct as of such earlier date, and in any event, subject to the
foregoing Material Adverse Effect qualification) and, at the Closing, Parent and
Acquisition shall have delivered to the Company a certificate to that effect,
executed by two (2) executive officers of Parent and Acquisition; and
(b) each of the covenants and obligations of Parent and Acquisition to
be performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or before
the Effective Time and, at the Closing, Parent and Acquisition shall have
delivered to the Company a certificate to that effect, executed by two (2)
executive officers of Parent and Acquisition.
SECTION 6.3. Conditions to the Obligations of Parent and Acquisition. The
respective obligations of Parent and Acquisition to effect the Merger are
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) the representations and warranties of the Company contained in this
Agreement shall be true and correct (except to the extent that the aggregate of
all breaches thereof do not constitute a Material Adverse Effect on the Company)
at and as of the Effective Time with the same effect as if made at and as of the
Effective Time (except to the extent such representations specifically relate to
an earlier date, in which case such representations shall be true and correct as
of such earlier date, and in any event, subject to the foregoing Material
Adverse Effect qualification) and, at the Closing, the Company shall have
delivered to Parent and Acquisition a certificate to that effect, executed by
two (2) executive officers of the Company;
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(b) each of the covenants and obligations of the Company to be performed
at or before the Effective Time pursuant to the terms of this Agreement shall
have been duly performed in all material respects at or before the Effective
Time and, at the Closing, the Company shall have delivered to Parent and
Acquisition a certificate to that effect, executed by two (2) executive officers
of the Company;
(c) since March 31, 1999, there shall have been no events, changes or
effects, individually or in the aggregate, with respect to the Company or its
subsidiaries that constitutes a Material Adverse Effect on the Company; or
(d) in connection with the compliance by Parent or Acquisition with any
Applicable Law (including the HSR Act) or obtaining the consent or approval of
any Governmental Entity whose consent or approval may be required to consummate
the transactions contemplated by this Agreement, Parent shall not be (i)
required, or be construed to be required, to sell or divest any assets or
business or to restrict any business operations in order to obtain the consent
or successful termination of any review of any such Governmental Entity
regarding the transactions contemplated hereby or (ii) prohibited from owning,
and no material limitation shall be imposed on Parent's ownership of, any
material portion of the Company's business or assets.
ARTICLE 7
TERMINATION; AMENDMENT; WAIVER
SECTION 7.1. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time whether before or after
approval and adoption of this Agreement by the Company's stockholders:
(a) by mutual written consent of Parent, Acquisition and the Company;
(b) by Parent and Acquisition or the Company if (i) any court of
competent jurisdiction in the United States or other United States federal or
state Governmental Entity shall have issued a final order, decree or ruling, or
taken any other final action, restraining, enjoining or otherwise prohibiting
the Merger and such order, decree, ruling or other action is or shall have
become nonappealable or (ii) the Merger has not been consummated by December 15,
1999 (the "Final Date"); provided, however, that no party may terminate this
Agreement pursuant to this clause (ii) if such party's failure to fulfill any of
its obligations under this Agreement shall have been a principal reason that the
Effective Time shall not have occurred on or before said date;
(c) by the Company if (i) there shall have been a breach of any
representations or warranties on the part of Parent or Acquisition set forth in
this Agreement or if any representations or warranties of Parent or Acquisition
shall have become untrue such that, in either such instance, the conditions set
forth in Section 6.2(a) would be incapable of being satisfied by the Final Date,
provided that the Company has not breached any of its obligations hereunder in
any material respect; (ii) there shall have been a breach by Parent or
Acquisition of any of their respective covenants or agreements hereunder having
a Material Adverse Effect on Parent or materially adversely affecting (or
materially delaying) the ability of the Company to consummate the Merger, and
Parent or Acquisition, as the case may be, has not cured such breach within five
(5) business days after notice by the Company thereof, provided that the Company
has not breached any of its obligations hereunder in any material respect; (iii)
the Company shall have convened the Meeting and shall have failed to obtain the
requisite vote of its stockholders thereat (including any adjournments thereof);
or (iv) the Company Board has received a Superior Proposal, has complied with
the provisions of Section 5.3(b), and has made the payment called for by Section
7.3(a);
(d) by Parent and Acquisition if (i) there shall have been a breach of
any representations or warranties on the part of the Company set forth in this
Agreement or if any representations or warranties of the Company shall have
become untrue such that, in either such instance, the conditions set forth in
Section 6.3(a) would be incapable of being satisfied by the Final Date, provided
that neither Parent nor Acquisition has breached any of their respective
obligations hereunder in any material respect; (ii) there shall have been a
breach by the Company of one or more of its covenants or agreements hereunder
having a
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Material Adverse Effect on the Company (or, in the case of Section 5.2, any
material breach thereof) or materially adversely affecting (or materially
delaying) the ability of Acquisition to consummate the Offer or of Parent,
Acquisition or the Company to consummate the Merger, and the Company has not
cured such breach within five (5) business days after notice by Parent or
Acquisition thereof, provided that neither Parent nor Acquisition has breached
any of their respective obligations hereunder in any material respect; (iii) the
Company Board shall have recommended to the Company's stockholders a Superior
Proposal; (iv) the Company Board shall have withdrawn or adversely modified its
approval or recommendation of this Agreement, the Offer or the Merger; (v) at
any time after the date on which Acquisition has accepted Shares for payment
pursuant to the Offer, the Company Board (with the concurrence of, or because of
the vote of, one or more of the Continuing Directors) shall have ceased using
all reasonable efforts to call, give notice of, or convene or hold the Meeting
as promptly as practicable or shall have adopted a resolution not to effect any
of the foregoing; or (vi) the Company shall have convened the Meeting,
Acquisition shall have voted all of the Shares accepted by Acquisition for
payment pursuant to the Offer in favor of the Merger, and the Company shall have
failed to obtain the requisite vote of its stockholders thereat (including any
adjournments thereof);
(e) by the Company, if by the Final Date, Acquisition shall have failed
to pay for Shares pursuant to the Offer; provided, however, that the right to
terminate this Agreement pursuant to this subsection (e) shall not be available
to the Company if it has breached in any material respect its obligations under
this Agreement that in any manner shall have proximately contributed in any
material respect to the failure referenced in this subsection (e); or
(f) by Parent and Acquisition, if Acquisition shall have terminated the
Offer in accordance with the provisions of Annex A; provided, however, that the
right to terminate this Agreement pursuant to this subsection (f) shall not be
available to Parent and Acquisition if either of them has breached in any
material respect its obligations under this Agreement in any manner that shall
have proximately contributed in any material respect to the termination of the
Offer.
SECTION 7.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any party hereto or its affiliates, directors, officers or stockholders other
than the provisions of this Section 7.2 and Sections 5.4(c) and 7.3. Nothing
contained in this Section 7.2 shall relieve any party from liability for any
breach of any covenant in this Agreement prior to such termination. The
representation and warranties made herein shall not survive beyond the Effective
Time or a termination of this Agreement, and, except for payments that may be
required under Section 7.3, no party shall have any liability for breach of any
representation or warranty. Nothing set forth herein shall limit any rights any
party may have arising out of the intentional fraudulent conduct of any other
party hereto.
SECTION 7.3. Fees and Expenses.
(a) In the event that this Agreement shall be terminated pursuant to:
(i) Section 7.1(c)(iv) or 7.1(d)(iii), (iv) or (v);
(ii) Section 7.1(d)(i) or (ii) and, at the time of such termination,
(x) there is outstanding an offer by a Third Party to consummate, or a Third
Party shall have publicly announced (and not withdrawn) a plan or proposal with
respect to, a Third Party Acquisition and such Third Party Acquisition occurs,
or (y) there is no such Third Party offer outstanding or plan or proposal
announced but within twelve (12) months after the date on which this Agreement
has been terminated the Company enters into an agreement with respect to a Third
Party Acquisition or a Third Party Acquisition occurs involving any person other
than Parent or one of its subsidiaries;
(iii) Section 7.1(f) and, at the time of such termination, there is
outstanding an offer by a Third Party to consummate, or a Third Party shall have
publicly announced (and not withdrawn) a plan or proposal with respect to a
Third Party Acquisition and the Company has entered into an agreement with
respect to such Third Party Acquisition or such Third Party Acquisition
otherwise occurs within twelve (12) months after the date on which this
Agreement has been terminated; or
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(iv) Section 7.1(c)(iii) or 7.1(d)(vi) and at the time of the Meeting
at which the Company failed to obtain the requisite vote there shall be
outstanding at that time an offer by a Third Party to consummate, or a Third
Party shall have publicly announced (and not withdrawn) a plan or proposal with
respect to, a Third Party Acquisition;
Parent and Acquisition would suffer direct and substantial damages, which
damages cannot be determined with reasonable certainty. To compensate Parent and
Acquisition for such damages, the Company shall pay to Parent the amount of
Twenty Five Million Dollars ($25,000,000) in liquidated damages immediately upon
the occurrence of the event described in this Section 7.3(a) giving rise to such
damages. It is specifically agreed that the amount to be paid pursuant to this
Section 7.3(a) represents liquidated damages and not a penalty. The Company
hereby waives any right to set-off or counterclaim against such amount.
(b) Upon termination of this Agreement pursuant to Section 7.1(c)(iii)
or (iv), or Section 7.1(d)(i), (ii), (iii), (iv), (v) or (vi), in addition to
any other remedies that Parent, Acquisition or their affiliates may have as a
result of such termination (including pursuant to Section 7.3(a) or otherwise),
the Company shall pay to Parent the amount of Three Million Dollars ($3,000,000)
as reimbursement for the out-of-pocket costs, fees and expenses incurred by any
of them or on their behalf in connection with this Agreement, the Stock Option
Agreement, the Offer, the Merger and the consummation of all transactions
contemplated by this Agreement and the Stock Option Agreement (including fees
payable to investment bankers, counsel to any of the foregoing and accountants);
provided, however, that if Parent requests reimbursement for such costs, fees
and expenses in excess of $1,000,000, Parent shall accompany such request with
invoices or other reasonable evidence of its or Acquisitions payment of such
costs, fees and expenses. If such request for reimbursement of such costs, fees
and expenses is in excess of $1,000,000, the Company shall promptly pay to
Parent $1,000,000 after Parent has requested reimbursement pursuant to this
subsection (b), and shall pay any balance promptly following receipt of such
invoices or other evidence. Notwithstanding any of the foregoing, Parent shall
not be entitled to receive more than $3,000,000 pursuant to this subsection (b).
Nothing contained in this Section 7.3(b) shall relieve any party of any
liability for breach of this Agreement.
(c) Upon termination of this Agreement pursuant to Section 7.1(c)(i) or
(ii), in addition to any other remedies that the Company or its affiliates may
have as a result of such termination, Parent shall pay to the Company the amount
of Three Million Dollars ($3,000,000) as reimbursement for the out-of-pocket
costs, fees and expenses incurred by any of them or on their behalf in
connection with this Agreement, the Stock Option Agreement, the Offer, the
Merger and the consummation of all transactions contemplated by this Agreement
and the Stock Option Agreement (including fees payable to investment bankers,
counsel to any of the foregoing and accountants); provided, however, that if the
Company requests reimbursement for such costs, fees and expenses in excess of
$1,000,000, the Company shall accompany such request with invoices or other
reasonable evidence of the payment thereof. If the Company makes such request
for reimbursement of such costs, fees and expenses in excess of $1,000,000,
Parent shall promptly pay to the Company $1,000,000 after the Company has
requested reimbursement pursuant to this subsection (c), and shall pay any
balance promptly following receipt of such invoices or other evidence.
Notwithstanding any of the foregoing, the Company shall not be entitled to
receive more than $3,000,000 pursuant to this subsection (c). Nothing contained
in this Section 7.3(c) shall relieve any party of any liability for breach of
this Agreement.
(d) Except as specifically provided in this Section 7.3, each party
shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby. The parties acknowledge that Parent shall pay
the fees imposed in connection with its filing under the HSR Act.
(e) The parties acknowledge that the agreements contained in this
Article 7 (including this Section 7.3) are an integral part of the transactions
contemplated by this Agreement and that, without these agreements, the parties
would not enter into this Agreement. Accordingly, if any party fails promptly to
pay the amounts required pursuant to Section 7.3 when due (including
circumstances where, in order to obtain such payment a party commences a suit
that results in a final nonappealable judgment against another party for such
amounts), the defaulting party shall pay to the other party (i) their costs and
expenses (including attorneys' fees) in connection with such suit and (ii)
interest on the amount that was determined to be due
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and payable hereunder at the rate announced by Chase Manhattan Bank as its
"reference rate" in effect on the date such payment was required to be made.
SECTION 7.4. Amendment. This Agreement may be amended by action taken by
the Company, Parent and Acquisition at any time before or after approval of the
Merger by the stockholders of the Company but after any such approval no
amendment shall be made that requires the approval of such stockholders under
Applicable Law without such approval. This Agreement (including, subject to
Section 5.9, the Company Disclosure Schedule) may be amended only by an
instrument in writing signed on behalf of the parties hereto.
Section 7.5. Extension; Waiver. At any time prior to the Effective Time,
each party hereto 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 any 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.
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ARTICLE 8
MISCELLANEOUS
SECTION 8.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 8.1 shall not
limit any covenant or agreement of the parties hereto that by its terms requires
performance after the Effective Time.
SECTION 8.2. Entire Agreement; Assignment. This Agreement (including the
Company Disclosure Schedule and the Exhibits and Annex A, all of which are
incorporated by reference into this Agreement) and the Stock Option Agreement
(a) constitute the entire agreement between the parties hereto with respect to
the subject matter hereof and supersede all other prior and contemporaneous
agreements and understandings both written and oral between the parties with
respect to the subject matter hereof and (b) shall not be assigned by operation
of law or otherwise; provided, however, that Acquisition may assign any or all
of its rights and obligations under this Agreement to any wholly owned
subsidiary of Parent, but no such assignment shall relieve Acquisition of its
obligations hereunder if such assignee does not perform such obligations.
SECTION 8.3. Validity. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
SECTION 8.4. Notices. All notices and other communications pursuant to this
Agreement shall be in writing and shall be deemed given if delivered personally,
telecopied, sent by nationally-recognized overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the addresses set forth below or to such other address as the party
to whom notice is to be given may have furnished to the other parties hereto in
writing in accordance herewith. Any such notice or communication shall be deemed
to have been delivered and received (i) in the case of personal delivery, on the
date of such delivery, (ii) in the case of telecopier, on the date sent if
confirmation of receipt is received and such notice is also promptly mailed by
registered or certified mail (return receipt requested), (iii) in the case of a
nationally-recognized overnight courier in circumstances under which such
courier guarantees next business day delivery, on the next business day after
the date when sent and (iv) in the case of mailing, on the third business day
following that on which the piece of mail containing such communication is
posted:
<TABLE>
<S> <C>
if to Parent or Acquisition: Intel Corporation
2200 Mission College Boulevard
Santa Clara, California 95052
Telecopier: (408) 765-1859
Attention: General Counsel
and
Intel Corporation
2200 Mission College Boulevard
Santa Clara, California 95052
Telecopier: (408) 765-6038
Attention: Treasurer
with a copy to: Gibson, Dunn & Crutcher LLP
One Montgomery Street
Telesis Tower
San Francisco, California 94104
Telecopier: (415) 986-5309
Attention: Kenneth R. Lamb
and
Gregory J. Conklin
</TABLE>
38
<PAGE> 45
<TABLE>
<S> <C>
if to the Company to: Dialogic Corporation
1515 Route 10
Parsippany, New Jersey 07054
Telecopier: (973) 993-3060
Attention: General Counsel
with a copy to: Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
Telecopier: (973) 597-2351
Attention: Peter H. Ehrenberg
and: Winthrop, Stimson, Putnam & Roberts
One Battery Park
New York, New York 10004
Telecopier: (212) 858-1442
Attention: Stephen R. Rusmisel
</TABLE>
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
SECTION 8.5. Governing Law and Venue; Waiver of Jury Trial.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS
SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW
OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. The parties hereby irrevocably submit to the jurisdiction of the courts
of the State of Delaware and the Federal courts of the United States of America
located in the State of Delaware solely in respect of the interpretation and
enforcement of the provisions of this Agreement and of the documents referred to
in this Agreement, and in respect of the transactions contemplated hereby, and
hereby waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such document,
that it is not subject thereto or that such action, suit or proceeding may not
be brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such document may not be
enforced in or by such courts, and the parties hereto irrevocably agree that all
claims with respect to such action or proceeding shall be heard and determined
in such a Delaware State or Federal court. The parties hereby consent to and
grant any such court jurisdiction over the person of such parties and over the
subject matter of such dispute and agree that mailing of process or other papers
in connection with any such action or proceeding in the manner provided in
Section 8.4 or in such other manner as may be permitted by Applicable Law, shall
be valid and sufficient service thereof.
(b) The parties agree that irreparable damage would occur and that the
parties would not have any adequate remedy at law 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 Federal court located in the State of Delaware or in Delaware
state court, this being in addition to any other remedy to which they are
entitled at law or in equity.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.5.
39
<PAGE> 46
SECTION 8.6. Descriptive Headings; Article and Section References. 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. All Article, Section, Subsection, Schedule, Exhibit and Annex
references in this Agreement are to Articles, Sections, subsections, Schedules,
Exhibits and Annexes, respectively, of or to this Agreement unless specified
otherwise.
SECTION 8.7. 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 expressly provided herein, including in
Sections 5.7 and 8.2, nothing in this Agreement 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 8.8. Certain Definitions. For the purposes of this Agreement the
term:
(a) "affiliate" means a person that, directly or indirectly, through one
or more intermediaries controls, is controlled by or is under common control
with the first-mentioned person.
(b) "Applicable Law" means, with respect to any person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, regulation,
order, writ, injunction, judgment, decree or other requirement of any
Governmental Entity existing as of the date hereof or as of the Effective Time
applicable to such Person or any of its respective properties, assets, officers,
directors, employees, consultants or agents.
(c) "business day" means any day other than a day on which the Nasdaq
National Market is closed.
(d) "capital stock" means common stock, preferred stock, partnership
interests, limited liability company interests or other ownership interests
entitling the holder thereof to vote with respect to matters involving the
issuer thereof.
(e) "Company Plans" means the Assumed Option Plans, together with the
Company's 1993 Non-Employee Director Stock Option Plan, as amended and restated
through March 29, 1997, Profit Sharing Plan and 401(k) Plan and the Dialogic
Corporation 1997 Director Stock Election/Deferral Plan.
(f) "knowledge" or "known" means, with respect to any matter in
question, the actual knowledge of such matter of any member of the Board of
Directors or any officer or employee of the Company or any of its subsidiaries,
or Parent or any of its subsidiaries, as the case may be, and each of such
persons shall be deemed to have actual knowledge of all books and records in the
possession or control of the Company or any of its subsidiaries, or Parent or
any of its subsidiaries, as the case may be, and all books and records to which
he or she has reasonable access.
(g) "include" or "including" means "include, without limitation" or
"including, without limitation," as the case may be, and the language following
"include" or "including" shall not be deemed to set forth an exhaustive list.
(h) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization or other
legal entity including any Governmental Entity.
(i) "Stock Option Agreement" means that certain Stock Option Agreement
of even date herewith between the Company and Parent.
(j) "subsidiary" or "subsidiaries" of the Company, Parent, the Surviving
Corporation or any other person means any corporation, partnership, limited
liability company, association, trust, unincorporated association or other legal
entity of which the Company, Parent, the Surviving Corporation or any such other
person, as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the capital stock the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
SECTION 8.9. Personal Liability. This Agreement shall not create or be
deemed to create or permit any personal liability or obligation on the part of
any direct or indirect stockholder of the Company or Parent or Acquisition or
any officer, director, employee, agent, representative or investor of any party
hereto.
40
<PAGE> 47
SECTION 8.10. Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Offer or the Merger, will cause irreparable
injury to the other parties, for which damages, even if available, will not be
an adequate remedy. Accordingly, each party hereby consents to the issuance of
injunctive relief by any court of competent jurisdiction to compel performance
of such party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder; provided, however, that if a
party hereto is entitled to receive any payment or reimbursement of expenses
pursuant to Section 7.3(a), (b) or (c), it shall not be entitled to specific
performance to compel the consummation of the Offer or the Merger.
SECTION 8.11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
41
<PAGE> 48
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
DIALOGIC CORPORATION, a New Jersey
corporation
By: /s/ HOWARD BUBB
--------------------------------------
Name: Howard Bubb
Title: President
Date: May 31, 1999
INTEL CORPORATION, a Delaware
corporation
By: /s/ ARVIND SODHANI
--------------------------------------
Name: Arvind Sodhani
Title: Treasurer
Date: May 31, 1999
INTEL LMH ACQUISITION CORPORATION, a
New Jersey corporation
By: /s/ ARVIND SODHANI
--------------------------------------
Name: Arvind Sodhani
Title: Treasurer
Date: May 31, 1999
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER BY AND AMONG DIALOGIC
CORPORATION, INTEL CORPORATION AND INTEL LMH ACQUISITION CORPORATION]
42
<PAGE> 49
ANNEX A
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer or this Agreement, and
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) relating to Acquisition's obligation to pay for or return tendered
shares after termination of the Offer, Acquisition shall not be required to
accept for payment or pay for any Shares tendered pursuant to the Offer, may
delay the acceptance for payment of any Shares pursuant to Section 1.1(b) of
this Agreement, may extend the Offer by one or more times, and may terminate the
Offer at any time after September 15, 1999 if (i) less than a majority of the
outstanding Shares on a fully-diluted basis (including for purposes of such
calculation all Shares issuable upon exercise of all vested Company Stock
Options and unvested Company Stock Options that vest prior to the Final Date,
but excluding any Shares held by the Company or any of its subsidiaries) has
been tendered pursuant to the Offer by the expiration of the Offer and not
withdrawn; (ii) any applicable waiting period under the HSR Act has not expired
or terminated; (iii) all necessary consents and approvals from all Governmental
Entities shall not have been obtained on terms and conditions reasonably
satisfactory to Parent; or (iv) at any time after the date of this Agreement,
and before acceptance for payment of any Shares, any of the following events
shall occur and be continuing:
(a) (1) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued or deemed applicable to the Offer or the Merger by any domestic
or foreign court or other Governmental Entity which directly or indirectly (i)
prohibits, or makes illegal, the acceptance for payment, payment for or purchase
of Shares or the consummation of the Offer, the Merger or the other transactions
contemplated by this Agreement, (ii) renders Acquisition unable to accept for
payment, pay for or purchase some or all of the Shares, (iii) imposes material
limitations on the ability of Parent effectively to exercise full rights of
ownership of the Shares, including the right to vote the Shares purchased by it
on all matters properly presented to the Company's stockholders, or (iv)
otherwise has a Material Adverse Effect on the Company; or (2) in connection
with the compliance by Parent or Acquisition with any Applicable Law (including
the HSR Act) or obtaining the consent or approval of any Governmental Entity
whose consent or approval may be required to consummate the transactions
contemplated by this Agreement, Parent shall be (i) required, or be construed to
be required, to sell or divest any assets or business or to restrict any
business operations in order to obtain the consent or successful termination of
any review of any such Governmental Entity regarding the transactions
contemplated hereby or (ii) prohibited from owning, or any material limitation
shall be imposed on Parent's ownership of, any material portion of the Company's
business or assets.
(b) (i) the representations and warranties of the Company contained in
this Agreement shall not be true and correct (except to the extent that the
aggregate of all breaches thereof would not have a Material Adverse Effect on
the Company) at the date hereof and as of the consummation of the Offer with the
same effect as if made at and as of the consummation of the Offer (except to the
extent such representations specifically relate to an earlier date, in which
case such representations shall be true and correct as of such earlier date, and
in any event, subject to the foregoing Material Adverse Effect qualification),
(ii) the Company shall have failed to perform in all material respects its
covenants and obligations contained in this Agreement , or (iii) there shall
have occurred since March 31, 1999 any events or changes which constitute a
Material Adverse Effect on the Company;
(c) it shall have been publicly disclosed or Parent shall have otherwise
learned that (i) any person or "group" (as defined in Section l3(d)(3) of the
Exchange Act) shall have acquired or entered into a definitive agreement or
agreement in principle to acquire beneficial ownership of more than 20% of the
Shares or any other class of capital stock of the Company, through the
acquisition of stock, the formation of a group or otherwise, or shall have been
granted any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 20% of the Shares and (ii) such person or
group shall not have tendered such Shares pursuant to the Offer;
(d) the Company Board shall have withdrawn, or modified or changed in a
manner adverse to Parent and Acquisition (including by amendment of the Schedule
14D-9), its recommendation of the Offer,
<PAGE> 50
this Agreement or the Merger, or recommended another proposal or offer, or the
Company Board, shall have resolved to do any of the foregoing;
(e) this Agreement shall have terminated in accordance with its terms;
or
(f) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange or the
Nasdaq National Market, for a period in excess of twenty-four (24) hours, (ii)
the commencement of a war, armed hostilities or other national or international
calamity directly or indirectly involving the United States that constitutes a
Material Adverse Effect on the Company or materially adversely affects or delays
the consummation of the Offer, (iii) the average of the closing prices of the
Standard & Poor's 500 Index for any twenty (20) consecutive trading days shall
be twenty-five percent (25%) or more below the closing price of such index on
any trading day on or after the date hereof that precedes the commencement of
such 20-trading day period, or (iv) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration or
worsening thereof;
which in the good faith judgment of Parent, in any such case, and regardless of
the circumstances (including any action or inaction by Parent) giving rise to
such condition makes it inadvisable to proceed with the Offer or the acceptance
for payment of or payment for the Shares.
The foregoing conditions (other than the Minimum Condition) are for the sole
benefit of Parent and Acquisition and may be waived by Parent and Acquisition,
in whole or in part at any time and from time to time, in the sole discretion of
Parent and Acquisition. The failure by Parent and Acquisition at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
2
<PAGE> 1
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Stock Option Agreement"), dated as of
May 31, 1999, is by and between Intel Corporation, a Delaware corporation
("Grantee"), and Dialogic Corporation, a New Jersey corporation ("Issuer").
RECITALS
A. Grantee, Intel LMH Acquisition Corporation, a New Jersey corporation and
wholly-owned subsidiary of Grantee ("Acquisition"), and Issuer are
simultaneously entering into an Agreement and Plan of Merger (the "Merger
Agreement") which provides, among other things, that upon the terms and subject
to the conditions thereof, Acquisition will commence a tender offer (the
"Offer") for all the issued and outstanding shares of Issuer's common stock, no
par value ("Issuer Common Stock"), and, after accepting for payment the shares
tendered in the Offer (the "Tendered Shares"), Acquisition will merge with and
into Issuer with Issuer to continue as the surviving corporation as a
wholly-owned subsidiary of Grantee (the "Merger").
B. As a condition to its willingness to enter into the Merger Agreement,
Grantee has required that Issuer agree, and Issuer has agreed, to enter into
this Stock Option Agreement, which provides, among other things, that Issuer
grant to Grantee an option to purchase shares of Issuer Common Stock, upon the
terms and subject to the conditions provided for herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements contained in this Stock Option Agreement and the Merger Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Grant of Option. Issuer hereby grants to Grantee an irrevocable
option (the "Option") to purchase Three Million, Four Hundred Thousand
(3,400,000) shares of Issuer Common Stock (the "Option Shares"), in the manner
set forth below, at an exercise price of Forty-Four Dollars ($44.00) per share
of Issuer Common Stock, subject to adjustment as provided below (the "Option
Price"). Initially capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement. Issuer represents and warrants to
Grantee that the number of Option Shares constitutes less than twenty percent
(20%) of the number of outstanding shares of Issuer's Common Stock on the date
hereof.
2. Exercise of Option.
(a) Subject to the satisfaction or waiver of the conditions set forth
in Section 9 of this Stock Option Agreement, prior to the termination of this
Stock Option Agreement in accordance with its terms, Grantee may exercise the
Option, in whole or in part, at any time or from time to time on or after the
occurrence of a Triggering Event (as defined below). The Option shall terminate
and not be exercisable at any time following the Expiration Date (as defined in
Section 11). The term "Triggering Event" means the earlier to occur of (i) the
time immediately prior to the occurrence of any of the events (or series of
events) specified in Section 7.3(a) of the Merger Agreement giving rise to the
obligation of the Company to pay the fee specified in Section 7.3(a) and (ii)
the date on which Acquisition has accepted for payment the Tendered Shares;
provided, however, that clause (ii) of this sentence shall only constitute a
Triggering Event if the number of Option Shares plus the number of Tendered
Shares will, upon issuance of the Option Shares, equal at least ninety percent
(90%) of the issued and outstanding shares of Issuer Common Stock.
(b) If Grantee wishes to exercise the Option at such time as the
Option is exercisable and has not terminated, Grantee shall deliver written
notice (the "Exercise Notice") to Issuer specifying Grantee's intention to
exercise the Option, the total number of Option Shares it wishes to purchase and
a date and time for the closing of such purchase (a "Closing"), which date shall
not be less than two (2) nor more than thirty (30) business days after the later
of (i) the date such Exercise Notice is given and (ii) the expiration or
termination of any applicable waiting period under the HSR Act. If, subsequent
to a Triggering Event and prior to the Expiration Date, any Third Party shall
have acquired fifteen percent (15%) or more of the then outstanding shares of
Issuer Common Stock (a "Share Acquisition"), or Issuer shall have entered into a
written definitive agreement with any Third Party providing for a Company
Acquisition (as defined below),
<PAGE> 2
then Grantee, in lieu of exercising the Option, shall have the right at any time
thereafter (for so long as the Option is exercisable under Section 2(a) hereof)
to request in writing that Issuer pay, and promptly (but in any event not more
than twenty (20) business days) after the giving by Grantee of such request,
Issuer shall pay to Grantee, in cancellation of the Option, an amount in cash
(the "Cancellation Amount") equal to the lesser of:
(i) (1) the excess over the Option Price of the greater of (A)
the last sale price of a share of Issuer Common Stock as reported on the Nasdaq
National Market on the last trading day prior to the date of the Exercise
Notice, and (B)(I) the highest price per share of Issuer Common Stock offered to
be paid or paid by any Third Party pursuant to or in connection with such Share
Acquisition or Company Acquisition or (II) if such Company Acquisition consists
of a purchase and sale of assets, the sum of (a) the aggregate consideration
offered to be paid or paid in any transaction or proposed transaction in
connection with a Company Acquisition and (b) the amount of cash receivable by
Issuer upon the exercise or conversion of outstanding in-the-money options,
warrants, rights or convertible securities, divided by the sum of (x) the number
of shares of Issuer Common Stock then outstanding plus (y) the number of shares
issuable upon exercise or conversion of outstanding in-the-money options,
warrants, rights or convertible securities, multiplied by (2) the number of
Option Shares then covered by the Option and
(ii) Five Million Dollars ($5,000,000).
If all or a portion of the price per share of Issuer Common Stock
offered, paid or payable or the aggregate consideration offered, paid or payable
for the stock or assets of Issuer, each as contemplated by the immediately
preceding sentence, consists of non-cash consideration, such price or aggregate
consideration shall be the cash consideration, if any, plus the fair market
value of the non-cash consideration as determined jointly by the investment
bankers of Issuer and the investment bankers of Grantee.
(c) Notwithstanding anything to the contrary herein, if Grantee
(including any of its affiliates) receives proceeds in connection with any sale
or other disposition of Option Shares (or any rights thereto or thereof),
together with any proceeds in connection with any dividends or distributions
received by Grantee on any Option Shares, in an aggregate amount that exceeds
the sum of (x) Five Million Dollars ($5,000,000), plus (y) the Option Price
multiplied by the number of Option Shares purchased hereunder, then all proceeds
to Grantee or its affiliates in excess of such sum shall be remitted to Issuer
promptly following receipt thereof.
(d) As used herein, "Company Acquisition" means the occurrence of any
of the following events: (i) the acquisition by a Third Party of fifteen percent
(15%) or more of the assets of Issuer and its subsidiaries taken as a whole; or
(ii) the acquisition by a Third Party of fifteen percent (15%) or more of the
outstanding shares of Issuer Common Stock or any securities convertible into or
exchangeable or exercisable for shares of Issuer Common Stock that would
constitute fifteen percent (15%) or more of the outstanding shares upon such
conversion or exchange or exercise, or any combination of the foregoing; or
(iii) the acquisition by Issuer of the assets or stock of a Third Party if, as a
result of which the outstanding shares of Issuer Common Stock immediately prior
thereto are increased by fifteen percent (15%) or more; or (iv) the merger,
consolidation or business combination of Issuer with or into a Third Party,
where, following such merger, consolidation or business combination, the
stockholders of Issuer (other than the Third Party or its affiliates) prior to
such transaction do not hold, immediately after such transaction, securities of
the surviving entity constituting more than fifty percent (50%) of the total
voting power of the surviving entity.
3. Payment of Option Price and Delivery of Certificate. Any Closings under
Section 2 of this Stock Option Agreement shall be held at the principal
executive offices of Issuer, or at such other place as Issuer and Grantee may
agree. At any Closing hereunder, (a) Grantee or its designee shall make payment
to Issuer of the aggregate price for the Option Shares being so purchased by
delivery of a certified check, official bank check or wire transfer of funds
pursuant to Issuer's instructions payable to Issuer in an amount equal to the
product obtained by multiplying the Option Price by the number of Option Shares
to be purchased, and (b) upon receipt of such payment, Issuer shall deliver to
Grantee or its designee a certificate or certificates representing the number of
validly issued, fully paid and non-assessable Option Shares so purchased, in the
denominations and registered in such names designated to Issuer in writing by
Grantee.
2
<PAGE> 3
4. Registration and Listing of Option Shares.
(a) Grantee may, by written notice (a "Registration Notice"), request
at any time or from time to time within two (2) years following a Triggering
Event (the "Registration Period"), in order to permit the sale, transfer or
other disposition of the Option Shares that have been acquired by or are
issuable to Grantee upon exercise of the Option ("Registrable Securities"), that
Issuer register under the Securities Act of 1933, as amended (the "Act"), the
offering, sale and delivery, or other transfer or disposition, of the
Registrable Securities by Grantee. Any such Registration Notice must relate to a
number of Registrable Securities equal to at least twenty percent (20%) of the
Option Shares, unless the remaining number of Registrable Securities is less
than such amount, in which case Grantee shall be entitled to exercise its rights
hereunder but only for all of the remaining Registrable Securities (a 'Permitted
Offering"). Grantee's rights hereunder shall terminate at such time as Grantee
shall be entitled to sell all of the remaining Registrable Securities pursuant
to Rule 144(k) under the Act. Issuer shall use all reasonable efforts to qualify
any Registrable Securities Grantee desires to sell or otherwise dispose of under
applicable state securities or "blue sky" laws; provided, however, that Issuer
shall not be required to qualify to do business, consent to general service of
process or submit to taxation in any jurisdiction by reason of this provision.
Except as otherwise required pursuant to agreements disclosed to Grantee on or
before the date hereof, without Grantee's prior written consent (which may be
withheld in its sole discretion), no other securities may be included in any
such registration. Issuer will use all reasonable efforts to cause each such
registration statement to become effective as promptly as possible, to obtain
all consents or waivers of other persons that are required therefor and to keep
such registration statement effective for a period of at least ninety (90) days
from the day such registration statement first becomes effective. The
obligations of Issuer hereunder to file a registration statement and to maintain
its effectiveness may be suspended for one or more periods not exceeding ninety
(90) days in the aggregate if the Board of Directors of Issuer shall have
determined in good faith that the filing of such registration statement or the
maintenance of its effectiveness would require disclosure of nonpublic
information that would materially and adversely affect Issuer, or Issuer is
required under the Act to include audited financial statements for any period in
such registration statement and such financial statements are not yet available
for inclusion in such registration statement. Grantee shall be entitled to make
up to two (2) requests for registration of Options Shares under this Section
4(a). For purposes of determining whether the two (2) requests have been made
under this Section 4(a), only requests relating to a registration statement that
has become effective under the Act will be counted.
(b) If, during the Registration Period, Issuer shall propose to
register under the Act the offering, sale and delivery of Issuer Common Stock
for cash for its own account or for any other stockholder of Issuer pursuant to
a firm commitment underwriting, it will, in addition to Issuer's other
obligations under this Section 4, allow Grantee the right to participate in such
registration so long as Grantee participates in such underwriting on terms
reasonably satisfactory to the managing underwriters of such offering; provided,
however, that, if the managing underwriter of such offering advises Issuer in
writing that in its opinion the number of shares of Issuer Common Stock
requested to be included in such registration exceeds the number that it would
be in the best interests of Issuer to sell in such offering, Issuer will, after
fully including therein all shares of Issuer Common Stock to be sold by Issuer,
include the shares of Issuer Common Stock requested to be included therein by
Grantee pro rata (based on the number of shares of Issuer Common Stock requested
to be included therein) with the shares of Issuer Common Stock requested to be
included therein by persons other than Issuer and persons to whom Issuer owes a
contractual obligation (other than any director, officer or employee of Issuer
to the extent any such person is not currently owed such contractual
obligation).
(c) The expenses associated with the preparation and filing of any
registration statement pursuant to this Section 4 and any sale covered thereby
(including any fees related to blue sky qualifications and filing fees in
respect of SEC or the National Association of Securities Dealers, Inc.)
("Registration Expenses") will be paid by Issuer, except for underwriting
discounts or commissions or brokers' fees in respect of Option Shares to be sold
by Grantee and the fees and disbursements of Grantee's counsel; provided,
however, that Issuer will not be required to pay for any Registration Expenses
with respect to such registration if the registration request is subsequently
withdrawn at the request of Grantee unless Grantee agrees to forfeit its right
to request one registration; provided further, however, that, if at the time of
such withdrawal Grantee
3
<PAGE> 4
has learned of a material adverse change in the results of operations,
condition, business or prospects of Issuer not known to Grantee at the time of
the request and has withdrawn the request within a reasonable period of time
following disclosure by Issuer to Grantee of such material adverse change, then
Grantee shall not be required to pay any of such expenses and shall not forfeit
such right to request one registration. Grantee will provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder.
(d) In connection with each registration under this Section 4, Issuer
shall indemnify and hold each holder of the Option or Option Shares
participating in such offering (a "Holder"), its underwriters and each of their
respective affiliates harmless against any and all losses, claims, damage,
liabilities and expenses (including, without limitation, investigation expenses
and fees and disbursements of counsel and accountants), joint or several, to
which such Holder, its underwriters and each of their respective affiliates may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in any registration statement (including any prospectus therein),
or any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, other
than such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) that arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in written information
furnished by a Holder to Issuer expressly for use in such registration
statement.
(e) In connection with any registration statement pursuant to this
Section 4, Grantee shall cause each Holder to contractually agree to furnish
Issuer with such information concerning itself and the proposed sale or
distribution as shall reasonably be required in order to ensure compliance with
the requirements of the Act and to provide representations and warranties
customary for selling stockholders who are unaffiliated with the issuer. In
addition, Grantee shall, and Grantee shall cause each Holder to contractually
agree to, indemnify and hold Issuer, its underwriters and each of their
respective affiliates harmless against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, investigation expenses
and fees and disbursement of counsel and accountants), joint or several, to
which Issuer, its underwriters and each of their respective affiliates may
become subject under the Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in written information furnished by any Holder to Issuer
expressly for use in such registration statement; provided, however, that in no
event shall any indemnification amount contributed by a Holder hereunder exceed
the proceeds of the offering received by such Holder.
(f) Upon the issuance of Option Shares hereunder, Issuer will use all
commercially reasonable efforts to promptly list such Option Shares on the
Nasdaq National Market or with such national or other exchange on which the
shares of Issuer Common Stock are at the time listed.
5. Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Issuer is a corporation duly organized, validly existing and in
good standing under the laws of the State of New Jersey and has all requisite
corporate power and authority to enter into and perform its obligations under
this Stock Option Agreement.
(b) The execution and delivery of this Stock Option Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to authorized this Stock Option
Agreement or to consummate the transactions contemplated hereby. The Board of
Directors of Issuer has duly approved the issuance and sale of the Option
Shares, upon the terms and subject to the conditions contained in this Stock
Option Agreement, and the consummation of the transactions contemplated hereby.
(c) Issuer has taken all necessary action to authorize and reserve
for issuance and to permit it to issue, and at all times from the date of this
Stock Option Agreement through the date of expiration of the
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<PAGE> 5
Option will have reserved for issuance upon exercise of the Option, a sufficient
number of authorized shares of Issuer Common Stock for issuance upon exercise of
the Option, each of which shares, upon issuance pursuant to this Stock Option
Agreement and when paid for as provided herein, will be validly issued, fully
paid and nonassessable, and shall be delivered free and clear of all claims,
liens, charges, encumbrances and security interests (other than those imposed by
Grantee, its affiliates or by Applicable Law).
(d) The execution, delivery and performance of this Stock Option
Agreement by Issuer and the consummation by it of the transactions contemplated
hereby, except as required by the HSR Act and any material foreign competition
authorities (if applicable), and, with respect to Section 4 hereof, compliance
with the provisions of the Act and any applicable state securities laws, do not
require the consent, waiver, approval, license or authorization of or result in
the acceleration of any obligation under, or constitute a default under, any
term, condition or provision of the Certificate of Incorporation or bylaws, or
any indenture, mortgage, lien, lease, agreement, contract, instrument, order,
judgment, ordinance, regulation or decree or any restriction to which Issuer or
any property of Issuer or its subsidiaries is bound, except where failure to
obtain such consents, waivers, approvals, licenses or authorizations or where
such acceleration or defaults could not, individually or in the aggregate,
reasonably be expected to materially and adversely affect Grantee's rights
hereunder or to have a Material Adverse Effect on Issuer.
6. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that:
(a) Grantee is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to enter into and perform its obligations under
this Stock Option Agreement.
(b) The execution and delivery of this Stock Option Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Grantee and no other corporate
proceedings on the part of Grantee are necessary to authorize this Stock Option
Agreement or to consummate the transactions contemplated hereby. This Stock
Option Agreement has been duly and validly executed and delivered by Grantee
and, assuming this Stock Option Agreement has been duly executed and delivered
by Issuer, constitutes a valid and binding obligation of Grantee enforceable
against Grantee in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
creditors' rights generally; the availability of injunctive relief and other
equitable remedies; and limitations imposed by law on indemnification for
liability under federal securities laws.
(c) Grantee is acquiring the Option and it will acquire the Option
Shares issuable upon the exercise thereof for its own account and not with a
view to the distribution or resale thereof in any manner not in accordance with
Applicable Law.
7. Covenants of Grantee. Grantee agrees not to transfer or otherwise
dispose of the Option or the Option Shares, or any interest therein, except that
Grantee may transfer or dispose of the Option Shares so long as such transaction
is in compliance with the Act and any applicable state securities laws. Grantee
further agrees to the placement of the following legend on the certificates
representing the Option Shares (in addition to any legend required under
applicable state securities laws) and any legend referring to the provisions of
Section 12 hereof:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE LAW GOVERNING THE OFFER AND SALE OF SECURITIES. NO
TRANSFER OR OTHER DISPOSITION OF THESE SHARES, OR OF ANY INTEREST
THEREIN, MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND SUCH OTHER STATE LAWS OR PURSUANT TO
EXEMPTIONS FROM REGISTRATION UNDER THE ACT, SUCH OTHER STATE LAWS, AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER."
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<PAGE> 6
8. HSR Compliance Efforts. Grantee and Issuer shall take, or cause to be
taken, all commercially reasonable actions to consummate and make effective the
transactions contemplated by this Stock Option Agreement, including, without
limitation, reasonable efforts to obtain any necessary consents of third parties
and Governmental Entities and the filing by Grantee and Issuer promptly of any
required HSR Act notification forms and the documents required to comply with
the HSR Act.
9. Certain Conditions. The obligation of Issuer to issue Option Shares
under this Stock Option Agreement upon exercise of the Option shall be subject
to the satisfaction or waiver of the following conditions:
(a) any waiting periods applicable to the acquisition of the Option
Shares by Grantee pursuant to this Stock Option Agreement under the HSR Act and
any material foreign competition laws shall have expired or been terminated; and
(b) no statute, rule or regulation shall be in effect, and no order,
decree or injunction entered by any court of competent jurisdiction or
Governmental Entity in the United States shall be in effect that prohibits the
exercise of the Option or acquisition or issuance of Option Shares pursuant to
this Stock Option Agreement.
10. Adjustments Upon Changes in Capitalization. In the event of any
change in the number of issued and outstanding shares of Issuer Common Stock by
reason of any stock dividend, stock split, recapitalization, merger, rights
offering, share exchange or other change in the corporate or capital structure
of Issuer, Grantee shall receive, upon exercise of the Option, the stock or
other securities, cash or property to which Grantee would have been entitled if
Grantee had exercised the Option and had been a holder of record of shares of
Issuer Common Stock on the record date fixed for determination of holders of
shares of Issuer Common Stock entitled to receive such stock or other
securities, cash or property at the same aggregate price as the aggregate Option
Price of the Option Shares.
11. Expiration. The Option shall expire at the earlier of (y) the
Effective Time and (z) 5:00 p.m., California time, on the day that is the one
year anniversary of the date on which the Merger Agreement has been terminated
in accordance with the terms thereof (such expiration date is referred to as the
"Expiration Date").
12. Issuer Call. If Grantee has acquired Option Shares pursuant to
exercise of the Option (the date of any closing relating to any such exercise
herein referred to as an "Exercise Date") and no Company Acquisition with
respect to Issuer has been consummated at any time after the date of this
Agreement and prior to one year following the date hereof (and Issuer has not
entered into a definitive agreement or letter of intent with respect to such a
Company Acquisition which agreement or letter of intent remains in effect at the
end of such year), then, at any time after the date thirteen (13) months
following the date hereof and prior to nineteen (19) months following such
Exercise Date, Issuer may require Grantee, upon delivery to Grantee of written
notice, to sell to Issuer any Option Shares held by Grantee as of the date that
is ten (10) business days after the date of such notice, up to a number of
shares equal to the number of Option Shares acquired by Grantee pursuant to
exercise of the Option in connection with such Exercise Date. The per share
purchase price for such sale (the "Issuer Call Price") shall be equal to the
Option Price less any dividends paid on the Option Shares to be purchased by
Issuer pursuant to this Section 12. The closing of any sale of Option Shares
pursuant to this Section 12 shall take place at the principal offices of Issuer
at a time and on a date designated by Issuer in the aforementioned notice to
Grantee, which date shall be no more than twenty (20) and no less than twelve
(12) business days from the date of such notice. The Issuer Call Price shall be
paid in immediately available funds.
13. General Provisions.
(a) Survival. All of the representations, warranties and covenants
contained herein shall survive a Closing and shall be deemed to have been made
as of the date hereof and as of the date of each Closing.
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<PAGE> 7
(b) Further Assurances. If Grantee exercises the Option, or any
portion thereof, in accordance with the terms of this Stock Option Agreement,
Issuer and Grantee will execute and deliver all such further documents and
instruments and use all reasonable efforts to take all such further action as
may be necessary in order to consummate the transactions contemplated thereby.
(c) Severability. It is the desire and intent of the parties that the
provisions of this Stock Option Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any provision of
this Stock Option Agreement would be held in any jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Stock Option Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Stock Option Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
(d) Assignment; Transfer of Stock Option. This Stock Option Agreement
shall be binding on and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that Issuer and
Grantee, without the prior written consent of the other party, shall not be
entitled to assign or otherwise transfer any of its rights or obligations
hereunder and any such attempted assignment or transfer shall be void; provided
further, that Grantee shall be entitled to assign or transfer this Stock Option
Agreement or any rights hereunder to any wholly-owned subsidiary of Grantee
without Issuer's consent so long as such wholly-owned subsidiary agrees in
writing to be bound by the terms and provisions hereof.
(e) Specific Performance. The parties acknowledge and agree that in
the event of a breach of any provision of this Stock Option Agreement, the
aggrieved party would be without an adequate remedy at law. The parties
therefore agree that in the event of a breach of any provision of this Stock
Option Agreement, the aggrieved party may elect to institute and prosecute
proceedings in any court of competent jurisdiction to enforce specific
performance or to enjoin the continuing breach of such provisions, as well as to
obtain damages for breach of this Stock Option Agreement. By seeking or
obtaining any such relief, the aggrieved party will not be precluded from
seeking or obtaining any other relief to which it may be entitled.
(f) Amendments. This Stock Option Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of a
written agreement executed by Grantee and Issuer.
(g) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to be
sufficient if contained in a written instrument and shall be deemed given if
delivered personally, telecopied, sent by nationally-recognized, overnight
courier or mailed by registered or certified mail (return receipt requested),
postage prepaid, to the other party at the following addresses (or such other
address for a party as shall be specified by like notice):
If to Grantee: Intel Corporation
2200 Mission College Boulevard
Santa Clara, California 95052
Telecopier: (408) 765-1859
Attention: General Counsel
with a copy to: Gibson, Dunn & Crutcher LLP
One Montgomery Street
Telesis Tower
San Francisco, California 94104
Telecopier: (415) 986-5309
Attention: Kenneth R. Lamb and
Gregory J. Conklin
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<PAGE> 8
If to Issuer: Dialogic Corporation
1515 Route 10
Parsippany, New Jersey 07054
Telecopier: (973) 993-3060
Attention: General Counsel
with a copy to: Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
Telecopier: (973) 597-2351
Attention: Peter Ehrenberg
and
Winthrop, Stimson, Putnam &
Roberts
One Battery Park
New York, New York 10004
Telecopier: (212) 858-1442
Attention: Stephen Rusmisel
(h) Headings. The headings contained in this Stock Option Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Stock Option Agreement.
(i) Counterparts. This Stock Option Agreement may be executed in one
or more counterparts, each of which shall be an original, but all of which
together shall constitute one and the same agreement.
(j) Governing Law and Venue; Waiver of Jury Trial.
(1) THIS STOCK OPTION AGREEMENT SHALL BE DEEMED TO BE MADE IN AND
IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT
OF LAW PRINCIPLES THEREOF. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of Delaware and the Federal courts of
the United States of America located in the State of Delaware solely in respect
of the interpretation and enforcement of the provisions of this Stock Option
Agreement and of the documents referred to in this Stock Option Agreement, and
in respect of the transactions contemplated hereby, and hereby waive, and agree
not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Stock Option Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
12(g) or in such other manner as may be permitted by Applicable Law, shall be
valid and sufficient service thereof.
(2) The parties agree that irreparable damage would occur and
that the parties would not have any adequate remedy at law in the event that any
of the provisions of this Stock Option 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 Stock Option Agreement and to enforce
specifically the terms and provisions of this Stock Option Agreement in any
Federal court located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or in
equity.
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<PAGE> 9
(3) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS STOCK OPTION AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii)
EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS STOCK OPTION AGREEMENT BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS IN THIS SECTION 12(j).
(k) Entire Agreement. This Stock Option Agreement and the Merger
Agreement, and any documents and instruments referred to herein and therein,
constitute the entire agreement between the parties hereto and thereto with
respect to the subject matter hereof and thereof and supersede all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof and thereof. Nothing in this Stock Option
Agreement shall be construed to give any person other than the parties to this
Stock Option Agreement or their respective successors or permitted assigns any
legal or equitable right, remedy or claim under or in respect of this Stock
Option Agreement or any provision contained herein.
(l) Expenses. Except as otherwise provided in this Stock Option
Agreement, each party shall pay its own expenses incurred in connection with
this Stock Option Agreement and the transactions contemplated hereby.
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<PAGE> 10
IN WITNESS WHEREOF, the parties have caused this Stock Option Agreement to
be signed by their respective officers thereunto duly authorized as of the date
first written above.
INTEL CORPORATION, a Delaware
corporation
By: /s/ JOHN H. F. MINER
------------------------------------
Name: John H. F. Miner
Title: Vice President
DIALOGIC CORPORATION,
a New Jersey corporation
By: /s/ HOWARD BUBB
------------------------------------
Name: Howard Bubb
Title: President
[SIGNATURE PAGE TO INTEL/DIALOGIC STOCK OPTION AGREEMENT]
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<PAGE> 1
TENDER AND VOTING AGREEMENT
AND
IRREVOCABLE PROXY
THIS TENDER AND VOTING AGREEMENT AND IRREVOCABLE PROXY, dated as of May 31,
1999 (this "Agreement"), is entered into by and between Intel Corporation, a
Delaware corporation ("Parent"), and Intel LMH Acquisition Corporation, a New
Jersey corporation and wholly-owned subsidiary of Parent ("Acquisition"), on the
one hand, and Nick Zwick ("Stockholder"), on the other hand.
WITNESSETH:
WHEREAS, concurrently herewith, Parent, Acquisition, and Dialogic
Corporation, a New Jersey corporation (the "Company"), have entered into an
Agreement and Plan of Merger, of even date herewith (as such agreement may
hereafter be amended from time to time, the "Merger Agreement"; initially
capitalized and other terms used but not defined herein shall have the meanings
ascribed to them in the Merger Agreement), pursuant to which Acquisition will
make a tender offer (the "Offer") for all outstanding shares of common stock, no
par value, of the Company ("Company Common Stock") and, after Acquisition has
accepted tendered shares for payment (the date on which such acceptance occurs,
the "Acceptance Date"), the Company and Acquisition will merge with the Company
as the surviving corporation and wholly-owned subsidiary of Parent (the
"Merger");
WHEREAS, Stockholder Beneficially Owns (as defined herein) 2,876,899 shares
of Company Common Stock (the "Shares"); and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent and Acquisition have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
1. Provisions Concerning Company Common Stock.
(a) Tender of Shares. Stockholder hereby agrees with Parent and
Acquisition that, subject to Section 4(f), Stockholder will, promptly after the
date of commencement of the Offer (but in all events not later than five (5)
business days thereafter), tender to Acquisition all Shares Beneficially Owned
by Stockholder on such date (the "Tendered Shares"). Stockholder further agrees
to tender to Acquisition promptly after Stockholder's acquisition thereof (but
in all events not later than five (5) business days thereafter) all other shares
of Company Common Stock acquired and Beneficially Owned by Stockholder at any
time prior to the Acceptance Date or the date on which the Offer is terminated
or expires without Acquisition's having accepted shares for payment; all such
subsequently tendered Shares shall constitute "Tendered Shares" for all purposes
of this Agreement. Stockholder agrees not to withdraw any of the Tendered Shares
unless the Offer is terminated or has expired without Acquisition's having
accepted the Tendered Shares for payment. Stockholder acknowledges and agrees
that Acquisition's obligation to accept for payment and pay for the Tendered
Shares is subject to all the terms and conditions of the Offer.
(b) Voting Agreement. Stockholder hereby agrees with Parent and
Acquisition that, at any meeting of the Company's stockholders, however called,
or in connection with any written consent of the Company's stockholders,
Stockholder shall, subject to Section 4(f) vote the Shares Beneficially Owned by
Stockholder, whether heretofore owned or hereafter acquired, (i) in favor of
approval of the Merger Agreement and any actions required in furtherance of the
transactions contemplated thereby, including without limitation voting such
shares in favor of the election to the Company Board of each person designated
by Parent for nomination thereto pursuant to Section 1.3(a) of the Merger
Agreement at any meeting of the Company's stockholders called for the election
of directors; (ii) against any action or agreement that would result in a breach
in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement; and (iii)
except as otherwise agreed to in writing in advance by Parent, against: (A) any
Third Party Acquisition, (B) any change in a majority of the individuals
<PAGE> 2
who, as of the date hereof, constitute the Board of Directors of the Company
(other than as contemplated by Section 1.3 of the Merger Agreement), (C) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or any of its subsidiaries and any
Third Party, (D) a sale, lease, transfer or disposition of any assets of the
Company's or any of its subsidiaries' business outside the ordinary course of
business, or any assets which are material to its business whether or not in the
ordinary course of business, or a reorganization, recapitalization, dissolution
or liquidation of the Company or any of its subsidiaries, (E) any change in the
present capitalization of the Company or any amendment of the Company's
Certificate of Incorporation or bylaws, (F) any other material change in the
Company's corporate structure or affecting its business, or (G) any other action
which is intended, or could reasonably be expected, to impede, interfere with,
delay, postpone or materially adversely affect the Offer, the Merger or any of
the other transactions contemplated by the Merger Agreement or the Stock Option
Agreement, or any of the transactions contemplated by this Agreement.
Stockholder shall not enter into any agreement or understanding with any person
the effect of which would be inconsistent or violative of the provisions and
agreements contained herein. For purposes of this Agreement, "Beneficially Own"
or "Beneficial Ownership" with respect to any securities shall mean
Stockholder's having such ownership, control or power to direct the voting with
respect to, or otherwise enables Stockholder to legally act with respect to,
such securities as contemplated hereby, including pursuant to any agreement,
arrangement or understanding, whether or not in writing but shall not include
the shares listed on Exhibit A hereto. Securities Beneficially Owned by
Stockholder shall include securities Beneficially Owned by all other persons
with whom Stockholder would constitute a "group" as within the meaning of
Section 13(d)(3) of the Exchange Act of 1934, as amended (the "Exchange Act")
but shall not include the shares listed on Exhibit a hereto. Stockholder and
Parent acknowledge and agree that nothing in this subsection (b) shall require
or be construed to require Stockholder to take any action in his capacity as a
member of the Company Board.
2. Irrevocable Proxy.
(a) Stockholder hereby constitutes and appoints Acquisition, which
shall act by and through Cary Klafter and Guy S. Anthony (each, a "Proxy
Holder"), or either of them, with full power of substitution, its true and
lawful proxy and attorney-in-fact to vote at any meeting (and any adjournment or
postponement thereof) of the Company's stockholders called for purposes of
considering whether to approve the Merger Agreement, the Merger or any of the
other transactions contemplated by the Merger Agreement, or any Third Party
Acquisition, or to execute a written consent of stockholders in lieu of any such
meeting, all Shares Beneficially Owned by Stockholder as of the date of such
meeting or written consent in favor of the approval of the Merger Agreement, the
Merger and the other transactions contemplated by the Merger Agreement, with
such modifications to the Merger Agreement as the parties thereto may make, or
against a Third Party Acquisition, as the case may be. Such proxy shall be
limited strictly to the power to vote the Shares in the manner set forth in the
preceding sentence and shall not extend to any other matters.
(b) The proxy and power of attorney granted herein shall be
irrevocable during the term of this Agreement, shall be deemed to be coupled
with an interest sufficient in law to support an irrevocable proxy and shall
revoke all prior proxies granted by Stockholder. Stockholder shall not grant any
proxy to any person which conflicts with the proxy granted herein, and any
attempt to do so shall be void. The power of attorney granted herein is a
durable power of attorney and shall survive the death or incapacity of
Stockholder.
(c) If Stockholder fails for any reason to vote his, hers or its
Shares in accordance with the requirements of Section 1(b) hereof, then the
Proxy Holder shall have the right to vote the Shares at any meeting of the
Company's stockholders and in any action by written consent of the Company's
stockholders in accordance with the provisions of this Section 2. The vote of
the Proxy Holder shall control in any conflict between his vote of such Shares
and a vote by Stockholder of such Shares.
3. Director Matters Excluded. Parent and Acquisition acknowledge and
agree that no provision of this Agreement shall limit or otherwise restrict
Stockholder with respect to any act or omission that Stockholder may undertake
or authorize in his capacity as a director of Dialogic, including, without
limitation, any vote that Stockholder may make as a director of Dialogic with
respect to any matter presented to the Board of Directors of Dialogic.
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<PAGE> 3
4. Other Covenants, Representations and Warranties. Stockholder hereby
represents and warrants to Parent and Acquisition as follows:
(a) Ownership of Shares. Stockholder is the Beneficial Owner of all
the Shares. On the date hereof, the Shares constitute all of the Shares
Beneficially Owned by Stockholder. Stockholder has voting power with respect to
the matters set forth in Section 1(b) hereof with respect to all of the Shares,
with no limitations, qualifications or restrictions on such rights.
(b) Power; Binding Agreement. Stockholder has the legal capacity,
power and authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by
Stockholder will not violate any agreement or any court order to which
Stockholder is a party or is subject including, without limitation, any voting
agreement or voting trust. This Agreement has been duly and validly executed and
delivered by Stockholder.
(c) Restriction on Transfer, Proxies and Non-Interference. Except as
expressly contemplated by this Agreement, Stockholder shall not, directly or
indirectly: (i) offer for sale, sell, transfer, tender, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to or consent to the offer for sale, sale,
transfer, tender, pledge, encumbrance, assignment or other disposition of, any
or all of the Shares or any interest therein; (ii) grant any proxies or powers
of attorney or deposit any Shares into a voting trust or enter into a voting
agreement with respect to any Shares; or (iii) take any action that would make
any representation or warranty of Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling Stockholder from
performing any of Stockholder's obligations under this Agreement.
(d) Other Potential Acquirors. Stockholder (i) shall immediately
cease any existing discussions or negotiations, if any, with any persons
conducted heretofore with respect to any acquisition of all or any material
portion of the assets of, or any equity interest in, the Company or any of its
subsidiaries, or any business combination with the Company or its subsidiaries,
in his, her or its capacity as such; (ii) from and after the date hereof until
the earlier of the termination of the Merger Agreement in accordance with its
terms and the Effective Time, shall not, in such capacity, directly or
indirectly, initiate, solicit or knowingly encourage (including, without
limitation, by way of furnishing non-public information or assistance), or take
any other action to facilitate knowingly, any inquiries or the making of any
Third Party Acquisition; and (iii) shall promptly notify Parent of any proposals
for, or inquiries with respect to, a potential Third Party Acquisition received
by Stockholder or of which Stockholder otherwise has knowledge.
(e) Reliance by Parent and Acquisition. Stockholder understands and
acknowledges that Parent and Acquisition are entering into the Merger Agreement
in reliance upon Stockholder's execution and delivery of this Agreement.
(f) Permitted Transfers.
(i) Stockholder shall have the right to tranfer to one or more
charitable entities an aggregate of 143,844 Shares, free and clear of any of the
restrictions set forth in this Agreement.
(ii) Stockholder shall have the right to transfer, assign, pledge
or otherwise dispose of any or all of the Shares to a Permitted Transferee,
provided that, prior to the transfer such proposed Permitted Transferee executes
an agreement substantially similar to this Agreement and otherwise in form and
substance reasonably satisfactory to Parent confirming that such transferred
Shares shall be held by the proposed Permitted Transferee subject to the terms
and conditions of this Agreement. For purposes of this Agreement, the term
"Permitted Transferee" means any corporation duly and validly organized and
existing under the laws of one of the states of the United States and controlled
by Stockholder.
5. Stop Transfer. Stockholder agrees with, and covenants to, Parent and
Acquisition that Stockholder shall not request that the Company register the
transfer (book-entry or otherwise) of any certificate or uncertificated interest
representing any Shares, unless such transfer is made pursuant to this
Agreement. In the event of a stock dividend or distribution, or any change in
the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term "Shares"
shall
3
<PAGE> 4
be deemed to refer to and include the Shares as well as all such stock dividends
and distributions and any shares into which or for which any or all of the
Shares may be changed or exchanged.
6. Termination. The proxy granted pursuant to Section 2 hereof and
Stockholder's covenants and agreements contained herein with respect to the
Shares shall terminate upon the earliest to occur of: (a) the termination of the
Merger Agreement in accordance with its terms; (b) the Acceptance Date; and (c)
June 30, 2000.
7. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
(b) Certain Events. Subject to Section 4(f)(i) Stockholder agrees
that this Agreement and the obligations hereunder shall attach to the Shares and
shall be binding upon any person to which legal or beneficial ownership of any
Shares shall pass, whether by operation of law or otherwise. Notwithstanding any
transfer of Shares, the transferor shall remain liable for the performance of
all obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party; provided,
however, that Parent may, in its sole discretion, assign its rights and
obligations hereunder to any direct wholly-owned subsidiary of Parent.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telecopy, or by
mail (registered or certified mail, postage prepaid, return receipt requested)
or by any nationally-recognized overnight courier service, such as Federal
Express, providing proof of delivery. Any such notice or communication shall be
deemed to have been delivered and received (i) in the case of hand delivery, on
the date of such delivery, (ii) in the case of telecopy, on the date sent if
confirmation of receipt is received and such notice is also promptly mailed by
registered or certified mail (return receipt requested), (iii) in the case of a
nationally-recognized overnight courier service, in circumstances under which
such courier guarantees next business day delivery, on the next business day
after the date when sent, and (iv) the case of mailing on the third business day
following that on which the piece of mail containing such communication is
posted. All communications hereunder shall be delivered to the respective
parties at the following addresses:
<TABLE>
<S> <C>
If to Stockholder: 4 Bittersweet Lane
Far Hills, New Jersey, 07931
Telephone: 908-781-6364
Telecopier: 908-781-6297
Attention: Nick Zwick
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C>
with a copy to: Dialogic Corporation
1515 Route 10
Parsippany, New Jersey 07054
Telecopier: (973) 993-3060
Attention: General Counsel
Pitney Hardin Kipp & Szuch
Park Avenue
Morris County Box 1945
Morristown, NJ 07962
Telephone: (973) 966-6300
Telecopier: (973) 966-1550
Attention: Ronald Janis, Esq.
and
Lowenstein Sandler P.C.
65 Lexington Avenue
Roseland, New Jersey 07068
Telephone: (975) 597-2350
Facsimile: (973) 597-2351
Attention: Peter H. Ehrenberg
If to Parent or Acquisition: Intel Corporation
2200 Mission College Boulevard
Santa Clara, California 95052
Telecopier: (408) 765-1859
Attention: General Counsel
and
Intel Corporation
2200 Mission College Boulevard
Santa Clara, California 95052
Telecopier: (408) 765-6038
Attention: Treasurer
with a copy to: Gibson, Dunn & Crutcher LLP
One Montgomery Street
Telesis Tower
San Francisco, California 94104
Telephone: (415) 393-8200
Telecopier: (415) 986-5309
Attention: Kenneth R. Lamb, Esq.
Gregory J. Conklin, Esq.
</TABLE>
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the matter set forth above.
(f) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain
5
<PAGE> 6
damage for which it would not have an adequate remedy at law for money damages,
and therefore each of the parties hereto agrees that in the event of any such
breach the aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or in
equity.
(h) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(i) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey, without giving effect to
the principles of conflicts of law thereof.
(j) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
6
<PAGE> 7
IN WITNESS WHEREOF, Parent, Acquisition and Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
INTEL CORPORATION, a Delaware
corporation
By: /s/ ARVIND SODHANI
------------------------------------
Name: Arvind Sodhani
Title: Treasurer
INTEL LMH ACQUISITION CORPORATION,
a New Jersey corporation
By: /s/ ARVIND SODHANI
------------------------------------
Name: Arvind Sodhani
Title: Treasurer
STOCKHOLDER:
By: /s/ NICK ZWICK
------------------------------------
Name: Nick Zwick
[SIGNATURE PAGE FOR INTEL/DIALOGIC STOCKHOLDER TENDER AND
VOTING AND IRREVOCABLE PROXY]
7
<PAGE> 8
EXHIBIT A
Nick Zwick shall not be deemed to be the Beneficial Owner of the 108,000
shares of Dialogic Common Stock held by a charitable trust for which Mr. Zwick's
sister serves as a trustee.
<PAGE> 1
TENDER AND VOTING AGREEMENT
AND
IRREVOCABLE PROXY
THIS TENDER AND VOTING AGREEMENT AND IRREVOCABLE PROXY, dated as of May 31,
1999 (this "Agreement"), is entered into by and between Intel Corporation, a
Delaware corporation ("Parent"), and Intel LMH Acquisition Corporation, a New
Jersey corporation and wholly-owned subsidiary of Parent ("Acquisition"), on the
one hand, and James Shinn ("Stockholder"), on the other hand.
WITNESSETH:
WHEREAS, concurrently herewith, Parent, Acquisition, and Dialogic
Corporation, a New Jersey corporation (the "Company"), have entered into an
Agreement and Plan of Merger, of even date herewith (as such agreement may
hereafter be amended from time to time, the "Merger Agreement"; initially
capitalized and other terms used but not defined herein shall have the meanings
ascribed to them in the Merger Agreement), pursuant to which Acquisition will
make a tender offer (the "Offer") for all outstanding shares of common stock, no
par value, of the Company ("Company Common Stock") and, after Acquisition has
accepted tendered shares for payment (the date on which such acceptance occurs,
the "Acceptance Date"), the Company and Acquisition will merge with the Company
as the surviving corporation and wholly-owned subsidiary of Parent (the
"Merger");
WHEREAS, Stockholder Beneficially Owns (as defined herein) 1,070,137 shares
of Company Common Stock (the "Shares"); and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent and Acquisition have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
1. Provisions Concerning Company Common Stock.
(a) Tender of Shares. Stockholder hereby agrees with Parent and
Acquisition that, subject to Section 4(f), Stockholder will, promptly after the
date of commencement of the Offer (but in all events not later than five (5)
business days thereafter), tender to Acquisition all Shares Beneficially Owned
by Stockholder on such date (the "Tendered Shares"). Stockholder further agrees
to tender to Acquisition promptly after Stockholder's acquisition thereof (but
in all events not later than five (5) business days thereafter) all other shares
of Company Common Stock acquired and Beneficially Owned by Stockholder at any
time prior to the Acceptance Date or the date on which the Offer is terminated
or expires without Acquisition's having accepted shares for payment; all such
subsequently tendered Shares shall constitute "Tendered Shares" for all purposes
of this Agreement. Stockholder agrees not to withdraw any of the Tendered Shares
unless the Offer is terminated or has expired without Acquisition's having
accepted the Tendered Shares for payment. Stockholder acknowledges and agrees
that Acquisition's obligation to accept for payment and pay for the Tendered
Shares is subject to all the terms and conditions of the Offer.
(b) Voting Agreement. Stockholder hereby agrees with Parent and
Acquisition that, at any meeting of the Company's stockholders, however called,
or in connection with any written consent of the Company's stockholders,
Stockholder shall, subject to Section 4(f) vote the Shares Beneficially Owned by
Stockholder, whether heretofore owned or hereafter acquired, (i) in favor of
approval of the Merger Agreement and any actions required in furtherance of the
transactions contemplated thereby, including without limitation voting such
shares in favor of the election to the Company Board of each person designated
by Parent for nomination thereto pursuant to Section 1.3(a) of the Merger
Agreement at any meeting of the Company's stockholders called for the election
of directors; (ii) against any action or agreement that would result in a breach
in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement; and (iii)
except as otherwise agreed to in writing in advance by Parent, against: (A) any
Third Party Acquisition, (B) any change in a majority of the individuals
<PAGE> 2
who, as of the date hereof, constitute the Board of Directors of the Company
(other than as contemplated by Section 1.3 of the Merger Agreement), (C) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or any of its subsidiaries and any
Third Party, (D) a sale, lease, transfer or disposition of any assets of the
Company's or any of its subsidiaries' business outside the ordinary course of
business, or any assets which are material to its business whether or not in the
ordinary course of business, or a reorganization, recapitalization, dissolution
or liquidation of the Company or any of its subsidiaries, (E) any change in the
present capitalization of the Company or any amendment of the Company's
Certificate of Incorporation or bylaws, (F) any other material change in the
Company's corporate structure or affecting its business, or (G) any other action
which is intended, or could reasonably be expected, to impede, interfere with,
delay, postpone or materially adversely affect the Offer, the Merger or any of
the other transactions contemplated by the Merger Agreement or the Stock Option
Agreement, or any of the transactions contemplated by this Agreement.
Stockholder shall not enter into any agreement or understanding with any person
the effect of which would be inconsistent or violative of the provisions and
agreements contained herein. For purposes of this Agreement, "Beneficially Own"
or "Beneficial Ownership" with respect to any securities shall mean
Stockholder's having such ownership, control or power to direct the voting with
respect to, or otherwise enables Stockholder to legally act with respect to,
such securities as contemplated hereby, including pursuant to any agreement,
arrangement or understanding, whether or not in writing but shall not include
the shares listed on Exhibit A hereto. Securities Beneficially Owned by
Stockholder shall include securities Beneficially Owned by all other persons
with whom Stockholder would constitute a "group" as within the meaning of
Section 13(d)(3) of the Exchange Act of 1934, as amended (the "Exchange Act")
but shall not include the shares listed on Exhibit a hereto. Stockholder and
Parent acknowledge and agree that nothing in this subsection (b) shall require
or be construed to require Stockholder to take any action in his capacity as a
member of the Company Board.
2. Irrevocable Proxy.
(a) Stockholder hereby constitutes and appoints Acquisition, which
shall act by and through Cary Klafter and Guy S. Anthony (each, a "Proxy
Holder"), or either of them, with full power of substitution, its true and
lawful proxy and attorney-in-fact to vote at any meeting (and any adjournment or
postponement thereof) of the Company's stockholders called for purposes of
considering whether to approve the Merger Agreement, the Merger or any of the
other transactions contemplated by the Merger Agreement, or any Third Party
Acquisition, or to execute a written consent of stockholders in lieu of any such
meeting, all Shares Beneficially Owned by Stockholder as of the date of such
meeting or written consent in favor of the approval of the Merger Agreement, the
Merger and the other transactions contemplated by the Merger Agreement, with
such modifications to the Merger Agreement as the parties thereto may make, or
against a Third Party Acquisition, as the case may be. Such proxy shall be
limited strictly to the power to vote the Shares in the manner set forth in the
preceding sentence and shall not extend to any other matters.
(b) The proxy and power of attorney granted herein shall be
irrevocable during the term of this Agreement, shall be deemed to be coupled
with an interest sufficient in law to support an irrevocable proxy and shall
revoke all prior proxies granted by Stockholder. Stockholder shall not grant any
proxy to any person which conflicts with the proxy granted herein, and any
attempt to do so shall be void. The power of attorney granted herein is a
durable power of attorney and shall survive the death or incapacity of
Stockholder.
(c) If Stockholder fails for any reason to vote his, hers or its
Shares in accordance with the requirements of Section 1(b) hereof, then the
Proxy Holder shall have the right to vote the Shares at any meeting of the
Company's stockholders and in any action by written consent of the Company's
stockholders in accordance with the provisions of this Section 2. The vote of
the Proxy Holder shall control in any conflict between his vote of such Shares
and a vote by Stockholder of such Shares.
3. Director Matters Excluded. Parent and Acquisition acknowledge and
agree that no provision of this Agreement shall limit or otherwise restrict
Stockholder with respect to any act or omission that Stockholder may undertake
or authorize in his capacity as a director of Dialogic, including, without
limitation, any vote that Stockholder may make as a director of Dialogic with
respect to any matter presented to the Board of Directors of Dialogic.
2
<PAGE> 3
4. Other Covenants, Representations and Warranties. Stockholder hereby
represents and warrants to Parent and Acquisition as follows:
(a) Ownership of Shares. Stockholder is the Beneficial Owner of all
the Shares. On the date hereof, the Shares constitute all of the Shares
Beneficially Owned by Stockholder. Stockholder has voting power with respect to
the matters set forth in Section 1(b) hereof with respect to all of the Shares,
with no limitations, qualifications or restrictions on such rights.
(b) Power; Binding Agreement. Stockholder has the legal capacity,
power and authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by
Stockholder will not violate any agreement or any court order to which
Stockholder is a party or is subject including, without limitation, any voting
agreement or voting trust. This Agreement has been duly and validly executed and
delivered by Stockholder.
(c) Restriction on Transfer, Proxies and Non-Interference. Except as
expressly contemplated by this Agreement, Stockholder shall not, directly or
indirectly: (i) offer for sale, sell, transfer, tender, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to or consent to the offer for sale, sale,
transfer, tender, pledge, encumbrance, assignment or other disposition of, any
or all of the Shares or any interest therein; (ii) grant any proxies or powers
of attorney or deposit any Shares into a voting trust or enter into a voting
agreement with respect to any Shares; or (iii) take any action that would make
any representation or warranty of Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling Stockholder from
performing any of Stockholder's obligations under this Agreement.
(d) Other Potential Acquirors. Stockholder (i) shall immediately
cease any existing discussions or negotiations, if any, with any persons
conducted heretofore with respect to any acquisition of all or any material
portion of the assets of, or any equity interest in, the Company or any of its
subsidiaries, or any business combination with the Company or its subsidiaries,
in his, her or its capacity as such; (ii) from and after the date hereof until
the earlier of the termination of the Merger Agreement in accordance with its
terms and the Effective Time, shall not, in such capacity, directly or
indirectly, initiate, solicit or knowingly encourage (including, without
limitation, by way of furnishing non-public information or assistance), or take
any other action to facilitate knowingly, any inquiries or the making of any
Third Party Acquisition; and (iii) shall promptly notify Parent of any proposals
for, or inquiries with respect to, a potential Third Party Acquisition received
by Stockholder or of which Stockholder otherwise has knowledge.
(e) Reliance by Parent and Acquisition. Stockholder understands and
acknowledges that Parent and Acquisition are entering into the Merger Agreement
in reliance upon Stockholder's execution and delivery of this Agreement.
(f) Permitted Transfers.
(i) Stockholder shall have the right to transfer to one or more
charitable entities an aggregate of 53,506 Shares, free and clear of any of the
restrictions set forth in this Agreement.
(ii) Stockholder shall have the right to transfer, assign, pledge
or otherwise dispose of any or all of the Shares to a Permitted Transferee,
provided that, prior to the transfer such proposed Permitted Transferee executes
an agreement substantially similar to this Agreement and otherwise in form and
substance reasonably satisfactory to Parent confirming that such transferred
Shares shall be held by the proposed Permitted Transferee subject to the terms
and conditions of this Agreement. For purposes of this Agreement, the term
"Permitted Transferee" means any corporation duly and validly organized and
existing under the laws of one of the states of the United States and controlled
by Stockholder.
5. Stop Transfer. Stockholder agrees with, and covenants to, Parent and
Acquisition that Stockholder shall not request that the Company register the
transfer (book-entry or otherwise) of any certificate or uncertificated interest
representing any Shares, unless such transfer is made pursuant to this
Agreement. In the event of a stock dividend or distribution, or any change in
the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term "Shares"
shall
3
<PAGE> 4
be deemed to refer to and include the Shares as well as all such stock dividends
and distributions and any shares into which or for which any or all of the
Shares may be changed or exchanged.
6. Termination. The proxy granted pursuant to Section 2 hereof and
Stockholder's covenants and agreements contained herein with respect to the
Shares shall terminate upon the earliest to occur of: (a) the termination of the
Merger Agreement in accordance with its terms; (b) the Acceptance Date; and (c)
June 30, 2000.
7. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
(b) Certain Events. Subject to Section 4(f)(i) Stockholder agrees
that this Agreement and the obligations hereunder shall attach to the Shares and
shall be binding upon any person to which legal or beneficial ownership of any
Shares shall pass, whether by operation of law or otherwise. Notwithstanding any
transfer of Shares, the transferor shall remain liable for the performance of
all obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party; provided,
however, that Parent may, in its sole discretion, assign its rights and
obligations hereunder to any direct wholly-owned subsidiary of Parent.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telecopy, or by
mail (registered or certified mail, postage prepaid, return receipt requested)
or by any nationally-recognized overnight courier service, such as Federal
Express, providing proof of delivery. Any such notice or communication shall be
deemed to have been delivered and received (i) in the case of hand delivery, on
the date of such delivery, (ii) in the case of telecopy, on the date sent if
confirmation of receipt is received and such notice is also promptly mailed by
registered or certified mail (return receipt requested), (iii) in the case of a
nationally-recognized overnight courier service, in circumstances under which
such courier guarantees next business day delivery, on the next business day
after the date when sent, and (iv) the case of mailing on the third business day
following that on which the piece of mail containing such communication is
posted. All communications hereunder shall be delivered to the respective
parties at the following addresses:
<TABLE>
<S> <C>
If to Stockholder: 120 East End Avenue, Apt 15B
New York, New York 10028
Telephone: 212-734-5111
Telecopier: 212-734-5102
Attention: James Shinn
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C>
with a copy to: Dialogic Corporation
1515 Route 10
Parsippany, New Jersey 07054
Telecopier: (973) 993-3060
Attention: General Counsel
Pitney Hardin Kipp & Szuch
Park Avenue
Morris County Box 1945
Morristown, NJ 07962
Telephone: (973) 966-6300
Telecopier: (973) 966-1550
Attention: Ronald Janis, Esq.
and
Lowenstein Sandler P.C.
65 Lexington Avenue
Roseland, New Jersey 07068
Telephone: (975) 597-2350
Facsimile: (973) 597-2351
Attention: Peter H. Ehrenberg
If to Parent or Acquisition: Intel Corporation
2200 Mission College Boulevard
Santa Clara, California 95052
Telecopier: (408) 765-1859
Attention: General Counsel
and
Intel Corporation
2200 Mission College Boulevard
Santa Clara, California 95052
Telecopier: (408) 765-6038
Attention: Treasurer
with a copy to: Gibson, Dunn & Crutcher LLP
One Montgomery Street
Telesis Tower
San Francisco, California 94104
Telephone: (415) 393-8200
Telecopier: (415) 986-5309
Attention: Kenneth R. Lamb, Esq.
Gregory J. Conklin, Esq.
</TABLE>
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the matter set forth above.
(f) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain
5
<PAGE> 6
damage for which it would not have an adequate remedy at law for money damages,
and therefore each of the parties hereto agrees that in the event of any such
breach the aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or in
equity.
(h) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(i) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey, without giving effect to
the principles of conflicts of law thereof.
(j) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
6
<PAGE> 7
IN WITNESS WHEREOF, Parent, Acquisition and Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
INTEL CORPORATION, a Delaware
corporation
By: /s/ ARVIND SODHANI
------------------------------------
Name: Arvind Sodhani
Title: Treasurer
INTEL LMH ACQUISITION CORPORATION,
a New Jersey corporation
By: /s/ ARVIND SODHANI
------------------------------------
Name: Arvind Sodhani
Title: Treasurer
STOCKHOLDER:
By: /s/ JAMES SHINN
------------------------------------
Name: James Shinn
[SIGNATURE PAGE FOR INTEL/DIALOGIC STOCKHOLDER TENDER AND
VOTING AND IRREVOCABLE PROXY]
7
<PAGE> 8
EXHIBIT A
James Shinn shall not be deemed to be the Beneficial Owner of the 80,000
shares of Dialogic Common Stock held by a Masako H. Shinn, as trustee for
Kiyoshi H. Shinn and Hirashi R. Shinn.
<PAGE> 1
TENDER AND VOTING AGREEMENT
AND
IRREVOCABLE PROXY
THIS TENDER AND VOTING AGREEMENT AND IRREVOCABLE PROXY, dated as of May 31,
1999 (this "Agreement"), is entered into by and between Intel Corporation, a
Delaware corporation ("Parent"), and Intel LMH Acquisition Corporation, a New
Jersey corporation and wholly-owned subsidiary of Parent ("Acquisition"), on the
one hand, and Masako H. Shinn, as trustee for Kiyoshi H. Shinn and Hirashi R.
Shinn ("Stockholder"), on the other hand.
WITNESSETH:
WHEREAS, concurrently herewith, Parent, Acquisition, and Dialogic
Corporation, a New Jersey corporation (the "Company"), have entered into an
Agreement and Plan of Merger, of even date herewith (as such agreement may
hereafter be amended from time to time, the "Merger Agreement"; initially
capitalized and other terms used but not defined herein shall have the meanings
ascribed to them in the Merger Agreement), pursuant to which Acquisition will
make a tender offer (the "Offer") for all outstanding shares of common stock, no
par value, of the Company ("Company Common Stock") and, after Acquisition has
accepted tendered shares for payment (the date on which such acceptance occurs,
the "Acceptance Date"), the Company and Acquisition will merge with the Company
as the surviving corporation and wholly-owned subsidiary of Parent (the
"Merger");
WHEREAS, Stockholder Beneficially Owns (as defined herein) 80,000 shares of
Company Common Stock (the "Shares"); and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent and Acquisition have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
1. Provisions Concerning Company Common Stock.
(a) Tender of Shares. Stockholder hereby agrees with Parent and
Acquisition that, subject to Section 4(f), Stockholder will, promptly after the
date of commencement of the Offer (but in all events not later than five (5)
business days thereafter), tender to Acquisition all Shares Beneficially Owned
by Stockholder on such date (the "Tendered Shares"). Stockholder further agrees
to tender to Acquisition promptly after Stockholder's acquisition thereof (but
in all events not later than five (5) business days thereafter) all other shares
of Company Common Stock acquired and Beneficially Owned by Stockholder at any
time prior to the Acceptance Date or the date on which the Offer is terminated
or expires without Acquisition's having accepted shares for payment; all such
subsequently tendered Shares shall constitute "Tendered Shares" for all purposes
of this Agreement. Stockholder agrees not to withdraw any of the Tendered Shares
unless the Offer is terminated or has expired without Acquisition's having
accepted the Tendered Shares for payment. Stockholder acknowledges and agrees
that Acquisition's obligation to accept for payment and pay for the Tendered
Shares is subject to all the terms and conditions of the Offer.
(b) Voting Agreement. Stockholder hereby agrees with Parent and
Acquisition that, at any meeting of the Company's stockholders, however called,
or in connection with any written consent of the Company's stockholders,
Stockholder shall, subject to Section 4(f) vote the Shares Beneficially Owned by
Stockholder, whether heretofore owned or hereafter acquired, (i) in favor of
approval of the Merger Agreement and any actions required in furtherance of the
transactions contemplated thereby, including without limitation voting such
shares in favor of the election to the Company Board of each person designated
by Parent for nomination thereto pursuant to Section 1.3(a) of the Merger
Agreement at any meeting of the Company's stockholders called for the election
of directors; (ii) against any action or agreement that would result in a breach
in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement; and (iii)
except as otherwise agreed to in writing in
<PAGE> 2
advance by Parent, against: (A) any Third Party Acquisition, (B) any change in a
majority of the individuals who, as of the date hereof, constitute the Board of
Directors of the Company (other than as contemplated by Section 1.3 of the
Merger Agreement), (C) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company or any
of its subsidiaries and any Third Party, (D) a sale, lease, transfer or
disposition of any assets of the Company's or any of its subsidiaries' business
outside the ordinary course of business, or any assets which are material to its
business whether or not in the ordinary course of business, or a reorganization,
recapitalization, dissolution or liquidation of the Company or any of its
subsidiaries, (E) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or bylaws, (F) any other
material change in the Company's corporate structure or affecting its business,
or (G) any other action which is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone or materially adversely affect the
Offer, the Merger or any of the other transactions contemplated by the Merger
Agreement or the Stock Option Agreement, or any of the transactions contemplated
by this Agreement. Stockholder shall not enter into any agreement or
understanding with any person the effect of which would be inconsistent or
violative of the provisions and agreements contained herein. For purposes of
this Agreement, "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean Stockholder's having such ownership, control or power to
direct the voting with respect to, or otherwise enables Stockholder to legally
act with respect to, such securities as contemplated hereby, including pursuant
to any agreement, arrangement or understanding, whether or not in writing but
shall not include the shares listed on Exhibit A hereto. Securities Beneficially
Owned by Stockholder shall include securities Beneficially Owned by all other
persons with whom Stockholder would constitute a "group" as within the meaning
of Section 13(d)(3) of the Exchange Act of 1934, as amended (the "Exchange Act")
but shall not include the shares listed on Exhibit a hereto. Stockholder and
Parent acknowledge and agree that nothing in this subsection (b) shall require
or be construed to require Stockholder to take any action in his capacity as a
member of the Company Board.
2. Irrevocable Proxy.
(a) Stockholder hereby constitutes and appoints Acquisition, which
shall act by and through Cary Klafter and Guy S. Anthony (each, a "Proxy
Holder"), or either of them, with full power of substitution, its true and
lawful proxy and attorney-in-fact to vote at any meeting (and any adjournment or
postponement thereof) of the Company's stockholders called for purposes of
considering whether to approve the Merger Agreement, the Merger or any of the
other transactions contemplated by the Merger Agreement, or any Third Party
Acquisition, or to execute a written consent of stockholders in lieu of any such
meeting, all Shares Beneficially Owned by Stockholder as of the date of such
meeting or written consent in favor of the approval of the Merger Agreement, the
Merger and the other transactions contemplated by the Merger Agreement, with
such modifications to the Merger Agreement as the parties thereto may make, or
against a Third Party Acquisition, as the case may be. Such proxy shall be
limited strictly to the power to vote the Shares in the manner set forth in the
preceding sentence and shall not extend to any other matters.
(b) The proxy and power of attorney granted herein shall be
irrevocable during the term of this Agreement, shall be deemed to be coupled
with an interest sufficient in law to support an irrevocable proxy and shall
revoke all prior proxies granted by Stockholder. Stockholder shall not grant any
proxy to any person which conflicts with the proxy granted herein, and any
attempt to do so shall be void. The power of attorney granted herein is a
durable power of attorney and shall survive the death or incapacity of
Stockholder.
(c) If Stockholder fails for any reason to vote his, hers or its
Shares in accordance with the requirements of Section 1(b) hereof, then the
Proxy Holder shall have the right to vote the Shares at any meeting of the
Company's stockholders and in any action by written consent of the Company's
stockholders in accordance with the provisions of this Section 2. The vote of
the Proxy Holder shall control in any conflict between his vote of such Shares
and a vote by Stockholder of such Shares.
3. Director Matters Excluded. Parent and Acquisition acknowledge and
agree that no provision of this Agreement shall limit or otherwise restrict
Stockholder with respect to any act or omission that Stockholder may undertake
or authorize in his capacity as a director of Dialogic, including, without
limitation,
2
<PAGE> 3
any vote that Stockholder may make as a director of Dialogic with respect to any
matter presented to the Board of Directors of Dialogic.
4. Other Covenants, Representations and Warranties. Stockholder hereby
represents and warrants to Parent and Acquisition as follows:
(a) Ownership of Shares. Stockholder is the Beneficial Owner of all
the Shares. On the date hereof, the Shares constitute all of the Shares
Beneficially Owned by Stockholder. Stockholder has voting power with respect to
the matters set forth in Section 1(b) hereof with respect to all of the Shares,
with no limitations, qualifications or restrictions on such rights.
(b) Power; Binding Agreement. Stockholder has the legal capacity,
power and authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by
Stockholder will not violate any agreement or any court order to which
Stockholder is a party or is subject including, without limitation, any voting
agreement or voting trust. This Agreement has been duly and validly executed and
delivered by Stockholder.
(c) Restriction on Transfer, Proxies and Non-Interference. Except as
expressly contemplated by this Agreement, Stockholder shall not, directly or
indirectly: (i) offer for sale, sell, transfer, tender, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to or consent to the offer for sale, sale,
transfer, tender, pledge, encumbrance, assignment or other disposition of, any
or all of the Shares or any interest therein; (ii) grant any proxies or powers
of attorney or deposit any Shares into a voting trust or enter into a voting
agreement with respect to any Shares; or (iii) take any action that would make
any representation or warranty of Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling Stockholder from
performing any of Stockholder's obligations under this Agreement.
(d) Other Potential Acquirors. Stockholder (i) shall immediately
cease any existing discussions or negotiations, if any, with any persons
conducted heretofore with respect to any acquisition of all or any material
portion of the assets of, or any equity interest in, the Company or any of its
subsidiaries, or any business combination with the Company or its subsidiaries,
in his, her or its capacity as such; (ii) from and after the date hereof until
the earlier of the termination of the Merger Agreement in accordance with its
terms and the Effective Time, shall not, in such capacity, directly or
indirectly, initiate, solicit or knowingly encourage (including, without
limitation, by way of furnishing non-public information or assistance), or take
any other action to facilitate knowingly, any inquiries or the making of any
Third Party Acquisition; and (iii) shall promptly notify Parent of any proposals
for, or inquiries with respect to, a potential Third Party Acquisition received
by Stockholder or of which Stockholder otherwise has knowledge.
(e) Reliance by Parent and Acquisition. Stockholder understands and
acknowledges that Parent and Acquisition are entering into the Merger Agreement
in reliance upon Stockholder's execution and delivery of this Agreement.
(f) Permitted Transfers.
(i) Stockholder shall have the right to tranfer to one or more
charitable entities an aggregate of 4,000 Shares, free and clear of any of the
restrictions set forth in this Agreement.
(ii) Stockholder shall have the right to transfer, assign, pledge
or otherwise dispose of any or all of the Shares to a Permitted Transferee,
provided that, prior to the transfer such proposed Permitted Transferee executes
an agreement substantially similar to this Agreement and otherwise in form and
substance reasonably satisfactory to Parent confirming that such transferred
Shares shall be held by the proposed Permitted Transferee subject to the terms
and conditions of this Agreement. For purposes of this Agreement, the term
"Permitted Transferee" means any corporation duly and validly organized and
existing under the laws of one of the states of the United States and controlled
by Stockholder.
5. Stop Transfer. Stockholder agrees with, and covenants to, Parent and
Acquisition that Stockholder shall not request that the Company register the
transfer (book-entry or otherwise) of any certificate or uncertificated interest
representing any Shares, unless such transfer is made pursuant to this
Agreement. In
3
<PAGE> 4
the event of a stock dividend or distribution, or any change in the Company
Common Stock by reason of any stock dividend, split-up, recapitalization,
combination, exchange of shares or the like, the term "Shares" shall be deemed
to refer to and include the Shares as well as all such stock dividends and
distributions and any shares into which or for which any or all of the Shares
may be changed or exchanged.
6. Termination. The proxy granted pursuant to Section 2 hereof and
Stockholder's covenants and agreements contained herein with respect to the
Shares shall terminate upon the earliest to occur of: (a) the termination of the
Merger Agreement in accordance with its terms; (b) the Acceptance Date; and (c)
June 30, 2000.
7. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
(b) Certain Events. Subject to Section 4(f)(i) Stockholder agrees
that this Agreement and the obligations hereunder shall attach to the Shares and
shall be binding upon any person to which legal or beneficial ownership of any
Shares shall pass, whether by operation of law or otherwise. Notwithstanding any
transfer of Shares, the transferor shall remain liable for the performance of
all obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party; provided,
however, that Parent may, in its sole discretion, assign its rights and
obligations hereunder to any direct wholly-owned subsidiary of Parent.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telecopy, or by
mail (registered or certified mail, postage prepaid, return receipt requested)
or by any nationally-recognized overnight courier service, such as Federal
Express, providing proof of delivery. Any such notice or communication shall be
deemed to have been delivered and received (i) in the case of hand delivery, on
the date of such delivery, (ii) in the case of telecopy, on the date sent if
confirmation of receipt is received and such notice is also promptly mailed by
registered or certified mail (return receipt requested), (iii) in the case of a
nationally-recognized overnight courier service, in circumstances under which
such courier guarantees next business day delivery, on the next business day
after the date when sent, and (iv) the case of mailing on the third business day
following that on which the piece of mail containing such communication is
posted. All communications hereunder shall be delivered to the respective
parties at the following addresses:
<TABLE>
<S> <C>
If to Stockholder: 120 East End Avenue, Apt 15B
New York, New York 10028
Telephone: 212-734-5111
Telecopier: 212-734-5102
Attention: Masako H. Shinn
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C>
with a copy to: Dialogic Corporation
1515 Route 10
Parsippany, New Jersey 07054
Telecopier: (973) 993-3060
Attention: General Counsel
Pitney Hardin Kipp & Szuch
Park Avenue
Morris County Box 1945
Morristown, NJ 07962
Telephone: (973) 966-6300
Telecopier: (973) 966-1550
Attention: Ronald Janis, Esq.
and
Lowenstein Sandler P.C.
65 Lexington Avenue
Roseland, New Jersey 07068
Telephone: (975) 597-2350
Facsimile: (973) 597-2351
Attention: Peter H. Ehrenberg
If to Parent or Acquisition: Intel Corporation
2200 Mission College Boulevard
Santa Clara, California 95052
Telecopier: (408) 765-1859
Attention: General Counsel
and
Intel Corporation
2200 Mission College Boulevard
Santa Clara, California 95052
Telecopier: (408) 765-6038
Attention: Treasurer
with a copy to: Gibson, Dunn & Crutcher LLP
One Montgomery Street
Telesis Tower
San Francisco, California 94104
Telephone: (415) 393-8200
Telecopier: (415) 986-5309
Attention: Kenneth R. Lamb, Esq.
Gregory J. Conklin, Esq.
</TABLE>
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the matter set forth above.
(f) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain
5
<PAGE> 6
damage for which it would not have an adequate remedy at law for money damages,
and therefore each of the parties hereto agrees that in the event of any such
breach the aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or in
equity.
(h) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(i) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey, without giving effect to
the principles of conflicts of law thereof.
(j) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
6
<PAGE> 7
IN WITNESS WHEREOF, Parent, Acquisition and Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
INTEL CORPORATION, a Delaware
corporation
By: /s/ ARVIND SODHANI
------------------------------------
Name: Arvind Sodhani
Title: Treasurer
INTEL LMH ACQUISITION CORPORATION,
a New Jersey corporation
By: /s/ ARVIND SODHANI
------------------------------------
Name: Arvind Sodhani
Title: Treasurer
STOCKHOLDER:
By: /s/ MASAKO H. SHINN
------------------------------------
Name: Masako H. Shinn, as trustee
for Kiyoshi H. Shinn and Hirashi
R. Shinn
[SIGNATURE PAGE FOR INTEL/DIALOGIC STOCKHOLDER TENDER AND
VOTING AND IRREVOCABLE PROXY]
7
<PAGE> 8
EXHIBIT A
Masako H. Shinn, as trustee for Kiyoshi H. Shinn and Hirashi R. Shinn,
shall not be deemed to be the Beneficial Owner of the 1,070,137 shares of
Dialogic Common Stock owned by James Shinn.
<PAGE> 1
TENDER AND VOTING AGREEMENT
AND
IRREVOCABLE PROXY
THIS TENDER AND VOTING AGREEMENT AND IRREVOCABLE PROXY, dated as of May 31,
1999 (this "Agreement"), is entered into by and between Intel Corporation, a
Delaware corporation ("Parent"), and Intel LMH Acquisition Corporation, a New
Jersey corporation and wholly-owned subsidiary of Parent ("Acquisition"), on the
one hand, and Kenneth J. Burkhardt ("Stockholder"), on the other hand.
WITNESSETH:
WHEREAS, concurrently herewith, Parent, Acquisition, and Dialogic
Corporation, a New Jersey corporation (the "Company"), have entered into an
Agreement and Plan of Merger, of even date herewith (as such agreement may
hereafter be amended from time to time, the "Merger Agreement"; initially
capitalized and other terms used but not defined herein shall have the meanings
ascribed to them in the Merger Agreement), pursuant to which Acquisition will
make a tender offer (the "Offer") for all outstanding shares of common stock, no
par value, of the Company ("Company Common Stock") and, after Acquisition has
accepted tendered shares for payment (the date on which such acceptance occurs,
the "Acceptance Date"), the Company and Acquisition will merge with the Company
as the surviving corporation and wholly-owned subsidiary of Parent (the
"Merger");
WHEREAS, Stockholder Beneficially Owns (as defined herein) 1,443,050 shares
of Company Common Stock (the "Shares"); and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent and Acquisition have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
1. Provisions Concerning Company Common Stock.
(a) Tender of Shares. Stockholder hereby agrees with Parent and
Acquisition that, subject to Section 4(f), Stockholder will, promptly after the
date of commencement of the Offer (but in all events not later than five (5)
business days thereafter), tender to Acquisition all Shares Beneficially Owned
by Stockholder on such date (the "Tendered Shares"). Stockholder further agrees
to tender to Acquisition promptly after Stockholder's acquisition thereof (but
in all events not later than five (5) business days thereafter) all other shares
of Company Common Stock acquired and Beneficially Owned by Stockholder at any
time prior to the Acceptance Date or the date on which the Offer is terminated
or expires without Acquisition's having accepted shares for payment; all such
subsequently tendered Shares shall constitute "Tendered Shares" for all purposes
of this Agreement. Stockholder agrees not to withdraw any of the Tendered Shares
unless the Offer is terminated or has expired without Acquisition's having
accepted the Tendered Shares for payment. Stockholder acknowledges and agrees
that Acquisition's obligation to accept for payment and pay for the Tendered
Shares is subject to all the terms and conditions of the Offer.
(b) Voting Agreement. Stockholder hereby agrees with Parent and
Acquisition that, at any meeting of the Company's stockholders, however called,
or in connection with any written consent of the Company's stockholders,
Stockholder shall, subject to Section 4(f) vote the Shares Beneficially Owned by
Stockholder, whether heretofore owned or hereafter acquired, (i) in favor of
approval of the Merger Agreement and any actions required in furtherance of the
transactions contemplated thereby, including without limitation voting such
shares in favor of the election to the Company Board of each person designated
by Parent for nomination thereto pursuant to Section 1.3(a) of the Merger
Agreement at any meeting of the Company's stockholders called for the election
of directors; (ii) against any action or agreement that would result in a breach
in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement; and (iii)
except as otherwise agreed to in writing in advance by Parent, against: (A) any
Third Party Acquisition, (B) any change in a majority of the individuals
<PAGE> 2
who, as of the date hereof, constitute the Board of Directors of the Company
(other than as contemplated by Section 1.3 of the Merger Agreement), (C) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or any of its subsidiaries and any
Third Party, (D) a sale, lease, transfer or disposition of any assets of the
Company's or any of its subsidiaries' business outside the ordinary course of
business, or any assets which are material to its business whether or not in the
ordinary course of business, or a reorganization, recapitalization, dissolution
or liquidation of the Company or any of its subsidiaries, (E) any change in the
present capitalization of the Company or any amendment of the Company's
Certificate of Incorporation or bylaws, (F) any other material change in the
Company's corporate structure or affecting its business, or (G) any other action
which is intended, or could reasonably be expected, to impede, interfere with,
delay, postpone or materially adversely affect the Offer, the Merger or any of
the other transactions contemplated by the Merger Agreement or the Stock Option
Agreement, or any of the transactions contemplated by this Agreement.
Stockholder shall not enter into any agreement or understanding with any person
the effect of which would be inconsistent or violative of the provisions and
agreements contained herein. For purposes of this Agreement, "Beneficially Own"
or "Beneficial Ownership" with respect to any securities shall mean
Stockholder's having such ownership, control or power to direct the voting with
respect to, or otherwise enables Stockholder to legally act with respect to,
such securities as contemplated hereby, including pursuant to any agreement,
arrangement or understanding, whether or not in writing but shall not include
the shares listed on Exhibit A hereto. Securities Beneficially Owned by
Stockholder shall include securities Beneficially Owned by all other persons
with whom Stockholder would constitute a "group" as within the meaning of
Section 13(d)(3) of the Exchange Act of 1934, as amended (the "Exchange Act")
but shall not include the shares listed on Exhibit a hereto. Stockholder and
Parent acknowledge and agree that nothing in this subsection (b) shall require
or be construed to require Stockholder to take any action in his capacity as a
member of the Company Board.
2. Irrevocable Proxy.
(a) Stockholder hereby constitutes and appoints Acquisition, which
shall act by and through Cary Klafter and Guy S. Anthony (each, a "Proxy
Holder"), or either of them, with full power of substitution, its true and
lawful proxy and attorney-in-fact to vote at any meeting (and any adjournment or
postponement thereof) of the Company's stockholders called for purposes of
considering whether to approve the Merger Agreement, the Merger or any of the
other transactions contemplated by the Merger Agreement, or any Third Party
Acquisition, or to execute a written consent of stockholders in lieu of any such
meeting, all Shares Beneficially Owned by Stockholder as of the date of such
meeting or written consent in favor of the approval of the Merger Agreement, the
Merger and the other transactions contemplated by the Merger Agreement, with
such modifications to the Merger Agreement as the parties thereto may make, or
against a Third Party Acquisition, as the case may be. Such proxy shall be
limited strictly to the power to vote the Shares in the manner set forth in the
preceding sentence and shall not extend to any other matters.
(b) The proxy and power of attorney granted herein shall be
irrevocable during the term of this Agreement, shall be deemed to be coupled
with an interest sufficient in law to support an irrevocable proxy and shall
revoke all prior proxies granted by Stockholder. Stockholder shall not grant any
proxy to any person which conflicts with the proxy granted herein, and any
attempt to do so shall be void. The power of attorney granted herein is a
durable power of attorney and shall survive the death or incapacity of
Stockholder.
(c) If Stockholder fails for any reason to vote his, hers or its
Shares in accordance with the requirements of Section 1(b) hereof, then the
Proxy Holder shall have the right to vote the Shares at any meeting of the
Company's stockholders and in any action by written consent of the Company's
stockholders in accordance with the provisions of this Section 2. The vote of
the Proxy Holder shall control in any conflict between his vote of such Shares
and a vote by Stockholder of such Shares.
3. Director Matters Excluded. Parent and Acquisition acknowledge and
agree that no provision of this Agreement shall limit or otherwise restrict
Stockholder with respect to any act or omission that Stockholder may undertake
or authorize in his capacity as a director of Dialogic, including, without
limitation, any vote that Stockholder may make as a director of Dialogic with
respect to any matter presented to the Board of Directors of Dialogic.
2
<PAGE> 3
4. Other Covenants, Representations and Warranties. Stockholder hereby
represents and warrants to Parent and Acquisition as follows:
(a) Ownership of Shares. Stockholder is the Beneficial Owner of all
the Shares. On the date hereof, the Shares constitute all of the Shares
Beneficially Owned by Stockholder. Stockholder has voting power with respect to
the matters set forth in Section 1(b) hereof with respect to all of the Shares,
with no limitations, qualifications or restrictions on such rights.
(b) Power; Binding Agreement. Stockholder has the legal capacity,
power and authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by
Stockholder will not violate any agreement or any court order to which
Stockholder is a party or is subject including, without limitation, any voting
agreement or voting trust. This Agreement has been duly and validly executed and
delivered by Stockholder.
(c) Restriction on Transfer, Proxies and Non-Interference. Except as
expressly contemplated by this Agreement, Stockholder shall not, directly or
indirectly: (i) offer for sale, sell, transfer, tender, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to or consent to the offer for sale, sale,
transfer, tender, pledge, encumbrance, assignment or other disposition of, any
or all of the Shares or any interest therein; (ii) grant any proxies or powers
of attorney or deposit any Shares into a voting trust or enter into a voting
agreement with respect to any Shares; or (iii) take any action that would make
any representation or warranty of Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling Stockholder from
performing any of Stockholder's obligations under this Agreement.
(d) Other Potential Acquirors. Stockholder (i) shall immediately
cease any existing discussions or negotiations, if any, with any persons
conducted heretofore with respect to any acquisition of all or any material
portion of the assets of, or any equity interest in, the Company or any of its
subsidiaries, or any business combination with the Company or its subsidiaries,
in his, her or its capacity as such; (ii) from and after the date hereof until
the earlier of the termination of the Merger Agreement in accordance with its
terms and the Effective Time, shall not, in such capacity, directly or
indirectly, initiate, solicit or knowingly encourage (including, without
limitation, by way of furnishing non-public information or assistance), or take
any other action to facilitate knowingly, any inquiries or the making of any
Third Party Acquisition; and (iii) shall promptly notify Parent of any proposals
for, or inquiries with respect to, a potential Third Party Acquisition received
by Stockholder or of which Stockholder otherwise has knowledge.
(e) Reliance by Parent and Acquisition. Stockholder understands and
acknowledges that Parent and Acquisition are entering into the Merger Agreement
in reliance upon Stockholder's execution and delivery of this Agreement.
(f) Permitted Transfers.
(i) Stockholder shall have the right to transfer to one or more
charitable entities an aggregate of 72,152 Shares, free and clear of any of the
restrictions set forth in this Agreement.
(ii) Stockholder shall have the right to transfer, assign, pledge
or otherwise dispose of any or all of the Shares to a Permitted Transferee,
provided that, prior to the transfer such proposed Permitted Transferee executes
an agreement substantially similar to this Agreement and otherwise in form and
substance reasonably satisfactory to Parent confirming that such transferred
Shares shall be held by the proposed Permitted Transferee subject to the terms
and conditions of this Agreement. For purposes of this Agreement, the term
"Permitted Transferee" means any corporation duly and validly organized and
existing under the laws of one of the states of the United States and controlled
by Stockholder.
5. Stop Transfer. Stockholder agrees with, and covenants to, Parent and
Acquisition that Stockholder shall not request that the Company register the
transfer (book-entry or otherwise) of any certificate or uncertificated interest
representing any Shares, unless such transfer is made pursuant to this
Agreement. In the event of a stock dividend or distribution, or any change in
the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like, the term "Shares"
shall
3
<PAGE> 4
be deemed to refer to and include the Shares as well as all such stock dividends
and distributions and any shares into which or for which any or all of the
Shares may be changed or exchanged.
6. Termination. The proxy granted pursuant to Section 2 hereof and
Stockholder's covenants and agreements contained herein with respect to the
Shares shall terminate upon the earliest to occur of: (a) the termination of the
Merger Agreement in accordance with its terms; (b) the Acceptance Date; and (c)
June 30, 2000.
7. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
(b) Certain Events. Subject to Section 4(f)(i) Stockholder agrees
that this Agreement and the obligations hereunder shall attach to the Shares and
shall be binding upon any person to which legal or beneficial ownership of any
Shares shall pass, whether by operation of law or otherwise. Notwithstanding any
transfer of Shares, the transferor shall remain liable for the performance of
all obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party; provided,
however, that Parent may, in its sole discretion, assign its rights and
obligations hereunder to any direct wholly-owned subsidiary of Parent.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telecopy, or by
mail (registered or certified mail, postage prepaid, return receipt requested)
or by any nationally-recognized overnight courier service, such as Federal
Express, providing proof of delivery. Any such notice or communication shall be
deemed to have been delivered and received (i) in the case of hand delivery, on
the date of such delivery, (ii) in the case of telecopy, on the date sent if
confirmation of receipt is received and such notice is also promptly mailed by
registered or certified mail (return receipt requested), (iii) in the case of a
nationally-recognized overnight courier service, in circumstances under which
such courier guarantees next business day delivery, on the next business day
after the date when sent, and (iv) the case of mailing on the third business day
following that on which the piece of mail containing such communication is
posted. All communications hereunder shall be delivered to the respective
parties at the following addresses:
<TABLE>
<S> <C>
If to Stockholder: 25B Long Beach Boulevard
Loveladies, New Jersey 08008
Telephone: 609-361-2288
Telecopier: 609-361-2263
Attention: Kenneth J. Burkhardt
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C>
with a copy to: Dialogic Corporation
1515 Route 10
Parsippany, New Jersey 07054
Telecopier: (973) 993-3060
Attention: General Counsel
Pitney Hardin Kipp & Szuch
Park Avenue
Morris County Box 1945
Morristown, NJ 07962
Telephone: (973) 966-6300
Telecopier: (973) 966-1550
Attention: Ronald Janis, Esq.
and
Lowenstein Sandler P.C.
65 Lexington Avenue
Roseland, New Jersey 07068
Telephone: (975) 597-2350
Facsimile: (973) 597-2351
Attention: Peter H. Ehrenberg
If to Parent or Acquisition: Intel Corporation
2200 Mission College Boulevard
Santa Clara, California 95052
Telecopier: (408) 765-1859
Attention: General Counsel
and
Intel Corporation
2200 Mission College Boulevard
Santa Clara, California 95052
Telecopier: (408) 765-6038
Attention: Treasurer
with a copy to: Gibson, Dunn & Crutcher LLP
One Montgomery Street
Telesis Tower
San Francisco, California 94104
Telephone: (415) 393-8200
Telecopier: (415) 986-5309
Attention: Kenneth R. Lamb, Esq.
Gregory J. Conklin, Esq.
</TABLE>
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the matter set forth above.
(f) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain
5
<PAGE> 6
damage for which it would not have an adequate remedy at law for money damages,
and therefore each of the parties hereto agrees that in the event of any such
breach the aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or in
equity.
(h) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(i) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey, without giving effect to
the principles of conflicts of law thereof.
(j) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
6
<PAGE> 7
IN WITNESS WHEREOF, Parent, Acquisition and Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
INTEL CORPORATION, a Delaware
corporation
By: /s/ ARVIND SODHANI
------------------------------------
Name: Arvind Sodhani
Title: Treasurer
Intel LMH Acquisition Corporation,
a New Jersey corporation
By: /s/ ARVIND SODHANI
------------------------------------
Name: Arvind Sodhani
Title: Treasurer
STOCKHOLDER:
By: /s/ KENNETH J. BURKHARDT
------------------------------------
Name: Kenneth J. Burkhardt
[SIGNATURE PAGE FOR INTEL/DIALOGIC STOCKHOLDER TENDER AND
VOTING AND IRREVOCABLE PROXY]
7
<PAGE> 8
EXHIBIT A
Kenneth J. Burkhardt shall not be deemed to be the Beneficial Owner of the
103,500 shares of Dialogic Common Stock held by Joanne Burkhardt in trust for
Kenneth John Burkhardt, III, Christopher L. Burkhardt and Julianne N. Burkhardt.
8
<PAGE> 1
TENDER AND VOTING AGREEMENT
AND
IRREVOCABLE PROXY
THIS TENDER AND VOTING AGREEMENT AND IRREVOCABLE PROXY, dated as of May 31,
1999 (this "Agreement"), is entered into by and between Intel Corporation, a
Delaware corporation ("Parent"), and Intel LMH Acquisition Corporation, a New
Jersey corporation and wholly-owned subsidiary of Parent ("Acquisition"), on the
one hand, and Joanne Burkhardt, as trustee for Kenneth John Burkhardt,
Christopher L Burkhardt and Juliane N. Burkhardt ("Stockholder"), on the other
hand.
WITNESSETH:
WHEREAS, concurrently herewith, Parent, Acquisition, and Dialogic
Corporation, a New Jersey corporation (the "Company"), have entered into an
Agreement and Plan of Merger, of even date herewith (as such agreement may
hereafter be amended from time to time, the "Merger Agreement"; initially
capitalized and other terms used but not defined herein shall have the meanings
ascribed to them in the Merger Agreement), pursuant to which Acquisition will
make a tender offer (the "Offer") for all outstanding shares of common stock, no
par value, of the Company ("Company Common Stock") and, after Acquisition has
accepted tendered shares for payment (the date on which such acceptance occurs,
the "Acceptance Date"), the Company and Acquisition will merge with the Company
as the surviving corporation and wholly-owned subsidiary of Parent (the
"Merger");
WHEREAS, Stockholder Beneficially Owns (as defined herein) 103,500 shares
of Company Common Stock (the "Shares"); and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent and Acquisition have requested that Stockholder agree, and
Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
1. Provisions Concerning Company Common Stock.
(a) Tender of Shares. Stockholder hereby agrees with Parent and
Acquisition that, subject to Section 4(f), Stockholder will, promptly after the
date of commencement of the Offer (but in all events not later than five (5)
business days thereafter), tender to Acquisition all Shares Beneficially Owned
by Stockholder on such date (the "Tendered Shares"). Stockholder further agrees
to tender to Acquisition promptly after Stockholder's acquisition thereof (but
in all events not later than five (5) business days thereafter) all other shares
of Company Common Stock acquired and Beneficially Owned by Stockholder at any
time prior to the Acceptance Date or the date on which the Offer is terminated
or expires without Acquisition's having accepted shares for payment; all such
subsequently tendered Shares shall constitute "Tendered Shares" for all purposes
of this Agreement. Stockholder agrees not to withdraw any of the Tendered Shares
unless the Offer is terminated or has expired without Acquisition's having
accepted the Tendered Shares for payment. Stockholder acknowledges and agrees
that Acquisition's obligation to accept for payment and pay for the Tendered
Shares is subject to all the terms and conditions of the Offer.
(b) Voting Agreement. Stockholder hereby agrees with Parent and
Acquisition that, at any meeting of the Company's stockholders, however called,
or in connection with any written consent of the Company's stockholders,
Stockholder shall, subject to Section 4(f) vote the Shares Beneficially Owned by
Stockholder, whether heretofore owned or hereafter acquired, (i) in favor of
approval of the Merger Agreement and any actions required in furtherance of the
transactions contemplated thereby, including without limitation voting such
shares in favor of the election to the Company Board of each person designated
by Parent for nomination thereto pursuant to Section 1.3(a) of the Merger
Agreement at any meeting of the Company's stockholders called for the election
of directors; (ii) against any action or agreement that would result in a breach
in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement; and (iii)
except as otherwise agreed to in writing in
<PAGE> 2
advance by Parent, against: (A) any Third Party Acquisition, (B) any change in a
majority of the individuals who, as of the date hereof, constitute the Board of
Directors of the Company (other than as contemplated by Section 1.3 of the
Merger Agreement), (C) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company or any
of its subsidiaries and any Third Party, (D) a sale, lease, transfer or
disposition of any assets of the Company's or any of its subsidiaries' business
outside the ordinary course of business, or any assets which are material to its
business whether or not in the ordinary course of business, or a reorganization,
recapitalization, dissolution or liquidation of the Company or any of its
subsidiaries, (E) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or bylaws, (F) any other
material change in the Company's corporate structure or affecting its business,
or (G) any other action which is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone or materially adversely affect the
Offer, the Merger or any of the other transactions contemplated by the Merger
Agreement or the Stock Option Agreement, or any of the transactions contemplated
by this Agreement. Stockholder shall not enter into any agreement or
understanding with any person the effect of which would be inconsistent or
violative of the provisions and agreements contained herein. For purposes of
this Agreement, "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean Stockholder's having such ownership, control or power to
direct the voting with respect to, or otherwise enables Stockholder to legally
act with respect to, such securities as contemplated hereby, including pursuant
to any agreement, arrangement or understanding, whether or not in writing but
shall not include the shares listed on Exhibit A hereto. Securities Beneficially
Owned by Stockholder shall include securities Beneficially Owned by all other
persons with whom Stockholder would constitute a "group" as within the meaning
of Section 13(d)(3) of the Exchange Act of 1934, as amended (the "Exchange Act")
but shall not include the shares listed on Exhibit a hereto. Stockholder and
Parent acknowledge and agree that nothing in this subsection (b) shall require
or be construed to require Stockholder to take any action in his capacity as a
member of the Company Board.
2. Irrevocable Proxy.
(a) Stockholder hereby constitutes and appoints Acquisition, which
shall act by and through Cary Klafter and Guy S. Anthony (each, a "Proxy
Holder"), or either of them, with full power of substitution, its true and
lawful proxy and attorney-in-fact to vote at any meeting (and any adjournment or
postponement thereof) of the Company's stockholders called for purposes of
considering whether to approve the Merger Agreement, the Merger or any of the
other transactions contemplated by the Merger Agreement, or any Third Party
Acquisition, or to execute a written consent of stockholders in lieu of any such
meeting, all Shares Beneficially Owned by Stockholder as of the date of such
meeting or written consent in favor of the approval of the Merger Agreement, the
Merger and the other transactions contemplated by the Merger Agreement, with
such modifications to the Merger Agreement as the parties thereto may make, or
against a Third Party Acquisition, as the case may be. Such proxy shall be
limited strictly to the power to vote the Shares in the manner set forth in the
preceding sentence and shall not extend to any other matters.
(b) The proxy and power of attorney granted herein shall be
irrevocable during the term of this Agreement, shall be deemed to be coupled
with an interest sufficient in law to support an irrevocable proxy and shall
revoke all prior proxies granted by Stockholder. Stockholder shall not grant any
proxy to any person which conflicts with the proxy granted herein, and any
attempt to do so shall be void. The power of attorney granted herein is a
durable power of attorney and shall survive the death or incapacity of
Stockholder.
(c) If Stockholder fails for any reason to vote his, hers or its
Shares in accordance with the requirements of Section 1(b) hereof, then the
Proxy Holder shall have the right to vote the Shares at any meeting of the
Company's stockholders and in any action by written consent of the Company's
stockholders in accordance with the provisions of this Section 2. The vote of
the Proxy Holder shall control in any conflict between his vote of such Shares
and a vote by Stockholder of such Shares.
3. Director Matters Excluded. Parent and Acquisition acknowledge and
agree that no provision of this Agreement shall limit or otherwise restrict
Stockholder with respect to any act or omission that Stockholder may undertake
or authorize in his capacity as a director of Dialogic, including, without
limitation,
2
<PAGE> 3
any vote that Stockholder may make as a director of Dialogic with respect to any
matter presented to the Board of Directors of Dialogic.
4. Other Covenants, Representations and Warranties. Stockholder hereby
represents and warrants to Parent and Acquisition as follows:
(a) Ownership of Shares. Stockholder is the Beneficial Owner of all
the Shares. On the date hereof, the Shares constitute all of the Shares
Beneficially Owned by Stockholder. Stockholder has voting power with respect to
the matters set forth in Section 1(b) hereof with respect to all of the Shares,
with no limitations, qualifications or restrictions on such rights.
(b) Power; Binding Agreement. Stockholder has the legal capacity,
power and authority to enter into and perform all of its obligations under this
Agreement. The execution, delivery and performance of this Agreement by
Stockholder will not violate any agreement or any court order to which
Stockholder is a party or is subject including, without limitation, any voting
agreement or voting trust. This Agreement has been duly and validly executed and
delivered by Stockholder.
(c) Restriction on Transfer, Proxies and Non-Interference. Except as
expressly contemplated by this Agreement, Stockholder shall not, directly or
indirectly: (i) offer for sale, sell, transfer, tender, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to or consent to the offer for sale, sale,
transfer, tender, pledge, encumbrance, assignment or other disposition of, any
or all of the Shares or any interest therein; (ii) grant any proxies or powers
of attorney or deposit any Shares into a voting trust or enter into a voting
agreement with respect to any Shares; or (iii) take any action that would make
any representation or warranty of Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling Stockholder from
performing any of Stockholder's obligations under this Agreement.
(d) Other Potential Acquirors. Stockholder (i) shall immediately
cease any existing discussions or negotiations, if any, with any persons
conducted heretofore with respect to any acquisition of all or any material
portion of the assets of, or any equity interest in, the Company or any of its
subsidiaries, or any business combination with the Company or its subsidiaries,
in his, her or its capacity as such; (ii) from and after the date hereof until
the earlier of the termination of the Merger Agreement in accordance with its
terms and the Effective Time, shall not, in such capacity, directly or
indirectly, initiate, solicit or knowingly encourage (including, without
limitation, by way of furnishing non-public information or assistance), or take
any other action to facilitate knowingly, any inquiries or the making of any
Third Party Acquisition; and (iii) shall promptly notify Parent of any proposals
for, or inquiries with respect to, a potential Third Party Acquisition received
by Stockholder or of which Stockholder otherwise has knowledge.
(e) Reliance by Parent and Acquisition. Stockholder understands and
acknowledges that Parent and Acquisition are entering into the Merger Agreement
in reliance upon Stockholder's execution and delivery of this Agreement.
(f) Permitted Transfers.
(i) Stockholder shall have the right to tranfer to one or more
charitable entities an aggregate of 5,175 Shares, free and clear of any of the
restrictions set forth in this Agreement.
(ii) Stockholder shall have the right to transfer, assign, pledge
or otherwise dispose of any or all of the Shares to a Permitted Transferee,
provided that, prior to the transfer such proposed Permitted Transferee executes
an agreement substantially similar to this Agreement and otherwise in form and
substance reasonably satisfactory to Parent confirming that such transferred
Shares shall be held by the proposed Permitted Transferee subject to the terms
and conditions of this Agreement. For purposes of this Agreement, the term
"Permitted Transferee" means any corporation duly and validly organized and
existing under the laws of one of the states of the United States and controlled
by Stockholder.
5. Stop Transfer. Stockholder agrees with, and covenants to, Parent and
Acquisition that Stockholder shall not request that the Company register the
transfer (book-entry or otherwise) of any certificate or uncertificated interest
representing any Shares, unless such transfer is made pursuant to this
Agreement. In
3
<PAGE> 4
the event of a stock dividend or distribution, or any change in the Company
Common Stock by reason of any stock dividend, split-up, recapitalization,
combination, exchange of shares or the like, the term "Shares" shall be deemed
to refer to and include the Shares as well as all such stock dividends and
distributions and any shares into which or for which any or all of the Shares
may be changed or exchanged.
6. Termination. The proxy granted pursuant to Section 2 hereof and
Stockholder's covenants and agreements contained herein with respect to the
Shares shall terminate upon the earliest to occur of: (a) the termination of the
Merger Agreement in accordance with its terms; (b) the Acceptance Date; and (c)
June 30, 2000.
7. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof.
(b) Certain Events. Subject to Section 4(f)(i) Stockholder agrees
that this Agreement and the obligations hereunder shall attach to the Shares and
shall be binding upon any person to which legal or beneficial ownership of any
Shares shall pass, whether by operation of law or otherwise. Notwithstanding any
transfer of Shares, the transferor shall remain liable for the performance of
all obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of
law or otherwise without the prior written consent of the other party; provided,
however, that Parent may, in its sole discretion, assign its rights and
obligations hereunder to any direct wholly-owned subsidiary of Parent.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telecopy, or by
mail (registered or certified mail, postage prepaid, return receipt requested)
or by any nationally-recognized overnight courier service, such as Federal
Express, providing proof of delivery. Any such notice or communication shall be
deemed to have been delivered and received (i) in the case of hand delivery, on
the date of such delivery, (ii) in the case of telecopy, on the date sent if
confirmation of receipt is received and such notice is also promptly mailed by
registered or certified mail (return receipt requested), (iii) in the case of a
nationally-recognized overnight courier service, in circumstances under which
such courier guarantees next business day delivery, on the next business day
after the date when sent, and (iv) the case of mailing on the third business day
following that on which the piece of mail containing such communication is
posted. All communications hereunder shall be delivered to the respective
parties at the following addresses:
<TABLE>
<S> <C>
If to Stockholder: 25B Long Beach Boulevard
Loveladies, New Jersey 08008
Telephone: 609-361-2288
Telecopier: 609-361-2263
Attention: Joanne Burkhardt
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C>
with a copy to: Dialogic Corporation
1515 Route 10
Parsippany, New Jersey 07054
Telecopier: (973) 993-3060
Attention: General Counsel
Pitney Hardin Kipp & Szuch
Park Avenue
Morris County Box 1945
Morristown, NJ 07962
Telephone: (973) 966-6300
Telecopier: (973) 966-1550
Attention: Ronald Janis, Esq.
and
Lowenstein Sandler P.C.
65 Lexington Avenue
Roseland, New Jersey 07068
Telephone: (975) 597-2350
Facsimile: (973) 597-2351
Attention: Peter H. Ehrenberg
If to Parent or Acquisition: Intel Corporation
2200 Mission College Boulevard
Santa Clara, California 95052
Telecopier: (408) 765-1859
Attention: General Counsel
and
Intel Corporation
2200 Mission College Boulevard
Santa Clara, California 95052
Telecopier: (408) 765-6038
Attention: Treasurer
with a copy to: Gibson, Dunn & Crutcher LLP
One Montgomery Street
Telesis Tower
San Francisco, California 94104
Telephone: (415) 393-8200
Telecopier: (415) 986-5309
Attention: Kenneth R. Lamb, Esq.
Gregory J. Conklin, Esq.
</TABLE>
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the matter set forth above.
(f) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain
5
<PAGE> 6
damage for which it would not have an adequate remedy at law for money damages,
and therefore each of the parties hereto agrees that in the event of any such
breach the aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or in
equity.
(h) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(i) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey, without giving effect to
the principles of conflicts of law thereof.
(j) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
6
<PAGE> 7
IN WITNESS WHEREOF, Parent, Acquisition and Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
INTEL CORPORATION, a Delaware
corporation
By: /s/ ARVIND SODHANI
--------------------------------------
Name: Arvind Sodhani
Title: Treasurer
INTEL LMH ACQUISITION
CORPORATION,
a New Jersey corporation
By: /s/ ARVIND SODHANI
--------------------------------------
Name: Arvind Sodhani
Title: Treasurer
STOCKHOLDER:
By: /s/ JOANNE BURKHARDT
--------------------------------------
Name: Joanne Burkhardt, as trustee for
Kenneth John Burkhardt, Christopher L.
Burkhardt and Juliane N. Burkhardt
[SIGNATURE PAGE FOR INTEL/DIALOGIC STOCKHOLDER TENDER AND
VOTING AND IRREVOCABLE PROXY]
7
<PAGE> 8
EXHIBIT A
Joanne K. Burkhardt, as trustee for Kenneth John Burkhardt, III,
Christopher L. Burkhardt and Julianne N. Burkhardt, shall not be deemed to be
the Beneficial Owner of 1,443,050 shares of Dialogic Common Stock owned by
Kenneth J. Burkhardt.
