SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
June 12, 2000
COMPTEK RESEARCH, INC.
(Exact Name of Registrant as Specified in Charter)
New York 1-8502 16-0959023
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(State of Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
2732 Transit Road, Buffalo, New York 14224-2523
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (716) 677-4070
Not Applicable
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(Former Name or Former Address, if Changed Since Last Year)
Item 5. OTHER EVENTS
On June 12, 2000, Comptek Research, Inc. (the "Company")
entered into an Agreement and Plan of Merger, dated as of
June 12, 2000 (the "Merger Agreement") with Northrop Grumman
Corporation ("Northrop") and Yavapai Acquisition Corp., a
wholly owned subsidiary of Northrop (the " Merger Sub"),
providing for the merger of Merger Sub with and into the
Company (the "Merger"). Upon consummation of the Merger
(i) the Company will become a wholly owned subsidiary of
Northrop and (ii) each outstanding share of common stock of
the Company will be converted into common stock of Northrop
and the right to receive cash in lieu of fractional shares
of Northrop common stock.
Pursuant to the Rights Agreement dated April 16, 1999
between the Company and American Stock Transfer & Trust
Company, as Rights Agent (the "Rights Agreement"), the Board
of Directors of the Company (the "Board") declared a
dividend of one right (a "Right") for each outstanding share
of the Company's common stock, par value $0.02 per share
(the "Company Common Stock"), to stockholders of record at
the close of business on April 30, 1999. Each Right
entitles the registered holder to purchase from the Company
a unit consisting of one one-hundredth of a share of Series
A Junior Participating Preferred Stock, par value $.01 per
share (the "Preferred Stock"), at a Purchase Price of $45.00
per unit of one one-hundredth of a share, subject to
adjustment. The description and the terms of the Rights are
set forth in the Rights Agreement.
At a Special Meeting of the Board held on June 12, 2000, the
Board approved an amendment to the Rights Agreement, dated
and effective as of June 12, 2000 (the "Amendment"). The
Amendment was entered into in connection with the Merger
Agreement. Pursuant to the Merger Agreement (i) Merger Sub
shall make an exchange offer (the "Offer") to exchange
shares of common stock, par value $1.00 per share ("Northrop
Common Stock"), of Northrop for all of the issued and
outstanding shares of the Company Common Stock and (ii)
Merger Sub shall merge with and into the Company (the
"Merger"), with the Company continuing as the surviving
corporation.
The Amendment provides that neither Northrop, Merger Sub nor
any Associate or Affiliate of Northrop or Merger Sub,
individually or collectively, shall be deemed to be an
Acquiring Person, nor shall a Distribution Date be deemed to
have occurred solely as a result of (i) the announcement,
approval, execution or delivery of the Merger Agreement,
(ii) the consummation of the Offer and/or the Merger or
(iii) the consummation of the other transactions
contemplated by the Merger Agreement.
The Amendment further provides that neither a Section
11(a)(ii) Event nor an event described in Section 13 of the
Rights Agreement shall be deemed to have occurred as a
result of (i) the announcement, approval, execution or
delivery of the Merger Agreement, (ii) the consummation of
the Offer and/or the Merger or (iii) the consummation of the
other transactions contemplated by the Merger Agreement and
the Rights shall not be adjusted or exercisable in
accordance with Section 11 or Section 13.
Copies of the Amendment and Merger Agreement are filed
herewith as Exhibit 99.1 and Exhibit 99.2, respectively.
Copies of the Rights Agreement and the Amendment are
available free of charge from the Company. This summary
description of the Rights Agreement and the Amendment does
not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement and the Amendment,
which are incorporated herein by reference.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
99 .1 Amendment to Rights Agreement between Comptek
Research, Inc. and American Stock Transfer & Trust
Company
99.2 Agreement and Plan of Merger among Northrop Grumman
Corporation, Yavapai Acquisition Corp. and Comptek
Research, Inc. dated as of June 12, 2000. The Company will
furnish supplementally a copy of all omitted schedules to
Exhibit 99.2 upon the request of the Securities and
Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
COMPTEK RESEARCH, INC.
Date: June 22, 2000 By:/s/John J. Sciuto
-----------------------
John J. Sciuto
Chairman, President and
CEO
Exhibit 99.1
AMENDMENT TO RIGHTS AGREEMENT
BETWEEN
COMPTEK RESEARCH, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
This Agreement, made as of this 12th day of June, 2000, between
Comptek Research, Inc., a New York corporation (the "Company"), and
American Stock Transfer & Trust Company, a New York banking corporation
(the "Rights Agent"), amends the Rights Agreement dated as of April 16,
1999 between the Company and the Rights Agent (the "Rights Agreement").
WHEREAS, Northrop Grumman Corporation, a Delaware corporation
("Parent"), Yavapai Acquisition Corp., a Delaware corporation ("Merger
Sub"), and the Company, intend to enter into an Agreement and Plan of
Merger (the "Merger Agreement;" capitalized terms used herein without
definition shall have the meanings assigned to them in the Merger
Agreement) pursuant to which, among other things, (i) Merger Sub shall
make an exchange offer (the "Offer") to exchange shares of common stock,
par value $1.00 per share ("Parent Common Stock"), of Parent for all of
the issued and outstanding shares (the "Shares") of common stock, par
value $.02 per share (the "Company Common Stock"), of the Company and
(ii) Merger Sub shall merge with and into the Company (the "Merger"),
with the Company continuing as the Surviving Corporation. The Board of
Directors of the Company has approved the Offer, the Merger and the
Merger Agreement.
WHEREAS, pursuant to Section 27 of the Rights Agreement, the Board
of Directors of the Company has determined that an amendment to the
Rights Agreement as set forth herein is necessary and/or desirable in
order to reflect the foregoing, and the Company and the Rights Agent
desire to evidence such amendment in writing;
NOW, THEREFORE, intending to be legally bound, the Company and the
Rights Agent hereby agree that the Rights Agreement is hereby amended as
set forth below:
1. Section 1(a) of the Rights Agreement is amended to add the
following sentence at the end thereof:
Notwithstanding anything in this Rights Agreement to the contrary,
neither Merger Sub, nor any Affiliates or Associates of Merger Sub,
individually or collectively, shall be deemed to be an Acquiring
Person solely as a result of (i) the announcement, approval,
execution or delivery of the Merger Agreement, (ii) the
consummation of the Offer and/or the Merger or (iii) the
consummation of the other transactions contemplated by the Merger
Agreement.
2. The following Sections 1(t) and 1(u) are inserted into the
Rights Agreement, and all subsequent subsections of Section 1 are
renumbered accordingly, and all cross-references to such renumbered
subsections are changed to refer to such subsections as if renumbered:
1(t) "Merger" shall mean the merger of Merger Sub with and
into the Company pursuant to the terms and conditions of the Merger
Agreement.
1(u) "Merger Agreement" shall mean the Agreement and Plan of
Merger dated June 12, 2000 by and among Parent, Merger Sub and the
Company.
3. Section 1(ae) of the Rights Agreement is hereby renumbered as
Section 1(ag) and is amended to add the following sentence at the end
thereof:
Notwithstanding anything in this Rights Agreement to the contrary,
neither (i) the announcement, approval, execution or delivery of
the Merger Agreement, (ii) the consummation of the Offer and/or the
Merger or (iii) the consummation of the other transactions
contemplated in the Merger Agreement shall be deemed to be a
Section 11(a)(ii) Event.
4. Section 1(ai) of the Rights Agreement is hereby renumbered as
Section 1(ak) and is amended to add the following sentence at the end
thereof:
Notwithstanding anything in this Rights Agreement to the contrary,
a Stock Acquisition Date shall not be deemed to have occurred as a
result of (i) the announcement, approval, execution or delivery of
the Merger Agreement, (ii) the consummation of the Offer and/or the
Merger or (iii) the consummation of any of the other transactions
contemplated by the Merger Agreement.
5. Section 3(a) of the Rights Agreement is amended to add the
following sentence at the end thereof:
Notwithstanding anything in this Rights Agreement to the contrary,
a Distribution Date shall not be deemed to have occurred solely as
a result of (i) the announcement, approval, execution or delivery
of the Merger Agreement, (ii) the consummation of the Offer and/or
the Merger or (iii) the consummation of any of the other
transactions contemplated by the Merger Agreement.
6. Section 11(a)(ii) of the Rights Agreement is amended to add
the following sentence at the end thereof:
Notwithstanding anything in this Rights Agreement to the contrary,
neither (i) the announcement, approval, execution or delivery of
the Merger Agreement, (ii) the consummation of the Offer and/or the
Merger or (iii) the consummation of the other transactions
contemplated in the Merger Agreement shall be deemed to be an event
described in this Section 11(a)(ii) and shall not cause the Rights
to be adjusted or exercisable in accordance with this Section 11.
7. Section 13(d) of the Rights Agreement is amended to add the
following sentence after the first sentence thereof:
Notwithstanding anything in this Rights Agreement to the contrary,
neither (i) the announcement, approval, execution or delivery of
the Merger Agreement, (ii) the consummation of the Offer and/or the
Merger or (iii) the consummation of the other transactions
contemplated in the Merger Agreement shall be deemed to be an event
described in this Section 13 and shall not cause the Rights to be
adjusted or exercisable in accordance with this Section 13.
8. Definition of "Merger". The term "Merger" as defined herein
shall include the merger contemplated by the Merger Agreement as of the
date hereof, and shall also include, in the event the parties to the
Merger Agreement duly amend the Merger Agreement to so reflect, a merger
with respect to which the Company is a constituent corporation, but is
not the surviving corporation.
9. Effectiveness. This Amendment shall be deemed effective as of
June 12, 2000. Except as amended hereby, the Rights Agreement shall
remain in full force and effect and shall be otherwise unaffected
hereby.
10. Miscellaneous. This Amendment shall be deemed to be a
contract made under the laws of the State of New York and for all
purposes shall be governed by and construed in accordance with the laws
of such state applicable to contracts made and performed entirely within
such state. This Amendment may be executed in any number of
counterparts, each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute
one and the same instrument. If any provision, covenant or restriction
of this Amendment is held by a court of competent jurisdiction or other
authority to be invalid, illegal or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Amendment shall
remain in full force and effect and shall in no way be effected,
impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be
duly executed and their respective corporate seals to be hereunto
affixed and
attested, all as of the day and year first above written.
Attest: COMPTEK RESEARCH, INC.
By: /s/Christopher A. Head By: /s/John J. Sciuto
Name: Christopher A. Head Name: John J. Sciuto
Title: Executive Vice Title: President and Chief
President, General Counsel Executive Officer
and Secretary
Attest: AMERICAN STOCK TRANSFER &
TRUST COMPANY
By: By:
/s/Susan Silber /s/Herbert J. Lemmer
Name: Susan Silber Name: Herbert J. Lemmer
Title: Assistant Title: Vice President
Secretary
Exhibit 99.2
AGREEMENT AND PLAN OF MERGER
among
NORTHROP GRUMMAN CORPORATION
YAVAPAI ACQUISITION CORP.
and
COMPTEK RESEARCH, INC.
Dated as of June 12, 2000
TABLE OF CONTENTS
PAGE
ARTICLE I 1
SECTION 1.01 CERTAIN DEFINED TERMS. 1
ARTICLE II 7
SECTION 2.01 THE OFFER. 7
SECTION 2.02 COMPANY ACTION. 9
SECTION 2.03 DIRECTORS. 9
ARTICLE III 10
SECTION 3.01 THE MERGER. 10
SECTION 3.02 CLOSING. 11
SECTION 3.03 EFFECTIVE TIME. 11
SECTION 3.04 EFFECT OF THE MERGER. 11
SECTION 3.05 CERTIFICATE OF INCORPORATION; BYLAWS; DIRECTORS
AND OFFICERS OF SURVIVING CORPORATION. 11
ARTICLE IV 12
SECTION 4.01 CONVERSION OF SHARES 12
SECTION 4.02 EXCHANGE OF SHARES OTHER THAN TREASURY SHARES. 13
SECTION 4.03 STOCK TRANSFER BOOKS. 15
SECTION 4.04 NO FRACTIONAL SHARE CERTIFICATES. 15
SECTION 4.05 OPTIONS TO PURCHASE COMPANY COMMON STOCK. 16
SECTION 4.06 CERTAIN ADJUSTMENTS. 16
SECTION 4.07 LOST, STOLEN OR DESTROYED CERTIFICATES. 17
SECTION 4.08 TAKING OF NECESSARY ACTION; FURTHER ACTION. 17
ARTICLE V 17
SECTION 5.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. 18
SECTION 5.02 CERTIFICATE OF INCORPORATION AND BYLAWS. 18
SECTION 5.03 CAPITALIZATION. 18
SECTION 5.04 AUTHORITY RELATIVE TO THIS AGREEMENT. 19
SECTION 5.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. 20
SECTION 5.06 PERMITS; COMPLIANCE WITH LAWS. 21
SECTION 5.07 SEC FILINGS; FINANCIAL STATEMENTS. 22
SECTION 5.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. 22
SECTION 5.09 EMPLOYEE BENEFIT PLANS; LABOR MATTERS. 23
SECTION 5.10 CONTRACTS. 26
SECTION 5.11 LITIGATION. 26
SECTION 5.12 ENVIRONMENTAL MATTERS. 27
SECTION 5.13 INTELLECTUAL PROPERTY. 27
SECTION 5.14 TAXES. 29
SECTION 5.15 INSURANCE. 30
SECTION 5.16 PROPERTIES. 30
SECTION 5.17 AFFILIATES. 31
SECTION 5.18 OPINION OF FINANCIAL ADVISOR. 31
SECTION 5.19 BROKERS. 32
SECTION 5.20 CERTAIN BUSINESS PRACTICES. 32
SECTION 5.21 BUSINESS ACTIVITY RESTRICTION. 32
SECTION 5.22 STATE TAKEOVER STATUTES; DISSENTERS' RIGHTS;
RIGHTS AGREEMENT. 32
SECTION 5.23 TAX FREE REORGANIZATION. 33
SECTION 5.24 VOTING REQUIREMENTS. 33
ARTICLE VI 33
SECTION 6.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. 33
SECTION 6.02 CERTIFICATE OF INCORPORATION AND BYLAWS. 33
SECTION 6.03 CAPITALIZATION. 34
SECTION 6.04 AUTHORITY RELATIVE TO THIS AGREEMENT. 34
SECTION 6.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. 34
SECTION 6.06 TAX FREE REORGANIZATION. 35
SECTION 6.07 PERMITS; COMPLIANCE WITH LAWS. 35
SECTION 6.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. 35
SECTION 6.09 SEC FILINGS; FINANCIAL STATEMENTS. 35
SECTION 6.10 BROKERS. 36
SECTION 6.11 ISSUANCE OF PARENT COMMON STOCK. 36
SECTION 6.12 COMPANY STOCK. 37
SECTION 6.13 TAXES. 37
SECTION 6.14. INFORMATION SUPPLIED. 37
ARTICLE VII 38
SECTION 7.01 CONDUCT OF BUSINESS BY COMPANY PENDING THE
CLOSING. 38
SECTION 7.02 NOTICES OF CERTAIN EVENTS. 41
SECTION 7.03 ACCESS TO INFORMATION; CONFIDENTIALITY. 41
SECTION 7.04 NO SOLICITATION OF TRANSACTIONS. 41
SECTION 7.05 CONTROL OF OPERATIONS. 42
SECTION 7.06 FURTHER ACTION; CONSENTS; FILINGS. 42
SECTION 7.07 ADDITIONAL REPORTS. 43
SECTION 7.08 EMPLOYEE RETENTION. 44
SECTION 7.09 THIRD PARTY CONSENTS. 44
SECTION 7.10 TAX-FREE TREATMENT. 44
ARTICLE VIII 45
SECTION 8.01 REGISTRATION STATEMENT; PROXY STATEMENT.. 45
SECTION 8.02 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND
INSURANCE. 47
SECTION 8.0 PUBLIC ANNOUNCEMENTS. 48
SECTION 8.04 EMPLOYEE BENEFIT MATTERS. 49
SECTION 8.05 NYSE LISTING. 49
SECTION 8.06 BLUE SKY. 50
SECTION 8.07 REASONABLE EFFORTS. 50
ARTICLE IX 50
SECTION 9.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY
TO CONSUMMATE THE MERGER. 50
ARTICLE X 51
SECTION 10.01 TERMINATION. 51
SECTION 10.02 EFFECT OF TERMINATION. 52
SECTION 10.03 AMENDMENT. 52
SECTION 10.04 WAIVER. 52
SECTION 10.05 ASSUMPTION OF CERTAIN OBLIGATIONS. 52
SECTION 10.06 FEES, EXPENSES AND OTHER PAYMENTS. 52
ARTICLE XI 54
SECTION 11.01 NON-SURVIVAL OF REPRESENTATIONS AND
WARRANTIES. 54
SECTION 11.02 NOTICES. 55
SECTION 11.03 SEVERABILITY. 56
SECTION 11.04 ASSIGNMENT; BINDING EFFECT; BENEFIT. 56
SECTION 11.05 INCORPORATION OF EXHIBITS. 56
SECTION 11.06 GOVERNING LAW. 57
SECTION 11.07 WAIVER OF JURY TRIAL. 57
SECTION 11.08 HEADINGS; INTERPRETATION. 57
SECTION 11.09 COUNTERPARTS. 57
SECTION 11.10 ENTIRE AGREEMENT. 57
SECTION 11.11. NO THIRD PARTY BENEFICIARIES. 57
SECTION 11.12. DISCLOSURE SCHEDULES. 58
ANNEX I
COMPANY DISCLOSURE SCHEDULE
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 12, 2000 (as
amended, supplemented or otherwise modified from time to time,
this "AGREEMENT"), among NORTHROP GRUMMAN CORPORATION, a Delaware
corporation ("PARENT"), COMPTEK RESEARCH, INC., a New York
corporation ("COMPANY"), and YAVAPAI ACQUISITION CORP., a
Delaware corporation and a direct wholly owned subsidiary of
Parent ("MERGER SUB").
W I T N E S S E T H:
WHEREAS, it is proposed that Merger Sub shall make an
exchange offer (the "OFFER") to exchange shares of common stock,
par value $1.00 per share ("PARENT COMMON STOCK"), of Parent for
all of the issued and outstanding shares (the "SHARES") of common
stock, par value $.02 per share (the "COMPANY COMMON STOCK"), of
the Company, including the associated Rights, in accordance with
the terms provided in this Agreement;
WHEREAS, for United States Federal income tax purposes, it
is intended that the Offer and the Merger shall qualify as a tax-
free reorganization under Section 368(a) of the Internal Revenue
Code of 1986, as amended (together with the rules and regulations
promulgated thereunder, the "CODE"), and that this Agreement
shall be, and hereby is, adopted as a plan of reorganization for
purposes of Section 368 of the Code; and
WHEREAS, promptly after the execution and delivery of this
Agreement and as a condition and inducement to the willingness of
Parent and Merger Sub to proceed with this Agreement, Parent and
certain stockholders of the Company (collectively, the
"STOCKHOLDERS") are entering into an agreement (the "TENDER
AGREEMENT") pursuant to which the Stockholders will agree to
tender for exchange all of their Shares in the Offer, to vote to
adopt and approve this Agreement and to take certain other
actions in furtherance of the transactions contemplated by this
Agreement upon the terms and subject to the conditions set forth
in the Tender Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth
herein, and other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, and intending to
be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS.
Unless the context otherwise requires, the following terms,
when used in this Agreement, shall have the respective meanings
specified below (such meanings to be equally applicable to the
singular and plural forms of the terms defined):
"AFFILIATE" shall mean, with respect to any Person, any
other Person that controls, is controlled by or is under common
control with the first Person.
"BLUE SKY LAWS" shall mean state securities or "blue sky"
laws.
"ASE" shall mean the American Stock Exchange.
"BCL" shall mean the Business Corporation Law of the State
of New York.
"BUSINESS DAY" shall mean any day on which the principal
offices of the SEC in Washington, D.C. are open to accept
filings, or, in the case of determining a date when any payment
is due, any day on which banks are not required or authorized by
Law or executive order to close in the City of New York.
"COMPANY COMPETING TRANSACTION" shall mean any of the
following involving the Company (other than the Offer and the
Merger):
(i) any merger, consolidation, share exchange,
business combination or other similar transaction;
(ii) any sale, lease, exchange, transfer or other
disposition of 20% or more of the assets of the Company and
the Company Subsidiaries, taken as a whole, in a single
transaction or series of transactions;
(iii) any tender offer or exchange offer for 20% or
more of the outstanding voting securities of the Company or
the filing of a registration statement under the Securities
Act in connection therewith;
(iv) any Person having acquired "beneficial ownership"
(as such term is defined under Section 13(d) of the Exchange
Act) or the right to acquire beneficial ownership of, or any
"group" (as such term is defined under Section 13(d) of the
Exchange Act) having been formed which beneficially owns or
has the right to acquire beneficial ownership of, 33% or
more of the outstanding voting securities of the Company;
(v) any solicitation by the Company in opposition to
the Offer; or
(vi) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure
schedule delivered by the Company to Parent simultaneously with
the execution of this Agreement and forming a part hereof.
"COMPANY ESPP" shall mean the Company's 1999 Employee Stock
Purchase Plan.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in
or effect on the business of the Company or the Company
Subsidiaries that, individually or in the aggregate (taking into
account all other such changes or effects), is, or is reasonably
likely to be, materially adverse to the business, assets,
liabilities, financial condition or results of operations of the
Company and the Company Subsidiaries, taken as a whole; provided,
however, that "Company Material Adverse Effect" shall not be
deemed to include the impact of (a) changes in generally accepted
accounting principles, (b) acts or omissions of the Company taken
with the prior written consent of Parent, (c) changes in general
economic or industry conditions, (d) the compliance by the
Company with the provisions of this Agreement and the effects of
the Offer and the Merger on the business, assets, liabilities,
financial condition or results of operations of the Company and
the Company Subsidiaries, (e) any change in the market price or
trading volume of the Company Common Stock, and (f) any changes
or effects as a result of the announcement of the Offer and the
Merger.
"COMPANY MATERIAL CONTRACT" shall mean any contract or
agreement of the Company or any Company Subsidiary: (a) for
indebtedness in excess of $1,000,000, (b) that is a "Material
Contract" as such term is defined in Item 601(b)(10) of
Regulation S-K promulgated by the SEC under the Exchange Act, (c)
which limits the liability of the Company or any Company
Subsidiary to compete (other than limitations undertaken in the
ordinary course of business), (d) that imposes any indemnity
obligation on the Company or any Company Subsidiary other than
indemnity obligations incurred in the ordinary course of
business, (e) that requires a capital expenditure in excess of
$500,000, (f) that is a real property lease or government prime
contract and the Company or any Company Subsidiary is lessee or
prime contractor and which has a term in excess of one (1) year
and requires aggregate payments or has a value in excess of
$500,000, or (g) that has a term in excess of one (1) year and
requires aggregate payments or has a value in excess of
$1,000,000.
"COMPANY'S KNOWLEDGE" shall mean the actual knowledge of the
Company's Chief Executive Officer, Chief Operating Officer,
Executive Vice President and General Counsel or Chief Financial
Officer, or any President of Comptek Federal Systems, Inc.,
Comptek PRB Associates, Inc. or Comptek Amherst Systems, Inc.
"COMPANY STOCK PLANS" shall mean the Company 1992 Equity
Incentive Plan, the Company 1998 Equity Incentive Stock Plan, the
Company 1994 Stock Option Plan for Non-Employee Directors and the
Company ESPP.
"CONFIDENTIALITY AGREEMENT" shall mean the confidentiality
agreement, dated as of February 4, 2000, between Parent and the
Company.
"DCAA" shall mean the Defense Contract Audit Agency.
"DGCL" shall mean the General Corporation Law of the State
of Delaware.
"$" shall mean United States Dollars.
"ENCUMBRANCES" shall mean all claims, security interests,
liens, pledges, charges, escrows, options, proxies, rights of
first refusal, preemptive rights, mortgages, hypothecations,
prior assignments, title retention agreements, indentures,
security agreements or any other encumbrance of any kind.
"ENVIRONMENTAL LAW" shall mean any Law and any enforceable
judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment,
relating to pollution or protection of the environment, health
and safety, or natural resources, including, without limitation,
those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Material.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval,
identification number, license or other authorization required
under or issued pursuant to any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, together with the rules and regulations
promulgated thereunder.
"EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, together with the rules and regulations
promulgated thereunder.
"EXCHANGE RATIO" shall mean the quotient obtained by
dividing $20.75 by the Final Average Closing Price; provided,
however, that if the Final Average Closing Price is (i) equal to
or less than $74.00, then the Exchange Ratio shall be 0.2804 or
(ii) equal to or greater than $84.00, the Exchange Ratio shall be
0.2470; provided, further, however, the Exchange Ratio may be
adjusted as provided in Section 2.01.
"EXPENSES" shall mean, with respect to any party hereto, all
reasonable out-of-pocket expenses (including, without limitation,
all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its
affiliates) incurred by such party or on its behalf in connection
with or related to the authorization, preparation, negotiation,
execution and performance of its obligations pursuant to this
Agreement and the consummation of the Offer and the Merger, the
preparation, printing, filing and mailing of the Registration
Statement, the Company Proxy Statement, the publication of the
Offer, the solicitation of stockholder approvals, the filing of
HSR Act notices, if any, and all other matters related to the
transactions contemplated hereby and the closing of the Merger.
"FAR" shall mean the Federal Acquisition Regulation.
"FINAL AVERAGE CLOSING PRICE" shall mean the average of the
per share closing sales prices of Parent Common Stock, rounded to
four decimal places, as reported under "NYSE Composite Reports"
in The Wall Street Journal for each of the twenty (20) NYSE
trading days in the period ending two Business Days prior to the
effective date of the Registration Statement.
"GOVERNMENTAL ENTITY" shall mean any United States Federal,
state, local or foreign governmental, regulatory or
administrative authority, agency or commission or any court,
tribunal or arbitral body.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered
by or with any Governmental Entity.
"HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum
products, by-products or breakdown products, radioactive
materials, friable asbestos-containing materials or
polychlorinated biphenyls or (ii) any chemical, material or
substance defined or regulated as toxic or hazardous or as a
pollutant or contaminant or waste under any applicable
Environmental Law.
"HSR ACT" shall mean Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, together with the rules and
regulations promulgated thereunder.
"IRS" shall mean the United States Internal Revenue Service.
"LAW" shall mean any Federal, state, foreign or local
statute, law, ordinance, regulation, rule, code, order, judgment,
decree, other requirement or rule of law of the United States or
any other jurisdiction.
"NYSE" shall mean the New York Stock Exchange.
"PARENT MATERIAL ADVERSE EFFECT" shall mean any change in or
effect on the business of Parent and the Subsidiaries of the
Parent that, individually or in the aggregate (taking into
account all other such changes or effects), is, or is reasonably
likely to be, materially adverse to the business, assets,
liabilities, financial condition or results of operations of
Parent and Subsidiaries, taken as a whole, provided, however,
that "Parent Material Adverse Effect" shall not be deemed to
include the impact of (a) changes in generally accepted
accounting principles, (b) acts or omissions of Parent taken with
the prior written consent of the Company, (c) changes in general
economic or industry conditions, (d) the compliance by Parent or
Merger Sub with the provisions of this Agreement and the effects
of the Offer and the Merger on the business, assets, liabilities,
financial condition or results of operations of Parent and its
Subsidiaries, taken as a whole, (e) any change in the market
price or trading volume of Parent Common Stock, and (f) any
changes or effects as a result of the announcement of the Offer
and the Merger.
"PARENT'S KNOWLEDGE" shall mean the actual knowledge of the
Parent's Chief Executive Officer, Chief Financial Officer,
General Counsel, or Corporate Vice President and Treasurer.
"PERMITTED ENCUMBRANCES" shall mean (i) liens for Taxes,
assessments and other governmental charges not yet due and
payable, (ii) immaterial unfiled mechanics', workmen's,
repairmen's, warehousemen's, carriers' or other like liens
arising or incurred in the ordinary course of business which are
not yet due and payable and (iii) equipment leases with third
parties entered into in the ordinary course of business which are
not material or which are disclosed on Schedule 5.10 of the
Company Disclosure Schedule.
"PERSON" shall mean an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person
(including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act), trust, association, entity
or government or political subdivision, agency or instrumentality
of a government.
"REPRESENTATIVES" of any specified Person shall mean the
officers, directors, employees, accountants, consultants, legal
counsel, agents and other representatives of such Person.
"RIGHTS" shall mean the preferred stock purchase rights
associated with the Company Common Stock pursuant to the Rights
Agreement.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, together with the rules and regulations promulgated
thereunder.
"SUBSIDIARY" shall mean, with respect to any Person, any
corporation, limited liability company, partnership, joint
venture, trust or other legal entity of which such Person (either
alone or through or together with any other subsidiary of such
Person) owns, directly or indirectly, a majority of the stock or
other equity interests, the holders of which are generally
entitled to select by vote or other means the board of directors
or other governing body of such corporation, limited liability
company, partnership, joint venture, trust or other legal entity.
"TAX" shall mean (i) any and all taxes, fees, levies,
duties, tariffs, imposts and other charges of any kind (together
with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any
Governmental Entity or taxing authority ("TAXING AUTHORITY"),
including, without limitation, taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment
compensation or net worth; taxes or other charges in the nature
of excise, withholding, ad valorem, stamp, transfer, value-added
or gains taxes; license, registration and documentation fees; and
customers' duties, tariffs and similar charges; (ii) any
liability for the payment of any amounts of the type described in
(i) as a result of being a member of an affiliated, combined,
consolidated or unitary group for any taxable period; and (iii)
any liability for the payment of amounts of the type described in
(i) or (ii) as a result of being a transferee of, or a successor
in interest to, any Person or as a result of an express or
implied obligation to indemnify any Person.
"TAX RETURN" shall mean any return, statement or form
(including, without limitation, any estimated tax reports or
return, withholding tax reports or return and information report
or return) required to be filed with respect to any Taxes.
"U.S. GAAP" shall mean United States generally accepted
accounting principles.
ARTICLE II
THE OFFER
SECTION 2.01 THE OFFER. (a) Provided that (i) this
Agreement shall not have been terminated in accordance with
Section 10.01 and (ii) none of the events set forth in Annex I
hereto shall have occurred or be existing, Merger Sub shall, as
promptly as practicable after the date hereof, commence the
Offer. Each Share (including the associated Right) accepted by
Merger Sub in accordance with the Offer shall be exchanged for
the right to receive from Merger Sub that number of fully paid
and nonassessable shares of Parent Common Stock equal to the
Exchange Ratio; provided, however, if the Final Average Closing
Price is less than $74.00 on the day Parent makes a request to
the SEC that the Registration Statement be declared effective,
the Company shall have the right to terminate this Agreement (and
such termination will have the effect set forth in Section 10.02
but shall not trigger any provision of Sections 10.06(b), (c),
(d) or (e)) if the Company gives written notice to Parent and
Merger Sub within one Business Day of such day prior to the
Registration Statement being declared effective (time being of
the essence); provided, further, however, that such termination
shall not be effective if Parent in the exercise of its sole
discretion elects, by written notice to the Company within one
Business Day to issue additional shares of Parent Common Stock
sufficient to equal the value to be received if the Final Average
Closing Price had been $74.00 (the "MAKE WHOLE RIGHT"). The
initial expiration date of the Offer shall be the twentieth
Business Day following commencement of the Offer. The Offer
shall be subject to the condition (the "MINIMUM CONDITION") that
there shall be validly tendered in accordance with the terms of
the Offer prior to the expiration date of the Offer and not
withdrawn a number of Shares which, together with the Shares then
owned by Parent and Merger Sub, represents at least 66.67% of the
total number of outstanding Shares, assuming the exercise of all
outstanding options, rights and convertible securities (if any)
and the issuance of all Shares that the Company is obligated to
issue (such total number of outstanding Shares being hereinafter
referred to as the "FULLY DILUTED SHARES") and to the other
conditions set forth in Annex I hereto. Parent and Merger Sub
expressly reserve the right to waive any conditions to the Offer
and to make any change in the terms or conditions of the Offer;
provided, however, that, without the written consent of the
Company, no change may be made which changes the form or amount
of consideration to be paid, imposes conditions to the Offer in
addition to those set forth in Annex I, changes or waives the
Minimum Condition, extends the Offer (except as set forth in the
following two sentences), or makes any other change to any
condition to the Offer set forth in Annex I which is adverse to
the holders of Shares. Subject to the terms of the Offer and
this Agreement and the satisfaction (or waiver to the extent
permitted by this Agreement) of the conditions to the Offer,
Merger Sub shall accept for payment all Shares validly tendered
and not withdrawn pursuant to the Offer as soon as practicable
after the applicable expiration date of the Offer and shall pay
for all such Shares promptly after acceptance; provided, that (x)
Merger Sub may (or, if the conditions set forth in clause (1),
(2), (3) or (4), or subclause (a), (b) or (c) of clause (5), of
Annex I have not been satisfied, shall) extend the Offer for
extension periods not in excess of 15 Business Days if, at the
scheduled expiration date of the Offer or any extension thereof,
any of the conditions to the Offer shall not have been satisfied,
until such time as such conditions are satisfied or waived
(provided, that if at any scheduled expiration date, all of the
conditions to the Offer have been satisfied or waived other than
the Minimum Condition, Merger Sub shall only be required to
extend the Offer for an additional 20 Business Days following
such scheduled expiration date; provided further, that Merger Sub
shall not be required to extend the Offer if there is no
reasonable possibility of all of the conditions to the Offer
being satisfied on or before October 31, 2000), and (y) Merger
Sub may extend the Offer if and to the extent required by the
applicable rules and regulations of the SEC. In addition, Merger
Sub may extend the Offer after the acceptance of Shares
thereunder for a further period of time by means of a subsequent
offering period under Rule 14d-11 promulgated under the Exchange
Act of not more than 20 Business Days to meet the objective
(which is not a condition to the Offer) that there be validly
tendered, in accordance with the terms of the Offer, prior to the
expiration date of the Offer (as so extended) and not withdrawn a
number of Shares, which together with Shares then owned by Parent
and Merger Sub, represents at least 90% of the Fully Diluted
Shares. The Offer shall terminate upon any termination of this
Agreement. Notwithstanding anything to the contrary set forth
herein, no certificates or scrip representing fractional shares
of Parent Common Stock shall be issued in connection with the
exchange of Parent Common Stock for Shares upon consummation of
the Offer, and in lieu thereof each tendering stockholder who
would otherwise be entitled to a fractional share of Parent
Common Stock in the Offer will be paid an amount in cash equal to
the product obtained by multiplying (A) the fractional share
interest such holder (after taking into account all shares of
Company Common Stock held at the Effective Time by such holder)
would otherwise be entitled by (B) the Final Average Closing
Price.
(b) As soon as practicable after the date of this
Agreement, but subject to receipt by Parent of the executed
Tender Agreement, Parent shall prepare and file with the SEC a
registration statement on Form S-4 to register the offer and sale
of Parent Common Stock pursuant to the Offer (the "REGISTRATION
STATEMENT"). The Registration Statement will include a
preliminary prospectus containing the information required under
Rule 14d-4(b) promulgated under the Exchange Act (the
"PRELIMINARY PROSPECTUS"). As soon as practicable on the date of
commencement of the Offer, Parent and Merger Sub shall (i) file
with the SEC a Tender Offer Statement on Schedule TO with respect
to the Offer (the "SCHEDULE TO") which will contain or
incorporate by reference all or part of the Preliminary
Prospectus and form of the related letter of transmittal
(together with the Schedule TO and with any supplements or
amendments to either hereof, collectively the "OFFER DOCUMENTS"),
and (ii) cause the Offer Documents to be disseminated to holders
of Shares. Parent, Merger Sub and the Company each agree
promptly to correct any information provided by it for use in the
Registration Statement or the Offer Documents if and to the
extent that it shall have become false or misleading in any
material respect. Parent and Merger Sub agree to take all steps
necessary to cause the Offer Documents as so corrected to be
filed with the SEC and to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal
securities laws and Blue Sky Laws. The Company and its counsel
shall be given a reasonable opportunity to review and comment on
each of the Schedule TO, the Registration Statement and the Offer
Documents prior to its being filed with the SEC.
SECTION 2.02 COMPANY ACTION. (a) The Company hereby
consents to the Offer and represents that its Board of Directors,
at a meeting duly called and held, has (i) determined that this
Agreement and the transactions contemplated hereby, including the
Offer and the Merger (as defined in Section 3.01), are advisable
and are fair to and in the best interest of the Company's
stockholders, (ii) approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger and the
transactions contemplated thereby, and (iii) resolved to
recommend acceptance of the Offer and approval and adoption of
this Agreement and the Merger by the Company's stockholders (the
recommendations referred to in this clause (iii) are collectively
referred to in this Agreement as the "RECOMMENDATIONS"). The
Company further represents that CIBC World Markets Corp. (the
"COMPANY FINANCIAL ADVISOR") has rendered to the Company's Board
of Directors its opinion to the effect that, as of the date of
this Agreement, the Exchange Ratio is fair, from a financial
point of view, to the holders of the Company Common Stock (other
than Parent and its Affiliates). The Company will promptly
furnish Parent and Merger Sub pursuant to the terms of the
Confidentiality Agreement with a list of its stockholders,
mailing labels and any available listing or computer file
containing the names and addresses of all record holders of
Shares and lists of securities positions of Shares held in stock
depositories, in each case as of the most recent practicable
date, and will provide to Parent and Merger Sub such additional
information (including, without limitation, updated lists of
stockholders, mailing labels and lists of securities positions)
and such other assistance as Parent or Merger Sub may reasonably
request in connection with the Offer.
(b) As soon as practicable on the day that the Offer
is commenced, the Company will file with the SEC and disseminate
to holders of Shares a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "SCHEDULE 14D-9") which shall reflect the
Recommendations; provided that the Board of Directors of the
Company may withdraw, modify or change such Recommendations if
but only if (i) it believes in good faith, based on such matters
as it deems relevant, after consultation with the Company's
financial advisors, that a Company Superior Proposal (as defined
in Section 7.04) has been made and (ii) it has determined in good
faith, after consultation with outside legal counsel, that the
withdrawal, modification or change of such Recommendation is, in
the good faith judgment of the Board of Directors, required by
the Board to comply with its fiduciary duties imposed by New York
Law. The Company, Parent and Merger Sub each agree promptly to
correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect. The Company agrees
to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Parent and its counsel shall
be given a reasonable opportunity to review and comment on the
Schedule 14D-9 prior to its being filed with the SEC.
SECTION 2.03 DIRECTORS. (a) Effective upon the acceptance
for payment by Merger Sub of 66.67% of the Shares pursuant to the
Offer (the "APPOINTMENT TIME"), Parent shall be entitled to
designate the number of directors, rounded up to the next whole
number, on the Company's Board of Directors that equals the
product of (i) the total number of directors on the Company's
Board of Directors (giving effect to the election of any
additional directors pursuant to this Section) and (ii) the
percentage that the number of Shares owned by Parent or Merger
Sub (including Shares accepted for payment) bears to the total
number of Shares outstanding, and the Company shall take all
action necessary to cause Parent's designees to be elected or
appointed to the Company's Board of Directors, including, without
limitation, increasing the number of directors, or seeking and
accepting resignations of incumbent directors, or both; provided
that, prior to the Effective Time (as defined in Section 3.03),
the Company's Board of Directors shall always have at least two
members who were directors of the Company prior to consummation
of the Offer (each, a "CONTINUING DIRECTOR"). If the number of
Continuing Directors is reduced to less than two for any reason
prior to the Effective Time, the remaining and departing
Continuing Directors shall be entitled to designate a person to
fill the vacancy. At such times, the Company will use its best
efforts to cause individuals designated by Parent to constitute
the same percentage as such individuals represent on the
Company's Board of Directors of (x) each committee of the Board
of Directors of the Company, (y) each Board of Directors of each
Subsidiary of the Company and (z) each committee of each such
Board. Notwithstanding anything in this Agreement to the
contrary, in the event that Parent's designees are elected to the
Company's Board of Directors prior to the Effective Time, the
affirmative vote of the Continuing Directors shall be required
for the Company to (a) amend or terminate this Agreement or agree
or consent to any amendment or termination of this Agreement, (b)
waive any of the Company's rights, benefits or remedies
hereunder, (c) extend the time for performance of Parent's and
Merger Sub's respective obligations hereunder, or (d) approve any
other action by the Company which is reasonably likely to
adversely affect the interests of the stockholders of the Company
(other than Parent, Merger Sub and their Affiliates (other than
the Company and the Company Subsidiaries)), with respect to the
transactions contemplated by this Agreement.
(b) The Company's obligations to appoint designees to
the Board of Directors shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-l promulgated thereunder. The Company
shall promptly take all actions required pursuant to
Section 14(f) and Rule 14f-l in order to fulfill its obligations
under this Section 2.03 and shall include in the Schedule 14D-9
such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-l to
fulfill its obligations under this Section 2.03. Parent will
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 Section 14(f) and
Rule 14f-1.
ARTICLE III
THE MERGER
SECTION 3.01 THE MERGER.
Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the DGCL and the BCL, at
the Effective Time, Merger Sub shall be merged with and into the
Company (the "MERGER"). As a result of the Merger, the separate
corporate existence of Merger Sub shall cease and the Company
shall continue as the surviving corporation of the Merger as a
wholly owned subsidiary of Parent (the "SURVIVING CORPORATION").
SECTION 3.02 CLOSING.
Unless this Agreement shall have been terminated and the
Merger herein contemplated shall have been abandoned pursuant to
Section 10.01 and subject to the satisfaction or waiver of the
conditions set forth in Article IX, the consummation of the
Merger shall take place as promptly as practicable (and in any
event within three Business Days) after satisfaction or waiver of
the conditions set forth in Article IX (the "CLOSING DATE") at a
closing (the "CLOSING") to be held at 10:00 AM at the offices of
Parent, unless another date, time or place is agreed to by Parent
and the Company.
SECTION 3.03 EFFECTIVE TIME.
At the Closing, the parties shall cause the Merger to be
consummated by filing (i) a certificate of merger (the "DELAWARE
CERTIFICATE OF MERGER") with the Secretary of State of the State
of Delaware in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL and (ii) a
certificate of merger (the "NEW YORK CERTIFICATE OF MERGER") with
the Secretary of State of the State of New York in such form as
required by, and executed in accordance with the relevant
provisions of, the BCL (the date and time of such filings, or
such later date and time as may be set forth therein, being the
"EFFECTIVE TIME").
SECTION 3.04 EFFECT OF THE MERGER.
At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of the DGCL and the BCL.
Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, except as otherwise provided
herein, all the property, rights, privileges, powers and
franchises of Merger Sub and the Company shall vest in the
Company as the Surviving Corporation, and all debts, liabilities
and duties of Merger Sub and the Company shall become the debts,
liabilities and duties of the Company as the Surviving
Corporation.
SECTION 3.05 CERTIFICATE OF INCORPORATION; BYLAWS;
DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.
Unless otherwise agreed by Parent and the Company before the
Effective Time, at the Effective Time:
(a) the certificate of incorporation of the Company in
effect immediately prior to the Effective Time shall be
amended and restated in its entirety to read substantially
the same as the certificate of incorporation of Merger Sub;
provided, however, that Article I of the certificate of
incorporation of the Surviving Corporation shall be amended
to read as follows: "The name of the corporation is COMPTEK
RESEARCH, INC." and, as so amended and restated, shall be
the certificate of incorporation of the Surviving
Corporation until amended in accordance with the terms
thereof and applicable Law;
(b) the bylaws of the Company in effect immediately
prior to the Effective Time shall be amended and restated in
their entirety to read substantially the same as the bylaws
of Merger Sub, and, as so amended and restated, shall be the
bylaws of the Surviving Corporation until amended in
accordance with the terms thereof and applicable Law;
(c) the officers of Merger Sub immediately prior to
the Effective Time shall serve in their respective offices
of the Surviving Corporation from and after the Effective
Time, in each case until their successors are elected or
appointed and qualified or until their resignation or
removal; and
(d) the directors of Merger Sub immediately prior to
the Effective Time shall serve as the directors of the
Surviving Corporation from and after the Effective Time, in
each case until their successors are elected or appointed
and qualified or until their resignation or removal.
ARTICLE IV
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 4.01 CONVERSION OF SHARES
At the Effective Time, by virtue of the Merger, and without
any action on the part of Parent, Merger Sub, the Company or the
holders of any of the following securities:
(a) Each share of Company Common Stock issued and
outstanding immediately before the Effective Time (excluding
(i) those held in the treasury of the Company, (ii) those
owned by any wholly owned Subsidiary of the Company and
(iii) those as to which appraisal rights, if any, have been
exercised) and all rights in respect thereof, shall be
converted into and shall represent the right to receive that
number of fully paid and nonassessable shares of Parent
Common Stock equal to the Exchange Ratio. Unless the
context otherwise requires, (i) each reference in this
Agreement to shares of Company Common Stock shall include
the associated Rights issued pursuant to the Rights
Agreement and (ii) each reference in this Agreement to
shares of Parent Common Stock shall include the associated
Rights issued pursuant the Rights Agreement dated as of
August 12, 1991 and amended on September 23, 1998 between
Parent and Chase Mellon Shareholders Services, LLC. All of
the shares of Company Common Stock to be converted into
Parent Common Stock pursuant to this Section 4.01(a) shall
cease to be outstanding, shall automatically be canceled and
retired and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common
Stock shall cease to have any rights with respect thereto,
except the right to receive the number of shares of Parent
Common Stock issuable therefor upon the surrender of such
certificate in accordance with Section 4.02(c) hereof,
without interest, and cash in lieu of fractional shares as
contemplated by Section 4.04.
(b) Each share of Company Common Stock held in the
treasury of the Company or owned by any wholly owned
subsidiary of the Company immediately prior to the Effective
Time shall be canceled and retired and no shares of stock or
other securities of Parent, the Surviving Corporation or any
other corporation shall be issuable, and no payment of other
consideration shall be made, with respect thereto and no
payment of other consideration shall be made, with respect
thereto.
(c) Each issued and outstanding share of capital stock
of Merger Sub shall be converted into and become one fully
paid and nonassessable share of common stock, par value $.01
per share, of the Surviving Corporation. From and after the
Effective Time, each outstanding certificate theretofore
representing shares of Merger Sub common stock shall be
deemed for all purposes to evidence ownership of and to
represent the number of shares of Surviving Corporation
common stock into which such shares of Merger Sub common
stock shall have been converted. Promptly after the
Effective Time, the Surviving Corporation shall issue to
Parent a stock certificate representing 1,000 shares of
Surviving Corporation common stock in exchange for the
certificate that formerly represented shares of Merger Sub
common stock, which shall be surrendered by Parent and
cancelled.
SECTION 4.02 EXCHANGE OF SHARES OTHER THAN TREASURY SHARES.
(a) EXCHANGE AGENT. At or prior to the Effective
Time, Parent shall enter into an agreement with a bank or
trust company designated by Parent and reasonably acceptable
to the Company, to act as exchange agent for the Merger (the
"EXCHANGE AGENT").
(b) PARENT TO PROVIDE COMMON STOCK. Parent shall make
available to the Exchange Agent for the benefit of the
holders of Company Common Stock (i) promptly after the
Effective Time, certificates of Parent Common Stock ("PARENT
CERTIFICATES") representing the number of whole shares of
Parent Common Stock issuable pursuant to Section 4.01(a) in
exchange for shares of Company Common Stock outstanding
immediately prior to the Effective Time; and (ii) no later
than the Closing, sufficient funds to permit payment of cash
in lieu of fractional shares pursuant to Section 4.04. All
funds deposited with the Exchange Agent shall be invested as
directed by the Surviving Corporation; provided, that such
investments shall be in obligations of or guaranteed by the
United States of America or of any agency thereof and backed
by the full faith and credit of the United States of
America, or in deposit accounts, certificates of deposit or
banker's acceptances of, repurchase or reverse repurchase
agreements with, or Eurodollar time deposits purchased from,
commercial banks with capital, surplus and undivided profits
aggregating in excess of $100 million (based on the most
recent financial statements of such bank which are then
publicly available).
(c) EXCHANGE PROCEDURES. The Exchange Agent shall
mail to each holder of record of certificates of Company
Common Stock ("COMPANY CERTIFICATES"), whose shares were
converted into the right to receive shares of Parent Common
Stock (and cash in lieu of fractional shares pursuant to
Section 4.04) promptly after the Effective Time (and in any
event no later than three Business Days after the later to
occur of the Effective Time and receipt by Parent of a
complete list from the Company of the names and addresses of
its holders of record): (i) a form letter of transmittal
(which shall specify that delivery shall be effected, and
risk of loss and title to the Company Certificates shall
pass, only upon receipt of the Company Certificates by the
Exchange Agent, and shall be in such form and have such
other provisions as Parent may reasonably specify, and which
shall be reasonably satisfactory to the Company); and (ii)
instructions for use in effecting the surrender of the
Company Certificates in exchange for Parent Certificates
(and cash in lieu of fractional shares). Upon surrender of
a Company Certificate for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly
completed and validly executed, and such other documents as
may be reasonably required by the Exchange Agent, the holder
of such Company Certificate shall be entitled to receive in
exchange therefor a Parent Certificate representing the
number of whole shares of Parent Common Stock that such
holder has the right to receive pursuant to this Article IV
and payment of cash in lieu of fractional shares which such
holder has the right to receive pursuant to Section 4.04,
and the Company Certificate so surrendered shall forthwith
be canceled. Until so surrendered, each outstanding Company
Certificate that, prior to the Effective Time, represented
shares of Company Common Stock will be deemed from and after
the Effective Time, for all purposes other than the payment
of dividends and distributions, to evidence the right to
receive the ownership of the number of full shares of Parent
Common Stock into which such shares of Company Common Stock
shall have been so converted plus cash in lieu of the
issuance of any fractional shares in accordance with
Section 4.04. Notwithstanding any other provision of this
Agreement, no interest will be paid or will accrue on any
cash payable to holders of Company Certificates pursuant to
the provisions of this Article IV.
(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.
No dividends or other distributions with respect to Parent
Common Stock with a record date after the Effective Time
will be paid to the holder of any unsurrendered Company
Certificate with respect to the shares of Parent Common
Stock represented thereby until the holder of record of such
Company Certificate shall surrender such Company
Certificate. Subject to the effect of applicable escheat or
similar laws, following surrender of any such Company
Certificate, there shall be paid to the record holder of the
Parent Certificates issued in exchange therefor, without
interest, at the time of such surrender, the amount of any
such dividends or other distributions with a record date
after the Effective Time theretofore payable (but for the
provisions of this Section 4.02(d)) with respect to such
shares of Parent Common Stock.
(e) TRANSFER OF OWNERSHIP. If any Parent Certificate
is to be issued in a name, or cash paid to a Person, other
than that in which the Company Certificate surrendered in
exchange therefor is registered, it will be a condition of
the issuance and/or payment thereof that the Company
Certificate so surrendered will be properly endorsed and
otherwise in proper form for transfer and that the Person
requesting such exchange will have paid to Parent or any
agent designated by it any transfer or other taxes required
by reason of the issuance of a Parent Certificate for shares
of Parent Common Stock in any name other than that of the
registered holder of the Company Certificate surrendered, or
established to the satisfaction of Parent or any agent
designated by it that such tax has been paid or is not
payable.
(f) TERMINATION OF EXCHANGE AGENT FUNDING. Any
portion of funds (including any interest earned thereon) or
Parent Certificates held by the Exchange Agent which have
not been delivered to holders of Company Certificates
pursuant to this Article IV within six months after the
Effective Time shall promptly be paid or delivered, as
appropriate, to Parent, and thereafter holders of Company
Certificates who have not theretofore complied with the
exchange procedures set forth in and contemplated by this
Section 4.02 shall thereafter look only to Parent (subject
to abandoned property, escheat and similar laws) only as
general creditors thereof for their claim for shares of
Parent Stock, any cash in lieu of fractional shares of
Parent Common Stock and any dividends or distributions (with
a record date after the Effective Time) with respect to
Parent Common Stock to which they are entitled.
(g) NO LIABILITY. Notwithstanding anything to the
contrary in this Section 4.02, none of the Exchange Agent,
the Surviving Corporation or any party hereto shall be
liable to any Person in respect of any shares of Parent
Common Stock or cash delivered to a public official pursuant
to any applicable abandoned property, escheat or similar
Law.
SECTION 4.03 STOCK TRANSFER BOOKS.
At the Effective Time, the stock transfer books of the
Company shall each be closed, and there shall be no further
registration of transfers of shares of Company Common Stock
thereafter on the records of any such stock transfer books. In
the event of a transfer of ownership of shares of Company Common
Stock that is not registered in the stock transfer records of the
Company at the Effective Time, a certificate or certificates
representing the number of full shares of Parent Common Stock
into which such shares of Company Common Stock shall have been
converted shall be issued to the transferee plus cash in lieu of
fractional shares, if any, in accordance with Section 4.04
hereof, and a cash payment in the amount of dividends, if any, in
accordance with Section 4.02(d) hereof, if the certificate or
certificates representing such shares of Company Common Stock is
or are surrendered as provided in Section 4.02(c) hereof,
accompanied by all documents required to evidence and effect such
transfer and by evidence of payment of any applicable stock
transfer tax.
SECTION 4.04 NO FRACTIONAL SHARE CERTIFICATES.
No scrip or fractional share Parent Certificate shall be
issued upon the surrender for exchange of Company Certificates,
and an outstanding fractional share interest shall not entitle
the owner thereof to vote, to receive dividends or to any rights
of a stockholder of Parent or of Surviving Corporation with
respect to such fractional share interest. No later than the
Closing, Parent shall deposit with the Exchange Agent an amount
in cash sufficient for the Exchange Agent to pay each holder of
Company Common Stock an amount in cash, rounded to the nearest
whole cent, equal to the product obtained by multiplying (i) the
fractional share interest to which such holder would otherwise be
entitled (after taking into account all shares of Company Common
Stock held at the Effective Time by such holder) by (ii) the
Final Average Closing Price. As soon as practicable after the
determination of the amount of cash, if any, to be paid to
holders of Company Common Stock with respect to any fractional
share interests, the Exchange Agent shall make available such
amounts, net of any required withholding taxes, to such holders
of Company Common Stock, subject to and in accordance with the
terms of Section 4.02 hereof.
SECTION 4.05 OPTIONS TO PURCHASE COMPANY COMMON STOCK.
(a) Commencing ten (10) Business Days prior to consummation
of the Offer, each option granted by the Company to purchase
shares of Company Common Stock pursuant to the Company Stock
Plans or otherwise listed on Schedule 5.03 of the Company
Disclosure Schedule ("COMPANY STOCK OPTIONS") shall be vested and
exercisable in full.
(b) At the Effective Time, each Company Stock Option which
is outstanding and unexercised immediately prior to the Effective
Time shall, without any further action, be assumed automatically
by Parent and converted into an option to purchase shares of
Parent Common Stock on economically equivalent terms and
conditions as in effect immediately prior to the Effective Time
(except to the extent that such terms, conditions and
restrictions may be altered in accordance with their terms as a
result of the Merger contemplated hereby and except that all
references in each such Company Stock Option to the Company shall
be deemed to refer to Parent), and provided that (i) each such
Company Stock Option shall be exercisable for that whole number
of shares of Parent Common Stock (rounded to the nearest share)
equal to the product of (y) the number of shares of Company
Common Stock subject to such Company Stock Option and (z) the
Exchange Ratio, and (ii) the option exercise price per share of
Parent Common Stock shall be an amount equal to (y) the option
exercise price per share of Company Common Stock under such
Company Stock Option in effect immediately prior to the Effective
Time divided by (z) the Exchange Ratio (the option exercise
price, as so determined, being rounded to the nearest full cent).
It is the intention of the parties that, subject to applicable
Law, the Company Stock Options assumed by Parent qualify
following the Effective Time as "incentive stock options" (as
defined in Section 422 of the Code) to the extent that such
Company Stock Options qualified as incentive stock options prior
to the Effective Time. Parent makes no representation with
respect to such qualification. To the extent Parent provides
similar treatment for its employee stock options, as soon as
practicable after the Effective Time, Parent shall file a
registration statement (including a reoffer prospectus) on Form S-
8 (or any successor form), or another appropriate form, with
respect to the shares of Parent Common Stock subject to such
assumed Company Stock Options and shall use its best efforts to
maintain the effectiveness of such registration statement (and
maintain the current status of the prospectus contained therein)
for so long as such assumed Company Stock Options remain
outstanding.
SECTION 4.06 CERTAIN ADJUSTMENTS.
If between the date of this Agreement and the Effective
Time, (a) the outstanding shares of Parent Common Stock or
Company Common Stock shall be changed into a different number of
shares or securities by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or
any dividend payable in stock or other securities shall be
declared thereon with a record date within such period, or (b)
the number of shares of Company Common Stock on a fully diluted
basis is in excess of that specified in Section 5.03 and
disclosed in Schedule 5.03 of the Company Disclosure
Schedule (regardless of whether such excess is a result of an
additional issuance of capital stock except as otherwise
permitted pursuant to this Agreement or a correction to such
Sections), then, in either case, the Exchange Ratio established
pursuant to the provisions of Section 2.01 and shall be adjusted
accordingly (by the proportionate adjustment of each of the
number of shares of Parent Common Stock and Company Common Stock)
to provide Parent and the stockholders and option holders of the
Company the same economic effect as contemplated by this
Agreement prior to such reclassification, recapitalization, split-
up, combination, exchange, dividend or increase.
SECTION 4.07 LOST, STOLEN OR DESTROYED CERTIFICATES.
In the event any Company Certificates shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange
for such lost, stolen or destroyed Company Certificates, upon the
making of an affidavit of that fact by the holder thereof, such
shares of Parent Common Stock (and cash in lieu of fractional
shares) as may be required pursuant to Section 4.01; provided,
however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed Company Certificates to indemnify
Parent against any claim that may be made against Parent, the
Surviving Corporation or the Exchange Agent with respect to the
Company Certificates alleged to have been lost, stolen or
destroyed.
SECTION 4.08 TAKING OF NECESSARY ACTION; FURTHER ACTION.
If, at any time after the Effective Time, any further action
is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right,
title and possession to all assets, property, rights, privileges,
powers and franchises of the Company, the officers and directors
of the Company are fully authorized in the name of their
corporation or otherwise to take, and will use good faith efforts
to take, all such lawful and necessary action, so long as such
action is not inconsistent with this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub, subject to the exceptions specifically disclosed in
writing in the Company Disclosure Schedule, all such exceptions
to be referenced to a specific representation set forth in this
Article V, that:
SECTION 5.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of the Company and each directly and indirectly
owned Subsidiary of the Company has been duly organized and is
validly existing and in good standing (to the extent applicable)
under the laws of the jurisdiction of its incorporation or
organization, as the case may be, and has the requisite corporate
power and authority to own, lease and operate its properties and
to carry on its business as it is now being conducted. The
Company and each Company Subsidiary is duly qualified or licensed
to do business, and is in good standing (to the extent
applicable), in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except
for such failures to be so qualified or licensed and in good
standing that could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
(b) Schedule 5.01 of the Company Disclosure Schedule sets
forth, as of the date of this Agreement, a true and complete list
of each Company Subsidiary, together with (i) the jurisdiction of
incorporation or organization of each Company Subsidiary and the
percentage of each Company Subsidiary's outstanding capital stock
or other equity interests owned by the Company or another Company
Subsidiary and (ii) an indication of whether each Company
Subsidiary is a "SIGNIFICANT SUBSIDIARY" as defined in Regulation
S-X promulgated by the SEC under the Securities Act and the
Exchange Act. Except as set forth in Schedule 5.01 of the
Company Disclosure Schedule, neither the Company nor any Company
Subsidiary owns an equity interest in any partnership or joint
venture arrangement or other business entity that is material to
the business, assets, liabilities, financial condition or results
of operations of the Company and the Company Subsidiaries, taken
as a whole.
(c) The maximum amount of shares of Company Common Stock
eligible to be purchased under the Company ESPP for the quarter
ending June 30, 2000 does not exceed 30,000.
SECTION 5.02 CERTIFICATE OF INCORPORATION AND BYLAWS.
The copies of certificate of incorporation and bylaws of the
Company and the Company Subsidiaries previously presented to
Parent by the Company are true, complete and correct copies
thereof. Such certificates of incorporation and bylaws are in
full force and effect. None of the Company or any Company
Subsidiary is in violation of any of the provisions of its
certificate of incorporation or bylaws.
SECTION 5.03 CAPITALIZATION.
The authorized capital stock of the Company consists of
20,000,000 shares of Company Common Stock and 3,000,000 shares of
preferred stock, par value $0.01 per share ("COMPANY PREFERRED
STOCK"). At May 31, 2000, (i) 6,223,094 shares of Company Common
Stock were issued and outstanding, all of which outstanding
shares were validly issued and are fully paid and nonassessable,
(ii) 473,110 shares of Company Common Stock were held in the
treasury of the Company, (iii) 101,864 shares of Company Common
Stock were reserved for future issuance pursuant to Company Stock
Plans; (iv) no shares of Company Preferred Stock are outstanding;
and (v) 559,709 shares of Company Common Stock were reserved for
issuance pursuant to the Company ESPP. The name of each holder
of a Company Stock Option, the grant date of each Company Stock
Option, the number of shares of Company Common Stock for which
each Company Stock Option is exercisable, the vesting or exercise
schedule and the exercise price of each Company Stock Option at
May 31, 2000 are set forth in Schedule 5.03 of the Company
Disclosure Schedule. Except for shares of Company Common Stock
issuable pursuant to Company Stock Plans and stock option
agreements entered into in connection therewith, and the Company
ESPP and as otherwise set forth in Schedule 5.03 of the Company
Disclosure Schedule, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character
to which the Company or any Company Subsidiary is a party or by
which the Company or any Company Subsidiary is bound relating to
the issued or unissued capital stock of the Company or any
Company Subsidiary or obligating the Company or any Company
Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any Company Subsidiary.
All shares of Company Common Stock subject to issuance as
aforesaid, upon issuance prior to the Effective Time on the terms
and conditions specified in the instruments pursuant to which
they are issuable, will be duly authorized, validly issued, fully
paid and nonassessable. There are no outstanding contractual
obligations of the Company or any Company Subsidiary to
repurchase, redeem or otherwise acquire any shares of Company
Common Stock or any capital stock of any Company Subsidiary.
Each outstanding share of capital stock of each Company
Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by the Company or another
Company Subsidiary is free and clear of all Encumbrances. Except
as set forth in Schedule 5.03 of the Company Disclosure Schedule,
to the Company's Knowledge there are no outstanding contractual
obligations of the Company or any Company Subsidiary to provide
funds to, or make any material investment (in the form of a loan,
capital contribution or otherwise) in excess of $100,000 in any
Company Subsidiary or any other entity or Person, other than
commitments to provide funds pursuant to commercially reasonable
cash management practices and other than commitments less than
$100,000 to any Company Subsidiary or less than $25,000 to any
other Company Affiliate.
SECTION 5.04 AUTHORITY RELATIVE TO THIS AGREEMENT.
The Company has all necessary corporate power and authority
to execute and deliver this Agreement, to perform its obligations
hereunder, and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on
the part of the Company are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby (other
than, with respect to the Merger, the approval of this Agreement
by the holders of 66.67% of the outstanding shares of Company
Common Stock entitled to vote with respect thereto at the Company
Stockholders' Meeting (as defined in Section 8.01(b)), and the
filing and recordation of the New York Certificate of Merger as
required by the BCL). This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes
the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms
except to the extent that enforceability thereof may be limited
by applicable bankruptcy, insolvency, reorganization or similar
laws affecting the enforcement of creditors' rights generally and
by principles of equity regarding the availability of remedies.
The Board of Directors of the Company has adopted resolutions for
the Company to take all necessary action to cause the Parent and
Merger Sub not to be deemed an "Acquiring Person" under the
Rights Agreement, dated as of April 16, 1999, between the Company
and American Stock Transfer and Trust Company, as Rights Agent
(the "RIGHTS AGREEMENT"), and to ensure that neither the
execution of this Agreement, nor the consummation of the
transactions contemplated herein, shall result in any Rights
under the Rights Agreement being exercisable. The Company shall
use its best efforts to deliver within five Business Days of this
Agreement a fully executed amendment to the Rights Agreement
reflecting the substance of the preceding sentence.
SECTION 5.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance by the Company of its
obligations hereunder, and the consummation of the Merger will
not, (i) conflict with or violate any provision of the
certificate of incorporation or bylaws of the Company or any
equivalent organizational documents of any Company Subsidiary,
(ii) assuming that all filings and notifications described in
Section 5.05(b) have been made, conflict with or violate in any
material respect any Law applicable to the Company or any Company
Subsidiary or by which any property or asset of the Company or
any Company Subsidiary is bound or affected or (iii) except as
otherwise set forth on Schedule 5.05(a) of the Company Disclosure
Schedule, result in any breach of or constitute a default (or an
event which with the giving of notice or lapse of time or both
could reasonably be expected to become a default) under, or give
to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of an Encumbrance on
any property or asset of the Company or any Company Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
or obligation evidencing a Company or a Company Subsidiary
obligation in any single instance in excess of $50,000 or in the
aggregate in excess of $250,000.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance by the Company of its
obligations hereunder and the consummation of the Merger will
not, require any consent, approval, authorization or permit of,
or filing by the Company with or notification by the Company to,
any Governmental Entity, except for (i) the filing of a premerger
notification and report form by the Company under the HSR Act,
and any applicable filings under similar foreign antitrust or
competition laws and regulations, (ii) the filing with the SEC of
(A) the Schedule 14D-9, (B) a proxy statement relating to the
Company Stockholders Meeting (as amended or supplemented from
time to time, the "COMPANY PROXY STATEMENT"), and (C) such
reports under the Exchange Act and the Securities Act, as may be
required in connection with this Agreement and the Tender
Agreement and the transactions contemplated hereby and thereby,
(iii) such filings as may be required under Blue Sky Laws, (iv)
the filing of the Delaware Certificate of Merger with the
Secretary of State of the State of Delaware and the New York
Certificate of Merger with the Secretary of State of the State of
New York and appropriate documents with the relevant authorities
of other states in which the Company is qualified to do business,
(v) filings with the ASE and (vi) such other consents, approvals,
orders, authorizations, registrations, declarations and filings
the failure of which to be made or obtained individually or in
the aggregate could not reasonably be expected to (x) have a
Company Material Adverse Effect, (y) impair the Company's ability
to perform its obligations under this Agreement or (z) prevent or
materially delay the consummation of the transactions
contemplated by this Agreement.
(c) Neither the Schedule 14D-9, nor any of the information
supplied or to be supplied by the Company or any Company
Subsidiary or any of their Representatives for inclusion or
incorporation by reference in the Registration Statement, the
Post-Effective Amendment (as defined in Section 8.01(a)) or the
Offer Documents will, at the respective times any such documents
or any amendments or supplements thereto are filed with the SEC,
are first published, sent or given to stockholders or become
effective under the Securities Act or the Exchange Act, as
applicable, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading. None of
the information supplied by the Company or any Company Subsidiary
or any of their Representatives for inclusion or incorporation by
reference in the Company Proxy Statement will, at the time the
Company Proxy Statement is first mailed to the Company's
stockholders or, at the time of the Company Stockholders Meeting,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The
Schedule 14D-9 and the Company Proxy Statement will comply as to
form in all material respects with the requirements of all
applicable federal securities Laws, including the Exchange Act.
No representation or warranty is made by the Company with respect
to statements made or incorporated by reference in any of such
documents based on information supplied by Parent or Merger Sub
specifically for inclusion or incorporation by reference therein.
SECTION 5.06 PERMITS; COMPLIANCE WITH LAWS.
The Company and the Company Subsidiaries are in possession
of all material franchises, grants, authorizations, licenses,
establishment registrations, product listings, permits, approvals
and orders of any Governmental Entity necessary for the Company
or any Company Subsidiary to own, lease and operate its
properties and assets or otherwise to carry on its business as it
is now being conducted (collectively, the "COMPANY PERMITS"),
and, as of the date of this Agreement, none of the Company
Permits has been suspended or cancelled nor is any such
suspension or cancellation pending or, to the Company's
Knowledge, threatened. Neither the Company nor any Company
Subsidiary is in conflict with, or in default or violation of,
(i) any Law applicable to the Company or any Company Subsidiary
or by which any property or asset of the Company or any Company
Subsidiary is bound or affected or (ii) any Company Permits,
except, in each case, for such conflicts, defaults or violations
that could not reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect. Schedule 5.06
of the Company Disclosure Schedule sets forth, as of the date of
this Agreement, all actions, proceedings, investigations or
surveys pending or, to the Company's Knowledge, threatened
against the Company or any Company Subsidiary that could
reasonably be expected to result in the suspension or
cancellation of any other Company Permit. Except as set forth in
Schedule 5.06 of the Company Disclosure Schedule, since
December 31, 1999, neither the Company nor any Company Subsidiary
has received from any Governmental Entity any written
notification with respect to possible material conflicts,
defaults or violations of Laws.
SECTION 5.07 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has timely filed all forms, reports,
statements and documents required to be filed by it (A) with the
SEC and the ASE since December 31, 1996 (collectively, together
with any such forms, reports, statements and documents the
Company may file subsequent to the date hereof until the Closing,
the ("COMPANY REPORTS") and (B) since December 31, 1996, in all
material respects, with any other Governmental Entities. Each
Company Report (i) was prepared in accordance with the
requirements of the Securities Act, the Exchange Act or the rules
and regulations of the ASE, as the case may be, and (ii) did not
at the time it was filed contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were
made, not misleading. Each form, report, statement and document
referred to in clause (B) of this paragraph was prepared in all
material respects in accordance with the requirements of
applicable Law. No Company Subsidiary is subject to the periodic
reporting requirements of the Exchange Act or required to file
any form, report or other document with the SEC, the ASE, any
other stock exchange or any other comparable Governmental Entity.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the
Company Reports was prepared in accordance with U.S. GAAP applied
on a consistent basis throughout the periods indicated (except as
may be indicated in the notes thereto) and each presented fairly
the consolidated financial position of the Company and the
Company Subsidiaries as at the respective dates thereof, and
their consolidated results of operations, stockholders' equity
and cash flows for the respective periods indicated therein,
except as otherwise noted therein (subject, in the case of
unaudited statements, to normal and recurring immaterial year-end
adjustments).
(c) Except as and to the extent set forth or reserved
against on the consolidated balance sheet of the Company and the
Company Subsidiaries as of December 31, 1999 as reported in the
Company Reports, none of the Company or any Company Subsidiary
has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet or in notes thereto
prepared in accordance with U.S. GAAP, except for liabilities or
obligations incurred in the ordinary course of business
consistent with past practice since December 31, 1999.
SECTION 5.08 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as otherwise set forth on Schedule 5.08 of the
Company Disclosure Schedule, since December 31, 1999, the Company
and the Company Subsidiaries have conducted their businesses only
in the ordinary course consistent with past practice and, since
such date, there has not been (i) any Company Material Adverse
Effect, (ii) any event that could reasonably be expected to
prevent the performance of the Company's obligations pursuant to
this Agreement and the consummation of the Merger by the Company,
(iii) any material change by the Company in its accounting
methods, principles or practices, (iv) any declaration, setting
aside or payment of any dividend or distribution in respect of
the shares of Company Common Stock or any redemption, purchase or
other acquisition of any of the Company's securities, (v) except
in the ordinary course of business consistent with past practice,
any increase in the compensation or benefits or establishment of
any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation
rights, performance awards or restricted stock awards), stock
purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any executive
officers of the Company or any Company Subsidiary, (vi) any
issuance or sale of any stock, notes, bonds or other securities
other than pursuant to the exercise of outstanding securities, or
entering into any agreement with respect thereto, (vii) any
amendment to the Company's certificate of incorporation or
bylaws, (viii) other than in the ordinary course of business, any
(x) purchase, sale, assignment or transfer of any material
assets, (y) mortgage, pledge or the institution of any lien,
encumbrance or charge on any material assets or properties,
tangible or intangible, except for liens for taxes not yet
delinquent and such other liens, encumbrances or charges which do
not, individually or in the aggregate, have a Company Material
Adverse Effect, or (z) waiver of any rights of material value or
cancellation or any material debts or claims, (ix) any incurrence
of any material liability (absolute or contingent), except for
current liabilities and obligations incurred in the ordinary
course of business consistent with past practice, (x) any
incurrence of any damage, destruction or similar loss, whether or
not covered by insurance, materially affecting the business or
properties of the Company or any Company Subsidiary, (xi) any
entering into of any transaction of a material nature other than
in the ordinary course of business, consistent with past
practices, (xii) any termination of any Company Material Contract
other than by expiration of its term; (xiii) any receipt by the
Company of notice that the employment of any of the employees set
forth on Schedule 7.01 hereof will terminate; or (xiv) any
receipt of notice by the Company that any Company Material
Contract (A) will terminate other than by expiration of its term,
(B) if such Company Material Contract has an optional renewal
clause that such option will not be exercised, or (C) that would
otherwise reasonably be expected to be resolicited at the end of
its term will not be re-solicited.
SECTION 5.09 EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) Schedule 5.09 of the Company Disclosure Schedule lists
each employee benefit fund, plan, program, arrangement and
contract (including, without limitation, any "pension" plan, fund
or program, as defined in Section 3(2) of ERISA, and any
"employee benefit plan", as defined in Section 3(3) of ERISA and
any plan, program, arrangement or contract providing for
severance, medical, dental or vision benefits; life insurance or
death benefits; disability benefits, sick pay or other wage
replacement; vacation, holiday or sabbatical; pension or profit-
sharing benefits; stock options or other equity compensation;
bonus or incentive pay or other material fringe benefits),
whether written or not ("BENEFIT PLANS"), maintained, sponsored
or contributed to or required to be contributed to by the Company
or any Company Subsidiary (the "COMPANY BENEFIT PLANS"). With
respect to each Company Benefit Plan, the Company has delivered
or made available to Parent a true, complete and correct written
summary or copy of (i) such Company Benefit Plan and the most
recent summary plan description, if any, related to such Company
Benefit Plan, (ii) each trust agreement or other funding
arrangement relating to such Company Benefit Plan, (iii) the most
recent annual report (Form 5500) filed with the IRS with respect
to such Company Benefit Plan (and, if the most recent annual
report is a Form 5500-R, the most recent Form 5500-C filed with
respect to such Company Benefit Plan), (iv) the most recent
actuarial report or financial statement relating to such Company
Benefit Plan and (v) the most recent determination letter, if
any, issued by the IRS with respect to such Company Benefit Plan,
or any pending request for such a determination letter. Neither
the Company nor any Company Subsidiary nor, to the Company's
Knowledge, any other Person, has any express or implied
commitment, to modify, change or terminate any Company Benefit
Plan, other than with respect to a modification, change or
termination required by ERISA or the Code.
(b) Each Company Benefit Plan has been administered in all
material respects in accordance with its terms and all applicable
laws, including, without limitation, ERISA and the Code, and all
contributions required to be made under the terms of any of the
Company Benefit Plans as of the date of this Agreement have been
timely made or, if not yet due, have been reflected on the most
recent consolidated balance sheet filed or incorporated by
reference in the Company Reports prior to the date of this
Agreement, to the extent required by U.S. GAAP.
(c) The Company, on behalf of itself and all of the Company
Subsidiaries, hereby represents that: (i) each Company Benefit
Plan which is intended to be qualified under Section 401(a) of
the Code has received, or will receive without the requirement of
an amendment to such plan (to the extent such letters are
available under current IRS practice), a favorable determination
letter from the IRS as to its qualified status under the Code,
and each trust established in connection with any Company Benefit
Plan which is intended to be exempt from federal income taxation
under Section 501(a) of the Code has received a determination
letter from the IRS that it is so exempt, and to the Company's
Knowledge no fact or event has occurred that could adversely
affect the qualified status of any such Company Benefit Plan or
the exempt status of any such trust; and (ii) to the Company's
Knowledge there has been no prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code other
than a transaction that is under a statutory or administrative
exemption) with respect to any Company Benefit Plan that could
result in liability to the Company or any Company Subsidiaries.
(d) No Company Benefit Plan is a multiemployer pension plan
(as defined in Section 3(37) of ERISA) or other pension plan
subject to Title IV of ERISA and neither the Company, any Company
Subsidiary nor any other trade or business (whether or not
incorporated) that is under "common control" with the Company or
a Company Subsidiary (within the meaning of Section 4001(b) of
ERISA) or with respect to which the Company or any Company
Subsidiary could otherwise incur liability under Title IV of
ERISA (a "COMPANY ERISA AFFILIATE") has sponsored or contributed
to or been required to contribute to a multiemployer pension plan
or other pension plan subject to Title IV of ERISA. No material
liability under Title IV of ERISA has been incurred by the
Company, any Company Subsidiary or any Company ERISA Affiliate
that has not been satisfied in full, and no condition exists that
presents a material risk to the Company or any Company Subsidiary
of incurring or being subject (whether primarily, jointly or
secondarily) to a material liability thereunder. None of the
assets of the Company or any Company Subsidiary is, or may
reasonably be expected to become, the subject of any lien arising
under ERISA or Section 412(n) of the Code.
(e) The Company has scheduled on Schedule 5.09(e) of the
Company Disclosure Schedule and has delivered or made available
to Parent true, complete and correct copies of (i) all current
employment agreements with officers and employees and all current
consulting agreements of the Company and each Company Subsidiary
providing for annual compensation in excess of $100,000, (ii) all
severance plans, termination agreements, post-employment and
other compensation agreements, arrangements and plans,
supplemental retirement, programs and policies of the Company and
each Company Subsidiary with or relating to their respective
employees, directors or consultants, and (iii) all plans,
programs, agreements and other arrangements of the Company and
each Company Subsidiary with or relating to their respective
employees, directors or consultants which contain "change of
control" provisions.
(f) Neither the Company nor any Company Subsidiary is a
party to any collective bargaining or other labor union contract
applicable to persons employed by the Company or any Company
Subsidiary and no collective bargaining agreement is being
negotiated by the Company or any Company Subsidiary. As of the
date of this Agreement, there is no labor dispute, strike or work
stoppage against the Company or any Company Subsidiary pending
or, to the Company's Knowledge, threatened which may interfere
with the respective business activities of the Company or any
Company Subsidiary. As of the date of this Agreement, to the
Company's Knowledge, none of the Company, any Company Subsidiary,
or any of their respective representatives or employees has
committed any unfair labor practice in connection with the
operation of the respective businesses of the Company or any
Company Subsidiary, and there is no charge or complaint against
the Company or any Company Subsidiary by the National Labor
Relations Board or any comparable Governmental Entity pending or
threatened in writing.
(g) Except as required by Law or as set forth in
Schedule 5.09(g) of the Company Disclosure Schedule, no Company
Benefit Plan provides any of the following retiree or post-
employment benefits to any person: medical, disability or life
insurance benefits. The Company and the Company ERISA Affiliates
are in compliance in all material respects with (i) the
requirements of the applicable health care continuation and
notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") and the
regulations (including proposed regulations) thereunder and (ii)
the applicable requirements of the Health Insurance Portability
and Accountability Act of 1996, as amended and the regulations
(including the proposed regulations) thereunder.
(h) All consultants retained by the Company or any Company
Subsidiary have been properly classified as independent
contractors and to the Company's Knowledge all consultants
retained by the Company or any Company Subsidiary prior to
December 31, 1996 have been properly classified as independent
contractors.
SECTION 5.10 CONTRACTS.
Schedule 5.10 of the Company Disclosure Schedule sets forth
a list of certain contracts including all Company Material
Contracts. Except as set forth in Schedule 5.10 of the Company
Disclosure Schedule, neither the Company nor any Company
Subsidiary is in material violation of or default under (nor does
there exist any condition which with the passage of time or the
giving of notice could reasonably be expected to cause such a
material violation of or default under) any Company Material
Contract. Each Company Material Contract is in full force and
effect and is a legal, valid and binding obligation of the
Company or a Company Subsidiary and, to the Company's Knowledge,
each of the other parties thereto, enforceable in accordance with
its terms, except to the extent that enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors'
rights generally and by principles of equity regarding the
availability of remedies. Except as set forth on Schedule 5.10 of
the Company Disclosure Schedule, (i) neither the Company, nor
Company Subsidiary, nor any Principal is debarred, suspended,
proposed for debarment, or declared ineligible for the award of
contracts by any agency or department of the United States
government; (ii) neither the Company, nor Company Subsidiary, nor
any Principal has been convicted of, had a civil judgment
rendered against them for, or received written notice of any
claim, suit, or investigation asserting or alleging the (a)
commission of fraud or a criminal offense in connection with
obtaining, attempting to obtain, or performing a Federal, state
or local government contract or subcontract, (b) violation of
Federal or state antitrust statutes relating to the submission of
offers, or (c) commission of embezzlement, theft, forgery,
bribery, falsification or destruction of records, making false
statements, tax evasion, or receiving stolen property; and (iii)
to the Company's Knowledge, the Company and the Company
Subsidiaries are in substantial compliance with all applicable
procurement laws, regulations and terms of Material Contracts
(including without limitation the FAR and Cost Accounting
Standards). For purposes of this Section 5.10, the term
"Principal" shall include executive officers and directors.
Except as previously disclosed by the Company to Parent, to the
Company's Knowledge, there is no outstanding issue in connection
with any Governmental Entity audit or investigation which may
give rise to an expense in excess of current reserves. To the
Company's Knowledge, no Company Material Contract is likely to
result in a loss in excess of reserves which is not fully
reflected on the Company Reports.
SECTION 5.11 LITIGATION.
Except as set forth in Schedule 5.11 of the Company
Disclosure Schedule, there is no suit, claim, action, proceeding
or investigation pending or to the Company's Knowledge,
threatened against the Company or any Company Subsidiary that
could reasonably be expected to cause, individually, a loss to
the Company or any Company Subsidiary in excess of $50,000, or in
the aggregate, losses to the Company and the Company Subsidiaries
in excess of $250,000, or materially impair the Company's ability
to consummate the transactions contemplated herein. The Company
is not aware of any facts or circumstances which could reasonably
be expected to result in the denial of insurance coverage under
policies issued to the Company and Company Subsidiaries in
respect of such suits, claims, actions, proceedings and
investigations, except in any case as could not reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Neither the Company nor any Company
Subsidiary is subject to any outstanding order, writ, injunction
or decree which could reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect or materially impair the Company's ability to consummate
the transactions contemplated herein.
SECTION 5.12 ENVIRONMENTAL MATTERS.
Except as could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect, (i) the Company and the Company Subsidiaries are in
compliance with all applicable Environmental Laws and all Company
Permits required by Environmental Laws; (ii) all past
noncompliance of the Company or any Company Subsidiary with
Environmental Laws or Environmental Permits has been resolved
without any pending, ongoing or future obligation, cost or
liability; (iii) neither the Company nor any Company Subsidiary
has, and to the Company's Knowledge no other Person has, released
a Hazardous Material at, or transported a Hazardous Material to
or from, any real property currently or formerly owned, leased or
occupied by the Company or any Company Subsidiary, in violation
of any Environmental Law and (vi) neither the Company nor any
Company Subsidiary has received any claim or written request for
information, or been notified in writing that it is a potentially
responsible party, under any Environmental Law or other written
communication alleging that the Company or any Company Subsidiary
may be in violation of, or liable under, any Environmental Law.
SECTION 5.13 INTELLECTUAL PROPERTY.
(a) All trademarks, trade names, service marks, trade dress
(whether or not registered), and all goodwill associated with any
of the foregoing, patents (including, without limitation, all
U.S. and foreign patents, patent applications, patent disclosures
and any and all divisions, continuations, continuations-in-part,
re-issues, re-examinations and extensions thereof), Internet
domain names, copyrights (whether or not registered), mask works
and any renewal rights therefor, inventions (whether or not
patented) technology, supplier lists, trade secrets, know-how,
computer software programs or applications in both source and
object code form, technical documentation of such software
programs, databases, data, registrations and applications for any
of the foregoing and all other tangible or intangible proprietary
information or materials that are or have been used (including
without limitation in the development of) in the Company's or any
Company Subsidiaries' business and/or in any product, technology
or process (i) currently being or formerly manufactured,
published or marketed by the Company or a Company Subsidiary or
(ii) previously or currently under development for possible
future manufacturing, publication, marketing or other use by the
Company or the Company Subsidiaries are hereinafter referred to
as the "COMPANY INTELLECTUAL PROPERTY."
(b) Schedule 5.13(b) of the Company Disclosure Schedule
contains a true and complete list of the Company's and the
Company Subsidiaries' patents, patent applications, trademarks,
trademark applications, trade names, service marks, service mark
applications, Internet domain names, Internet domain name
applications, copyrights and copyright registrations and
applications, all of the foregoing existing anywhere in the
world, owned by the Company or any Company Subsidiary. All of
the Company's and the Company Subsidiaries' patents,
registrations, trademark registrations and copyright
registrations are enforceable and subsisting in all material
respects, and remain in good standing with all fees and filings
that are due as of the Closing having been made as of the
Closing.
(c) The Company Intellectual Property consists solely of
items and rights which are: (i) owned by the Company or any
Company Subsidiary; or (ii) in the public domain; or (iii)
jointly owned between the Company or a Company Subsidiary and a
customer or vendor pursuant to the terms of an agreement between
the Company and its Subsidiaries and such customer or vendor; or
(iv) rightfully used by the Company or any Company Subsidiary
pursuant to a valid and enforceable license (the "COMPANY
LICENSED INTELLECTUAL PROPERTY"), the parties, date and subject
matter of each such material license agreement and each material
agreement in which the Company or a Company Subsidiary is the
licensee or owner of the subject rights in the agreement being
set forth on Schedule 5.13(c) of the Company Disclosure Schedule.
Except as described in Schedule 5.13(c) of the Company Disclosure
Schedule, the Company and its Subsidiaries have all rights in
Company Intellectual Property and Company Licensed Intellectual
Property. The Company or its Subsidiaries have all rights to
Company Intellectual Property necessary to carry out the
Company's and the Company Subsidiaries' current activities and
the Company's and the Company Subsidiaries' future activities to
the extent such future activities are already planned, including
without limitation, to the extent required to carry out such
activities, rights to make, have made, use, import, export,
reproduce, modify, adapt, create derivative works based on,
translate, distribute (directly and indirectly), transmit,
display and perform publicly, license, sublicense, rent and lease
and, other than with respect to the Company Licensed Intellectual
Property, assign and sell, the Company Intellectual Property.
(d) The reproduction, manufacturing, distribution,
licensing, sublicensing or sale of any Company Intellectual
Property, product, service, work, technology or process as now
used or offered or proposed for use, licensing or sale by the
Company or any Company Subsidiary and which are material to the
Company's or the Company Subsidiaries' business does not infringe
on any patent, copyright, trademark, service mark, trade name,
trade dress, firm name, Internet domain name, logo, trade dress,
mask work or other proprietary right of any Person and does not
constitute a misappropriation of any trade secret. Except as set
forth in Schedule 5.13(d) of the Company Disclosure Schedule, no
claims (i) challenging the validity, effectiveness or ownership
by the Company or the Company Subsidiaries of any of the Company
Intellectual Property, or (ii) to the effect that the use,
distribution, licensing, sublicensing or sale of the Company
Intellectual Property, product, service, work, technology or
process as now used or offered by the Company or any Company
Subsidiary, their agents or the intended use by their customers
infringes or will infringe on any intellectual property or other
proprietary right of any Person have been asserted or, to the
Company's Knowledge, are threatened by any Person or have been
made or threatened by any Person against the Company or the
Company Subsidiaries or a distributor of any Company Subsidiary,
nor are there, to the Company's Knowledge, any valid grounds for
any bona fide claim of any such kind in all cases, except for
those claims that would not have a Company Material Adverse
Effect. Except as set forth in Schedule 5.13(d) of the Company
Disclosure Schedule, to the Company's Knowledge, there is no
unauthorized use, infringement or misappropriation from the
Company or any Subsidiary of the Company Intellectual Property or
the Company Licensed Intellectual Property by any third party,
employee or former employee.
e) Except as set forth in Schedule 5.13(e) of the Company
Disclosure Schedule, neither the Company nor any Company
Subsidiary is, or as a result of the execution or delivery of
this Agreement, or performance of the Company's obligations
hereunder, will be, in violation of any material license,
sublicense, agreement or instrument to which the Company or any
Company Subsidiary is a party or otherwise bound, nor will
execution or delivery of this Agreement, or performance of the
Company's obligations or the obligations of any Company
Subsidiary hereunder, cause the diminution, termination or
forfeiture of any material Company Intellectual Property, except
in all cases for violations, diminutions, terminations or
forfeitures that would not reasonably be expected to have a
Company Material Adverse Effect.
SECTION 5.14 TAXES.
Except as set forth on Schedule 5.14 of the Company
Disclosure Schedule or in those instances that would not result
in a Company Material Adverse Effect:
(a) the Company and each of the Company Subsidiaries,
and any consolidated, combined, unitary or aggregate group
for Tax purposes of which the Company or any Company
Subsidiary is or has been a member, have properly completed
in all material respects and timely filed all Tax Returns
required to be filed by them and have paid all Taxes shown
thereon to be due. The Company has provided adequate
accruals in accordance with U.S. GAAP in its March 31, 1999
balance sheet contained in the Company Reports (the "1999
BALANCE SHEET") for any Taxes that have not been paid,
whether or not shown as being due on any Tax Returns, and
the Company and the Company Subsidiaries have no material
liability for unpaid Taxes accruing after March 31, 1999;
(b) there is (i) no material claim for Taxes that is a
lien against the property of the Company or any Company
Subsidiary or is being asserted against the Company or any
Company Subsidiary other than liens for Taxes not yet due
and payable, (ii) no audit of any Tax Return of the Company
or any Company Subsidiary being conducted by a Tax
Authority; and (iii) no extension of the statute of
limitations on the assessment of any Taxes granted by the
Company or any Company Subsidiary and currently in effect.
(c) without giving effect to the transactions
contemplated by this Agreement, there has been no change in
ownership of the Company or any Company Subsidiaries that
has caused the utilization of any losses of such entities to
be limited pursuant to Section 382 of the Code, and any loss
carryovers reflected on the 1999 Balance Sheet are properly
computed and reflected;
(d) the Company and the Company Subsidiaries are not
and will not be required to include any material adjustment
in taxable income for Tax period (or portion thereof)
pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a
result of transactions, events or accounting methods
employed prior to the Merger;
(e) neither the Company nor any Company Subsidiary has
filed or will file any consent to have the provisions of
Section 341(f)(2) of the Code (or comparable provisions of
any state Tax laws) apply to the Company or any Company
Subsidiary;
(f) neither the Company nor any Company Subsidiary is
a party to any Tax sharing or Tax allocation agreement nor
does the Company or any Company Subsidiary have any
liability or potential liability to another party under any
such agreement;
(g) the Company and each Company Subsidiary has in its
possession receipts for any Taxes paid to foreign Tax
authorities. Neither the Company nor any Company Subsidiary
has ever been a "personal holding company" within the
meaning of Section 542 of the Code or a "United States real
property holding corporation" within the meaning of
Section 897 of the Code.
(h) each of the Company and the Company Subsidiaries
has disclosed on federal income Tax Returns all positions
taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of
Code 6662.
(i) none of the Company and the Company Subsidiaries
(A) has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than as a
group the common parent of which was the Company), or (B)
has any liability for the Taxes of any Person under
Regulation 1. 1502-6 (or any similar provision of state,
local, or foreign law) as a transferee or successor, by
contract or otherwise.
SECTION 5.15 INSURANCE.
The Company has heretofore furnished to Parent a complete
and correct list as of the date hereof of all insurance policies
maintained by the Company or the Company Subsidiaries, and has
made available to Parent complete and correct copies of all such
policies, together with all riders and amendments thereto. All
such policies are in full force and effect and all premiums due
thereon have been paid to the date hereof. The Company and the
Company Subsidiaries have complied in all material respects with
the terms of such policies. As of the date of this Agreement,
the Company's annual insurance premium for directors' and
officers' liability insurance is $65,000.
SECTION 5.16 PROPERTIES.
Except as set forth in Schedule 5.16 of the Company
Disclosure Schedule, the Company and the Company Subsidiaries
have good and valid title, free and clear of all Encumbrances,
except for Permitted Encumbrances, to all their properties and
assets having a fair market value in excess of $50,000
individually or $250,000 in the aggregate, whether tangible or
intangible, real, personal or mixed, reflected in the Company's
consolidated financial statements contained in the Company's
Annual Report on Form 10-K for the period ended March 31, 1999 as
being owned by the Company and the Company Subsidiaries as of the
date thereof, other than (i) any properties or assets that have
been sold or otherwise disposed of in the ordinary course of
business since the date of such financial statements, (ii) liens
disclosed in the notes to such financial statements and (iii)
liens arising in the ordinary course of business after the date
of such financial statements. All buildings, and all fixtures,
equipment and other property and assets with a fair market value
in excess of $50,000 individually or $250,000 in the aggregate,
held under leases or sub-leases by the Company or any Company
Subsidiary are held under valid instruments enforceable in
accordance with their respective terms, subject to applicable
laws of bankruptcy, insolvency or similar laws relating to
creditors' rights generally and to general principles of equity
(whether applied in a proceeding in law or equity). Except where
the failure to so maintain would not have a Company Material
Adverse Effect, all of the Company's and the Company
Subsidiaries' equipment in regular use has been reasonably
maintained and is in serviceable condition, reasonable wear and
tear excepted. Except as set forth on Schedule 5.16 of the
Company Disclosure Schedule, there are no condemnation
proceedings, or eminent domain proceedings of any kind pending,
or to the Company's Knowledge, threatened against any real
property which is owned, leased, subleased, occupied or used by
the Company or any of the Company Subsidiaries.
SECTION 5.17 AFFILIATES.
Schedule 5.17 of the Company Disclosure Schedule sets forth
the names and addresses of each Person who is, in the Company's
reasonable judgment, an "affiliate" (as such term is used in
Rule 145 under the Securities Act) of the Company. To the
Company's Knowledge, except as disclosed in Schedule 5.17 of the
Company Disclosure Schedule, no Affiliate of the Company: (a)
has a financial interest in a competitor, supplier or customer of
the Company or any Company Affiliate (except for interests
representing less than two and one half percent (2.5%) of the
outstanding capital stock of any competing business that is
publicly traded on any recognized exchange or in the over-the-
counter market), (b) owns any property necessary for the
operations of the Company or any other Company Affiliate or (c)
has any claim against the Company or any Affiliate of the Company
outside the normal course of business. The Company shall use its
reasonable efforts to cause each Person who is so identified as
an Affiliate to deliver to Parent on or prior to the Effective
Time an appropriate letter agreement in connection with
restrictions on Affiliates under Rule 145 of the Securities Act.
SECTION 5.18 OPINION OF FINANCIAL ADVISOR.
The Company Financial Advisor has delivered to the Board of
Directors of the Company its opinion to the effect that, as of
the date of this Agreement, the Exchange Ratio is fair, from a
financial point of view, to the holders of the Company Common
Stock (other than Parent and its Affiliates). The Company will
deliver a copy of such opinion to Parent within five Business
Days of the date of this Agreement.
SECTION 5.19 BROKERS.
No broker, finder or investment banker (other than the
Company Financial Advisor) is entitled to any brokerage, finder's
or other fee or commission in connection with the Merger based
upon arrangements made by or on behalf of the Company. The
Company has heretofore made available to Parent true, complete
and correct copies of all agreements between the Company and
Company Financial Advisor pursuant to which such firm would be
entitled to any payment relating to the Merger or any other
transaction.
SECTION 5.20 CERTAIN BUSINESS PRACTICES.
Neither the Company nor any Company Subsidiary nor any
directors, officers, agents or employees of the Company or any
Company Subsidiary (in their capacities as such) has (i) used any
funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity or (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. To the Company's Knowledge,
there is no pending claim or investigation with respect to the
matter set forth in the preceding sentence against the Company,
any Company Subsidiary or any of their respective directors,
officers, agents or employees.
SECTION 5.21 BUSINESS ACTIVITY RESTRICTION.
Except as set forth in Schedule 5.21 of the Company
Disclosure Schedule, there is no non-competition or other similar
agreement, commitment, judgment, injunction, order or decree to
which the Company or any Company Subsidiary is a party or subject
to that has or could reasonably be expected to have the effect of
prohibiting or impairing the conduct of business by the Company.
Except as set forth in Schedule 5.21 of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary has
entered into any material agreement under which the Company or
any Company Subsidiary is restricted from selling, licensing or
otherwise distributing any of its technology or products intended
for distribution to, or providing services to, customers or
potential customers or any class of customers, in any geographic
area, during any period of time or in any segment of the market
or line of business.
SECTION 5.22 STATE TAKEOVER STATUTES; DISSENTERS' RIGHTS;
RIGHTS AGREEMENT.
(a) The Board of Directors of the Company has approved this
Agreement and the consummation of the transactions contemplated
by this Agreement. To the Company's Knowledge, no other "Fair
Price", "Moratorium", "Control Share Acquisition", or other anti-
takeover statute or similar statute or regulation, applies or
purports to apply this Agreement or the Offer, the Merger or the
other transactions contemplated by this Agreement. Holders of
Company Common Stock do not have dissenters' rights in connection
with the Offer.
(b) The Company will amend, within two Business Days of the
date of this Agreement, the Rights Agreement to provide that
neither Parent nor any of its Affiliates will become an Acquiring
Person (as defined in the Rights Agreement), that no Distribution
Date or Shares Acquisition Date (each as defined in the Rights
Agreement) will occur, and that the Rights will not separate from
the underlying shares of Company Common Stock or give the holders
thereof the right to acquire securities of any party hereto, in
each case as a result of the execution, delivery or performance
of this Agreement or the consummation of the Offer, the Merger or
the other transactions contemplated by this Agreement.
SECTION 5.23 TAX FREE REORGANIZATION.
The Company is aware of no circumstances or events that
would prevent the Merger from being treated as a tax-free
reorganization pursuant to Section 368(a) of the Code.
SECTION 5.24 VOTING REQUIREMENTS.
In the event that Section 253 of the DGCL and Section 905 of
BCL are inapplicable and unavailable to effectuate the Merger,
the Company Shareholder Vote is the only vote of the holders of
the Company's capital stock necessary to approve and adopt this
Agreement and the transactions contemplated hereby.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Each of Parent and Merger Sub hereby represents and warrants
to the Company all such exceptions to be referenced to a specific
representation set forth in this Article VI, that:
SECTION 6.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Each of Parent and Merger Sub has been duly organized
and is validly existing and in good standing (to the extent
applicable) under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority
and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now
being conducted.
SECTION 6.02 CERTIFICATE OF INCORPORATION AND BYLAWS.
The copies of each of Parent's and Merger Sub's certificate
of incorporation and bylaws previously provided to the Company by
Parent are true, complete and correct copies thereof. Such
certificates of incorporation and bylaws are in full force and
effect. Parent is not in violation of any of the provisions of
its certificate of incorporation or bylaws.
SECTION 6.03 CAPITALIZATION.
The authorized capital stock of Parent consists of
200,000,000 shares of Parent Common Stock and 10,000,000 shares
of preferred stock, $1.00 par value per share. As of
May 31, 2000, 69,892,122 shares of Parent Common Stock are issued
and outstanding, all of which are validly issued, fully paid and
nonassessable. All shares of Parent Common Stock subject to
issuance as aforesaid, upon issuance prior to the Effective Time
on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly
issued, fully paid and nonassessable. Each outstanding share of
capital stock of each Merger Sub is duly authorized, validly
issued, fully paid and nonassessable and each such share owned by
Parent or another Merger Sub is free and clear of all security
interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on Parent's or such other Merger
Sub's voting rights, charges and other encumbrances of any nature
whatsoever.
SECTION 6.04 AUTHORITY RELATIVE TO THIS AGREEMENT.
Each of Parent and Merger Sub has all necessary corporate
power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by each of Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on
the part of Parent or Merger Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated herein
(other than the consent of Parent as sole shareholder of Merger
Sub). This Agreement has been duly executed and delivered by
each of Parent and Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes
a legal, valid and binding obligation of each of Parent and
Merger Sub enforceable against Parent and Merger Sub in
accordance with its terms except to the extent that
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization and other similar laws affecting the
enforcement of creditors' rights generally and by principles of
equity regarding the availability of remedies.
SECTION 6.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent
and Merger Sub do not, and the performance by Parent and Merger
Sub of their obligations hereunder and the consummation of the
Merger will not, (i) conflict with or violate any provision of
the certificate of incorporation or bylaws of Parent or Merger
Sub or (ii) assuming that all consents, approvals, authorizations
and permits described in Section 6.05(b) have been obtained and
all filings and notifications described in Section 6.05(b) have
been made, conflict with or violate in any material respect any
Law applicable to Parent or Merger Sub or by which any property
or asset of Parent or Merger Sub is bound or affected.
(b) The execution and delivery of this Agreement by Parent
and Merger Sub do not, and the performance by Parent and Merger
Sub of their obligations hereunder and the consummation of the
Merger will not, require any consent, approval, authorization or
permit of, or filing by Parent with or notification by Parent to,
any Governmental Entity, except pursuant to applicable
requirements of the premerger notification requirements of the
HSR Act, if any, and the filing and recordation of the
Certificate of Merger as required by the BCL and the DGCL. There
are no actions, proceedings, (other than any possible HSR Act
proceeding), investigations or surveys pending or, to the
knowledge of Parent, threatened against Parent or Merger Sub that
could reasonably be expected to result in the delay or
prohibition of the transactions contemplated by this Agreement.
SECTION 6.06 TAX FREE REORGANIZATION.
Neither Parent nor Merger Sub is aware of any circumstance
or event that would prevent the Merger from being treated as a
tax-free reorganization pursuant to Section 368(a) of the Code.
SECTION 6.07 PERMITS; COMPLIANCE WITH LAWS.
Parent and the Merger Sub are in possession of all material
franchises, grants, authorizations, licenses, establishment
registrations, product listings, permits, approvals and orders of
any Governmental Entity necessary for Parent or Merger Sub to
own, lease and operate its properties and assets or otherwise to
carry on its business as it is now being conducted (collectively,
the "PARENT PERMITS"), and, as of the date of this Agreement,
none of the Parent Permits has been suspended or cancelled nor is
any such suspension or cancellation pending or, to the knowledge
of Parent, threatened. Neither Parent nor Merger Sub is in
conflict with, or in default or violation of, (i) any Law
applicable to Parent or Merger Sub or by which any property or
asset of Parent or Merger Sub is bound or affected or (ii) any
Parent Permits, except for such conflicts, defaults or violations
that could not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect. Since
December 31, 1999 neither Parent nor Merger Sub has received from
any Governmental Entity any written notification with respect to
possible conflicts, defaults or violations of Laws other than
conflicts, defaults or violations that would not have,
individually or in the aggregate, a Parent Material Adverse
Effect.
SECTION 6.08 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Except as otherwise set forth in Parents Reports, since
December 31, 1999, Parent and the Parent Subsidiaries have
conducted their businesses only in the ordinary course consistent
with past practice and, since such date there has not been any
Parent Material Adverse Effect.
SECTION 6.09 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has timely filed all forms, reports, statements
and documents required to be filed by it with the SEC and the
NYSE since December 31, 1996 (collectively, together with any
such forms, reports, statements and documents Parent may file
subsequent to the date hereof until the Closing, the "PARENT
REPORTS"). Each Parent Report (i) was prepared in accordance
with the requirements of the Securities Act, the Exchange Act or
the NYSE, as the case may be, and (ii) did not at the time it was
filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each
form, report, statement and document referred to in this
paragraph was prepared in all material respects in accordance
with the requirements of applicable Law. Merger Sub is not
subject to the periodic reporting requirements of the Exchange
Act or required to file any form, report or other document with
the SEC, the NYSE, any other stock exchange or any other
comparable Governmental Entity.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the
Parent Reports was prepared in accordance with U.S. GAAP applied
on a consistent basis throughout the periods indicated (except as
may be indicated in the notes thereto) and each presented fairly
the consolidated financial position of Parent and the Parent
Subsidiaries as at the respective dates thereof, and their
consolidated results of operations, stockholders' equity and cash
flows for the respective periods indicated therein, except as
otherwise noted therein (subject, in the case of unaudited
statements, to normal and recurring immaterial year-end
adjustments).
(c) Except as and to the extent set forth or reserved
against on the consolidated balance sheet of Parent and the
Merger Sub as of December 31, 1999 as reported in the Parent
Reports, neither Parent nor Merger Sub has any liabilities or
obligations of any nature (whether accrued, absolute, contingent
or otherwise) that would be required to be reflected on a balance
sheet or in notes thereto prepared in accordance with U.S. GAAP,
except for liabilities or obligations incurred in the ordinary
course of business consistent with past practice since
December 31, 1999.
SECTION 6.10 BROKERS.
No broker, finder or investment banker (other than Salomon
Smith Barney (the "PARENT FINANCIAL ADVISOR")) is entitled to any
brokerage, finder's or other fee or commission in connection with
the Merger based upon arrangements made by or on behalf of
Parent.
SECTION 6.11 ISSUANCE OF PARENT COMMON STOCK.
The shares of Parent Common Stock to be issued in connection
with the Merger have been duly authorized and, when issued as
contemplated by this Agreement, will be duly authorized, validly
issued, fully paid and non-assessable, free of any preemptive
rights created by Law, the certificate of incorporation of
Parent, the bylaws of Parent or any agreement to which Parent or
Merger Sub is a party or by which Parent or Merger Sub is bound
and will be registered under the Securities Act and registered or
exempt from registration under applicable Blue Sky Laws and
listed on the NYSE.
SECTION 6.12 COMPANY STOCK.
Neither Parent, Merger Sub nor any subsidiary of the Parent
or Merger Sub owns any capital stock of any class of the Company,
either directly or indirectly, or any rights to acquire or
dispose of any capital stock of any class of the Company, the
ownership of which would adversely affect the intended tax-free
nature of the transaction contemplated hereby.
SECTION 6.13 TAXES.
Representations made in this Section 6.13 shall not be
applicable unless a breach would give rise to a Parent Material
Adverse Effect:
(a) Parent and Merger Sub, and any consolidated, combined,
unitary or aggregate group for Tax purposes of which Parent or
Merger Sub is or has been a member, have properly completed in
all material respects and timely filed all Tax Returns required
to be filed by them and have paid all Taxes shown thereon to be
due. Parent has provided adequate accruals in accordance with
U.S. GAAP in its December 31, 1999 balance sheet contained in the
Parent Reports (the "1999 BALANCE SHEET") for any Taxes that have
not been paid, whether or not shown as being due on any Tax
Returns, and Parent and Merger Sub have no material liability for
unpaid Taxes accruing after December 31, 1999; and
(b) there is (i) no material claim for Taxes that is a lien
against the property of Parent or Merger Sub or is being asserted
against Parent or Merger Sub other than liens for Taxes not yet
due and payable, (ii) no audit of any Tax Return of Parent or
Merger Sub being conducted by a Tax Authority; and (iii) no
extension of the statute of limitations on the assessment of any
Taxes granted by Parent or Merger Sub and currently in effect.
SECTION 6.14 INFORMATION SUPPLIED.
Neither the Offer Documents nor the Registration Statement
or the Post-Effective Amendment, nor any of the information
supplied or to be supplied by Parent or its Subsidiaries or
representatives for inclusion or incorporation by reference in
the Schedule 14D-9 or the Company Proxy Statement will, at the
respective times any such documents or any amendments or
supplements thereto are filed with the SEC, are first published,
sent or given to shareholders or become effective under the
Securities Act or the Exchange Act, as applicable, or, in the
case of the Company Proxy Statement, at the time of the Company
Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading. The
Offer Documents and the Registration Statement and the Post-
Effective Amendment will comply as to form in all material
respects with the requirements of all applicable laws, including
the Securities Act and the Exchange Act, as applicable. No
representation or warranty is made by Parent or Merger Sub with
respect to statements made or incorporated by reference therein
based on information supplied by the Company for inclusion or
incorporation by reference therein.
ARTICLE VII
COVENANTS
SECTION 7.01 CONDUCT OF BUSINESS BY COMPANY PENDING THE
CLOSING.
The Company agrees that, between the date of this Agreement
and the Effective Time, unless Parent shall otherwise agree in
writing, or except as set forth in Schedule 7.01 of the Company
Disclosure Schedule or as otherwise provided for in this
Agreement (x) the respective businesses of the Company and the
Company Subsidiaries shall be conducted only in, and the Company
and the Company Subsidiaries shall not take any action except in,
the ordinary course of business consistent with past practice and
(y) the Company shall use all reasonable efforts to keep
available the services of such of the current officers,
significant employees and consultants of the Company and the
Company Subsidiaries and to preserve the current business
relationships of the Company and the Company Subsidiaries with
such of the corporate partners, customers, suppliers and other
Persons with which the Company or any Company Subsidiary has
significant business relations in order to preserve substantially
intact its business organization; provided, however, that the
loss of any officers (other than any officer named on
Schedule 7.01 (other than by way of death or disability)),
employees, consultants, corporate partners, customers (exclusive
of any customer with which the Company or any Company Subsidiary
has in effect a contract representing annual revenue to the
Company or such Company Subsidiary in excess of $15,000,000 per
annum), suppliers or other Persons prior to the Effective Time
shall not constitute a breach of this Section 7.01 unless such
loss would have a Company Material Adverse Effect. Without
limitation, neither the Company nor any Company Subsidiary shall,
between the date of this Agreement and the Effective Time, except
as set forth in Schedule 7.01 of the Company Disclosure
Schedule or as otherwise provided for in this Agreement, directly
or indirectly, do, or agree to do, any of the following without
the prior written consent of Parent:
(a) amend or otherwise change its certificate of
incorporation or bylaws or equivalent organizational
documents;
(b) issue, sell, pledge, dispose of, grant, transfer,
lease, license, guarantee or encumber, or authorize the
issuance, sale, pledge, disposition, grant, transfer, lease,
license or encumbrance of, (i) any shares of capital stock
of the Company or any Company Subsidiary of any class, or
securities convertible into or exchangeable or exercisable
for any shares of such capital stock, or any options,
warrants or other rights of any kind to acquire any shares
of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of
the Company or any Company Subsidiary, other than the
issuance of shares of Company Common Stock pursuant to the
exercise of stock options therefor outstanding as of the
date of this Agreement or the grant after the date hereof of
Company Stock Options to newly hired employees, whether or
not granted pursuant to any Company Stock Plans, in the
ordinary course of business consistent with past practice
and in each case subject to the prior approval of Parent
before grant (provided, that such additional amount of
Company Common Stock subject to such Company Stock Options
shall not exceed 25,000 shares in the aggregate), and the
issuance of shares of the Company Common Stock pursuant to
such options or (ii) any material property or assets of the
Company or any Company Subsidiary except (A) transactions
pursuant to existing contracts, (B) transactions in the
ordinary course of business consistent with past practice
and (C) shares of Company Common Stock issued pursuant to
the Company ESPP in the ordinary course of business
consistent with past practice (provided, that the Company
shall take all necessary action to suspend offering of
shares under the Company ESPP as of July 1, 2000);
(c) (i) acquire (including, without limitation, by
merger, consolidation, or acquisition of stock or assets)
any interest in any Person or any division thereof, other
than the purchase of assets in the ordinary course of
business consistent with past practice; (ii) incur any
indebtedness for borrowed money (other than indebtedness
with respect to working capital in amounts consistent with
past practice) or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any Person (other
than a Company Subsidiary) for borrowed money or make any
loans or advances material to the business, assets,
liabilities, financial condition or results of operations of
the Company and the Company Subsidiaries, taken as a whole;
(iii) terminate, cancel or request any material change in,
or agree to any material change in, any Company Material
Contract or other material License Agreement (it being
understood that no consent of Parent shall be required for
the Company to enter into any enhancement of such agreements
or additional agreements in the ordinary course of
business); (iv) make or authorize any capital expenditure,
other than capital expenditures in the ordinary course of
business consistent with past practice that are not, in the
aggregate, in excess of $500,000 for the Company and the
Company Subsidiaries taken as a whole; or (v) enter into or
amend any contract, agreement, commitment or arrangement
that, if fully performed, would not be permitted under this
Section 7.01(c). Notwithstanding anything to the contrary
contained herein, the Company may, subject to approval of
its shareholders, add up to 350,000 shares to the plan
reserve under the Company Stock Plans;
(d) except as otherwise provided in this Agreement,
declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock, except that any
Company Subsidiary may pay dividends or make other
distributions to the Company or any other Company
Subsidiary;
(e) except as otherwise provided in this Agreement,
reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its
capital stock except repurchases of unvested shares at cost
in connection with the termination of the employment
relationship with any employee pursuant to stock option or
purchase agreements in effect on the date hereof;
(f) except as otherwise provided in this Agreement,
amend or change the period (or permit any acceleration,
amendment or change) of exercisability of options granted
under the Company Stock Plans or authorize cash payments in
exchange for any Company Stock Options granted under any of
such plans;
(g) amend the terms of, repurchase, redeem or
otherwise acquire, or permit any Company Subsidiary to
repurchase, redeem or otherwise acquire, any of its
securities or any securities of any Company Subsidiary;
(h) except as set forth in Section 7.08, increase the
compensation payable or to become payable to its directors,
officers, consultants or employees, grant any rights to
severance or termination pay to, or enter into any
employment or severance agreement, except as required by the
terms of this Agreement, which provides benefits upon a
change in control of the Company that would be triggered by
the Merger with, any director, officer, consultant or other
employee of the Company or any Company Subsidiary who is not
currently entitled to such benefits from the Merger,
establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement
for the benefit of any director, officer, consultant or
employee of the Company or any Company Subsidiary, except to
the extent required by applicable Law or the terms of a
collective bargaining agreement, or enter into or amend any
contract, agreement, commitment or arrangement between the
Company or any Company Subsidiary and any of the Company's
directors, officers, consultants or employees, except for
increases in compensation paid and bonuses payable to
Persons who are not directors of the Company in the ordinary
course of business consistent with past practice;
(i) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge
or satisfaction of claims, liabilities or obligations (A) in
the ordinary course of business and consistent with past
practice or (B) claims, liabilities or obligations reflected
on the Balance Sheet or (C) as otherwise set forth on
Schedule 7.01 of the Company Disclosure Schedule;
(j) except as required by any Governmental Entity,
make any material change with respect to the Company's
accounting policies, principles, methods or procedures,
including, without limitation, revenue recognition policies,
other than as required by U.S. GAAP;
(k) make any material Tax election or settle or
compromise any material Tax liability; or
(l) authorize or enter into any formal or informal
agreement or otherwise make any commitment to do any of the
foregoing or to take any action which would make any of the
representations or warranties of the Company contained in
this Agreement untrue or incorrect or prevent the Company
from performing or cause the Company not to perform its
covenants hereunder or result in any of the conditions to
the Merger set forth herein not being satisfied.
SECTION 7.02 NOTICES OF CERTAIN EVENTS.
Each of Parent and the Company shall give prompt notice to
the other of (i) any notice or other communication from any
Person alleging that the consent of such Person is or may be
required in connection with the Offer, the Merger or any other
transactions contemplated by this Agreement; (ii) any notice or
other communication from any Governmental Entity in connection
with the Offer, the Merger or any other transactions contemplated
by this Agreement; (iii) any actions, suits, claims,
investigations or proceedings commenced or, to its knowledge,
threatened against, relating to or involving or otherwise
affecting Parent or the Parent Subsidiaries or the Company or the
Company Subsidiaries, respectively, which, if pending on the date
hereof, would have been required to have been disclosed in this
Agreement, or that relate to the consummation of the Offer, the
Merger or any other transactions contemplated by this Agreement;
(iv) the occurrence of a default or event that, with the giving
of notice or lapse of time or both, will become a default under
any Company Material Contract; and (v) any change that could
reasonably be expected to have a Parent Material Adverse Effect
or a Company Material Adverse Effect, respectively, or to delay
or impede the ability of either Parent or the Company,
respectively, to perform their respective obligations pursuant to
this Agreement and to effect the consummation of the Merger.
SECTION 7.03 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Except as required pursuant to any confidentiality
agreement or similar agreement or arrangement to which Parent or
the Company or any of the Parent Subsidiaries or the Company
Subsidiaries is a party or pursuant to applicable Law or the
regulations or requirements of any stock exchange or other
regulatory organization with whose rules a party hereto is
required to comply, from the date of this Agreement to the
Effective Time, the Company shall (and shall cause the Company
Subsidiaries, to) (i) provide to Parent (and its Representatives)
access at reasonable times upon prior notice to its and its
subsidiaries' officers, employees, agents, properties, offices
and other facilities and to the books and records thereof, and
(ii) furnish promptly such information concerning its and its
subsidiaries' business, properties, contracts, assets,
liabilities and personnel as Parent or its Representatives may
reasonably request. No investigation conducted pursuant to this
Section 7.03 shall affect or be deemed to modify any
representation or warranty made in this Agreement.
(b) The parties hereto shall comply with, and shall cause
their respective Representatives to comply with, all of their
respective obligations under the Confidentiality Agreement with
respect to the information disclosed pursuant to this
Section 7.03.
SECTION 7.04 NO SOLICITATION OF TRANSACTIONS.
The Company shall not, directly or indirectly, and shall
cause its Representatives not to, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing
nonpublic information), any inquiries or the making of any
proposal or offer (including, without limitation, any proposal or
offer to its stockholders) that constitutes, or may reasonably be
expected to lead to, any Company Competing Transaction, or enter
into or maintain or continue discussions or negotiate with any
Person in furtherance of such inquiries or to obtain a Company
Competing Transaction, or agree to or endorse any Company
Competing Transaction, or authorize or permit any of the
Company's Representatives or any Company Subsidiary, or any
Representative retained by any Company's Subsidiary, to take any
such action; provided, however, that nothing contained in this
Section 7.04 shall prohibit the Board of Directors of the Company
(i) from complying with Rule 14d-9 or 14e-2(a) promulgated under
the Exchange Act with regard to a tender or exchange offer not
made in violation of this Section 7.04 or (ii) prior to receipt
of the approval by the stockholders of the Company of this
Agreement and the Merger, if necessary, from providing
information (subject to a confidentiality agreement at least as
restrictive, in all material respects, as the Confidentiality
Agreement) in connection with, and negotiating, another
unsolicited, bona fide written proposal regarding a Company
Competing Transaction that (A) the Company's Board of Directors
shall have determined in good faith, after considering applicable
Law, and after consulting with independent outside counsel, that
such action is required in order for the Board of Directors of
the Company to comply with its fiduciary duties to the Company's
stockholders under applicable Law, (B) if any cash consideration
is involved, shall not be subject to any financing contingency,
and with respect to which the Company's Board of Directors shall
have determined in the proper exercise of its fiduciary duties to
the Company's stockholders that the acquiring party is reasonably
capable of consummating such Company Competing Transaction on the
terms proposed, and (C) the Company's Board of Directors shall
have determined in its good faith judgment (after consulting with
the Company's independent financial advisors of nationally
recognized reputation) that such Company Competing Transaction
provides greater value, in the aggregate, to the stockholders of
the Company than the Merger (any such Company Competing
Transaction being referred to herein as a "COMPANY SUPERIOR
PROPOSAL"). The Company shall notify Parent promptly if any
proposal or offer, or any inquiry or contact with any Person with
respect thereto, regarding a Company Competing Transaction is
made, such notice to include the identity of the Person making
such proposal, offer, inquiry or contact, and the terms of such
Company Competing Transaction. The Company immediately shall
cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect
to a Company Competing Transaction. The Company shall not
release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which it is a party.
SECTION 7.05 CONTROL OF OPERATIONS.
Nothing contained in this Agreement shall give Parent,
directly or indirectly, the right to control or direct the
operations of the Company and the Company Subsidiaries prior to
the Effective Time. Prior to the Effective Time, the Company
shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its operations.
SECTION 7.06 FURTHER ACTION; CONSENTS; FILINGS.
(a) Upon the terms and subject to the conditions hereof,
each of the parties hereto shall use all reasonable efforts to
(i) take, or cause to be taken, all appropriate action, and do,
or cause to be done, all things necessary, proper or advisable
under applicable Law or otherwise to consummate and make
effective the Offer and the Merger, (ii) obtain from Governmental
Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by
Parent or the Company or any of their respective Subsidiaries in
connection with the authorization, execution and delivery of this
Agreement and the consummation of the Offer and the Merger and
(iii) make all necessary filings, and thereafter make any other
required or appropriate submissions, with respect to this
Agreement, the Offer and the Merger required under (A) the rules
and regulations of the NYSE and the ASE, (B) the Securities Act,
the Exchange Act and any other applicable Federal or state
securities Laws, (C) the HSR Act, if any, and (D) any other
applicable Law. The parties hereto shall cooperate and consult
with each other in connection with the making of all such
filings, including by providing copies of all such documents to
the nonfiling parties and their advisors prior to filing, and
none of the parties shall file any such document if any of the
other parties shall have reasonably objected to the filing of
such document. No party shall consent to any voluntary extension
of any statutory deadline or waiting period or to any voluntary
delay of the consummation of the Offer or the Merger at the
behest of any Governmental Entity without the consent and
agreement of the other parties hereto, which consent shall not be
unreasonably withheld or delayed.
(b) Each of the Company and Parent will give (or will cause
their respective Subsidiaries to give) any notices to third
Persons, and use, and cause their respective Subsidiaries to use,
reasonable efforts to obtain any consents from third Persons
necessary, proper or advisable to consummate the transactions
contemplated by this Agreement.
(c) From the date of this Agreement until the Effective
Time, each of the Company and Parent covenants and agrees that it
will not: (i) knowingly take any action that could reasonably be
expected to prevent the Merger from constituting a transaction
qualifying under Section 368(a) of the Code; or (ii) take any
action which would make any of the representations or warranties
made by it contained in this Agreement untrue and incorrect or
prevent it from performing or cause it not to perform its
covenants hereunder or result in any of the conditions to the
Offer or the Merger set forth herein not being satisfied.
(d) Merger Sub will comply in all respects with
Section 1602 of the BCL.
(e) Parent shall not file a request with the SEC to have
the Registration Statement declared effective until after the day
on which the waiting period under the HSR Act and any other
applicable antitrust Laws expires or terminates.
SECTION 7.07 ADDITIONAL REPORTS.
The Company and Parent shall each furnish to the other
copies of any reports of the type referred to in Sections 5.07
and 6.09 which it files with the SEC on or after the date hereof,
and the Company and Parent, as the case may be, covenant and
warrant that as of the respective dates thereof, such reports
will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Any
unaudited consolidated interim financial statements included in
such reports (including any related notes and schedules) will
fairly present the financial position of the Company and its
consolidated Subsidiaries or Parent and its consolidated
Subsidiaries, as the case may be, as of the dates thereof and the
results of operations and changes in financial position or other
information including therein for the periods or as of the date
then ended (subject, where appropriate, to normal year-end
adjustments), in each case in accordance with past practice and
U.S. GAAP consistently applied during the periods involved
(except as otherwise disclosed in the notes thereto).
SECTION 7.08 EMPLOYEE RETENTION.
The Company and the Company Subsidiaries shall use their
best efforts to cause the employees of the Company and/or the
Company Subsidiaries set forth on Schedule 7.08 to agree upon
arrangements satisfactory to Parent and such employees for such
employees to remain employed or engaged by the Surviving
Corporation during a post-closing transition period to assist
Parent in integrating the Surviving Corporation with the Parent.
SECTION 7.09 THIRD PARTY CONSENTS.
The Company shall use its commercially reasonable efforts to
obtain the consent or approval or confirmation or other
reasonable comfort of those persons listed on Schedule 7.09 with
respect to the continuing relationship of the Company and such
parties under existing contracts and arrangements following the
Effective Time.
SECTION 7.10 TAX-FREE TREATMENT.
This Agreement is intended to constitute a "plan of
reorganization" within the meaning of Section 1.368-2(g) of the
income tax regulations promulgated under the Code. From and
after the date of this Agreement, each party hereto shall use its
reasonable best efforts to cause the Offer and the Merger to
qualify, and shall not, without the prior written consent of the
other parties hereto, knowingly take any actions or cause any
actions to be taken which could reasonably be expected to prevent
the Offer and the Merger from qualifying as a reorganization
under the provisions of Section 368 of the Code. In the event
that the Offer and the Merger shall fail to qualify as a
reorganization under the provisions of Section 368, then the
parties hereto agree to negotiate in good faith to restructure
the Offer and the Merger in order that it shall qualify as a tax-
free transaction under the Code. Each party shall provide the
other party with such representations as shall be reasonably
requested in order to enable the respective counsel of such
parties to render the tax opinions with respect to the Offer and
the Merger constituting a "reorganization" within the meaning of
Section 368 of the Code. In the event counsel for either Parent
or the Company is unable to render such opinion, respectively,
then the parties hereto agree to negotiate in good faith to
restructure the Offer and the Merger in order to permit each such
counsel to render such opinion. Following the Effective Time,
and consistent with any such consent, neither the Surviving
Corporation nor Parent nor any of their respective affiliates
knowingly and voluntarily shall take any action or cause any
action to be taken which could reasonably be expected to cause
the Offer and the Merger to fail to qualify as a reorganization
under Section 368 of the Code.
ARTICLE VIII
ADDITIONAL AGREEMENTS
SECTION 8.01 REGISTRATION STATEMENT; PROXY STATEMENT.
(a) If approval of the Company's stockholders is required
by applicable law in order to consummate the Merger other than
pursuant to Section 253 of the DGCL and Section 905 of the BCL,
following the acceptance for exchange of Shares pursuant to the
Offer, Parent and the Company shall, as soon as practicable
following the acceptance of Shares pursuant to the Offer, prepare
and the Company shall file with the SEC the Company Proxy
Statement and Parent and the Company shall prepare and Parent
shall file with the SEC a post-effective amendment to the
Registration Statement (the "POST-EFFECTIVE AMENDMENT") for the
offer and sale of the Parent Common Stock pursuant to the Merger
and in which the Company Proxy Statement will be included. Each
of the Company and Parent shall use all reasonable efforts to
have the Post-Effective Amendment declared effective under the
Securities Act as promptly as practicable after such filing, and,
prior to the effective date of the Post-Effective Amendment,
Parent shall, with the cooperation of the Company, take all
action required under any applicable Laws in connection with the
issuance of shares of Parent Common Stock pursuant to the Merger.
The Company will use all reasonable efforts to cause the Company
Proxy Statement to be mailed to the Company's stockholders as
promptly as practicable after the Post-Effective Amendment is
declared effective under the Securities Act. Parent shall also
take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified or to file a
general consent to service of process) required to be taken under
any applicable state securities Laws in connection with the
issuance of Parent Common Stock in the Offer and the Merger, and
the Company shall furnish all information concerning the Company
and the holders of capital stock of the Company as may be
reasonably requested in connection with any such action and the
preparation, filing and distribution of the Company Proxy
Statement. No filing of, or amendment or supplement to, or
correspondence to the SEC or its staff with respect to, the
Registration Statement or the Post-Effective Amendment will be
made by Parent, or the Company Proxy Statement will be made by
the Company, without providing the other party a reasonable
opportunity to review and comment thereon. Parent will advise
the Company, promptly after it receives notice thereof, of the
time when the Post-Effective Amendment has become effective or
any supplement or amendment has been filed, the issuance of any
stop order, the suspension of the qualification of the Parent
Common Stock issuable in connection with the Offer or the Merger
for offering or sale in any jurisdiction, or any request by the
SEC for amendment of the Post-Effective Amendment or comments
thereon and responses thereto or requests by the SEC for
additional information. The Company will advise Parent, promptly
after it receives notice thereof, of any request by the SEC for
the amendment of the Company Proxy Statement or comments thereon
and responses thereto or requests by the SEC for additional
information. If at any time prior to the Effective Time any
information relating to the Company or Parent, or any of their
respective Affiliates, officers or directors, should be
discovered by the Company or Parent which should be set forth in
an amendment or supplement to any of the Registration Statement,
the Post-Effective Amendment or the Company Proxy Statement, so
that any of such documents would not include any misstatement of
a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading, the party which discovers
such information shall promptly notify the other parties hereto
and an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and, to the
extent required by law, disseminated to the stockholders of the
Company.
(b) If approval of the Company's stockholders is required
by applicable law in order to consummate the Merger, the Company
shall establish, prior to or as soon as practicable following the
date upon which the Post-Effective Amendment becomes effective, a
record date (which shall be prior to or as soon as practicable
following the date upon which the Post-Effective Amendment
becomes effective) for, duly call, give notice of, convene and
hold a meeting of its stockholders (the "COMPANY STOCKHOLDERS
MEETING") for the purpose of considering and taking action upon
this Agreement and the Merger and (with the consent of Parent)
such other matters as may in the reasonable judgment of the
Company be appropriate for consideration at the Company
Stockholders Meeting. Once the Company Stockholders Meeting has
been called and noticed, the Company shall not postpone or
adjourn the Company Stockholders Meeting (other than for the
absence of a quorum) without the consent of Parent. Subject to
the Company's right, pursuant to Section 2.01 hereof, to
terminate this Agreement, or pursuant to Section 2.02(b) hereof,
to withdraw or modify the Recommendations, the Board of Directors
of the Company shall include in the Post-Effective Amendment and
the Company Proxy Statement a copy of the Recommendations as such
Recommendations pertain to the Merger and this Agreement.
Notwithstanding the foregoing, if approval of the Company's
stockholders is required by applicable law in order to consummate
the Merger, the Board of Directors of the Company shall submit
this Agreement and the Merger for approval to the Company's
stockholders whether or not the Board of Directors of the Company
determines in accordance with Section 2.02(b) after the date
hereof that this Agreement and the Merger are no longer advisable
and recommends that the stockholders of the Company reject it.
Unless the Board of Directors of the Company has withdrawn its
recommendation of this Agreement and the Merger in compliance
with Section 2.02(b), the Company shall use its reasonable best
efforts to solicit from stockholders of the Company proxies in
favor of this Agreement and the Merger and shall take all other
actions necessary or advisable to secure the vote or consent of
stockholders required by the BCL to effect the Merger.
(c) Notwithstanding the foregoing clauses (a) and (b)
above, in the event that Merger Sub shall acquire at least 90% of
the outstanding Shares in the Offer, the parties hereto shall
take all necessary actions to cause the Merger to become
effective, as soon as practicable after the expiration of the
Offer, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL and Section 905 of the
BCL.
(d) Parent or the Company, as the case may be, shall
furnish all information concerning Parent or the Company as the
other party may reasonably request in connection with the
preparation of the Registration Statement, the Post-Effective
Amendment and the Company Proxy Statement. Each of Parent and
the Company shall notify the other of the receipt of any comments
from the SEC on the Registration Statement, the Post-Effective
Amendment and the Company Proxy Statement and of any requests by
the SEC for any amendments or supplements thereto or for
additional information and shall provide to each other promptly
copies of all correspondence between Parent, the Company or any
of their representatives and advisors and the SEC. As promptly
as practicable after the effective date of the Registration
Statement, the Post Effective Amendment and the Company Proxy
Statement shall be mailed to the stockholders of the Company and
of Parent. Each of Parent and the Company shall cause the
Company Proxy Statement to comply as to form and substance as to
such party in all material respects with the applicable
requirements of (i) the Exchange Act, (ii) the Securities Act,
(iii) the rules and regulations of the ASE. Copies of the Company
Proxy Statement shall be provided to the ASE in accordance with
its rules.
(e) The Company Proxy Statement shall include (i) the
approval of the Merger and the recommendation of the Board of
Directors of the Company to the Company's stockholders that they
vote in favor of approval of this Agreement and the Merger, and
(ii) the opinion of the Company Financial Advisor referred to in
Section 5.18.
(f) None of the information supplied by the Company for
inclusion or incorporation by reference in the Registration
Statement, the Post-Effective Amendment or the Company Proxy
Statement shall, at the respective times filed with the SEC or
other regulatory agency and, in addition, (A) in the case of the
Company Proxy Statement, at the date it or any amendments or
supplements thereto are mailed to stockholders of the Company, at
the time of the Company Stockholders' Meeting, and (B) in the
case of the Registration Statement and the Post-Effective
Amendment, when each becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(g) None of the information supplied by Parent for
inclusion or incorporation by reference in the Registration
Statement, the Post-Effective Amendment or the Company Proxy
Statement shall, at the respective times filed with the SEC or
other regulatory agency and, in addition, (A) in the case of the
Company Proxy Statement, at the date it or any amendments or
supplements thereto are mailed to stockholders of the Company, at
the time of Company Stockholders' Meeting, and (B) in the case of
the Registration Statement and the Post-Effective Amendment, when
each becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
they are made, not misleading.
SECTION 8.02 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND
INSURANCE.
(a) The provisions with respect to indemnification that are
set forth in the certificate of incorporation and bylaws of the
Surviving Corporation shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any
manner that would affect adversely the rights thereunder of
individuals who at or at any time prior to the Effective Time
were directors, officers, employees or agents of the Company.
(b) From and after the Effective Time, the Company shall
indemnify and hold harmless each present and former director and
officer of the Company (the "INDEMNIFIED PARTIES") against any
costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities
(collectively, "COSTS") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or
pertaining to matters relating to their service as such an
officer or director existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after
the Effective Time, to the fullest extent that the Company would
have been permitted under New York Law and its charter documents
(each as in effect on the date hereof) to indemnify such
Indemnified Parties.
(c) For a period of six years after the Effective Time, the
Company shall maintain in effect insurance reasonably comparable
to the directors' and officers' liability insurance policies
maintained by the Company immediately prior to the Effective
Time; provided, however, that in no event shall the Company be
required to expend in any one year in excess of 150% of the
annual premium currently paid by the Company for such coverage
immediately prior to the Effective Time; provided further, that
if the premium for such coverage exceeds such amount, the Company
shall purchase a policy with the greatest coverage available for
such 150% of the annual premium.
(d) If the Surviving Corporation or any of its successors
or assigns (i) consolidates with or merges into any other Person
and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any Person,
then and in each such case, proper provision shall be made so
that the successors and assigns of the Surviving Corporation
assume the obligations set forth in this Section 8.02.
(e) The provisions of this Section 8.02 are intended to be
for the benefit of, and enforceable by, each Indemnified Party
and his or her heirs and representatives, and nothing herein
shall affect any indemnification rights that any Indemnified
Party and his or her heirs and representatives may have under the
certificate of incorporation or bylaws of the Company or any
Company Subsidiary, any contract or applicable Law.
SECTION 8.03 PUBLIC ANNOUNCEMENTS.
Parent and the Company shall consult with each other before
issuing any press release or otherwise making any public
statements with respect to this Agreement, the Offer or the
Merger and shall not issue any such press release or make any
such public statement without the prior written approval of the
other, except to the extent required by applicable Law or the
requirements of the rules and regulations of the NYSE or ASE, in
which case the issuing party shall use all reasonable efforts to
consult with the other party before issuing any such release or
making any such public statement.
SECTION 8.04 EMPLOYEE BENEFIT MATTERS.
(a) From and after the Effective Time, Parent agrees to
provide the employees of the Company (the "COMPANY EMPLOYEES")
who remain employed after the Effective Time (collectively, the
"TRANSFERRED COMPANY EMPLOYEES") with industry competitive
benefits for similarly situated employees at comparable
companies; provided, that this obligation shall not include the
Company Stock Plans; and provided further, that from and after
the Effective Time until the first anniversary of the Effective
Time such benefits shall be at least comparable, in the aggregate
for each employee, to the benefits maintained for such employee
by the Company and Company Subsidiaries immediately prior to
Closing. Parent will treat, and cause its applicable benefit
plans to treat, the service and compensation of Company Employees
with and from the Company or any Company Subsidiary as service
rendered to, and compensation paid by, Parent or any Affiliate of
Parent for all purposes (except for purposes of benefit accruals
under any defined benefit pension plan of Parent or an affiliate
of Parent). Without limiting the foregoing, Parent shall not
treat any Company Employee as a "new" employee for purposes of
any exclusions under any health or similar plan of Parent for a
pre-existing medical condition, and will make appropriate
arrangements with its insurance carrier(s) to ensure such result.
(b) Following the Effective Time, Parent shall honor in
accordance with their terms all individual employment,
termination, severance, change in control, post-employment and
other compensation agreements, arrangements and plans set forth
on Schedule 5.09(e) of the Company Disclosure Schedule, and
Parent will not challenge the validity of any obligation of the
Company or any Company Subsidiary under any such contract or
arrangement with any current or former director, officer or
employee of the Company.
(c) Notwithstanding anything to the contrary contained
herein, Parent shall have sole discretion with respect to the
determination as to whether or when to terminate, merge or
continue any Company Benefit Plan; provided, however, that Parent
shall continue to maintain the Company Benefit Plans (other than
stock based plans and the Company's 401(k) plan) until Company
Employees are permitted to participate in the Parent's plans.
(d) The provisions of Section 8.04 respecting the Parent's
agreement to honor the contracts, arrangements, commitments and
understandings referred to in Section 8.04(b) are intended to be
for the benefit of and enforceable by the Persons referred to
therein or the parties to these agreements, respectively, and
their heirs and representatives.
SECTION 8.05 NYSE LISTING.
Prior to the Effective Time, Parent shall file with the NYSE
an Application for Listing Additional Shares with respect to the
Parent Common Stock issued or issuable in connection with the
Merger and shall use its best efforts to have such Parent Common
Stock approved for listing on the NYSE.
SECTION 8.06 BLUE SKY.
Parent shall use its best efforts to obtain prior to the
Effective Time all necessary permits and approvals required under
Blue Sky Laws to permit the distribution of the shares of Parent
Common Stock to be issued in accordance with the provisions of
this Agreement.
SECTION 8.07 REASONABLE EFFORTS.
Each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable,
the Offer, the Merger, and the other transactions contemplated by
this Agreement and the Tender Agreement, including (i) the
obtaining of all other necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities and the making
of all other necessary registrations and filings (including other
filings with Governmental Entities, if any), (ii) the obtaining
of all necessary consents, approvals or waivers from third
parties, (iii) the preparation of the Registration Statement, the
Offer Documents, the Schedule 14D-9 and, if necessary, the Post-
Effective Amendment and the Company Proxy Statement, and (iv) the
execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry
out the purposes of, this Agreement and the Tender Agreement.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO
CONSUMMATE THE MERGER.
The respective obligations of each party to effect the
Merger are subject to the satisfaction or, to the extent
permitted by applicable Law, waiver on or prior to the Closing
Date of each of the following conditions:
(a) If required by the BCL or the DGCL, this Agreement and
the Merger shall have been approved and adopted by the Company
Shareholder Vote.
(b) Merger Sub shall have accepted for exchange and
exchanged all of the Shares tendered pursuant to the Offer unless
the failure to consummate the Offer is the result of a willful
and material breach of this Agreement by the party asserting such
condition.
(c) No judgment, order, decree, statute, law, ordinance,
rule or regulation, entered, enacted, promulgated, enforced or
issued by any court or other Governmental Entity of competent
jurisdiction or other legal restraint or prohibition shall be in
effect preventing or prohibiting consummation of the Merger.
(d) Registration Statement or the Post-Effective Amendment,
as the case may be, shall have become effective under the
Securities Act and shall not be the subject of any stop order.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01 TERMINATION.
This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of this
Agreement and the Merger by the shareholders of the Company or
Merger Sub:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Offer shall have expired or been terminated
in accordance with the terms of this Agreement without
Parent or Merger Sub having accepted for exchange any
Shares pursuant to the Offer (provided that Parent and
Merger Sub shall not be permitted to terminate this
Agreement if the Offer is terminated or expires without
Shares being accepted for exchange in violation of this
Agreement);
(ii) if the Offer shall not have been consummated on
or before October 30, 2000, unless the failure to
consummate the Offer is the result of a willful and
material breach of this Agreement by the party seeking
to terminate this Agreement;
(iii) if the Merger shall not have been consummated as
a result of any condition thereto in Article IX being
incapable of being satisfied; or
(iv) if any statute, rule, regulation, injunction or
decree having the effects set forth in subclause (a) or
(b) of clause (5) of Annex I shall be in effect and
shall have become final and nonappealable;
(c) by Parent, upon the occurrence of any Trigger Event
described in clauses (i) through (iv) of Section 10.06(b); or
(d) by the Company, (i) if the Company's Board of Directors
shall have recommended to the stockholders of the Company a
Company Competing Transaction; provided that, in order for the
termination of this Agreement pursuant to this clause (d) to be
deemed effective, the Company shall have complied with all
provisions of Section 7.04.
The right of any party hereto to terminate this Agreement
pursuant to this Section 10.01 will remain operative and in full
force and effect regardless of any investigation made by or on
behalf of any party hereto, any Person controlling any such party
or any of their respective officers, directors, representatives
or agents, whether prior to or after the execution of this
Agreement.
SECTION 10.02 EFFECT OF TERMINATION.
Except as hereinafter specified, in the event of termination
of this Agreement pursuant to Section 10.01 or pursuant to the
termination provisions set forth in Section 2.01, this Agreement
shall forthwith become void, there shall be no liability under
this Agreement on the part of any party hereto or any of its
affiliates or any of its or their officers or directors, and all
rights and obligations of each party hereto shall cease;
provided, however, that nothing herein shall relieve any party
hereto from liability for the willful or intentional breach of
any of its representations and warranties or the willful or
intentional breach of any of its covenants or agreements set
forth in this Agreement; provided, further, however, that this
Section 10.02, Section 10.06 and Article XI of this Agreement
shall survive the termination hereof.
SECTION 10.03 AMENDMENT.
This Agreement may be amended by the parties hereto by
action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided,
however, that, after the approval of this Agreement by the
stockholders of the Company, no amendment may be made that
changes the amount or type of consideration into which the
Company Common Stock will be converted pursuant to this
Agreement. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 10.04 WAIVER.
At any time prior to the Effective Time, any party hereto
may (a) extend the time for or waive compliance with the
performance of any obligation or other act of any other party
hereto, (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant
hereto and (c) waive compliance by the other party with any of
the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument
in writing signed by the party or parties to be bound thereby.
SECTION 10.05 ASSUMPTION OF CERTAIN OBLIGATIONS.
To the extent necessary, Parent shall, or shall cause the
Surviving Corporation to, enter into supplemental indentures or
otherwise affirmatively assume in writing the obligations of the
Company under the those indentures or other financing agreements
as set forth on Schedule 5.10.
SECTION 10.06 FEES, EXPENSES AND OTHER PAYMENTS.
(a) Except as otherwise set forth in this Section 10.06,
all Expenses incurred in connection with this Agreement, the
Offer and the Merger shall be paid by the party incurring such
Expenses, whether or not the Offer or the Merger is consummated,
except that Parent shall pay all Expenses incurred solely for
printing, filing and mailing the Registration Statement, the Post-
Effective Amendment, if necessary, the Proxy Statement, if
necessary, and all SEC and other regulatory filing fees incurred
in connection with the Registration Statement and the Proxy
Statement and any fees required to be paid under HSR Act.
(b) The Company agrees to pay liquidated damages to Parent
in immediately available funds equal to $4,000,000 promptly, but
in no event later than ten Business Days, after the termination
of this Agreement (or such later date as may apply in the case of
clause (i) below) as a result of the occurrence of any of the
events set forth below (a "TRIGGER EVENT"):
(i) the Company shall have received a Company
Competing Transaction, and at any time prior to, or
within one year after (unless this Agreement is
terminated pursuant to Section 10.01(a) or Section
10.01(b)(iv)), the termination of this Agreement, the
Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or
an agreement in principle (other than a confidentiality
agreement permitted by Section 7.04) with respect to
any Company Competing Transaction;
(ii) any person or group (defined in Section 13(d)(3)
of the Exchange Act) (other than Parent or any of its
Subsidiaries) shall have become the beneficial owner
(defined in Rule 13d-3 promulgated under the Exchange
Act) of at least 20% of the outstanding Company Common
Stock or shall have acquired, directly or indirectly,
at least 20% of the assets of the Company and its
Subsidiaries;
(iii) the Company shall have intentionally breached or
willfully failed to perform in any material respect any
of its representations, warranties, covenants or other
agreements contained in this Agreement, which breach or
failure to perform would give rise to the failure of a
condition set forth in subclause (c), (d) or (e) of
clause (5) of Annex I; or
(iv) other than pursuant to the last paragraph of
Annex I, the Board of Directors of the Company (or any
committee thereof) shall have recommended to the
shareholders of the Company any Company Competing
Transaction or shall have resolved to, or publicly
announced an intention to, do so.
Notwithstanding the foregoing, no such liquidated
damages shall be paid pursuant to this Section 10.06(b)
if Parent shall be in material breach of its
obligations hereunder; provided, however, that Parent
shall not be deemed in material breach of its
obligations hereunder if any such breach is cured
within 10 Business Days after receipt by Parent of
written notice of such breach from the Company.
(c) In the event that Parent shall terminate this Agreement
because of any breach or failure to perform by the Company as set
forth in Section 10.06(b)(iii) that is not an intentional breach
or willful failure to perform on the part of the Company, then,
without limiting any other remedies available to Parent, the
Company shall reimburse Parent (not later than ten Business Days
after submission of statements therefor) for all actual,
documented out-of-pocket Expenses not to exceed $750,000
reasonably incurred by Parent or on its behalf in connection with
the consummation of the transaction contemplated by this
Agreement. Notwithstanding the foregoing, no amounts shall be
paid pursuant to this Section 10.06(c) if Parent shall be in
material breach of its obligations hereunder; provided, however,
that Parent shall not be deemed in material breach of its
obligations hereunder if any such breach is cured within five
Business Days after receipt by Parent of written notice of such
breach from the Company.
(d) In the event that the Board of Directors of the Company
rescinds its recommendation of the Offer or recommends a Company
Superior Proposal in accordance with the last paragraph of
Annex I and as a result the Offer and the Merger are not
consummated, then, without limiting any other remedies available
to the Company, Parent shall reimburse the Company (not later
than ten Business Days after submission of statements therefor)
for all actual, documented out-of-pocket Expenses not to exceed
$750,000 reasonably incurred by the Company or on its behalf in
connection with the consummation of the transaction contemplated
by this Agreement. Notwithstanding the foregoing, no fee shall
be paid pursuant to this Section 10.06(d) if the Company shall be
in material breach of its obligations hereunder; provided,
however, that the Company shall not be deemed in material breach
of its obligations hereunder if any such breach is cured within
five Business Days after receipt by the Company of written notice
of such breach from Parent.
(e) Parent and the Company agree that the agreements
contained in Sections 10.06(b), (c) and (d) above are an integral
part of the transaction contemplated by this Agreement. If the
Company fails to pay to Parent any fee or make any reimbursement
due under Section 10.06(b) or (c), the Company shall pay the cash
and expenses (including reasonable legal fees and expenses) in
connection with any action, including the filing of any lawsuit
of other legal action, taken to collect payment. Similarly, if
Parent fails to pay to the Company any fee due under
Section 10.06(d), Parent shall pay the cash and expenses
(including reasonable legal fees and expenses) in connection with
any action, including the filing of any lawsuit or other action
taken to collect payment.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 NON-SURVIVAL OF REPRESENTATIONS AND
WARRANTIES.
The representations, warranties and agreements in this
Agreement (and in any certificate delivered in connection with
the Closing) shall be deemed to be conditions to the Merger and
shall not survive the Effective Time, except that (i)
Section 8.02 (Indemnification and Insurance) which shall, to the
extent contemplated, survive the Effective Time or termination of
this Agreement, (ii) except for Section 7.03 (Confidentiality),
Section 10.02 (Effect of Termination), Section 10.06 (Fees,
Expenses and Other Payments) and this Article XI (General
Provisions), each of which shall, to the extent contemplated
therein, survive termination of this Agreement indefinitely.
SECTION 11.02 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 given upon receipt) by
delivery in person, by telecopy or facsimile, by registered or
certified mail (postage prepaid, return receipt requested) or by
a nationally recognized courier service to the respective parties
at the following addresses (or at such other address for a party
as shall be specified in a notice given in accordance with this
Section 11.02):
(a) if to the Company:
Comptek Research, Inc.
2732 Transit Road
Buffalo, New York 14224
Attention: Chief Executive Officer
Telecopier: (716) 677-0014
with a copy to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attention: James R. Tanenbaum, Esq.
Telecopier: (212) 806-5400
(b) if to Parent or Merger Sub:
Northrop Grumman Corporation
1840 Century Park East
Los Angeles, CA 90067
Attention: R.R. Molleur, Senior Vice
President and
General Counsel
Telecopier: (310)-556-4570
with copies to:
John Mullan
Vice President and Corporate Secretary
and
Howrey Simon Arnold & White, LLP
1299 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: Roger Klein, Esq.
Telecopier: (202) 383-6610
SECTION 11.03 SEVERABILITY.
If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law or
public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the Offer and the
Merger is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner to the fullest extent
permitted by applicable Law in order that the Offer and the
Merger may be consummated as originally contemplated to the
fullest extent possible.
SECTION 11.04 ASSIGNMENT; BINDING EFFECT; BENEFIT.
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of Law or otherwise) without the
prior written consent of the other parties hereto. Subject to
the preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
SECTION 11.05 INCORPORATION OF EXHIBITS.
The Company Disclosure Schedule and Annex I attached hereto
and referred to herein are hereby incorporated herein and made a
part of this Agreement for all purposes as if fully set forth
herein. Parent and the Company acknowledge that the Company
Disclosure Schedule (i) is qualified in its entirety by reference
to specific provisions of this Agreement and (ii) is not intended
to constitute and shall not be construed as indicating that such
matter is required to be disclosed, nor shall such disclosure be
construed as an admission that such information is material with
respect to the Company except to the extent required by this
Agreement and by applicable Law.
SECTION 11.06 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
OTHER THAN CONFLICT OF LAWS PRINCIPLES THEREOF DIRECTING THE
APPLICATION OF ANY LAW OTHER THAN THAT OF NEW YORK.
SECTION 11.07 WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY OR THE ACTIONS OF
ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE
OR ENFORCEMENT HEREOF.
SECTION 11.08 HEADINGS; INTERPRETATION.
The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement. The
parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
SECTION 11.09 COUNTERPARTS.
This Agreement may be executed and delivered (including by
facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which
when executed and delivered shall be deemed to be an original but
all of which taken together shall constitute one and the same
agreement. A telecopy signature of any party shall be considered
to have the same binding legal effect as the original signature.
SECTION 11.10 ENTIRE AGREEMENT.
This Agreement (including Annex I and the Company Disclosure
Schedule) and the Confidentiality Agreement constitute the entire
agreement among the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all
parties hereto.
SECTION 11.11. NO THIRD PARTY BENEFICIARIES.
Except as otherwise provided in Sections 8.02 and 8.04
hereof, this Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other
Person any right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
SECTION 11.12. DISCLOSURE SCHEDULES.
The disclosures made on any disclosure schedule, including
the Company Disclosure Schedule, with respect to any
representation or warranty shall be deemed to be made with
respect to any other representation or warranty requiring the
same or similar disclosure to the extent that the relevance of
such disclosure to other representations and warranties is
evident from the information specifically set forth in such
schedule without reference to any document or information not set
forth on such schedule. The inclusion of any matter on any
disclosure schedule will not be deemed an admission by any party
that such listed matter is material or that such listed matter
has or would have a Company Material Adverse Effect.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
NORTHROP GRUMMAN CORPORATION
By: /s/Albert F. Myers
Name: Albert F. Myers
Title: Corporate Vice President
and Treasurer
YAVAPAI ACQUISITION CORP.
By: /s/Albert F. Myers
Name: Albert F. Myers
Title: President
COMPTEK RESEARCH, INC.
By: /s/John J. Sciuto
Name: John J. Sciuto
Title: President and Chief
Executive Officer
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, subject to
the terms of this Agreement, Merger Sub shall not be required to accept
for exchange or exchange or deliver any shares of Parent Common Stock
for (subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Merger Sub's
obligation to pay for or return tendered Shares after the termination or
withdrawal of the Offer)) any Shares tendered, if by the expiration of
the Offer (as it may be extended in accordance with the requirements of
Section 2.01), (1) the Minimum Condition shall not have been satisfied,
(2) the applicable waiting period under the HSR Act and any other
applicable antitrust Laws shall not have expired or been terminated, (3)
the Registration Statement shall not have become effective under the
Securities Act or shall be the subject of any stop order or proceedings
seeking a stop order, (4) the shares of Parent Common Stock to be issued
in the Offer shall not have been approved for listing on the NYSE,
subject to official notice of issuance, or (5) at any time on or after
the date of this Agreement and prior to the acceptance for exchange of
Shares pursuant to the Offer, any of the following conditions exist:
(a) there shall be instituted or pending any action or
proceeding by any Governmental Entity, (i) challenging or seeking to
make illegal, to delay materially or otherwise directly or indirectly to
restrain or prohibit the making of the Offer, the acceptance for
exchange of, or the exchange or delivery of shares of Parent Common
Stock for, some of or all the Shares by Parent or Merger Sub or the
consummation by Parent or Merger Sub of the Merger, seeking to obtain
material damages or otherwise directly or indirectly relating to the
transactions contemplated by the Tender Agreement, this Agreement, the
Offer or the Merger, (ii) seeking to restrain or prohibit Parent's or
Merger Sub's ownership or operation (or that of their respective
Subsidiaries or Affiliates) of all or any portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or of
Parent and its Subsidiaries, taken as a whole, or to compel Parent or
any of its Subsidiaries or affiliates to dispose of or hold separate all
or any portion of the business or assets of the Company and its
Subsidiaries, taken as a whole, or of Parent and its Subsidiaries, taken
as a whole, (iii) seeking to impose limitations on the ability of Parent
or any of its Subsidiaries or Affiliates effectively to exercise full
rights of ownership of the Shares, including, without limitation, the
right to vote any Shares acquired or owned by Parent or any of its
Subsidiaries or Affiliates on all matters properly presented to the
Company's stockholders or (iv) seeking to require divestiture by Parent
or any of its Subsidiaries or Affiliates of any Shares; or
(b) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to this Agreement, the Offer or
the Merger, by any Governmental Entity that, in the reasonable judgment
of Parent, is reasonably likely, directly or indirectly, to result in
any of the consequences referred to in clauses (i) through (iv) of
paragraph (a) above, subject as aforesaid; or
(c) (i) the representations and warranties of the Company
set forth in this Agreement that are qualified as to materiality shall
become untrue or incorrect (except to the extent expressly made as of an
earlier date, in which case as of such date), or any of the
representations and warranties set forth in this Agreement that are not
so qualified shall become untrue or incorrect in any material respect
(except to the extent expressly made as of an earlier date, in which
case as of such date) or (ii) there shall be a material breach of any of
the covenants of the Company set forth in this Agreement; provided,
however, that the Company shall not be deemed in material breach of its
obligations hereunder if any such breach is cured within 10 Business
Days after receipt by the Company of written notice of such breach from
Parent, if such cure can be accomplished before the Offer expires
without any extension thereof; or
(d) there shall have been a Company Material Adverse Effect;
or
(e) this Agreement shall have been terminated in accordance
with its terms; or
(f) (1) the Board of Directors of the Company (or any
committee thereof) shall have withdrawn or materially modified or
amended in a manner adverse to Parent or Merger Sub its approval or
recommendation of the Offer, the Merger or this Agreement or shall have
failed to make such favorable recommendation or (2) the Board of
Directors of the Company (or any committee thereof) shall have
recommended to the shareholders of the Company any Company Superior
Proposal or shall have resolved to, or publicly announced an intention
to, do so; or
(g) the Company shall have entered into, or shall have
publicly announced its intention to enter into, an agreement or
agreement in principle (other than a confidentiality agreement permitted
by Section 7.04 of this Agreement) with respect to any Company Superior
Proposal; or
(h) any Person or "group" (as defined in Section 13(d)(3) of
the Exchange Act) (other than Parent or any of its Subsidiaries) shall
have become the "beneficial owner" (as defined in Rule 13d-3 promulgated
under the Exchange Act) of at least 20% of the outstanding Shares or
shall have acquired, directly or indirectly, at least 20% of the assets
of the Company and its subsidiaries; which, in the good faith judgment
of Parent in any such case, and regardless of the circumstances
(including any action or omission by Parent or Merger Sub) giving rise
to any such condition, makes it inadvisable to proceed with such
acceptance for exchange or exchange; or
(i) the Company shall have failed to satisfy any of the
following conditions to the consummation of the Offer:
(A) Parent shall have been furnished with evidence
satisfactory to it of the consent or approval of those
Persons listed on Schedule 7.09 of the Company Disclosure
Schedule whose consent or approval may be required in
connection with the Offer and the Merger;
(B) The key employees of the Company or Company
Subsidiaries set forth on Part A of Annex Schedule II
shall have executed and delivered employment agreements
and non-competition agreements reasonably acceptable to
Parent and at least three out of the six key employees
set forth on Part B of Annex Schedule II shall have
executed and delivered employment agreements and non-
competition agreements reasonably acceptable to Parent;
and
(C) Company shall have terminated all contracts
with foreign consultants of Company or the Company
Subsidiaries for which the Parent has requested such
termination at least 45 days prior to Effective Time;
provided, however, the parties hereto agree that any
damages that the Company or any Company Subsidiary
suffers or may suffer as a result of any such termination
shall not constitute a breach of any representation,
warranty, covenant or agreement made by the Company in
the Agreement.
Notwithstanding anything to the contrary herein, the Board of
Directors of the Company (or any committee thereof) may (1) withdraw or
materially modify or amend in a manner adverse to Parent or Merger Sub
its approval or recommendation of the Offer, the Merger or this
Agreement or (2) may recommend to the shareholders of the Company any
Company Superior Proposal or may resolved to, or publicly announced an
intention to, do so, if:
(i) the representations and warranties of the Parent set forth in
this Agreement that are qualified as to materiality shall become untrue
or incorrect (except to the extent expressly made as of an earlier date,
in which case as of such date), or any of the representations and
warranties set forth in this Agreement that are not so qualified shall
become untrue or incorrect in any material respect (except to the extent
expressly made as of an earlier date, in which case as of such date), or
(ii) there shall be a material breach of any of the covenants of the
Parent set forth in this Agreement; provided, however, that the Parent
shall not be deemed in material breach of its obligations hereunder or
any representation or warranty if any such breach is cured within 10
Business Days after receipt by the Parent of written notice of such
breach from Company, if such cure can be accomplished before the Offer
expires without any extension thereof; or
(iii) there shall have been a Parent Material Adverse Effect.
