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EXECUTION COPY
TENDER OFFER AGREEMENT
TENDER OFFER AGREEMENT (the "AGREEMENT"), dated as of October 3, 2000, by
and among Gilat Satellite Networks Ltd., an Israeli corporation ("PURCHASER"),
ZapMe! Corporation, a Delaware corporation (the "COMPANY"), and the certain
stockholders of the Company listed on Schedule A hereto (the "SCHEDULE A
STOCKHOLDERS"), and certain other stockholders listed on Schedule B hereto (the
"SCHEDULE B STOCKHOLDERS", and together with the Schedule A Stockholders, the
"IDENTIFIED STOCKHOLDERS").
W I T N E S S E T H:
WHEREAS, each of the respective Boards of Directors of Purchaser and the
Company has determined it is in the best interests of their respective
stockholders for Purchaser to acquire outstanding shares of the common stock, $
.01 par value, of the Company (the "SHARES") up to a number of Shares which,
together with the Shares owned by Purchaser, would constitute 51% of the voting
power (determined on a Fully Diluted Basis, as defined herein) of all securities
of the Company entitled to vote (the "MAXIMUM NUMBER OF SHARES"), at a price of
$2.32 in cash per Share pursuant to a cash tender offer (the "OFFER") upon the
terms and conditions set forth herein;
WHEREAS, in order to induce Purchaser to enter into this Agreement,
Purchaser has requested that (i) each of the Schedule B Stockholders, and each
Schedule B Stockholder has agreed to, tender its Shares in the Offer upon the
terms and conditions set forth herein and (ii) each of the Schedule A
Stockholders has agreed to grant Purchaser an option, which Purchaser shall be
required to exercise, to the extent necessary for Purchaser to acquire the
Maximum Number of Shares (taking into account the Shares validly tendered and
not timely withdrawn as of the expiration of the Offer); and
WHEREAS, Purchaser, the Company and the Identified Stockholders desire to
make certain representations, warranties, covenants and agreements in connection
with this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto, intending to be
legally bound, agree as follows:
ARTICLE I.
TENDER OFFER
1.1 Tender Offer.
(a) Provided that this Agreement shall not have been terminated
in accordance with Article IX hereof, Purchaser shall commence (within the
meaning of Rule 14d-2 under the Securities and Exchange Act of 1934, as amended
(together with all the rules and regulations promulgated thereunder, the
"EXCHANGE ACT")), the Offer within ten (10) business days of the date hereof.
The Offer will be subject only to the satisfaction or waiver of the conditions
set forth in Article VIII hereof (the "OFFER CONDITIONS"), any of which
conditions may be waived in the sole discretion of Purchaser. Assuming all of
the conditions to consummation of the Offer are satisfied, Purchaser shall
consummate the Offer as promptly as possible and shall exercise the Option (as
herein defined) to the extent necessary to acquire the Maximum Number of Shares
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(taking into account the Shares validly tendered and not timely withdrawn as of
the expiration of the Offer).
(b) Purchaser agrees that upon the terms and subject to the
conditions of this Agreement (including the Offer Conditions), Purchaser shall
accept for payment all Shares, up to the Maximum Number of Shares, that are
validly tendered on or prior to the expiration of the Offer and not timely
withdrawn, as soon as it is permitted to do so under applicable law, and shall
pay for such Shares promptly thereafter. Purchaser may, at any time, assign to
one or more corporations, which are direct or indirect majority owned and
controlled subsidiaries of Purchaser, the right to purchase all or any portion
of the Shares tendered pursuant to this Offer, but any such transfer or
assignment shall not relieve Purchaser of its obligations under the Offer or
prejudice the rights of Identified Stockholders or any other stockholder to
receive payment for Shares properly tendered and accepted for payment in
accordance with the terms of this Agreement.
(c) In the event that the number of Shares that are validly
tendered on or prior to the expiration of the Offer and not timely withdrawn,
exceed the Maximum Number of Shares, the number of Shares tendered by each
stockholder of the Company (including the Identified Stockholders) shall be
reduced by an amount equal to the product of: (i) the number of Shares
representing the difference between the number of validly tendered Shares and
the Maximum Number of Shares, multiplied by (ii) the quotient of (A) the number
of Shares held by the stockholder (including any securities that are by their
terms convertible into Shares) as of the expiration of the Offer, divided by (B)
the number of Shares outstanding on a Fully Diluted Basis (as hereinafter
defined) as of the expiration of the Offer.
(d) The Offer shall initially be scheduled to expire twenty
(20) business days following the commencement thereof; provided that, unless
this Agreement shall have been terminated pursuant to Article IX hereof,
Purchaser shall have the right to extend the Offer, in its sole discretion, from
time to time in the event that, at a then-scheduled expiration date, the Offer
Conditions have not been satisfied; provided further that, under no
circumstances shall any such extension be less than the minimum number of days
required by the Exchange Act or the rules and regulations promulgated thereunder
or by applicable law.
(e) As promptly as practicable on the date of commencement of
the Offer, Purchaser shall file with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule TO (together with all amendments and
supplements thereto, the "SCHEDULE TO") with respect to the Offer. The Schedule
TO shall contain or incorporate by reference an offer to purchase (the "OFFER TO
PURCHASE") and forms of the related letter of transmittal and all other
ancillary Offer documents (collectively, together with all amendments and
supplements thereto, the "OFFER DOCUMENTS"). The Company and Purchaser shall
cause the Offer Documents to be disseminated to the holders of the Shares as and
to the extent required by applicable federal securities laws. Purchaser, on the
one hand, and the Company, on the other hand, will promptly correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect, and
Purchaser will cause the Offer Documents as so corrected to be filed with the
SEC and to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given a reasonable opportunity to review and
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comment upon the Schedule TO before it is filed with the SEC. In addition, the
Company and Purchaser agree to provide one another and respective counsel with
any comments, whether written or oral, that the Company or Purchaser or their
counsel may receive from time to time from the SEC or its staff with respect to
the Offer Documents promptly after the receipt of such comments and to consult
with the Company and its counsel prior to responding to any such comments. For
the purposes of this Agreement, shares outstanding on a "FULLY DILUTED BASIS"
shall include all issued and outstanding shares of common stock, par value $.01,
of the Company ("COMPANY COMMON STOCK") and any and all issued and outstanding
securities, options, warrants or rights which have been converted into, or
exercised for, shares of Company Common Stock as of October 1, 2000.
1.2 Company Action
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that the Company's Board of Directors (the "BOARD"),
at a meeting duly called and held, has (i) determined that the terms of the
Offer are fair to and in the best interests of the stockholders of the Company,
(ii) approved this Agreement, the Offer and the other transactions contemplated
hereby and (iii) resolved to recommend that the stockholders of the Company
accept the Offer, tender their Shares to Purchaser thereunder and approve and
adopt this Agreement. The Company hereby consents to the inclusion in the Offer
Documents of the Board's recommendation described in the immediately preceding
sentence. The Company's financial advisor Thomas Weisel Partners (the "FINANCIAL
ADVISOR"), has delivered to the Board, subject to the qualifications and
assumptions set forth therein, its opinion to the effect that, as of the date of
this Agreement, the $2.32 per Share in cash to be received in the Offer by
holders of shares (other than Purchaser, the Identified Stockholders and their
respective affiliates) is fair, from a financial point of view, to such holders.
The Company has been authorized by the Financial Advisor to permit the inclusion
of a copy of such opinion (and a reference thereto in form and substance
satisfactory to the Financial Advisor) in the Schedule 14D-9 (as hereinafter
defined).
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended or
supplemented from time to time, the "SCHEDULE 14D-9") containing the
recommendations referred to in paragraph (a) above and shall mail the Schedule
14D-9 to the record holders of Shares as required by law. Each of the Company
and Purchaser shall promptly correct any information provided by it for use in
the Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect, and the Company shall take all
steps necessary to amend or supplement the Schedule 14D-9 and to cause the
Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to the Company's stockholders, in each case as and to the extent
required by or deemed advisable under applicable federal securities laws.
Purchaser and its counsel shall be given reasonable opportunity to review and
comment upon the Schedule 14D-9 prior to its filing with the SEC or
dissemination to stockholders of the Company. The Company shall provide
Purchaser and its counsel in writing with any written comments (and orally, any
oral comments) the Company or its counsel may receive from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the receipt of such comments
and shall consult with Purchaser and its counsel prior to responding to such
comments.
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(c) The Company shall promptly furnish Purchaser with mailing
labels containing the names and addresses of all record holders of Shares and
with security position listings of Shares held in stock depositories, each as of
a recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
non-objecting beneficial owners of Shares. The Company shall furnish Purchaser
with such additional information, including, without limitation, updated
listings and computer files of stockholders, mailing labels and security
position listings, and such other assistance as the Company, Purchaser or their
agents may reasonably require in communicating the Offer to the record and
beneficial holders of Shares. Subject to the requirements of applicable law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Offer, the Company and Purchaser
shall hold in confidence the information contained in such labels, listings and
files, shall use such information solely in connection with the Offer, and, if
this Agreement is terminated in accordance with Article IX hereof or if the
Offer is otherwise terminated, shall promptly deliver or cause to be delivered
to the Company all copies of such information, labels, listings and files then
in their possession or in the possession of their agents or representatives.
ARTICLE II.
AGREEMENT TO TENDER
2.1 Agreement to Tender.
Each Schedule B Stockholder hereby agrees to irrevocably tender in the
Offer that number of Shares currently held by him, as set forth across from such
Schedule B Stockholder's name on Schedule B hereto (the "TENDERED SHARES").
2.2 Grant of Option.
Effective on the date hereof, Purchaser shall have, and Schedule A
Stockholders hereby grant to Purchaser, the right and option to purchase (the
"OPTION") from the Schedule A Stockholders at a price of $ 2.32 per Option
Share, the number of Shares held currently by him, as set forth across from such
Schedule A Stockholder's name on Schedule A hereto (the "OPTION SHARES").
Purchaser hereby agrees to exercise such Option upon consummation of the Offer
only to the extent required to acquire a number of Shares equal to the Maximum
Number of Shares as of the last business day prior to consummation of the Offer
(taking into account the Shares validly tendered and not timely withdrawn as of
the expiration of the Offer). Under this section only, for purposes of
determining the Maximum Number of Shares, "Fully Diluted Basis" shall be
determined as of the last business day prior to consummation of the Offer. The
purchase of the Option Shares from the Schedule A Stockholders pursuant to this
Section 2.2 shall be accepted and paid for at the same time and in the same
manner as Purchaser accepts and pays for the Shares tendered in the Offer.
2.3 Representations and Warranties of Identified Stockholders
Each Identified Stockholder hereby represents and warrants to the Company
and Purchaser as follows:
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(a) Valid Title; Absence of Liens. Identified Stockholder is
the sole, true, lawful and beneficial owner of, in the case of a Schedule A
Stockholder, those Option Shares set forth opposite its name on Schedule A, or,
in the case of a Schedule B Stockholder, those Tendered Shares set forth
opposite its name on Schedule B. Identified Stockholder owns the Tendered Shares
or Option Shares, as the case may be, free and clear of any liens or
encumbrances of any kind and there is no restriction on Identified Stockholder's
ability, power or right to transfer or dispose of the Tendered Shares or Option
Shares, as the case may be. Upon delivery of the certificate or certificates for
the Tendered Shares or Option Shares, as the case may be, upon consummation of
the Offer, Purchaser will acquire valid title to the Tendered Shares or Option
Shares, as the case may be, free and clear of any encumbrances or liens of any
kind other than restrictions imposed by applicable securities laws.
(b) Authority; Enforceability; Noncontravention.
(i) Identified Stockholder has the requisite power and
authority to enter into this Agreement and to perform all of its obligations
hereunder. The execution and delivery of this Agreement by Identified
Stockholder and the performance of all of its obligations hereunder have been
duly authorized by all necessary action (including any consultation, approval or
other action by or with any other person). This Agreement has been duly executed
and delivered by Identified Stockholder and constitutes a valid and binding
obligation of Identified Stockholder, enforceable against Identified Stockholder
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
(ii) The execution and delivery of this Agreement by
Identified Stockholder does not, and the performance by Identified Stockholder
of all of its obligations hereunder will not, conflict with or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or result in the creation of any lien or encumbrance upon the Tendered
Shares or Option Shares, as the case may be, under, any provision of applicable
law or regulation or of any agreement, judgment, injunction, order, decree, or
other instrument binding on Identified Stockholder. No consent, approval, order
or authorization of, or registration, declaration or filing with or exemption by
any federal, state or local government or any court, administrative or
regulatory agency or commission or other governmental authority or agency,
domestic or foreign, is required by or with respect to Identified Stockholder in
connection with the execution and delivery of this Agreement by Identified
Stockholder or performance by Identified Stockholder of all of its obligations
hereunder, except for applicable requirements, if any, of (a) Sections 13 and 16
of the Exchange Act and the rules and regulations thereunder and (b) the
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT").
(c) Total Shares. In the case of a Schedule A Stockholder,
Schedule A sets forth a true and accurate number of the Option Shares
beneficially owned by the Schedule A Stockholder as of the date hereof, and, in
the case of a Schedule B Stockholder, Schedule B sets forth a true and accurate
number of the Tendered Shares beneficially owned by the Schedule B Stockholder
as of the date hereof.
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2.4 Covenants of Identified Stockholders. For so long as the Agreement
is in effect, Identified Stockholder agrees as follows:
(a) Identified Stockholder shall not, except as contemplated by
the terms of this Agreement, knowingly take any action that would in any way
restrict, limit or interfere with the performance of its obligations hereunder.
(b) Identified Stockholder will not, except as contemplated by
the terms of this Agreement, (i) knowingly take, agree or commit to take any
action that would make any representation or warranty of Identified Stockholder
hereunder inaccurate in any respect as of any time prior to the termination of
this Agreement or (ii) knowingly omit, or agree or commit to omit, to take any
action necessary to prevent any such representation or warranty from being
inaccurate in any respect at any such time.
(c) Provided that this Agreement shall not have been terminated
in accordance with Article IX hereof, Identified Stockholder hereby agrees to
waive any and all of its rights under any agreements, contracts or other
arrangements to redeem the Tendered or Option Shares (or any securities
convertible by its terms into Shares).
2.5 Indemnification
(a) Each Identified Stockholder shall, individually, and not
jointly and severally, save, defend indemnify, and hold harmless Purchaser and
its affiliates and their respective directors, officers, employees, and agents
(each an "INDEMNIFIED PARTY") from, and promptly reimburse such Indemnified
Party for, any and all liabilities, losses, damages, fines, suits, actions,
demands, penalties, costs and expenses, including out-of-pocket, incidental
expenses, legal fees and expenses, the allocated costs and expenses of in-house
counsel and legal staff and the costs and expenses of defending or preparing to
defend against any claim incurred or assessed against such Indemnified Party and
arising out of or resulting from:
(i) the inaccuracy of any representation or warranty
made by such Identified Stockholder in Section 2.3 hereof, or
(ii) any breach by such Identified Stockholder of
Sections 2.1, 2.2 and 2.4 of this Agreement.
(b) Indemnification shall be conditioned on compliance with the
procedure outlined below:
(i) Provided that any and all obligations of each
Identified Stockholder under this Section 2.5 shall in no event exceed the
amount received by such Identified Stockholder.
(ii) Provided that prompt written notice is given of a
claim or suit for which indemnification might be claimed, unless the failure to
provide such notice does not actually and materially prejudice the interests of
the party to whom such notice is to be provided,
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the indemnifying party promptly will defend, contest, or otherwise protect
against any such claim or suit at its own cost and expense. Such notice shall
describe the claim or suit in reasonable detail and shall indicate the amount
(estimated, if necessary) of the loss that has been or may be suffered by the
Indemnified Party.
(iii) The Indemnified Party may, but will not be obligated
to, participate at its own expense in a defense thereof by counsel of its own
choosing, but the indemnifying party shall be entitled to control the defense
unless the Indemnified Party has relieved the indemnifying party from liability
with respect to the particular matter, provided that the indemnifying party may
only settle or compromise the matter subject to indemnification without the
consent of the Indemnified Party if such settlement includes a complete release
of all indemnified parties as to the matters in dispute and provided further
that the Indemnified Party will not unreasonably withhold consent to any
settlement or compromise that requires its consent.
(c) In the event the indemnifying party fails to timely defend,
contest, or otherwise protect against any such claim or suit, the Indemnified
Party may, but will not be obligated to, defend, contest, or otherwise protect
against the same, and make any compromise or settlement thereof and recover the
entire costs thereof from the indemnifying party, including reasonable
documented attorneys' fees, disbursements and all amounts paid as a result of
such claim or suit or the compromise or settlement thereof; provided, however,
that if the indemnifying party undertakes the defense of such matter, the
Indemnified Party shall not be entitled to recover from the indemnifying party
for its costs incurred in the defense thereof other than the reasonable costs of
investigation undertaken by the Indemnified Party and reasonable costs of
providing assistance.
(d) The Indemnified Party shall cooperate and provide such
assistance as the indemnifying party may reasonably request in connection with
the defense of the matter subject to indemnification and in connection with
recovering from any third parties amounts that the indemnifying party may pay or
be required to pay by way of indemnification hereunder. The Indemnified Party
shall take all commercially reasonable steps to protect its position with
respect to any matter that may be the subject of indemnification hereunder in
the same manner as it would any similar matter where no indemnification is
available.
2.6 Survival
The representations and warranties of each of the Identified Stockholders
set forth in Section 2.3 hereof shall survive for a period of one (1) year from
the date on which the Offer shall have been consummated; provided, however, that
the representations and warranties with respect to the Identified Stockholders'
Tendered and Option Shares set forth in Section 2.3(a) shall survive
indefinitely, without any limitations.
ARTICLE III.
PURCHASE AND SALE OBLIGATION
If the Offer is terminated or not consummated, in each case solely
because purchase by means of the Offer is precluded by law, administrative or
judicial action, and such law,
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administrative or judicial action does not directly or indirectly preclude
Purchaser's acquisition of the Maximum Number of Shares outside the Offer,
Purchaser shall agree to purchase from each of the Identified Stockholders, and
each of the Identified Stockholders shall agree to sell to Purchaser, all of its
Tendered Shares or Option Shares, as the case may be, at the purchase price of
$2.32 per Tendered or Option Share.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In this Agreement, any reference to any event, change, condition or
effect being "MATERIAL" with respect to any entity means any material event,
change, condition or effect related to the financial condition, properties,
assets (including intangible assets), liabilities, business, operations or
results of operations of such entity and its subsidiaries, taken as a whole. In
this Agreement, any reference to a "MATERIAL ADVERSE EFFECT" with respect to any
entity means any event, change or effect that is materially adverse to the
financial condition, properties, assets (including intangible assets),
liabilities (including contingent liabilities), business, operations or results
of operations of such entity and its subsidiaries, taken as a whole; provided,
that changes or effects which are primarily and directly caused by the execution
and delivery of this Agreement or the announcement of the transactions
contemplated hereby shall not constitute a Material Adverse Effect (it being
understood that in any controversy concerning the applicability of this proviso,
the party claiming the benefit of this proviso shall have the burden of proof
with respect to the elements of such proviso).
In this Agreement, the words "AWARE," "KNOWLEDGE" or similar words,
expressions or phrases with respect to a party means such party's actual
knowledge after reasonable inquiry of officers and directors of such party and
its subsidiaries reasonably believed to have knowledge of the relevant matters.
The Company represents and warrants to Purchaser that the statements
contained in this Article IV are true and correct, except as set forth in the
Disclosure Schedule delivered by the Company to Purchaser immediately prior to
the execution and delivery of this Agreement (the "DISCLOSURE SCHEDULE").
Reference to any section in the Disclosure Schedule in this Article IV shall be
deemed to be a reference to all other sections in the Disclosure Schedule. Any
reference in this Article IV to an agreement being "ENFORCEABLE" shall be deemed
to be qualified to the extent such enforceability is subject to (i) laws of
general application relating to bankruptcy, insolvency, moratorium, fraudulent
conveyance and the relief of debtors and (ii) the availability of specific
performance, injunctive relief and other equitable remedies.
4.1 Organization and Qualification.
Each of the Company and its subsidiaries is a corporation or other legal
entity, duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted or as proposed to be conducted. Each of the Company and
its subsidiaries is duly qualified as a foreign corporation to do business, and
is in good standing, in each jurisdiction where the character of its properties
owned or leased or the nature of its activities makes such qualification
necessary, except for failures to
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be so qualified or in good standing which would not, individually or in the
aggregate, have a Material Adverse Effect. Section 4.1 of the Disclosure
Schedule sets forth, with respect to the Company, each jurisdiction within the
United States where it is qualified or otherwise licensed as a foreign
corporation to do business, and with respect to each of its subsidiaries, (i)
its name and jurisdiction of incorporation; (ii) each jurisdiction where it is
qualified or otherwise licensed as a foreign corporation to do business; (iii)
the number of shares of authorized capital stock of each class of its capital
stock; (iv) the number of issued and outstanding shares of each class of its
capital stock; (v) the number of shares of its capital stock held in treasury;
and (vi) its duly elected directors and officers. The Company has heretofore
delivered to Purchaser a complete and correct copy of the Certificate of
Incorporation (or other applicable charter document) and the Bylaws (or other
applicable organizational document), each as amended to the date hereof, of the
Company and each of its subsidiaries. Neither the Company nor any of its
subsidiaries is in violation of any of the provisions of its Certificate of
Incorporation (or other applicable charter document) or its Bylaws (or other
applicable organizational document).
4.2 Capital Stock of Subsidiaries.
The only direct or indirect subsidiaries of the Company are those listed
in Section 4.2 of the Disclosure Schedule. The Company is directly or indirectly
the record and beneficial owner of all of the outstanding shares of capital
stock of each of its subsidiaries, there are no proxies with respect to such
shares, and no equity securities of any of such subsidiaries are or may be
required to be issued by reason of any options, warrants, scrip, rights to
subscribe for, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any capital
stock of any such subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any such subsidiary is bound to issue
additional shares of its capital stock or securities convertible into or
exchangeable for such shares. Other than as set forth in Section 4.2 of the
Disclosure Schedule, all of such shares so owned by the Company are validly
issued, fully paid and nonassessable and are owned by it free and clear of any
claim, lien or encumbrance of any kind with respect thereto. Except as disclosed
in Section 4.2 of the Disclosure Schedule, the Company does not directly or
indirectly own any interest in any corporation, partnership, joint venture or
other business association or entity.
4.3 Capitalization.
The authorized capital stock of the Company consists of 200,000,000
shares of Company Common Stock and 5,000,000 shares of Company preferred stock.
As of August 31, 2000, 45,215,695 shares of Company Common Stock were issued and
outstanding. All of such issued and outstanding Shares are validly issued, fully
paid and nonassessable and free of preemptive rights. As of the date hereof,
10,275,000 shares of Common Stock were reserved for issuance upon exercise of
outstanding options pursuant to the Stock Option Plans, all of which are listed
and described in Section 4.3 of the Disclosure Schedule. Other than the Stock
Option Plans, the Company has no other plan that provides for the grant of
options or rights to purchase shares of capital stock, stock appreciation or
similar rights or stock awards. Except as set forth above, there are not now,
and as of the date the Offer is consummated except for Shares issued after the
date hereof upon the exercise options outstanding on the date hereof, there will
not be, any shares of capital stock of the Company issued or outstanding or any
subscriptions, options, warrants,
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calls, claims, rights (including without limitation any stock appreciation or
similar rights), convertible securities or other agreements or commitments of
any character obligating the Company to issue, transfer or sell any of its
securities. Except as disclosed in Section 4.3 of the Disclosure Schedule, or as
contemplated by this Agreement, none of the Company and its subsidiaries is a
party to any voting agreement, voting trust, proxy or similar agreement,
arrangement or understanding relating to its capital stock or any agreement,
arrangement or understanding relating to or providing for registration rights
with respect to its capital stock.
4.4 Authority Relative to This Agreement.
The Company has full corporate power and authority to execute and deliver
this Agreement and, subject to obtaining any necessary stockholder approval of
the Offer, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof by Purchaser, constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
4.5 No Violations, etc.
(a) Other than the filings, permits, authorizations, consents
and approvals or waivers thereof that are identified in Section 4.5(b) and
except as listed in Section 4.5(a) of the Disclosure Schedule, neither the
execution and delivery of this Agreement by the Company nor the consummation of
the transactions contemplated hereby nor compliance by the Company with any of
the provisions hereof will (i) violate, conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or suspension of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its subsidiaries under, any of the
terms, conditions or provisions of (x) their respective charters or by-laws, (y)
any note, bond, mortgage, outstanding loans or borrowings, indenture or deed of
trust, or (z) any license, lease, agreement or other instrument or obligation to
which the Company or any such subsidiary is a party or to which they or any of
their respective properties or assets may be subject, or (ii) violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets, except, in the case of clauses (i) and (ii) above, for
such violations, conflicts, breaches, defaults, terminations, suspensions,
accelerations, rights of termination or acceleration or creations of liens,
security interests, charges or encumbrances which would not, individually or in
the aggregate, either have a Material Adverse Effect or materially impair or
delay the Company's ability to consummate the transactions contemplated hereby
or perform its obligations under this Agreement.
(b) No filing or registration with, no notification to and no
permit, authorization, consent or approval of any governmental entity
(including, without limitation, any
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federal, state or local regulatory authority or agency) is required by the
Company in connection with the execution and delivery of this Agreement or the
consummation by the Company of the transactions contemplated hereby, except as
set forth in Schedule 4.5(b) of the Disclosure Schedule and except (i) as
required by (A) applicable requirements of the HSR Act, (B) the Securities Act
of 1933 as amended and the rules and regulatory promulgated thereunder (the
"SECURITIES ACT") and the Exchange Act, (C) State Securities or "blue sky" laws
and (D) the National Association of Securities Dealers, Inc. ("NASD") or the
NASDAQ, (ii) the approval of the Company's stockholders pursuant to the DGCL and
(iv) such other filings, registrations, notifications, permits, authorizations,
consents or approvals the failure of which to be obtained, made or given would
not, individually or in the aggregate, either have a Company Material Adverse
Effect or materially impair the Company's ability to consummate the transactions
contemplated hereby.
(c) The Company and its subsidiaries are not in violation of or
default under, except as set forth in Section 4.5(a) of the Disclosure Schedule
and except for such violations or defaults which would not, individually or in
the aggregate, either have a Material Adverse Effect or materially impair the
Company's ability to consummate the transactions contemplated hereby, (x) any
note, bond, mortgage, indenture or deed of trust, or (y) any license, lease,
agreement or other instrument or obligation to which the Company or any such
subsidiary is a party or to which they or any of their respective properties or
assets may be subject.
4.6 Commission Filings; Financial Statements.
The Company has filed all forms, reports, schedules, statements and other
documents required to be filed by it since January 1, 2000 (as supplemented and
amended since the time of filing collectively, the "SEC REPORTS") with the SEC,
each of which complied when filed in all material respects with all applicable
requirements of the Securities Act and the Exchange Act.
The audited consolidated financial statements and unaudited consolidated
interim financial statements of the Company and its subsidiaries included or
incorporated by reference in such SEC Reports complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and present fairly the financial position and results of
operations and cash flows of the Company and its subsidiaries on a consolidated
basis at the respective dates and for the respective periods indicated (subject,
in the case of all such financial statements that are interim financial
statements, to normal year-end audit adjustments, none of which are expected to
result in a Material Adverse Effect).
Except as set forth in Section 4.6 of the Disclosure Schedule, since
December 31, 1999, there has not been any change, or any application or request
for any change, by the Company or any of its subsidiaries in accounting
principles, methods or policies for financial accounting or tax purposes
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments). None of the SEC Reports, including, without limitation,
any financial statements or schedules included or incorporated therein by
reference, contained at the time filed any untrue statement of a material fact
or omitted to state any material fact required to be stated
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therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.7 Absence of Changes or Events.
Except as set forth in Section 4.7 of the Disclosure Schedule and in the
Company's Form 10-K for the fiscal year ended December 31, 1999, as filed with
the SEC, or the Company's Form 10-Q for the fiscal quarter ended March 31, 2000,
as filed with the SEC, since December 31, 1999, the Company and its subsidiaries
have conducted their respective businesses in the ordinary course consistent
with their past practices and have not incurred any material liability, except
in the ordinary course of their businesses consistent with their past practices,
and there has not been (i) any change in the business, financial condition or
results of operations of the Company or any of its subsidiaries which has had,
or could have, individually or in the aggregate, a Material Adverse Effect; (ii)
any damage, destruction or loss, whether covered by insurance or not, which has
had, or could have, individually or in the aggregate, a Material Adverse Effect;
(iii) any entry into or termination of any material commitment, contract,
agreement or transaction (including, without limitation, any material borrowing
or capital expenditure or sale or other disposition of any material asset or
assets) of or involving the Company and its subsidiaries, other than this
Agreement; (iv) any redemption, repurchase or other acquisition for value of its
capital stock by the Company, or any issuance of capital stock of the Company or
any of its subsidiaries or of securities convertible into or rights to acquire
any such capital stock or any dividend or distribution declared, set aside, or
paid on capital stock of the Company; (v) any transfer of or right granted under
any material lease, license, agreement or Intellectual Property (as defined in
Section 4.14 below) of the Company or any of its subsidiaries or any liens or
other security interests in any Intellectual Property of the Company or any of
its subsidiaries; (vi) any sale or other disposition of any asset of the Company
or any of its subsidiaries or any charge, mortgage, pledge or imposition of any
lien or other encumbrance (or any satisfaction and discharge thereof) on any
asset of the Company or any of its subsidiaries, other than in the ordinary
course of business, or any agreement relating to any of the foregoing; (vii) any
default or breach by the Company or any of its subsidiaries in any material
respect under any contract, license or permit; (viii) any general wage or salary
increase or any increase in compensation or other benefits payable or to become
payable to any executive officers or management employees of the Company or any
of its subsidiaries or any entry into any employment contract with any executive
officer or key salaried employee of the Company or any of its subsidiaries; and
(ix) any change in the accounting methods of the Company or any of its
subsidiaries.
4.8 Accounts Receivable.
All accounts receivable of the Company reflected in the Company's audited
consolidated balance sheet contained in the Company's Form 10-K for the fiscal
year ended December 31, 1999 filed with the SEC ( the "BALANCE SHEET")
represented transactions in the ordinary course of business and were current and
collectible net of any reserves shown on such Balance Sheet (which reserves the
Company believes are adequate and were calculated consistent with past
practice). The accounts receivable of the Company arising after the Balance
Sheet and prior to the date hereof arose in the ordinary course of business and
consistent with past practice.
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4.9 Litigation.
Except as set forth in Section 4.9 of the Disclosure Schedule, there is
no (i) claim, action, suit or proceeding pending or, to the best knowledge of
the Company or any of its subsidiaries, threatened against or relating to the
Company or any of its subsidiaries or any of their respective properties or
assets before any court or governmental or regulatory authority or body or
arbitration tribunal, or (ii) outstanding judgment, order, writ, injunction or
decree, or application, request or motion therefor, of any court, governmental
agency or arbitration tribunal in a proceeding to which the Company, any
subsidiary of the Company or any of their respective assets was or is a party.
4.10 Title to and Condition of Properties; Leases.
(a) Each of the Company and its subsidiaries (i) except as set
forth in Section 4.10(a)(i) of the Disclosure Schedule, has good, marketable and
insurable title to all of the properties and assets reflected on the Balance
Sheet as being owned by the Company or its subsidiaries, except for any property
or asset since sold or otherwise disposed of since the date thereof in the
ordinary course of business and consistent with past practice; and (ii) is the
lessee under all of the leases set forth in Section 4.10(a)(ii) of the
Disclosure Schedule and has valid, effective, enforceable and continuing
leasehold rights without default in all property leased by it under such leases,
free and clear of all encumbrances, except in the case of clauses (i) and (ii)
above (x) statutory liens securing payments not yet due and (y) such
imperfections or irregularities of title, claims, liens, charges, security
interests or encumbrances as do not materially affect the use of the properties
or assets subject thereto or affected thereby or otherwise materially impair the
business operations at such properties. The assets and properties of the Company
and its subsidiaries are in good operating condition and repair and are adequate
for the uses to which they are being put.
(b) The Company is not a party to any executory contract to
sell or transfer any part of any leasehold interest of the Company. True and
accurate copies of all leases, and of all amendments, supplements, extensions
and modifications thereof, have been delivered to Purchaser by the Company.
4.11 Contracts and Commitments.
Section 4.11 of the Disclosure Schedule sets forth a complete list of all
existing contracts of the Company or any of its subsidiaries, except for those
contracts having a total value of less than $500,000 or that can be terminated
by giving notice of 60 days or less. Other than as disclosed in Section 4.11 of
the Disclosure Schedule, no existing material contract or material commitment of
the Company or any of its subsidiaries, or as to which any thereof is a party or
their respective assets are bound contains an agreement with respect to any
change of control that would be triggered by the Offer.
4.12 Labor Matters.
Each of the Company and its subsidiaries is in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and neither
the Company nor any of its subsidiaries is
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<PAGE> 14
engaged in any unfair labor practice. There is no labor strike, slowdown or
stoppage pending (or, to the best knowledge of the Company, any labor strike or
stoppage threatened) against or affecting the Company or any of its
subsidiaries. To the knowledge of the Company, no petition for certification has
been filed and is pending before the National Labor Relations Board with respect
to any employees of the Company or any of its subsidiaries. None of the
Company's employees are represented by any labor union or covered by any
collective bargaining agreement.
4.13 Compliance with Law.
Since December 31, 1999 and except as set forth in Section 4.13 of the
Disclosure Schedule, neither the Company nor any of its subsidiaries has
violated or failed to comply with any statute, law, ordinance, regulation, rule
or order of any foreign, federal, state or local government or any other
governmental department or agency, or any judgment, decree or order of any
court, applicable to its business or operations, except where any such violation
or failure to comply would not, individually or in the aggregate, have a
Material Adverse Effect. The Company and its subsidiaries have all permits,
licenses and franchises from governmental agencies required to conduct their
businesses as now being conducted, except for such permits, licenses and
franchises the absence of which would not, individually or in the aggregate,
have a Material Adverse Effect.
4.14 Intellectual Property.
(a) Section 4.14 of the Disclosure Schedule lists all of the
Intellectual Property of the Company and its subsidiaries and any predecessor
entities of the foregoing.
(b) The Company and its subsidiaries own or have the right to
use all Intellectual Property used in the conduct of their respective
businesses. None of the Intellectual Property used in the conduct of their
respective businesses infringes or violates the intellectual property rights of
any third parties. Consummation of the transactions contemplated hereby shall
not impair any rights or impose any obligations with respect to Intellectual
Property used in the conduct of the businesses of the Company and its
subsidiaries.
(c) There is no pending or, to the knowledge of the Company or
its subsidiaries, threatened (or unasserted but considered probable of
assertion) claim against the Company or any of its subsidiaries, nor has the
Company or any of its subsidiaries received any notice, (i) asserting that any
of the Intellectual Property, or that the past, present or, to the knowledge of
the Company or its subsidiaries, contemplated future conduct of the Company's or
its subsidiaries' business, infringes or violates the intellectual property
rights of any third parties; (ii) asserting that any third parties have any
rights to use any of the Intellectual Property except for Licensed Intellectual
Property licensed to the Company or any subsidiary on a nonexclusive basis; or
(iii) which could, if adversely determined against the Company or any
subsidiary, adversely affect the ability of the Company or any subsidiary to use
any of the Intellectual Property upon consummation of the transactions
contemplated hereby or thereafter, and to the knowledge of the Company and its
subsidiaries, there is no basis for any claim of the foregoing types.
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(d) Neither the Company nor any subsidiary has given notice to
any third parties asserting infringement by such third parties of any of the
Intellectual Property, and to the knowledge of the Company and its subsidiaries,
there is no basis for any such claim against a third party.
(e) All of the Licensed Intellectual Property is licensed
pursuant to valid written agreements (the "LICENSE AGREEMENTS"), enforceable in
accordance with their terms.
(f) Neither the Company nor any subsidiary is subject to any
bars or other restrictions with respect to its rights to utilize the
Intellectual Property, except for the terms and conditions of the License
Agreements and, to the knowledge of the Company and its subsidiaries, no bars or
other restrictions on such rights will be created by or exist after the
consummation of the transactions contemplated herein.
(g) There is no pending or, to the knowledge of the Company or
any of its subsidiaries, threatened claim that the Company, any subsidiary or
any licensor is in breach of any of the License Agreements and, to the knowledge
of the Company and its subsidiaries, no basis for any such claim exists.
(h) There is no pending or, to the knowledge of the Company or
any of its subsidiaries, threatened claim against the Company, any subsidiary or
the licensor of any Licensed Intellectual Property asserting that any of the
Licensed Intellectual Property infringes or conflicts with the rights of third
parties, and to the knowledge of the Company and its subsidiaries, no basis for
any such claim exists.
(i) Each of the Company and its subsidiaries has performed all
of the obligations required to be performed by it, and is not in default under
any agreement relating to any Intellectual Property, except where any such
failure to perform any obligation under any such agreement would not constitute
a material breach of, or trigger a default under, such agreement.
(j) Section 4.14(j) of the Disclosure Schedule identifies each
trade name, fictitious business name, or other similar name under which the
Company or any of its subsidiaries has conducted any part of its business during
the five (5) years preceding the date hereof.
(k) For purposes of this Section 4.14:
(i) "COPYRIGHTS" shall mean all registered and
unregistered copyrights and applications for copyright registration in every
country of the world;
(ii) "INTELLECTUAL PROPERTY" shall mean Patents,
Trademarks, Copyrights and Know-How, including Licensed Intellectual Property;
(iii) "KNOW-HOW" shall mean technical information, trade
secrets, inventions, processes, specifications, manuals, reports, documents,
drawings, procedures, processes, devices, software and source code, software
documentation, flow charts, recording media, research and development data,
notebooks, marketing information, customer lists,
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database rights, other tangible embodiments of information and proprietary
rights other than Copyrights, Patents and Trademarks, in every country of the
world;
(iv) "LICENSED INTELLECTUAL PROPERTY" shall mean all
intellectual property owned by third parties and licensed to the Company or any
subsidiary;
(v) "PATENTS" shall mean all utility and design patents
and patent applications (including any divisions, continuations,
continuations-in-part, reexaminations, extensions, renewals or reissues
thereof), design, design registrations, utility models and any similar rights
and applications therefor, in every country of the world; and
(vi) "TRADEMARKS" shall mean all registered and
unregistered trademarks, service marks, trade dress, trade names, fictitious
business names or other similar names and applications for registration of any
of the foregoing, in every country of the world.
4.15 Taxes.
"TAX" or "TAXES" shall mean all federal, state, local and foreign taxes,
duties, levies, charges and assessments of any nature, including social security
payments and deductibles relating to wages, salaries and benefits and payments
to subcontractors (to the extent required under applicable Tax law), and also
including all interest, penalties and additions imposed with respect to such
amounts. Except as set forth in Section 4.15 of the Disclosure Schedule: (i) the
Company and its subsidiaries have prepared and timely filed or will timely file
with the appropriate governmental agencies all franchise, income and all other
material Tax returns and reports required to be filed for any period ending on
or before the expiration of the Offer, taking into account any extension of time
to file granted to or obtained on behalf of the Company and/or its subsidiaries;
(ii) all Taxes of the Company and its subsidiaries in respect of the pre-Offer
period have been paid in full to the proper authorities, other than such Taxes
as are being contested in good faith by appropriate proceedings and/or are
adequately reserved for in accordance with generally accepted accounting
principles; (iii) all deficiencies resulting from Tax examinations of federal,
state and foreign income, sales and franchise and all other material Tax returns
filed by the Company and its subsidiaries have either been paid or are being
contested in good faith by appropriate proceedings; (iv) to the best knowledge
of the Company, no deficiency has been asserted or assessed against the Company
or any of its subsidiaries, and no examination of the Company or any of its
subsidiaries is pending or threatened for any material amount of Tax by any
taxing authority; (v) no extension of the period for assessment or collection of
any material Tax is currently in effect and no extension of time within which to
file any material Tax return has been requested, which Tax return has not since
been filed; (vi) no Tax liens have been filed with respect to any Taxes; (vii)
the Company and each of its subsidiaries will not make any voluntary adjustment
by reason of a change in their accounting methods for any pre-Offer period that
would affect the taxable income or deductions of the Company or any of its
subsidiaries for any period ending after the consummation of the Offer; (viii)
the Company and its subsidiaries have made timely payments of the Taxes required
to be deducted and withheld from the wages paid to their employees; and (ix) the
Company and its subsidiaries are not parties to any tax sharing or tax matters
agreement.
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4.16 Employee Benefit Plans.
(a) Section 4.16(a) of the Disclosure Schedule contains a true
and complete list of each material bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance pay, vacation, worker's
compensation, medical, life or other material insurance, profit-sharing, or
pension plan, program, agreement or arrangement, and each other material
employee benefit plan, program, agreement or arrangement, sponsored, maintained
or contributed to or required to be contributed to by the Company or any of its
subsidiaries or by any trade or business, whether or not incorporated, that
together with the Company or any of its subsidiaries would be deemed a "single
employer" under Section 414 of the Code (an "ERISA AFFILIATE") for the benefit
of any employee or director or former employee or former director of the Company
or any of its subsidiaries, whether formal or informal and whether legally
binding or not (the "PLANS"). With respect to each Plan, Section 4.16(a) of the
Disclosure Schedule identifies each ERISA Affiliate that sponsors, maintains, or
contributes to the Plan and whether the Plan covers or provides benefits to
current or former employees or directors of any ERISA Affiliate (and if so, the
identity of each such ERISA Affiliate). Neither the Company nor any of its
subsidiaries has any formal plan or commitment, whether legally binding or not,
to create any additional plan or modify or change any existing Plan that would
materially increase the benefit payable to, any employee or director or former
employee or former director of the Company or any of its subsidiaries, except as
required by applicable law.
(b) With respect to each of the Plans, the Company has
heretofore delivered or made available to Purchaser true and complete copies of
each of the following documents: (i) the Plan and related documents (including
all amendments thereto); (ii) the two most recent annual reports, actuarial
reports, and financial statements, if any; (iii) the most recent Summary Plan
Description, together with each Summary of Material Modifications, required
under The Employee Retirement Income Security Act of 1974, as amended ("ERISA")
with respect to such Plan, and all material employee communications relating to
such Plan; and (iv) the most recent determination letter received from the IRS
with respect to each Plan that is intended to be qualified under the Code, and
all communications to or from the IRS or any other governmental or regulatory
authority relating to each Plan.
(c) No liability under Title IV of ERISA has been incurred by
the Company or any of its subsidiaries or any ERISA Affiliate since the
effective date of ERISA that has not been satisfied in full, and no condition
exists that presents a material risk to the Company or any of its subsidiaries
or any ERISA Affiliate of incurring a liability under such Title, in either
case, other than liability for the payment of PBGC premiums, which have been or
will be paid when due.
(d) Neither the Company nor any of its subsidiaries nor any
ERISA Affiliate, nor any of the Plans, nor any trust created thereunder, nor, to
the Company's knowledge, any trustee or administrator thereof has engaged in a
transaction in connection with which the Company, or any of its subsidiaries,
any of the Plans, any such trust, or any trustee or administrator thereof,
could, directly or indirectly, be subject to a civil penalty assessed pursuant
to Section 409 or 502(i) of ERISA, or a tax imposed pursuant to Section 4975 or
4976 of the Code, or any other liability.
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(e) Full payment has been made, or will be made (where
applicable) in accordance with Section 404(a)(6) of the Code, of all amounts
that the Company or any of its subsidiaries or any ERISA Affiliate is required
to pay under Section 412 of the Code or under the terms of the Plans and the
applicable contracts of employment, and all such amounts properly accrued
through the date the Offer is consummated, with respect to the current plan year
thereof will be paid on or prior to the date the Offer is consummated or will be
properly recorded on the Company's financial statements.
(f) As of the date the Offer is consummated, the then fair
market value of the assets held under each Plan that is subject to Title IV of
ERISA will be sufficient so as to permit a "standard termination" of each such
Plan under Section 4042(b) of ERISA without the need to make any additional
contributions to such Plans. No reportable event under Section 4043 of ERISA
with respect to which the notice requirement has not been waived has occurred or
will occur with respect to any Plan on or before the date the Offer is
consummated other than any reportable event occurring by reason of the
transactions contemplated by this Agreement.
(g) None of the Plans is a "multi-employer pension plan," as
such term is defined in Section 3(37) of ERISA, a "multiple employer welfare
arrangement," as such term is defined in Section 3(40) of ERISA, or a single
employer plan that has two or more contributing sponsors, at least two of whom
are not under common control, within the meaning of Section 4063(a) of ERISA.
(h) To the Company's knowledge, each of the Plans that is
intended to be "qualified" within the meaning of Section 401(a) of the Code is
so qualified and a favorable determination to that effect has been issued by the
IRS with respect to each such Plan. Each of the Plans that is intended to
satisfy the requirements of Section 125 or 501(c)(9) of the Code satisfies such
requirements. Each of the Plans has been operated and administered in all
material respects in accordance with its terms and applicable laws and
regulations, including but not limited to ERISA and the Code.
(i) Except as set forth in Section 4.16(i) of the Disclosure
Schedule, each Plan may be amended or terminated without liability to the
Company or any of its subsidiaries or any ERISA Affiliate other than for accrued
benefits. No amounts payable under the Plans will fail to be deductible for
federal income tax purposes under Section 280G of the Code. To the Company's
knowledge, each person who performs services for the Company or any of its
subsidiaries has been, and is, properly classified by the Company or any of its
subsidiaries as an employee or independent contractor.
(j) There are no claims pending, or, to the knowledge of the
Company, threatened or anticipated (other than routine claims for benefits)
against any Plan, the assets of any Plan or against the Company or any of its
subsidiaries or any ERISA Affiliate with respect to any Plan. There is no
judgment, decree, injunction, rule or order of any court, governmental body,
commission, agency or arbitrator outstanding against or in favor of any Plan or
any fiduciary thereof (other than rules of general applicability). There are no
pending or, to the knowledge of the Company, threatened audits or investigations
by any governmental body, commission or agency involving any Plan.
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(k) Except as set forth in Section 4.16(k) of the Disclosure
Schedule, no Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with respect to current or former
employees or directors after retirement or other termination of service (other
than (i) coverage mandated by applicable law; (ii) death benefit or retirement
benefits under any "employee pension plan," as that term is defined in Section
3(2) of ERISA; (iii) deferred compensation benefits accrued as liabilities on
the books of the Company or the ERISA Affiliates; or (iv) benefits, the full
cost of which is borne by the current or former employee or director (or his
beneficiary)).
(l) Except as set forth in Section 4.16(l) of the Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not (i) entitle any current or former employee or director of the Company
or any of its subsidiaries to severance pay, unemployment compensation,
termination or any similar payment; or (ii) accelerate the time of payment or
vesting, or increase the amount, of any compensation due to any such current or
former employee or director; or (iii) renew or extend the term of any agreement
regarding compensation for any such current or former employee or director.
4.17 Environmental Matters.
Except as set forth in Section 4.17 of the Disclosure Schedule and except
as would not result in a Material Adverse Effect:
(a) The Company and its subsidiaries have obtained all
Environmental Permits and all licenses and other authorizations and have made
all registrations and given all notifications that are required under any
applicable Environmental Law.
(b) There is no Environmental Claim pending against the Company
and its subsidiaries under an Environmental Law.
(c) The Company and its subsidiaries are in compliance with all
terms and conditions of their Environmental Permits, and are in compliance with
all applicable Environmental Laws.
(d) The Company and its subsidiaries did not generate, treat,
store, transport, discharge, dispose of or release any Hazardous Materials on or
from any property now or previously owned, leased or used by the Company and its
subsidiaries.
(e) For purposes of Section 4.17:
(i) "ENVIRONMENT" shall mean any surface water, ground
water, or drinking water supply, land surface or subsurface strata, or ambient
air and includes, without limitation, any indoor location;
(ii) "ENVIRONMENTAL CLAIM" means any written notice or
written claim by any person alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental costs, or harm, injuries or damages to any person, property or
natural resources, and any fines or penalties) arising out of, based upon,
resulting from or relating to (1) the emission, discharge, disposal or other
release or threatened
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release in or into the Environment of any Hazardous Materials or (2)
circumstances forming the basis of any violation, or alleged violation, of any
applicable Environmental Law;
(iii) "ENVIRONMENTAL LAWS" means any federal, state, and
local laws, codes, and regulations as now or previously in effect relating to
pollution, the protection of human health, the protection of the Environment or
the emission, discharge, disposal or other release or threatened release of
Hazardous Materials in or into the Environment;
(iv) "ENVIRONMENTAL PERMIT" shall mean a permit,
identification number, license or other written authorization required under any
applicable Environmental Law; and
(v) "HAZARDOUS MATERIALS" shall mean all pollutants,
contaminants, or chemical, hazardous or toxic materials, substances,
constituents or wastes, including, without limitation, asbestos or
asbestos-containing materials, polychlorinated biphenyls and petroleum, oil, or
petroleum or oil derivatives or constituents, including, without limitation,
crude oil or any fraction thereof.
4.18 Absence of Undisclosed Liabilities.
Except as set forth in Section 4.18 of the Disclosure Schedule, neither
the Company nor any of its subsidiaries has any liabilities or obligations of
any nature, whether absolute, accrued, unmatured, contingent or otherwise, or
any unsatisfied judgments or any leases of personality or realty or unusual or
extraordinary commitments, except the liabilities recorded on the Balance Sheet,
and except for liabilities or obligations incurred in the ordinary course of
business and consistent with past practice since December 31, 1999 that would
not, individually or in the aggregate, have a Material Adverse Effect.
4.19 Finders or Brokers.
Except as set forth in Section 4.19 of the Disclosure Schedule, none of
the Company, the subsidiaries of the Company, the Board of Directors or any
member of the Board of Directors has employed any investment banker, broker,
finder or intermediary in connection with the transactions contemplated hereby
who might be entitled to a fee or any commission in connection with the Offer,
and Section 4.19 of the Disclosure Schedule sets forth the maximum consideration
(present and future) agreed to be paid to each such party.
4.20 State Antitakeover Statutes.
The Company has granted all approvals and taken all other steps necessary
to exempt the transactions contemplated hereby from the requirements and
provisions of Section 203 of the DGCL and any other applicable state
antitakeover statute or regulation such that none of the provisions of such
Section 203 or any other "business combination," "moratorium," "control share"
or other state antitakeover statute or regulation (i) prohibits or restricts the
Company's ability to perform its obligations under this Agreement to consummate
the transactions contemplated hereby, (ii) would have the effect of invalidating
or voiding this Agreement any provision hereof, or (iii) would subject Purchaser
to any material impediment or condition in connection with the exercise of any
of its rights under this Agreement.
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4.21 Insurance.
Section 4.21 of the Disclosure Schedule lists all insurance policies in
force on the date hereof covering the businesses, properties and assets of the
Company and its subsidiaries. The Company has not received any notice of
cancellation, termination or reduction of coverage, nor has the Company received
any notice of intention to cancel, terminate or reduce coverage, relating
thereto. The Company has given Purchaser access to complete and correct copies
of all such policies together with all riders and amendments thereto. Such
policies are (i) in such amounts as are appropriate and reasonable, in the
judgment of the Company's Board of Directors, taking into account the Company's
and its subsidiaries' properties, business and operations and (ii) are in full
force and effect, with all premiums due thereon having been paid.
4.22 Employment and Labor Contracts.
Except as set forth on Section 4.22 of the Disclosure Schedule or the SEC
Reports, neither the Company nor any of its subsidiaries is a party to any
employment contract or other similar contract or any other contract for the
provision of management or consulting services to the Company or any of its
subsidiaries with any past or present officer, director, employee or, to the
best of the Company's knowledge, any entity affiliated with any past or present
officer, director or employee other than those set forth in Section 4.22 of the
Disclosure Schedule and other than the agreements executed by employees
generally, the forms of which have been delivered to Purchaser.
4.23 Absence of Questionable Payments.
Neither the Company nor any of its subsidiaries nor, to the Company's
knowledge, any director, officer, agent, employee or other person acting on
behalf of the Company or any of its subsidiaries, has used any corporate or
other funds for unlawful contributions, payments, gifts, or entertainment, or
made any unlawful expenditures relating to political activity to government
officials or others established or maintained any unlawful or unrecorded funds
in violation of Section 30A of the Exchange Act. Neither the Company nor any of
its subsidiaries nor, to the Company's knowledge, any director, officer, agent,
employee or other person acting on behalf of the Company or any of its
subsidiaries, has accepted or received any unlawful contributions, payments,
gifts, or expenditures. To the Company's knowledge, the Company and each of its
subsidiaries which is required to file reports pursuant to Section 12 or 15(d)
of the Exchange Act is in compliance with the provisions of Section 13(b) of the
Exchange Act.
4.24 Board Approval Required.
The Board of Directors of the Company has, by a majority vote at a
meeting of such Board duly held, approved and adopted this Agreement, the
transactions contemplated hereby, determined that the Offer is in the best
interests of the stockholders and the Company and recommended it to the
stockholders of the Company.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company that:
5.1 Organization and Qualification.
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the country of Israel and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Purchaser is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or leased or the nature of its activities
makes such qualification necessary. Purchaser's public filing with the SEC
include accurate and complete copies of its Articles of Incorporation (or other
applicable charter document) and bylaws, as currently in effect.
5.2 Authority Relative to This Agreement.
Purchaser has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Purchaser and no other corporate proceedings on the part
of Purchaser are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Purchaser and, assuming the due authorization,
execution and delivery hereof by the Company, constitutes a valid and binding
agreement of Purchaser, enforceable against Purchaser in accordance with its
terms, except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally or by general equitable or fiduciary
principles.
5.3 Valid Title. Purchaser is the sole, true, lawful and beneficial
owner of at least Five hundred thousand (500,000) Shares as of the date hereof.
5.4 No Violations, etc.
(a) Neither the execution and delivery of this Agreement by
Purchaser nor the consummation of the transactions contemplated hereby nor
compliance by Purchaser with any of the provisions hereof will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or suspension of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Purchaser or any
of Purchaser's subsidiaries under, any of the terms, conditions or provisions of
(x) their respective charters or by-laws, (y) any note, bond, mortgage,
indenture or deed of trust, or (z) any license, lease, agreement or other
instrument or obligation, to which Purchaser or any such subsidiary is a party
or to which they or any of their respective properties or assets may be
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subject, or (ii) subject to compliance with the statutes and regulations
referred to in the next paragraph, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Purchaser or any
of their respective properties or asset.
(b) No filing or registration with, notification to and no
permit, authorization, consent or approval of any governmental entity is
required by Purchaser or any of Purchaser's subsidiaries in connection with the
execution and delivery of this Agreement or the consummation by Purchaser of the
transactions contemplated hereby, except: (i) as required by (A) applicable
requirements, if any, of the HSR Act, (B) the Securities Act and the Exchange
Act, (C) state securities or "blue sky" laws, and (D) the NASDAQ and (ii) such
other filings, registrations, notifications, permits, authorizations, consents
or approvals the failure of which to be obtained, made or given would not,
individually or in the aggregate, materially impair Purchaser's ability to
consummate the transactions contemplated hereby.
5.5 Approvals.
The Board of Directors of Purchaser has, by a majority vote at a meeting
of such Board duly held, approved and adopted this Agreement and the Offer and
the other transactions contemplated hereby.
5.6 Litigation.
There is no action, suit, proceeding or formal governmental inquiry or
investigation pending, or to the best knowledge of Purchaser, threatened,
against Purchaser that seeks to restrain or prohibit or otherwise challenges the
consummation, legality or validity of the transactions contemplated hereby.
5.7 Financial Ability.
Purchaser has sufficient cash, available lines of credit or other sources
of immediately available funds to enable it to make payment for all Shares
tendered in the Offer pursuant to the terms of this Agreement and to consummate
the other transactions contemplated hereby.
5.8 Disclosure.
All of the facts and circumstances not required to be disclosed as
exceptions under or to any of the foregoing representations and warranties made
by Purchaser by reason of any minimum disclosure requirement in any such
representation and warranty would not, in the aggregate, have a Material Adverse
Effect on Purchaser.
5.9 Finders or Brokers.
None of Purchaser, the subsidiaries of Purchaser, the Board of Directors
of Purchaser or any member of the Board of Directors of Purchaser has employed
any investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to a fee or any
commission in connection with the Offer.
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ARTICLE VI.
CONDUCT OF BUSINESS OF PURCHASER AND
THE COMPANY PENDING THE OFFER
6.1 Conduct of Business of the Company Pending the Offer.
(a) In accordance with the business plan previously discussed
with the Purchaser or as may be hereafter agreed by Purchaser and the Company,
the Company may take action to significantly contract its business operations,
and accordingly, the effect of any such action shall not be deemed a Material
Adverse Effect.
(b) Except as contemplated by this Agreement, including, without
limitation, Section 6.1(a), or as expressly agreed to in writing by Purchaser,
during the period from the date of this Agreement until the date the Offer
expires, each of the Company and its subsidiaries will conduct their respective
operations according to its ordinary course of business consistent with past
practice, and will use all commercially reasonable efforts to preserve intact
its business organization, to keep available the services of its officers and
employees and to maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with it and
will take no action which would materially adversely affect the ability of the
parties to consummate the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement, prior to the consummation of the Offer, the Company
will not nor will it permit any of its subsidiaries to, without the prior
written consent of Purchaser, which consent shall not be unreasonably withheld:
(i) amend its Certificate of Incorporation or Bylaws or
other organizational documents;
(ii) authorize for issuance, issue, sell, deliver, grant
any options for, or otherwise agree or commit to issue, sell or deliver any
shares of any class of its capital stock or any securities convertible into
shares of any class of its capital stock, except pursuant to and in accordance
with the terms of currently outstanding options;
(iii) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock or purchase, redeem or otherwise acquire any shares of its own
capital stock or of any of its subsidiaries, except as otherwise expressly
provided in this Agreement;
(iv) (i) create, incur, assume, maintain or permit to
exist any debt for borrowed money other than under existing lines of credit in
the ordinary course of business consistent with past practice; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except for
its wholly owned subsidiaries, in the ordinary course of business and consistent
with past practices; or (iii) make any loans, advances or capital contributions
to, or investments in, any other person in an aggregate amount exceeding
$50,000;
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(v) (i) increase in any manner the compensation of any
employee, director or officer except in the ordinary course of business
consistent with past practice; (ii) pay or agree to pay any pension, retirement
allowance or other employee benefit not required, or enter into or agree to
enter into any agreement or arrangement with such director or officer or
employee, whether past or present, relating to any such pension, retirement
allowance or other employee benefit, except as required under currently existing
agreements, plans or arrangements; (iii) grant any severance or termination pay
to, or enter into any employment or severance agreement with any employee,
officer or director except consistent with commercially acceptable standards; or
(iv) except as may be required to comply with applicable law, become obligated
(other than pursuant to any new or renewed collective bargaining agreement)
under any new pension plan, welfare plan, multiemployer plan, employee benefit
plan, benefit arrangement, or similar plan or arrangement, which was not in
existence on the date hereof, including any bonus, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other benefit plan, agreement or
arrangement, or employment or consulting agreement with or for the benefit of
any person, or amend any of such plans or any of such agreements in existence on
the date hereof; provided, however, that this clause (iv) shall not prohibit the
Company from renewing any such plan, agreement or arrangement already in
existence on terms no more favorable to the parties to such plan, agreement or
arrangement;
(vi) except as otherwise expressly contemplated by this
Agreement, enter into any other agreements, commitments or contracts, except for
(i) agreements, commitments or contracts for the purchase, sale or lease of
goods or services involving payments or receipts by the Company or its
subsidiaries not in excess of $50,000, or (ii) leases for rental space in an
amount not to exceed $50,000 for any lease;
(vii) except as otherwise expressly contemplated by this
Agreement, authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into any agreement in principle or an agreement
with respect to, any plan of liquidation or dissolution, any acquisition of a
material amount of assets or securities, any sale, transfer, lease, license,
pledge, mortgage, or other disposition or encumbrance of a material amount of
assets or securities or any material change in its capitalization, or any entry
into a material contract or any amendment or modification of any material
contract or any release or relinquishment of any material contract rights;
(viii) authorize or commit to make capital expenditures in
excess of $50,000;
(ix) make any change in the accounting methods or
accounting practices followed by the Company;
(x) settle any action, suit, claim, investigation or
proceeding (legal, administrative or arbitrative) in excess of $50,000 without
the consent of Purchaser;
(xi) make any election under the Code which would have a
Material Adverse Effect;
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(xii) agree to do any of the foregoing.
6.2 Conduct of Business of Purchaser Pending the Offer.
Except as contemplated by this Agreement or as expressly agreed to in
writing by the Company, during the period from the date of this Agreement to the
date on which the transactions contemplated herein are consummated, Purchaser
will use all commercially reasonable efforts to keep substantially intact its
business, properties and business relationships and will take no action which
would materially adversely affect the ability of the parties to consummate the
transactions contemplated by this Agreement.
ARTICLE VII.
COVENANTS AND AGREEMENTS
7.1 Additional Agreements; Cooperation.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use its best efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, and to cooperate with each other in
connection with the foregoing, including using its best efforts (i) to obtain
all necessary waivers, consents and approvals from other parties to loan
agreements, material leases and other material contracts, (ii) to obtain all
necessary consents, approvals and authorizations as are required to be obtained
under any federal, state or foreign law or regulations, (iii) to defend all
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby, (iv) to lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby, (v)
to effect all necessary registrations and filings, including, but not limited
to, filings under the HSR Act and submissions of information requested by
governmental authorities, (vi) provide all necessary information for the
Information Statement and (vii) to fulfill all conditions to this Agreement.
(b) Each of the parties hereto agrees to furnish to the other
party hereto such necessary information and reasonable assistance as such other
party may request in connection with its preparation of necessary filings or
submissions to any regulatory or governmental agency or authority, including,
without limitation, any filing necessary under the provisions of the HSR Act or
any other applicable Federal or state statute. At any time upon the written
request of Purchaser, the Company shall advise Purchaser of the number of
Shares.
7.2 Publicity.
The Company and Purchaser agree to consult with each other in issuing any
press release and with respect to the general content of other public statements
with respect to the transactions contemplated hereby, and shall not issue any
such press release or make any such public statement prior to such consultation
and agreement of all parties as to content and timing, except as may be required
by law.
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7.3 No Solicitation.
(a) Neither the Company nor any of its affiliates will,
directly or indirectly, through any directors, officers, employees, agents,
representatives or otherwise, solicit, initiate, facilitate or encourage
(including by way of furnishing or disclosing non-public information) any
inquiries or the making of any proposal with respect to any merger,
consolidation or other business combination involving the Company or its
subsidiaries or the acquisition of all or any significant assets or capital
stock of the Company and its subsidiaries taken as a whole (an "ACQUISITION
PROPOSAL") or negotiate, explore or otherwise engage in discussions with any
person (other than Purchaser and its representatives) with respect to any
Acquisition Proposal or enter into any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the transactions
contemplated hereby.
(b) Notwithstanding the provisions of Section 7.3(a) hereof, in the
event that prior to the consummation of the Offer, the Board of Directors of the
Company determines in good faith, after consultation with outside counsel, that
it is necessary to respond to an Unsolicited Superior Proposal (as defined
below) in order to comply with its fiduciary duties to the Company's
stockholders under applicable law, the Board of Directors of the Company may
(subject to this and the following sentences) (x) withdraw or modify its
approval or recommendation of the Offer and this Agreement or (y) approve or
recommend an Unsolicited Superior Proposal or terminate this Agreement (and
concurrently with or after such termination, if it so chooses, cause the Company
to enter into any agreement with respect to any Unsolicited Superior Proposal),
but in each of the cases set forth in this clause (y), no action shall be taken
by the Company pursuant to clause (y) until a time that is after the fifth (5th)
business day following Purchaser's receipt of written notice advising Purchaser
that the Board of Directors of the Company has received an Unsolicited Superior
Proposal, specifying the material terms and conditions of such Unsolicited
Superior Proposal and identifying the person making such Unsolicited Superior
Proposal, to the extent such identification of the person making such proposal
does not breach the fiduciary duties of the Board of Directors as advised by
outside legal counsel and provided, that if the Board of Directors takes any
action pursuant to the foregoing clauses (x) and (y), the Company shall within
two (2) business days of such action pay Purchaser an amount equal to 3% of the
consideration payable by Purchaser hereunder for the Maximum Number of Shares
that may be tendered in the Offer and reimburse Purchaser for any of Purchaser's
out of pocket expenses (including without limitation fees and expenses of
outside professionals) by wire transfer of immediately available funds to an
account specified by Purchaser. For purposes of this Agreement, an "UNSOLICITED
SUPERIOR PROPOSAL" means any bona fide, unsolicited, written proposal made by a
third party to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than 50% of the voting power of the shares of
Company Common Stock and then outstanding or all or substantially all the assets
of the Company and otherwise on terms that the Board of Directors of the Company
determines in its good faith judgment (based on the advice of a financial
advisor of nationally recognized reputation) to be more favorable to the
Company's stockholders than the Offer.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 7.3, the Company shall immediately advise
Purchaser orally and in writing of any request for information or of any
Acquisition Proposal, the material terms and conditions of such request or
Acquisition Proposal, and to the extent such disclosure is not a breach of the
fiduciary
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duties of the Board of Directors as advised by outside legal counsel, the
identity of the person making such request or Acquisition Proposal.
(d) Nothing contained in this Section 7.3 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act, or from making any disclosure to
the Company's stockholders if, in the good faith judgment of the Board of
Directors of the Company, after consultation with outside counsel, failure to
disclose would be inconsistent with its fiduciary duties to the Company's
stockholders under applicable law; provided, however, that neither the Company
nor its Board of Directors nor any committee thereof shall, except as permitted
by Section 7.3(b), withdraw or modify, or propose publicly to withdraw or
modify, its position with respect to this Agreement or the Offer or approve or
recommend, or propose publicly to approve or recommend, a Acquisition Proposal.
7.4 Access to Information.
(a) From the date of this Agreement until the consummation of the
Offer, the Company will give Purchaser and its authorized representatives
(including counsel, environmental and other consultants, accountants and
auditors) full access during normal business hours to all facilities, personnel
and operations and to all books, records, documents, contracts, and financial
statements of it and its subsidiaries, will permit Purchaser to make such
inspections as it may reasonably require and will cause its officers and those
of its subsidiaries to furnish Purchaser with such financial and operating data
and other information with respect to its business and properties as Purchaser
may from time to time reasonably request.
(b) Purchaser acknowledges that information received by it or them
concerning the Company and its operations is subject to the Confidentiality
Agreement dated September 18, 2000 between Purchaser and the Company (the
"CONFIDENTIALITY AGREEMENT"). Without limiting the foregoing, Purchaser will
not, and will cause their representatives not to, use any information obtained
pursuant to Section 7.4 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. Subject to the requirements of law,
Purchaser will keep confidential, and will cause their representatives to keep
confidential, all information and documents obtained pursuant to Section 7.4
unless such information (i) was already known to Purchaser, (ii) becomes
available to Purchaser from other sources not known by Purchaser to be bound by
a confidentiality obligation, (iii) is disclosed with prior written approval of
the Company, or (iv) is or becomes readily ascertainable from published
information. In the event that this Agreement is terminated or the transactions
contemplated by this Agreement shall otherwise fail to be consummated, Purchaser
shall promptly cause all copies of documents or extracts thereof containing
information and data as to the Company to be returned. In the event that this
Agreement has been terminated or the transactions contemplated hereby shall have
failed to be consummated and Purchaser or any of its agents or representatives
are requested or required (by oral questions, interrogatories, requests for
information, or documents in legal proceedings, subpoena, civil investigative
demand, or other similar process) to disclose any of the materials delivered or
obtained pursuant to this Agreement (the "COMPANY DOCUMENTATION"), Purchaser
shall provide the Company with prompt written notice of any such request or
requirement so that the Company may seek a protective order or other appropriate
remedy. If, in the absence of a protective order or other remedy, Purchaser or
any of its agents or
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representatives are compelled to disclose any of such Company Documentation to
any tribunal or else stand liable for contempt or suffer other censure or
penalty, Purchaser or its agents or representatives, as the case may be, may,
without liability hereunder, disclose to such tribunal only that portion of the
Company Documentation which Company's counsel advises is legally required to be
disclosed, provided, that Purchaser, as the case may be, shall exercise
commercially reasonable efforts to preserve the confidentiality of the Company
Documentation, including, without limitation, by cooperating with the Company to
obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded the Company Documentation by such
tribunal.
7.5 Notification of Certain Matters.
The Company or Purchaser, as the case may be, shall promptly notify the
other of (i) its obtaining of actual knowledge as to the matters set forth in
clauses (x) and (y) below, or (ii) the occurrence, or failure to occur, of any
event, which occurrence or failure to occur would be likely to cause (x) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the date
the Offer is consummated, or (y) any material failure of the Company or
Purchaser, as the case may be, or of any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that
no such notification shall affect the representations or warranties of the
parties or the conditions to the obligations of the parties hereunder.
7.6 Resignation of Directors.
At or prior to the date the Offer is consummated, the Company shall
deliver to Purchaser the resignations of such officers and directors of Company
and its subsidiaries as Purchaser shall specify, effective as of the
consummation of the Offer.
7.7 Director's and Officer's Insurance.
Purchaser shall cause to be maintained in effect for not less than two
(2) years from the date the Offer expires the current policies of the directors'
and officers' liability insurance maintained by the Company (provided that
Purchaser may substitute therefor policies of at least the same coverage
containing terms and conditions which are no less advantageous) with respect to
matters occurring on or prior to the date the Offer expires; provided, that in
no event shall Purchaser or the Company be required to expend annually more than
200% of the amount that the Company spent for these purposes in the last fiscal
year to maintain or procure insurance coverage pursuant hereto; provided
further, that Purchaser shall indemnify the Company's officers and directors to
the same extent that it indemnifies its officers and directors.
7.8 Fees and Expenses.
Whether or not the Offer is consummated, the Company and Purchaser shall
bear their respective expenses incurred in connection with the Offer, including,
without limitation, the preparation, execution and performance of this Agreement
and the transactions contemplated hereby, and all fees and expenses of
investment bankers, finders, brokers, agents, representatives,
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counsel and accountants. It being understood that all fees and expenses of Piper
Marbury Rudnick & Wolfe LLP are being incurred for the benefit of the Company.
7.9 Stockholder Litigation.
Each of the Company and Purchaser shall give the other the reasonable
opportunity to participate in the defense of any stockholder litigation against
or in the name of the Company or Purchaser, as applicable, and/or their
respective directors relating to the transactions contemplated by this
Agreement.
7.10 Sale of Purchaser's Shares.
Purchaser hereby covenants and agrees that it shall not sell,
hypothecate, pledge or otherwise transfer any of the Shares that it owns as of
the date hereof until consummation of the Offer.
ARTICLE VIII.
CONDITIONS TO THE OFFER
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares, including the Tendered Shares, promptly after termination or
withdrawal of the Offer), pay for any Shares tendered pursuant to the Offer, and
may postpone the acceptance for payment, or, subject to the restriction referred
to above, payment for, Shares tendered pursuant to the Offer, and may terminate
the Offer (whether or not any Shares have theretofore been purchased or paid
for) to the extent permitted by the Agreement, if (i) at the expiration of the
Offer, the number of Shares validly tendered and not timely withdrawn, including
the Tendered Shares, which, together with any Shares owned by Purchaser, shall
not constitute at least 17% of the voting power (determined on a Fully Diluted
Basis), of all the securities of the Company entitled to vote (the "MINIMUM
CONDITION"), or (ii) if, at any time prior to the acceptance for payment for any
such Shares, any of the following conditions occurs or has occurred and
continues to exist (each of paragraphs (a) through (i) providing a separate and
independent condition to Purchaser's obligations pursuant to the Offer):
(a) any waiting periods under the HSR Act applicable to the
purchase of Shares pursuant to the Offer shall not have expired or been
terminated;
(b) there shall be in effect any 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 (collectively,
"RESTRAINTS") preventing the Purchaser from acquiring the Tendered Shares and
the Option Shares;
(c) there shall be in effect any action or proceeding
instituted by any governmental authority seeking to prevent the Purchaser from
acquiring the Tendered Shares and the Option Shares or seeking material damages
in connection with the transactions contemplated hereby which continues to be
outstanding;
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(d) there shall have been instituted against the Company or
Purchaser any action or proceeding (judicial or otherwise) that seeks to enjoin
or delay the Purchaser from acquiring the Tendered Shares and the Option Shares.
(e) any representation or warranty of the Company or any of the
Identified Stockholders set forth in this Agreement shall not be true and
correct in any material respect in each case as if such representation or
warranty were made at the time of such determination (except for any
representations or warranties which by their terms are given as of a specified
date);
(f) the Company or any Identified Stockholder shall fail to
perform or comply in any material respect with any covenant or agreement to be
performed or complied with by it or identified to be performed or complied with
by it prior to the consummation of the Offer;
(g) any necessary consents and approvals of any federal, state
or local governmental authority or any other third party required for the
consummation by Purchaser, Company or any Identified Stockholder of the
transactions contemplated by this Agreement shall not have been obtained;
(h) except as contemplated in Article VI, there shall have
occurred any Material Adverse Effect, in the general affairs, business,
management, operations, assets and liabilities or prospects of the Company and
its subsidiaries taken as a whole or in the condition (financial or otherwise)
of the Company or any of its subsidiaries; or
(i) the Agreement shall have been terminated in accordance with
its terms;
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances giving rise to any
such condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares.
The foregoing conditions are for the sole benefit of Purchaser and (i)
may be asserted by Purchaser regardless of the circumstances giving rise to such
condition (except for any action or inaction by Purchaser or any of its
affiliates constituting a breach of the Agreement) or (ii) may be waived by
Purchaser in whole at any time or in part from time to time in its reasonable
discretion. The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right and may be asserted at any time and from
time to time.
ARTICLE IX.
TERMINATION
9.1 Termination.
This Agreement may be terminated at any time prior to the time Purchaser
purchases Shares pursuant to the Offer by either the Company's stockholders or
Purchaser's stockholders:
(a) by mutual written consent of the Company and Purchaser;
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(b) by either the Company or Purchaser:
(i) if Purchaser shall not have accepted for payment any
Shares pursuant to the Offer prior to November 30, 2000, unless at such date the
waiting period applicable to the consummation of the Offer under the HSR Act or
any other necessary governmental filing shall not have expired or been
terminated (except for such waiting periods (other than under the HSR Act) or
approvals the failure of which to expire or be obtained is not reasonably likely
to have a Material Adverse Effect on the Company or Purchaser), in which case
Purchaser shall begin accepting payment of Shares tendered in the Offer as soon
as possible after the appropriate governmental agencies have given approval to
the HSR Act and any other necessary governmental filings and shall not be
grounds for termination of this Agreement, unless the parties hereto mutually
agree; provided, further, however, that the right to terminate this Agreement
pursuant to this Section 9.1(b)(i) shall not be available to any party whose
failure to perform any of its obligations under this Agreement results in the
failure of the Offer to be consummated by such time; or
(ii) if any Restraint having any of the effects set forth
in paragraph (b) of Article VIII hereof shall be in effect and shall have become
final and nonappealable.
(c) by the Company, if Purchaser shall have breached or failed
to perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement;
(d) by Purchaser, if the Company or any Identified Stockholder
shall have breached or failed to perform in any material respect any of its
representations, warranties, covenants or other agreements (other than Section
7.3(b)) contained in this Agreement);
(e) by Purchaser, upon the commencement or written threat of
material litigation by any third party, which litigation could have a Material
Adverse Effect on the Company or Purchaser, or affect either party's ability to
consummate the transactions contemplated hereby, or challenging the validity of
this Agreement;
(f) by Purchaser, if (i) Section 7.3 shall be breached by the
Company or any of its officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative of the Company,
in any material respect and the Company shall have failed promptly to terminate
the activity giving rise to such breach and used best efforts to cure such
breach, or (ii) the Company shall breach Section 7.3 by failing to promptly
notify Purchaser as required thereunder; provided, in the case of (i), the
Company shall comply with applicable requirements relating to the payment
(including the timing of any payment) of Purchaser's expenses and the fee
required by Section 7.3;
(g) by Purchaser, if (i) the Board of Directors of the Company
or any committee thereof shall have withdrawn or modified in a manner adverse to
Purchaser its approval or recommendation of the Offer or this Agreement, or
failed to reconfirm its recommendation within five business days after a written
request to do so, or approved or recommended any Acquisition Proposal or (ii)
the Board of Directors of the Company or any committee thereof shall have
resolved to take any of the foregoing actions; provided, that in the
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<PAGE> 33
case of clauses (i) or (ii), the Company shall comply with applicable
requirements relating to the payment (including the timing of any payment) of
Purchaser's expenses and the fee required by Section 7.3(b); or
(h) by the Company, if it elects to terminate this Agreement in
accordance with Section 7.3(b); provided that it has complied with all
provisions thereof.
9.2 Effect of Termination. The termination of this Agreement shall
become effective upon delivery to the other party of written notice thereof. In
the event of the termination of this Agreement pursuant to the foregoing
provisions of this Article IX, this Agreement shall become void and have no
effect, with no liability on the part of any party (except as provided in
Section 7.3 hereof) or its stockholders or directors or officers in respect
thereof except for agreements which survive the termination of this Agreement
and except for liability that Purchaser, the Company or any Identified
Stockholder might have arising from a breach of this Agreement.
ARTICLE X.
MISCELLANEOUS
10.1 Survival of Representations and Warranties.
None of the representations and warranties of the Company or Purchaser in
this Agreement shall survive the consummation of the Offer. This Section 10.1
shall not limit any covenant or agreement of the parties, which by its terms
contemplates performance after the consummation of the Offer.
10.2 Notices.
(a) Any notice or communication to any party hereto (each, a
"NOTICE") shall be duly given if in writing and delivered in person or mailed by
first class mail (registered or certified, return receipt requested), facsimile
or overnight air courier guaranteeing next day delivery, to such other party's
address.
If to Purchaser:
Gilat Satellite Networks, Ltd.
21/D Yegia Kapayim Street
Daniv Park, Kiryat Arye
Petah Tikva, Israel
Facsimile No:
Attention: Joann R. Blasberg, Vice President and General Counsel
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<PAGE> 34
with a copy to:
Arnold & Porter
399 Park Avenue
New York, New York 10022
Facsimile No.: (212) 713-1399
Attention: Steven G. Tepper, Esq.
If to the Company:
ZapMe! Corporation
3000 Executive Parkway, Suite 150
San Ramon, CA 94583
Facsimile No.: (925) 355-1299
Attention: Lance Mortensen, Chairman
with a copy to:
Piper Marbury Rudnick & Wolfe LLP
6225 Smith Avenue
Baltimore, Maryland 21209
Facsimile No.: (410) 580-3001
Attention: Wilbert H. Sirota, Esq.
George J. Nemphos, Esq.
or, in each case, at such other address as may be specified in a Notice to the
other parties hereto. All Notices shall be deemed effective and given upon
receipt.
10.3 Counterparts.
This Agreement may be executed (including by facsimile transmission) with
counterpart signature pages or in several counterparts, each of which shall be
deemed an original and all of which shall together constitute one and the same
instrument.
10.4 Interpretation.
The headings of articles and sections herein are for convenience of
reference, do not constitute a part of this Agreement, and shall not be deemed
to limit or affect any of the provisions hereof. All references to the masculine
gender shall be deemed to include feminine and neutral genders. As used in this
Agreement, "PERSON" means any individual, corporation, limited or general
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof; "subsidiary" of any person means (i) a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly, by such
person or by one or more other subsidiaries of such person or by such person and
one or more subsidiaries thereof or (ii) any other person (other than a
corporation) in which such person, or one or more other subsidiaries of
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<PAGE> 35
such person or such person and one or more other subsidiaries thereof, directly
or indirectly, have at least a majority ownership and voting power relating to
the policies, management and affairs thereof; and "VOTING STOCK" of any person
means capital stock of such person which ordinarily has voting power for the
election of directors (or persons performing similar functions) of such person,
whether at all times or only so long as no senior class of securities has such
voting power by reason of any contingency.
10.5 Amendment.
This Agreement may be amended by the parties at any time prior to the
purchase by Purchaser of the Shares pursuant to the Offer. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties.
10.6 No Third Party Beneficiaries.
Nothing in this Agreement shall confer any rights upon any person or
entity which is not a party or permitted assignee of a party to this Agreement;
provided, however, that the provisions of Section 7.7 above concerning insurance
are intended for the benefit of the individuals specified therein, and their
respective representatives, affiliates, successors and assigns.
10.7 Governing Law.
(a) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without regard to principles
of conflicts of laws.
(b) Each of the parties hereto irrevocably consents to the
services of process, pleading, notices or other papers by the mailing of copies
thereof by registered, certified or first class mail, postage prepaid, to such
party at such party's address set forth herein, or by any other method provided
or permitted under Delaware law.
(c) Each party irrevocably and unconditionally agrees and
consents that any suit, action or other legal proceeding arising out of or
related to this Agreement shall be brought and heard in State of Delaware, and
each party irrevocably consents to personal jurisdiction in any and all
tribunals in the State of Delaware.
10.8 Entire Agreement.
This Agreement and the Exhibits and Schedules hereto constitute the
entire agreement among the parties with respect to the subject matter hereof.
There are no representations, warranties, covenants or undertakings with respect
to the subject matter hereof other than those expressly set forth herein. This
Agreement supersedes all prior agreements between the parties with respect to
the subject matter hereof.
10.9 No Reliance on Other Information.
Except for the representations and warranties contained in this
Agreement, none of the parties hereto nor any representative, agent or affiliate
or other person acting for any of them makes any other representation or
warranty, express or implied.
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<PAGE> 36
10.10 Severability.
If any provision of this Agreement, including any phrase, sentence,
clause, Section or subsection is inoperative or unenforceable for any reason,
such circumstances shall not have the effect of rendering the provision in
question inoperative or unenforceable in any other case or circumstance, or of
rendering any other provision or provisions herein contained invalid,
inoperative, or unenforceable to any extent whatsoever.
10.11 Declaration of Trust.
A copy of the Agreement and Declaration of Trust of WM Trust I is on file
with the Secretary of State of The Commonwealth of Massachusetts, and notice is
hereby given that this agreement is executed on behalf of the trustees of WM
Trust I on behalf of its Small Cap Stock Fund series as trustees and not
individually and that the obligations of WM Trust I and its Small Cap Stock Fund
series under this agreement are not binding upon any of the trustees, officers
or shareholders of the trust individually but are binding only upon the assets
and property of the Small Cap Stock Fund series of WM Trust.
[SIGNATURES BEGIN ON NEXT PAGE]
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<PAGE> 37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers all as of the day and year first
above written
Gilat Satellite Networks, Ltd.
By: /s/Yoel Gat
-------------------------------------------
Name: Yoel Gat
Title: Chairman of the Board of Directors,
Chief Executive Officer and
Director
ZapMe! Corporation
By: /s/Rick Inatome
--------------------------------------------
Name: Rick Inatome
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
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<PAGE> 38
SCHEDULE A STOCKHOLDERS
The Mortensen 2000 Family Resource Trust
By: /s/Brian Herrera
---------------------------------------
Brian Herrera, Trustee for The Mortensen
Charitable Trust
The Mortensen Charitable Trust
By: /s/Brian Herrera
---------------------------------------
Brian Herrera, Trustee for The Mortensen
Charitable Trust
CAVCO of North Florida, Inc.
By: /s/ Douglas R. Aiosa
----------------------------------------
Name: Douglas R. Aiosa
Title: Treasurer
MC Investment Trust
By: /s/Christopher R. Purrier
---------------------------------------
Name: Christopher R. Purrier
Title: Trustee
[SCHEDULE A STOCKHOLDERS' SIGNATURES CONTINUED ON NEXT PAGE]
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<PAGE> 39
The Arnouse Charitable Trust
By: /s/ Christopher R. Purrier
-------------------------------------------
Christopher R. Purrier, Trustee of The Arnouse
Charitable Trust
/s/ Darryl N. Deaton
--------------------------------------------
Darryl N. Deaton, JTWROS with
Julie A. Graham
/s/ Julie A. Graham
----------------------------------------------
Julie A. Graham, JTWROS with
Darryl N. Deaton
/s/ Michael Arnouse
----------------------------------------------
Michael Arnouse
[SCHEDULE B STOCKHOLDERS' SIGNATURES CONTINUED ON NEXT PAGE]
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<PAGE> 40
SCHEDULE B STOCKHOLDERS
QuestMark Partners, LP
By: QuestMark Advisors, LLC
By: /s/ Thomas R. Hitchner
-----------------------------------------
Name: Thomas R. Hitchner
Title: President
Sylvan Ventures
By: /s/ B. Lee McGee
-----------------------------------------
Name: B. Lee McGee
Title: Executive V. P.
WM Advisors
By: /s/ Linda C. Walk
-----------------------------------------
Name: Linda C. Walk, CPA
Title: Vice President, Senior Portfolio
Manager
Dell USA LP
By: Dell Gen. P. Corp.
By: /s/ Paul J. Legris
-----------------------------------------
Name: Paul J. Legris
Title: Portfolio Manager
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<PAGE> 41
SCHEDULE A
SCHEDULE A STOCKHOLDERS
<TABLE>
<CAPTION>
---------------------------------------- -------------------------------------- --------------------------------------
NAME OF SCHEDULE A NUMBER OF SHARES AND OTHER NUMBER OF
STOCKHOLDER SECURITIES CONVERTIBLE OR OPTION SHARES
EXERCISABLE FOR SHARES
---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
The Mortensen20000 Family Resource 6,600,000 6,600,000
Trust
Brian Herrera, Trustee
c/o Marianne Schmitt Hellauer, Esquire
Piper Marbury Rudnick & Wolfe LLP
6225 Smith Ave.
Baltimore, Maryland 21209
---------------------------------------- -------------------------------------- --------------------------------------
The Mortensen Charitable Trust 2,000,000 2,000,000
Brian Herrera, Trustee
c/o Marianne Schmitt Hellauer, Esquire
Piper Marbury Rudnick & Wolfe LLP
6225 Smith Ave.
Baltimore, Maryland 21209
---------------------------------------- -------------------------------------- --------------------------------------
CAVCO of North Florida, Inc. 1,186,885 1,186,885
9350 Baymeadows Road
Suite 220
Jacksonville, Florida 32256
Attention: Charlie Appleby/Doug Aiosa
---------------------------------------- -------------------------------------- --------------------------------------
Darryl N. Deaton & Julie A. Graham, 1,188,000 1,188,000
JTWROS
172 Serra Court
Vallejo, California 95590
---------------------------------------- -------------------------------------- --------------------------------------
Michael Arnouse 2,776,560 2,776,560
15 Hickory Drive
Old Brookville, NY 11545
---------------------------------------- -------------------------------------- --------------------------------------
MC Investment Trust 700,000 700,000
6324 160th Place, S.E.
Bellevue, Washington 98006
c/o Christopher R. Purrier, Trustee
---------------------------------------- -------------------------------------- --------------------------------------
The Arnouse Charitable Trust 2,500,000 2,500,000
Christopher Purrier, Trustee
The Mortensen20000 Family Resource
Trust
Brian Herrera, Trustee
c/o Marianne Schmitt Hellauer, Esquire
Piper Marbury Rudnick & Wolfe LLP
6225 Smith Ave.
Baltimore, Maryland 21209
---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
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<PAGE> 42
SCHEDULE B
SCHEDULE B STOCKHOLDERS
<TABLE>
<CAPTION>
---------------------------------------- -------------------------------------- --------------------------------------
NAME OF SCHEDULE B NUMBER OF SHARES AND NUMBER OF SHARES REQUIRED
STOCKHOLDER OTHER SECURITIES CONVERTIBLE TO BE TENDERED
OR EXERCISABLE FOR SHARES
---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
QuestMark Partners, LP 2,153,680 2,153,680
One South Street
Baltimore, Maryland 21202
Attention: Thomas Hitcher
---------------------------------------- -------------------------------------- --------------------------------------
Sylvan Ventures 652,495 652,495
1000 Lancaster Street
Baltimore, Maryland 21202
Attention: Doug Becker
---------------------------------------- -------------------------------------- --------------------------------------
WM Advisors 1,577,000 1,577,000
1201 Third Avenue
Suite 1400
Seattle, Washington 9801
---------------------------------------- -------------------------------------- --------------------------------------
Dell USA LP 1,469,730 1,469,730
One Dell Way
Round Rock, Texas 78682
Attention: Mark Mouritsen
---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
42
