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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
OPAL, INC.
(NAME OF SUBJECT COMPANY)
OPAL, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
683474-10-0
(CUSIP NUMBER OF CLASS OF SECURITIES)
HENRY SCHWARZBAUM
CHIEF FINANCIAL OFFICER, VICE PRESIDENT OF FINANCE AND SECRETARY
3203 SCOTT BOULEVARD
SANTA CLARA, CA 95054
(408) 727-6060
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICE AND COMMUNICATIONS ON BEHALF OF THE
PERSON(S) FILING STATEMENT)
COPY TO:
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<S> <C> <C>
THOMAS P. STORER, P.C. STANLEY KOMAROFF, ESQ. YEHUDA M. LEVY, ADV.
Goodwin, Procter & Hoar LLP Proskauer Rose Goetz Goldfarb, Levy, Eran & Co.
Exchange Place & Mendelsohn LLP 2 Ibn Gvirol Street
Boston, MA 02109 1585 Broadway Tel-Aviv 64077 Israel
(617) 570-1000 New York, NY 10036 011-972-3-695-4343
(212) 969-3000
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PAGE 1 OF 228 PAGES
EXHIBIT INDEX IS LOCATED ON PAGE 15.
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Opal, Inc., a Delaware corporation (the
"Company"). The address of the principal executive offices of the Company is
3203 Scott Boulevard, Santa Clara, CA 95054. The title of the class of equity
securities to which this Statement relates is the Company's Common Stock, par
value $.01 per share (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER
This Statement relates to the tender offer being made by Orion Corp. I, a
Delaware corporation (the "Purchaser"), and a wholly owned subsidiary of
Applied Materials, Inc., a Delaware corporation ("Parent"), disclosed in a
Tender Offer Statement on Schedule 14D-1, dated November 26, 1996 (the
"Schedule 14D-1"), to purchase all of the issued and outstanding Shares at
$18.50 per Share, net to the seller in cash (the "Offer Price"), upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
November 26, 1996 (the "Offer to Purchase"), and the related Letter of
Transmittal (which together constitute the "Offer" and are contained within
the Schedule 14D-1). As set forth in the Schedule 14D-1, the principal
executive offices of Parent and the Purchaser are located at 3050 Bowers
Avenue, Santa Clara, CA 95054.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of November 24, 1996 (the "Merger Agreement"), by and among the Company,
Parent and the Purchaser. Certain terms of the Merger Agreement are described
below in Item 3(b)(2). A copy of the Merger Agreement is filed herewith as
Exhibit A and is incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person
filing this Statement, are set forth in Item 1 above.
(b)(1) The following describes material contracts, agreements,
arrangements or understandings and any actual or potential conflict of
interest between the Company or its affiliates and the Company, or its
executive officers, directors or affiliates:
Certain contracts, agreements, arrangements or understandings between the
Company and certain of its directors and executive officers are described in
the section entitled "Executive Compensation" in Annex I hereto.
Executive officers of the Company hold an aggregate of 171,713 vested
options to purchase Shares at prices ranging from $.35 to $9.75 per Share and
215,718 unvested options to purchase Shares at a price of $9.75 per Share
which were granted under the Company's Class B Common Stock Option Plan
(which terminated in 1994) and the Company's Employee Stock Option Plan.
Executive officers of the Company have the right to acquire approximately
2,400 Shares at $10.84 per Share (85% of the fair market value of the Shares
at the commencement of the purchase period) under the Company's 1995 Employee
Stock Purchase Plan (the "1995 Plan"). Copies of the Class B Common Stock
Option Plan, the Employee Stock Option Plan and the 1995 Plan are filed
herewith as Exhibits B, C and D, respectively, and are incorporated herein by
reference.
See "The Merger Agreement--Options" for a description of the treatment
under the Merger Agreement of options outstanding under the Class B Common
Stock Option Plan and the Employee Stock Option Plan and the treatment of
outstanding contributions under the 1995 Plan.
Dan Maydan, a Director of the Company, is the President of Parent. Due to
this relationship, Dr. Maydan has waived his right to participate in and has
not participated in any deliberations or voting of the Board of Directors of
the Company (the "Company Board") relating to the Merger Agreement and the
transactions contemplated thereby, including the Merger (as defined in the
Offer to Purchase) and the Offer.
Zvi Lapidot, a Director of the Company, is the Chairman of the Board of
Orbot Instruments Ltd., a privately held Israeli company ("Orbot
Instruments"). Concurrently with the execution of the Merger
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Agreement, Parent entered into an agreement with Orbot Instruments and all of
its stockholders to acquire all of the outstanding capital stock of Orbot
Instruments. Due to this relationship, Zvi Lapidot has waived his right to
participate in and has not participated in any deliberations or voting of the
Company Board relating to the Merger Agreement and the transactions
contemplated thereby, including the Merger and the Offer.
The Company understands that Parent intends to offer terms of employment
to Rafi Yizhar, the Company's Chief Executive Officer and President, and
Israel Niv, the Company's General Manager and Executive Vice President of
Sales and Marketing, following the Merger. Accordingly, each of Rafi Yizhar
and Israel Niv, as Directors of the Company, did not participate in the final
decisions of the Company Board relating to the Merger Agreement.The Company
also understands that certain of the other executive officers of the Company
may be offered terms of employment by Parent following the Merger.
(b)(2) The following describes material contracts, agreements,
arrangements, or understandings and any actual or potential conflict of
interest between the Company or its affiliates and Parent, the Purchaser, or
their respective executive officers, directors or affiliates:
In connection with the Offer, (i) the Company entered into the Merger
Agreement with Parent and the Purchaser and (ii) Parent and the Purchaser
entered into separate Stockholder Agreements, dated as of November 24, 1996
(collectively, the "Stockholder Agreements"), with each of Rafi Yizhar, the
beneficial owner of an aggregate of 253,922 Shares, Israel Niv, the
beneficial owner of an aggregate of 101,878 Shares, Clal Electronics
Industries Ltd., the beneficial owner of an aggregate of 2,692,327 Shares
("Clal"), and Orbotech Ltd., the beneficial owner of an aggregate of
1,241,650 Shares (each, a "Selling Stockholder" and, collectively, the
"Selling Stockholders"). Summaries of the Merger Agreement and the
Stockholder Agreements are set forth below. Copies of such agreements are
filed herewith as Exhibits A, E, F, G and H, respectively, and the following
summaries are qualified in their entirety by reference to the text of such
agreements, which are incorporated herein by reference.
In connection with the Offer, the Company has entered into a
Confidentiality and Nondisclosure Agreement, dated October 21, 1996, with
Parent. Pursuant to such agreement, the Company and Parent agreed to provide
for the confidential treatment of their discussions regarding the Offer and
the Merger and the exchange of certain confidential information concerning
the Company. A copy of the Confidentiality and Nondisclosure Agreement is
filed herewith as Exhibit I and is incorporated herein by reference.
Dan Maydan, a Director of the Company, is the President of Parent. Due to
this relationship, Dr. Maydan has waived his right to participate in and has
not participated in any deliberations or voting of the Company Board relating
to the Merger Agreement and the transactions contemplated thereby, including
the Merger and the Offer.
THE MERGER AGREEMENT
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to prior satisfaction or
waiver of the conditions of the Offer, the Purchaser will purchase all Shares
validly tendered pursuant to the Offer. The Merger Agreement provides that,
without the written consent of the Company, the Purchaser will not decrease
the Offer Price, decrease the number of Shares sought in the Offer, amend or
waive the condition that there shall have been validly tendered and not
withdrawn prior to the expiration of the Offer at least a majority of the
Shares outstanding on a fully diluted basis (as defined in the Offer to
Purchase), or amend any condition of the Offer in a manner adverse to the
holders of Shares (other than with respect to insignificant changes or
amendments and subject to certain conditions in the Merger Agreement), except
that if on the initial scheduled expiration date all conditions to the Offer
shall not have been satisfied or waived, the Purchaser may (and under certain
circumstances will be required to) extend the expiration date. The Merger
Agreement provides that if, immediately prior to the expiration date of the
Offer, as it may be extended, the Shares tendered and not withdrawn pursuant
to the Offer equal less than 90% of the Shares outstanding, the Purchaser may
extend the Offer for a period not to exceed 30 business days.
The Merger. Following the consummation of the Offer, the Merger Agreement
provides that, subject to the terms and conditions thereof, and in accordance
with Delaware law, at the effective time
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of the Merger (the "Effective Time"), the Purchaser will be merged with and
into the Company. As a result of the Merger, the separate corporate existence
of the Purchaser will cease and the Company will continue as the surviving
corporation (the "Surviving Corporation").
The respective obligations of Parent and the Purchaser, on the one hand,
and the Company, on the other hand, to effect the Merger are subject to the
satisfaction on or prior to the Closing Date (as defined in the Merger
Agreement) of each of the following conditions, any and all of which may be
waived in whole or in part, to the extent permitted by applicable law: (i)
the Merger Agreement shall have been approved and adopted by the requisite
vote of the holders of Shares, if required by applicable law, in order to
consummate the Merger; (ii) no law, statute, rule, order, decree or
regulation shall have been enacted or promulgated by any court, arbitral
tribunal, administrative agency or commission or other governmental or other
regulatory authority or agency (a "Governmental Entity") of competent
jurisdiction which declares the Merger Agreement invalid or unenforceable in
any material respect or which prohibits the consummation of the Merger, and
all governmental consents, orders and approvals required for the consummation
of the Merger and the transactions contemplated by the Merger Agreement shall
have been obtained and shall be in effect at the Effective Time; (iii)
Parent, the Purchaser or their affiliates shall have purchased Shares
pursuant to the Offer, unless such failure to purchase is as a result of a
breach of Parent's and the Purchaser's obligations under the Merger
Agreement; and (iv) the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") shall have
expired or been terminated.
At the Effective Time of the Merger (i) each issued and outstanding Share
(other than Shares that are owned by the Company as treasury stock, any
Shares owned by Parent, the Purchaser or any other wholly owned subsidiary of
Parent, or any Shares which are held by stockholders exercising appraisal
rights under Delaware law) will be converted into the right to receive the
per share price paid in the Offer, without interest (the "Merger
Consideration") and (ii) each issued and outstanding share of the Purchaser
will be converted into one share of common stock of the Surviving
Corporation.
The Company's Board of Directors. The Merger Agreement provides that
promptly after the purchase by Parent of at least a majority of the
outstanding Shares (on a fully diluted basis), Parent will be entitled to
designate such number of directors, rounded up to the next whole number, on
the Company Board as is equal to the product of the total number of directors
on the Company Board multiplied by the percentage that the number of Shares
so accepted for payment bears to the total number of Shares then outstanding.
The Company will, upon request of the Purchaser, use its best reasonable
efforts promptly to either increase the size of the Company Board or secure
the resignations of such number of its incumbent directors as is necessary to
enable Parent's designees to be elected to the Company Board. In the event
that Parent's designees are elected to the Company Board, until the Effective
Time, the Company Board will have at least three directors who are directors
on the date of the Merger Agreement. The Company's obligation to appoint the
Purchaser's designees to the Board of Directors is subject to compliance with
Section 14(f) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and Rule 14f-1 promulgated thereunder.
Stockholders Meeting. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, duly call,
give notice of, convene and hold a special meeting of its stockholders (the
"Special Meeting") as soon as practicable following the acceptance for
payment and purchase of Shares by the Purchaser pursuant to the Offer for the
purpose of considering and taking action upon the Merger Agreement. The
Merger Agreement provides that the Company will, if required by applicable
law in order to consummate the Merger, prepare and file with the Securities
and Exchange Commission (the "Commission") a preliminary proxy or information
statement (the "Proxy Statement") relating to the Merger and the Merger
Agreement and use its best efforts (i) to obtain and furnish the information
required to be included by the Commission in the Proxy Statement and, after
consultation with Parent, to respond promptly to any comments made by the
Commission with respect to the preliminary Proxy Statement and cause a
definitive Proxy Statement to be mailed to its stockholders, and (ii) to
obtain the necessary approvals of the Merger and the Merger Agreement by its
stockholders. If the Purchaser acquires at least a majority of the
outstanding Shares, the Purchaser will have sufficient voting power to
approve the Merger, even if no other stockholder votes in favor of the
Merger. The
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Company has agreed, subject to the provisions described below under "No
Solicitation," to include in the Proxy Statement the recommendation of the
Company Board that stockholders of the Company vote in favor of the approval
of the Merger and the adoption of the Merger Agreement. Parent has agreed
that it will vote, or cause to be voted, all of the Shares then owned by it,
the Purchaser or any of its other subsidiaries and affiliates in favor of the
approval of the Merger and the adoption of the Merger Agreement.
The Merger Agreement provides that in the event that Parent, the Purchaser
or any other subsidiary of Parent acquires at least 90% of the outstanding
Shares, pursuant to the Offer or otherwise, Parent, the Purchaser and the
Company will, at the request of Parent and subject to the terms of the Merger
Agreement, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after such acquisition, without a
meeting of stockholders of the Company, in accordance with Delaware law.
Options. Pursuant to the Merger Agreement, effective as of the Effective
Time, and subject to the receipt of certain Israeli Securities Authority
approvals, Parent and the Company will cause each outstanding unvested
employee stock option to purchase Shares (the "Unvested Options") granted
under the Company's stock option plans (collectively, the "Option Plan") to
be assumed by Parent and converted into an option (or a new substitute option
shall be granted) (a "Parent Option") to purchase shares of common stock, par
value $.01 per share (the "Parent Common Stock"), of Parent. Pursuant to the
Merger Agreement (i) the number of shares of Parent Common Stock subject to
each such Parent Option will be determined by multiplying the number of
Shares subject to the Unvested Option to be cancelled by the Option Exchange
Ratio (as defined below), rounding any fractional share up to the nearest
whole share, and (ii) the exercise price per share of such Parent Option will
be determined by dividing the exercise price per share under the Unvested
Option in effect immediately prior to the Effective Time by the Option
Exchange Ratio, and rounding the exercise price thus determined up to the
nearest whole cent, subject to appropriate adjustments for stock splits and
other similar events. Except as provided above, the converted or substituted
Parent Options will be subject to the same terms and conditions (including,
without limitation, expiration date, vesting and exercise provisions) as were
applicable to the Unvested Options immediately prior to the Effective Time.
The issuance of Parent Options as provided above is subject to, and
conditioned upon, obtaining an exemption by the Israeli Securities Authority
from the registration and prospectus delivery requirements of certain Israeli
securities laws. In the event such exemption is not obtained, unless Parent
elects to comply with the applicable requirements of the Israeli securities
laws, all Unvested Options held by the 35 persons holding the greatest
aggregate amount of Unvested Options will be treated as described above and
exchanged for Parent Options and the remaining Unvested Options will be
treated in the same manner as the Vested Options (as defined below) described
below. For purposes of the Merger Agreement, the "Option Exchange Ratio" is
(x) the Offer Price divided by (y) the average of the closing prices of the
Parent Common Stock on the Nasdaq National Market System during the ten
trading days preceding the fifth trading day prior to the Closing Date.
Immediately before the Effective Time, each outstanding fully vested
employee stock option to purchase Shares (a "Vested Option," and together
with an Unvested Option, a "Company Option") granted under the Option Plan,
subject to certain limited exceptions and subject to the receipt of certain
Israeli Securities Authority approvals and the consent of holders of Vested
Options, will be surrendered to the Company and will be cancelled and the
Company or the Surviving Corporation will pay to each holder of a Vested
Option, by check, an amount equal to (i) the product of the number of the
Shares which are issuable upon exercise of such Vested Option, multiplied by
the Offer Price, less (ii) the aggregate exercise price of such Vested
Option.
In addition, except as may be otherwise agreed to by Parent or the
Purchaser and the Company, the Option Plan and the 1995 Plan will terminate
as of the Effective Time and the provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any of its subsidiaries will
be deleted as of the Effective Time. However, each participant in the 1995
Plan will be entitled to receive, pursuant to the 1995 Plan, a number of
Shares based upon such participant's contributions in accordance with the
provisions of the 1995 Plan for the
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Purchase Period (as defined in the 1995 Plan) ending December 31, 1996, or
such part of such Purchase Period as has been completed at the Effective
Time, and at the applicable purchase price per Share determined in accordance
with the provisions of the 1995 Plan for such Purchase Period, provided that
no such participant will be entitled to increase his or her rate of
contribution after the date of the Merger Agreement, and the Shares so
purchased will immediately be exchanged for cash pursuant to the Merger.
Interim Operations. Pursuant to the Merger Agreement, the Company has
agreed that, except as expressly contemplated or provided by the Merger
Agreement or agreed to in writing by Parent, prior to the time the directors
of the Purchaser constitute a majority of the Company Board, the business of
the Company and its subsidiaries will be conducted only in the ordinary and
usual course and to the extent consistent therewith, each of the Company and
its subsidiaries will use its best efforts to preserve its business
organization intact and maintain its existing relations with customers,
suppliers, employees, creditors and business partners, and (a) the Company
will not, directly or indirectly, (i) sell, transfer or pledge, or agree to
sell, transfer or pledge, any treasury stock of the Company or any capital
stock of any of its subsidiaries beneficially owned by it; (ii) amend its
Certificate of Incorporation or By-Laws or similar organizational documents;
or (iii) split, combine or reclassify the outstanding Shares or preferred
stock or any outstanding capital stock of any of the subsidiaries of the
Company; and (b) neither the Company nor any of its subsidiaries shall (i)
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock; (ii) issue, sell,
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of
any class of the Company or its subsidiaries, other than Shares reserved for
issuance on November 24, 1996 pursuant to the exercise of Company Options
outstanding on November 24, 1996 or pursuant to the 1995 Plan; (iii)
transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any
material assets other than in the ordinary and usual course of business and
consistent with past practice, or incur or modify any material indebtedness
or other liability, other than in the ordinary and usual course of business
and consistent with past practice; (iv) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock, except pursuant to stock
restriction agreements with employees existing on November 24, 1996; (v)
grant any increase in the compensation payable or to become payable by the
Company or any of its subsidiaries to any of its executive officers or key
employees, except inflationary increases given in accordance with past
practice or adopt any new or amend or otherwise increase or accelerate the
payment or vesting of the amounts payable or to become payable under any
existing bonus, incentive compensation, deferred compensation, severance,
profit sharing, stock option, stock purchase, insurance, pension, retirement
or other employee benefit plan, agreement or arrangement including, without
limitation, the Option Plan and the 1995 Plan; (vi) enter into any employment
or severance agreement with, or, except in accordance with the existing
written policies of the Company, grant any severance or termination pay to
any officer, director or employee of the Company or any of its subsidiaries;
(vii) modify, amend or terminate any of its material contracts or waive,
release or assign any material rights or claims, except in the ordinary
course of business and consistent with past practice; (viii) permit any
material insurance policy naming it as a beneficiary or a loss payable payee
to be cancelled or terminated without notice to Parent, except in the
ordinary course of business and consistent with past practice; (ix) incur or
assume any long-term debt, or, except in the ordinary course of business,
incur or assume any short-term indebtedness in amounts not consistent with
past practice; (x) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations
of any other person, except in the ordinary course of business and consistent
with past practice; (xi) make any loans, advances or capital contributions
to, or investments in, any other person (other than to wholly owned
subsidiaries of the Company); (xii) enter into any material commitment or
transaction (including, but not limited to, any borrowing, capital
expenditure or purchase, sale or lease of assets or real estate); (xiii)
change any of the accounting methods used by it unless required by generally
accepted accounting principles; (xiv) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction,
in the ordinary course of business and consistent with past practice of
claims, liabilities or obligations reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes thereto)
of the Company and its consolidated subsidiaries; (xv) adopt a plan of
complete or partial liquidation,
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dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries (other than the
Merger); (xvi) take, or agree to commit to take, any action that would or is
reasonably likely to result in any of the conditions to the Offer or any of
the conditions to the Merger not being satisfied, or would make any
representation or warranty of the Company contained in the Merger Agreement
inaccurate in any respect at, or as of any time prior to, the Effective Time,
or that would materially impair the ability of the Company to consummate the
Offer or the Merger in accordance with the terms of the Merger Agreement or
materially delay such consummation; or (xvii) enter into an agreement,
contract, commitment or arrangement to do any of the foregoing, or to
authorize, recommend, propose or announce an intention to do any of the
foregoing.
No Solicitation. In the Merger Agreement, the Company has agreed that
neither the Company nor any of its subsidiaries will (and the Company will
use its best efforts to cause its officers, directors, employees,
representatives and agents, including, but not limited to, investment
bankers, attorneys and accountants, not to), directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations
with, or provide any information to, any corporation, partnership, person or
other entity or group (other than Parent, any of its affiliates or
representatives) concerning any proposal or offer to acquire all or a
substantial part of the business and properties of the Company or any of its
subsidiaries or any capital stock of the Company or any of its subsidiaries,
whether by merger, tender offer, exchange offer, sale of assets or similar
transactions involving the Company or any subsidiary, division or operating
or principal business unit of the Company (an "Acquisition Proposal"), except
that the Company and the Company Board are not prohibited from (i) taking and
disclosing to the Company's stockholders a position with respect to a tender
or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2
promulgated under the Exchange Act, or (ii) making such disclosure to the
Company's stockholders as, in the good faith judgment of the Board, after
receiving advice from outside counsel, is required under applicable law,
provided that the Company may not, except as described below, withdraw or
modify, or propose to withdraw or modify, its position with respect to the
Offer or the Merger or approve or recommend, or propose to approve or
recommend, any Acquisition Proposal, or enter into any agreement with respect
to any Acquisition Proposal. The Company also agreed to immediately cease any
existing activities, discussions or negotiations with any parties conducted
prior to the date of the Merger Agreement with respect to any of the
foregoing. The Merger Agreement provides that the Company may furnish
information concerning its business, properties or assets to any corporation,
partnership, person or other entity or group pursuant to appropriate
confidentiality agreements, and may negotiate and participate in discussions
and negotiations with such entity or group concerning an Acquisition Proposal
(i) if such entity or group has on an unsolicited basis submitted a bona fide
written proposal to the Company Board relating to any such transaction which
the Company Board determines in good faith represents a superior transaction
to the Offer and the Merger and which is not conditioned upon obtaining
additional financing and (ii) if, in the opinion of the Company Board, only
after receipt of advice from independent legal counsel, the failure to
provide such information or access or to engage in such discussions or
negotiations could reasonably be expected to cause the Company Board to
violate its fiduciary duties to the Company's stockholders under applicable
law (an Acquisition Proposal which satisfies clauses (i) and (ii) is referred
to in the Merger Agreement as a "Superior Proposal"). The Company will
immediately notify Parent of the existence of any proposal or inquiry, and
the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction.
Except as provided below, pursuant to the terms of the Merger Agreement,
neither the Company Board nor any committee thereof is permitted to (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or the Purchaser, the approval or recommendation by the Company Board
or any such committee of the Offer, the Merger Agreement or the Merger, (ii)
approve or recommend, or propose to approve or recommend, any Acquisition
Proposal or (iii) enter into any agreement with respect to any Acquisition
Proposal. Notwithstanding the foregoing, prior to the time of acceptance for
payment of Shares in the Offer, the Company Board may (subject to the terms
of this and the following sentence) withdraw or modify its approval or
recommendation of the Offer, the Merger Agreement or the Merger, approve or
recommend a Superior Proposal, or enter into an agreement with respect to a
Superior Proposal, in each case at any time after the second business day
following Parent's receipt of written notice advising Parent that the Company
Board has received a Superior Proposal,
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specifying the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal; provided that the
Company may not enter into an agreement with respect to a Superior Proposal
unless the Company furnishes Parent with written notice not later than 12:00
noon one day in advance of any date that it intends to enter into such
agreement and has caused its financial and legal advisors to negotiate with
Parent to make such adjustments in the terms and conditions of the Merger
Agreement as would enable the Company to proceed with the transactions
contemplated herein on such adjusted terms. In addition, if the Company
proposes to enter into an agreement with respect to any Acquisition Proposal,
it will be required to concurrently with entering into such agreement pay, or
cause to be paid, to Parent the termination fee described below under
"Termination Fee."
Indemnification and Insurance. Pursuant to the Merger Agreement, for seven
years after the Effective Time, Parent will, and will cause the Surviving
Corporation (or any successor to the Surviving Corporation) to, (i) retain
all provisions of the Company's Certificate of Incorporation as now in effect
respecting the limitation of liabilities of directors and officers and (ii)
indemnify, defend and hold harmless the present and former officers and
directors of the Company and its subsidiaries with respect to matters
occurring at or prior to the Effective Time to the full extent permitted
under Delaware law, subject to the Company's Certificate of Incorporation and
By-laws. The Merger Agreement also provides that Parent or the Surviving
Corporation will maintain the Company's existing officers' and directors'
liability insurance ("D&O Insurance") for a period of not less than seven
years after the Effective Time, provided that Parent may substitute therefor
policies of substantially similar coverage and amounts containing terms no
less favorable to such former directors or officers. Parent has also agreed
that if the existing D&O Insurance expires, is terminated or cancelled during
such period, Parent or the Surviving Corporation will use all reasonable
efforts to obtain substantially similar D&O Insurance, but in no event will
it be required to pay aggregate premiums for such insurance in excess of 150%
of the aggregate premiums paid in 1995 on an annualized basis for such
purpose (the "1995 Premium"). If Parent or the Surviving Corporation is
unable to obtain substantially similar D&O Insurance, Parent or the Surviving
Corporation has agreed to obtain as much insurance as can be obtained for an
annual premium not in excess of 150% of the 1995 Premium.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser
with respect to, among other things, its organization, capitalization,
financial statements, public filings, conduct of business, employee benefit
plans, intellectual property, employment matters, compliance with laws,
contracts, potential conflicts of interest, tax matters, litigation, title
and condition of properties, vote required to approve the Merger Agreement,
undisclosed liabilities, suppliers and customers, information in the Proxy
Statement and the absence of any material adverse changes in the Company
since December 31, 1995.
Termination; Fees. The Merger Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time, whether before or after
approval of the stockholders of the Company, (a) by mutual consent of the
Board of Directors of Parent or the Purchaser and the Company Board, (b) by
either the Company Board or the Board of Directors of Parent or the Purchaser
(i) if (x) the Offer shall have expired without any Shares being purchased
therein or (y) the Purchaser shall not have accepted for payment any Shares
pursuant to the Offer by August 24, 1997, provided that such right to
terminate will not be available to any party whose failure to fulfill any
obligation under the Merger Agreement was the cause of, or resulted in, the
failure of Parent or the Purchaser to purchase the Shares on or before such
date; or (ii) if any Governmental Entity shall have issued an order, decree
or ruling or taken any other action (which order, decree, ruling or other
action the parties shall use their best efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the acceptance
for payment of, or payment for, Shares pursuant to the Offer or the Merger
and such order, decree, ruling or other action shall have become final and
non-appealable, (c) by the Company Board (i) if Parent, the Purchaser or any
of their affiliates shall have failed to commence the Offer on or prior to
five business days following the date of the initial public announcement of
the Offer; provided, that the Company may not terminate the Merger Agreement
pursuant to this clause (i) if the Company is at such time in material breach
of its obligations under the Merger Agreement; (ii) in connection with
entering into a definitive agreement with respect to an Acquisition Proposal;
provided it has complied with all of the provisions, including the
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notice provisions described above under "No Solicitation," and that it makes
simultaneous payment of the Termination Fee (as defined below); or (iii) if
Parent or the Purchaser shall have breached in any material respect any of
their respective representations, warranties, covenants or other agreements
contained in the Merger Agreement, which breach cannot be or has not been
cured within 30 days after the giving of written notice to Parent or the
Purchaser, as applicable, (d) by the Board of Directors of Parent or the
Purchaser (i) if, due to an occurrence, not involving a breach by Parent or
the Purchaser of their obligations under the Merger Agreement, which makes it
impossible to satisfy any of the conditions to the Offer, Parent, the
Purchaser, or any of their affiliates shall have failed to commence the Offer
on or prior to five business days following the date of the initial public
announcement of the Offer; (ii) if prior to the purchase of Shares pursuant
to the Offer, the Company shall have breached any representation, warranty,
covenant or other agreement contained in the Merger Agreement which (x) would
give rise to the failure of a condition described in paragraph (f) or (g)
under "Section 14. Conditions to the Offer" in the Offer to Purchase and (y)
cannot be or has not been cured within 30 days after the giving of written
notice to the Company; or (iii) if either Parent or the Purchaser is entitled
to terminate the Offer as a result of the occurrence of any event described
in paragraph (e) under "Section 14. Conditions to the Offer" in the Offer to
Purchase.
In accordance with the Merger Agreement, if (i) the Company Board
terminates the Merger Agreement pursuant to clause (c)(ii) of the immediately
preceding paragraph, (ii) the Board of Directors of Parent or the Purchaser
terminates the Merger Agreement pursuant to clause (d)(iii) of the
immediately preceding paragraph, or (iii) prior to the termination of the
Merger Agreement (other than by the Company Board pursuant to clauses (c)(i)
or (c)(iii) of the immediately preceding paragraph), an Acquisition Proposal
shall have been made and within one year of such termination, the Company
enters into an agreement with respect to, approves or recommends or takes any
action to facilitate an Acquisition Proposal with the person making such
original Acquisition Proposal at a price and on terms at least as favorable
to the stockholders of the Company as the Offer and the Merger and such later
Acquisition Proposal is consummated, the Company has agreed to pay to Parent
(concurrently with such termination, in the case of clauses (i) or (ii)
above, and not later than the consummation of such later Acquisition
Proposal, in the case of clause (iii) above) an amount equal to $4,000,000
(the "Termination Fee"); provided that no Termination Fee will be payable if
the Purchaser or Parent was in material breach of its representations,
warranties or obligations under the Merger Agreement at the time of its
termination.
STOCKHOLDER AGREEMENTS.
Tender of Shares. In connection with the execution of the Merger
Agreement, Parent and the Purchaser entered into a separate Stockholder
Agreement with each of the Selling Stockholders. Upon the terms and subject
to the conditions of each of such agreements, each of the Selling
Stockholders has agreed to validly tender (and not withdraw) pursuant to and
in accordance with the terms of the Offer, not later than the fifth business
day after commencement of the Offer, the number of Shares owned beneficially
by such Selling Stockholder (or a total of 4,289,777 Shares, representing
approximately 47% of the outstanding Shares on a fully diluted basis). The
Selling Stockholders have also consented to the treatment of Company Options
held by them as described under "The Merger Agreement--Options" above.
Stock Option. In order to induce Parent and the Purchaser to enter into
the Merger Agreement, each of the Selling Stockholders has granted to Parent
an irrevocable option (a "Stock Option") to purchase such Selling
Stockholder's Shares (the "Option Shares") at an amount (the "Purchase
Price") equal to the Offer Price. Pursuant to each of the Stockholder
Agreements, if (i) the Offer is terminated, abandoned or withdrawn by Parent
or the Purchaser (whether due to the failure of any of the conditions set
forth in Section 14 of the Offer to Purchase or otherwise), other than at a
time when Parent or the Purchaser is in material breach of the terms of the
Merger Agreement, or (ii) the Merger Agreement is terminated in accordance
with its terms, other than as a result of certain material breaches by Parent
or the Purchaser of the terms of the Merger Agreement, the Stock Options
will, in any such case, become exercisable, in whole but not in part, upon
the first to occur of any such event and remain exercisable in whole until
the date which is 60 days after the date of the occurrence of such event (the
"60 Day Period"),
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so long as: (i) all waiting periods under the HSR Act required for the
purchase of the Option Shares upon such exercise, shall have expired or been
waived, (ii) all other applicable consents of any governmental entity
required for the purchase or sale of the Option Shares upon such exercise
shall have been granted or otherwise satisfied, and (iii) there shall not be
in effect any preliminary or final injunction or other order issued by any
court or governmental entity prohibiting the exercise of the Stock Options
pursuant to the Stockholder Agreements. Each of the Stockholder Agreements
provides that if (i) all HSR Act waiting periods have not expired or been
waived, (ii) all other applicable consents of any Governmental Entity
required for the purchase or sale of the Option Shares shall not have been
granted or otherwise satisfied, or (iii) or there shall be in effect any such
injunction or order, in each case on the expiration of the 60 Day Period, the
60 Day Period shall be extended until 5 business days after the later of (A)
the date of expiration or waiver of all HSR Act waiting periods, (B) the
grant or other satisfaction of such required consents, and (C) the date of
removal or lifting of such injunction or order; provided, however, that in no
event will the Stock Option be exercisable after the date which is six months
after the date on which the Stock Option first becomes exercisable; provided,
further, that the Stock Option will terminate if any Governmental Entity
issues an order, decree or ruling or takes any other action (which order,
decree, ruling or other action the parties to each of the Stockholder
Agreements will use their best efforts to lift), which permanently restrains,
enjoins or otherwise prohibits Parent's exercise of the Stock Option or the
sale of the Option Shares to Parent by the Selling Stockholders.
Resale of the Option Shares. Each of the Stockholder Agreements provides
that if, within 12 months following the acquisition by the Purchaser of the
Option Shares, Parent or its affiliates sell, transfer or otherwise dispose
of any or all of the Option Shares to any third party (other than to another
affiliate of Parent) (a "Subsequent Sale") and realizes a Profit (as defined
below) from such Subsequent Sale, then Parent will pay to the Selling
Stockholder an amount equal to 95% of the Profit, promptly upon receipt of
the proceeds from such Subsequent Sale. "Profit" is defined in each of the
Stockholder Agreements to mean (A) the amount of the excess, if any, of (x)
the aggregate consideration received by Parent or its affiliates in
connection with a Subsequent Sale over (y) the product of (i) the number of
Shares sold, transferred or disposed of multiplied by (ii) the Purchase Price
less (B) any taxes or any other payment of any nature due or payable by
Parent with respect to the amount specified in clause (A), other than
Parent's or the Purchaser's expenses incurred in connection with the
negotiation, execution and delivery of the Stockholder Agreements and the
Merger Agreement. In the event the consideration received by Parent in a
Subsequent Sale is other than cash, each of the Stockholder Agreements
provides that the Selling Stockholder shall be entitled to the same form of
consideration as received by Parent in such Subsequent Sale or, at Parent's
election, an amount in cash equal to the fair market value of such other
consideration that the Selling Stockholder would have been entitled to.
Provisions Concerning the Shares. The Selling Stockholders have agreed
that during the period commencing on the date of each of the Stockholder
Agreements and continuing until the first to occur of the Effective Time or
the termination of the Merger Agreement in accordance with its terms, at any
meeting of the Company's stockholders or in connection with any written
consent of the Company's stockholders, the Selling Stockholders will vote (or
cause to be voted) the Shares held of record or beneficially owned by each of
such Selling Stockholders: (i) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement and the approval of the terms
thereof and each of the other actions contemplated by the Merger Agreement
and each of the Stockholder Agreements and any actions required in
furtherance thereof; and (ii) against any Acquisition Proposal, and against
any action or agreement that would impede, frustrate, prevent or nullify each
of the Stockholder Agreements or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or which would result in any of the
conditions to the Offer or to the Merger not being fulfilled. In addition,
each of the Selling Stockholders has appointed representatives of Parent as
proxies to vote such Selling Stockholder's Shares or grant a consent or
approval in respect of such Shares in favor of the various transactions
contemplated by the Merger Agreement and against any Acquisition Proposal.
Each of the Selling Stockholders also agreed not to transfer such Selling
Stockholder's Shares and not to, directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Parent, any of its affiliates or representatives) concerning any
Acquisition Proposal.
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Other Covenants, Representations, Warranties. In connection with each of
the Stockholder Agreements, each of the Selling Stockholders made certain
customary representations and warranties, including with respect to (i)
ownership of the Shares, (ii) the Selling Stockholder's authority to enter
into and perform its or his obligations under the Stockholder Agreement,
(iii) the absence of conflicts and requisite governmental consents and
approvals, and (iv) the absence of encumbrances on and in respect of the
Selling Stockholder's Shares. Parent and the Purchaser have made certain
representations and warranties with respect to Parent and the Purchaser's
authority to enter into the Stockholder Agreements and the absence of
conflicts and requisite governmental consents and approvals.
In each of the Stockholder Agreements, Parent agreed that, in the event
that within three years following Parent's exercise of a Stock Option,
Parent, the Purchaser or any of their subsidiaries acquires any additional
Shares from, or pursuant to an offer made to all of the Company's
stockholders, whether by merger, consolidation, tender offer or other similar
transaction, the price paid per Share would be no less than the Purchase
Price.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Between August and November 1995, Mr. Mendy Erad, the Company's
Chairman and the Managing Director of Clal, discussed with Dr. Dan Maydan,
the President of Parent, Clal's view of the strategic opportunities in the
metrology and inspection business (the "M&I Business") in Israel, including
the benefits to the global competitiveness of certain participants that might
result from an industry consolidation. Dr. Maydan joined the Company Board in
November 1995. Since December 1995, Mr. Erad and Mr. Dennis Hunter, Managing
Director, Corporate Development of Parent, discussed from time to time the
possibilities of enhancing Clal's and initiating Parent's participation in
the M&I Business, including by forming a joint venture to acquire interests
in various companies (including the Company) engaged in the M&I Business
principally in Israel.
During this period, management of the Company was considering various
options for expansion of the Company, which were presented at a meeting of
the Company Board on July 18, 1996. The Company Board directed management to
pursue such options. Thereafter, management and Mr. Erad sought to initiate
discussions with Orbot Instruments, an Israeli company involved in a
different segment of the M&I Business, with regard to a possible merger of
the two companies. After considering the unfavorable response of management
of Orbot Instruments, management of the Company determined to continue its
discussions with Parent.
Discussions continued during the Spring of 1996 regarding various
participation opportunities and the goals of the respective companies. During
July 1996, Mr. James C. Morgan, the Chairman and Chief Executive Officer of
Parent, informed Mr. Erad of Parent's decision to explore entry into the M&I
Business alone, rather than through a joint venture with Clal.
Notwithstanding Parent's July decision, during August and September 1996,
representatives of Parent, together with representatives of Parent's
financial advisors and legal counsel, met with Mr. Erad and legal counsel and
a tax advisor to discuss alternative transaction approaches that would enable
Clal to participate with Parent in the M&I Business, including through the
possible acquisition of the Company. Following these meetings, Clal
determined that the complexity and timing of a collaborative transaction
involving Clal and Parent would not be in the best interests of the Company
and its stockholders, and Parent reaffirmed its conclusion that it would not
be in Parent's best interests to include Clal in its contemplated efforts to
enter the M&I Business.
On October 20, 1996, the Company engaged Robertson, Stephens & Company LLC
("RS & Co.) and Evergreen Capital Markets Ltd. ("Evergreen") to assist the
Company in its evaluation of any offer which might be made by Parent.
On October 21, 1996, Parent and the Company entered into a confidentiality
agreement preceding Parent's review of certain confidential information
concerning the Company. Subsequently, there were meetings in the United
States and Israel to review and analyze Company information.
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During meetings in late October and early November 1996, representatives
of Parent's financial advisors met with the Company's financial advisors to
discuss valuation parameters of the Company. In addition, a representative of
Parent's legal counsel met with representatives of the Company's legal
counsel to discuss generally the terms and conditions of a possible
transaction between Parent and the Company. At these meetings, Parent's
financial advisors and legal counsel stated that it was an express condition
to Parent's willingness to enter into an agreement to acquire the Company
that there be an agreement along the lines of the Stockholder Agreements.
At a meeting of the Company Board held on November 7, 1996, the Company
Board authorized Mr. Erad to continue discussions with representatives of
Parent regarding the possible acquisition of the Company by Parent. At a
meeting on November 10, 1996, representatives of Parent and the Company began
negotiating the terms of a definitive agreement providing for Parent's
acquisition of the Company. At a meeting of the Company Board held on
November 10, 1996, Mr. Erad reported to the Company Board on the status of
his discussions with representatives of Parent.
Following further negotiations on November 11, 1996, representatives of
Parent indicated that they would be prepared to recommend to Parent's Board
of Directors that Parent pay a price of $18.50 per Share in cash to acquire
the Company, conditioned upon the willingness of the Selling Stockholders to
sign the Stockholder Agreements providing for the sale of the Shares owned by
each of them to Parent at a price per Share equal to the price paid in the
Offer, through a tender of such Shares in the Offer or otherwise.
On November 17, 1996, the Company Board (other than Zvi Lapidot and Dan
Maydan) reviewed the proposed transaction, received reports from RS & Co. and
legal counsel and engaged in lengthy deliberations with respect thereto.
Negotiations between Parent and the Company continued through November 22,
1996, culminating in Parent and the Company agreeing upon a form of Merger
Agreement and a form of the Stockholder Agreements which were presented to
and approved by Parent's Board of Directors at a meeting held on November 22,
1996, subject to the finalization of certain open items.
After completion of final negotiations, at a meeting of the Company Board
held on November 24, 1996, at which RS & Co. delivered its opinion as to the
fairness of the Offer Price to the Company's stockholders from a financial
point of view, the Company Board, by unanimous vote (with Messrs. Zvi
Lapidot, Dan Maydan, Rafi Yizhar and Israel Niv not participating in the
vote of the Company Board relating to the Merger Agreement, the Stockholder
Agreements and the transactions contemplated thereby because of the
circumstances described in the last three paragraphs under Item 3(b)(1)
hereof and under Item 3(b)(2) hereof), determined that the Merger Agreement
and the transactions contemplated thereby, including the Offer and the
Merger, taken together, are fair to and in the best interests of the Company
and its stockholders, approved the Merger Agreement and the Stockholder
Agreements and the transactions contemplated thereby, including the Offer and
the Merger, and resolved to recommend that the Company's stockholders accept
the Offer and tender their Shares pursuant thereto and approve the Merger
Agreement and the transactions contemplated thereby. Following this approval,
the Merger Agreement and the Stockholder Agreements were executed and the
transactions were publicly announced before financial markets opened on
November 25, 1996. Copies of a press release and a letter to stockholders
announcing such recommendations are filed herewith as Exhibits J and K,
respectively, and are incorporated herein by reference.
In addition, on November 24, 1996, Parent entered into an agreement to
acquire all of the outstanding capital stock of Orbot Instruments, whose
Chairman is also a director of the Company, for $110 million. Certain
stockholders of the Company have stockholders that are also stockholders of
Orbot Instruments.
(b) In reaching its determination described in the next to last paragraph
of (a) above, the Company Board gave careful consideration to a number of
factors, including, without limitation, the following:
(i) The financial and other terms and conditions of the Offer, the Merger
and the Merger Agreement.
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(ii) The terms and conditions of the Stockholder Agreements, which were a
condition to Parent's willingness to agree to the Offer and the Merger and
which provide that the Selling Stockholders would receive the same
consideration per Share as would all other holders of Shares in the Offer
and the Merger.
(iii) Presentations by the Company's financial advisors regarding the
financial condition, results of operations, business and prospects of the
Company, including the prospects if the Company were to remain
independent, based on projections prepared by the Company's management.
(iv) Current industry, economic and market conditions, including the
acquisitions and consolidations taking place in the industry.
(v) Historical market prices and trading information with respect to the
Shares and Parent Common Stock.
(vi) Publicly available information concerning other companies comparable
to the Company and the trading history of the stock of each such company.
(vii) Certain information regarding other companies in the same or
related industries which might represent potential acquirors of the
Company.
(viii) The presentations of RS & Co. and Evergreen at the November 17,
1996 and November 24, 1996 meetings of the Company Board and the written
opinion to the Company Board, dated November 24, 1996, of RS & Co. that,
as of the date of the opinion and based upon and subject to the matters
set forth in the opinion, the offer price of $18.50 in cash per Share to
be received by the stockholders of the Company in connection with the
Offer and the Merger is fair to such holders from a financial point of
view. A copy of such opinion which sets forth the assumptions made,
matters considered and review undertaken by RS & Co. in connection with
its opinion is filed herewith as Exhibit L and is incorporated herein by
reference. Stockholders are urged to read the opinion carefully in its
entirety.
(ix) The fact that the $18.50 per Share price to be paid in the Offer and
the Merger represents a premium of 52.6% over $12.125, the closing price
of the Shares on the Nasdaq National Market System on November 22, 1996,
the last full trading day prior to the execution and delivery of the
Merger Agreement, a premium of 97.3% over $9.375, the closing price of the
Shares on the Nasdaq National Market System on November 8, 1996, ten
trading days prior to the execution and delivery of the Merger Agreement,
and a premium of 84.3% over $10.04, the average closing price of the
Shares on the Nasdaq National Market System for the 30 trading days ending
on the last full trading day prior to the execution and delivery of the
Merger Agreement.
(x) The fact that the terms of the Merger Agreement, including the price
to be paid, compare favorably to the terms and prices paid in other recent
acquisition transactions.
(xi) The terms and conditions of the Merger Agreement, including the
facts that the Offer is not subject to a financing condition, that Parent
and the Purchaser have agreed that Shares not purchased in the Offer will
receive the same form and amount of consideration as Shares purchased in
the Offer pursuant to the Merger, and that the Company may terminate the
Merger Agreement and pay Parent a termination fee of approximately $4
million (or approximately $.46 per outstanding Share) in order to permit
the Company to execute an agreement with a third party providing for the
acquisition of the Company on terms more favorable to the Company's
stockholders (as determined by the Company Board) than the Offer and the
Merger.
(xii) Possible alternatives to the Merger and the Offer that might be
available to the Company and its stockholders, including without
limitation, continuing to operate the Company as an independent entity and
the risks associated therewith, particularly in light of Parent's
intention to enter the M&I Business.
(xiii) The fact that the Merger Agreement, which prohibits the Company,
its subsidiaries and their respective officers, directors, employees,
representatives and agents from encouraging, solicit-
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ing, participating in or initiating discussions or negotiations with, or
providing any information to any person or entity concerning any potential
Acquisition Proposal does permit the Company to furnish information to,
and negotiate and participate in discussions and negotiations with, any
person or entity that makes an unsolicited written proposal relating to an
Acquisition Proposal after the date of the Merger Agreement which the
Company Board determines in good faith represents a superior transaction
to the Offer and the Merger and which is not conditioned upon obtaining
additional financing and, in the opinion of the Company Board, after the
receipt of the advice of outside legal counsel, the failure to provide
such information or access or to engage in such discussions or
negotiations could reasonably be expected to cause the Company Board to
violate its fiduciary duties to the Company's stockholders under
applicable law.
The Company Board did not assign relative weights to the factors or
determine that any factor was of particular importance. Rather, the Company
Board viewed its position and recommendation as being on the totality of the
information presented to and considered by it.
In analyzing the Offer and the Merger, the Company Board was assisted and
advised by representatives of RS & Co., Evergreen and representatives of the
Company's legal counsel, who reviewed various financial, legal and other
considerations, as well as the terms of the Merger Agreement and the
Stockholder Agreements, with the Company Board.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
RS & Co. and Evergreen (collectively, the "Advisors") are acting as the
Company's financial advisor in connection with the Offer and the Merger.
Pursuant to a letter agreement dated November 17, 1996 between the Company
and the Advisors (the "Engagement Letter"), if a sale of, or business
combination involving all or a portion of the Shares, or assets of the
Company is consummated, a transaction fee will be payable to RS & Co. based
on the following schedule: $700,000 if the Aggregate Consideration, as
defined in the Engagement Letter, is less than $140 million; $900,000 if the
Aggregated Consideration is equal to or greater than $140 million but less
than $160 million; $1,000,000 if the Aggregate Consideration is equal to or
greater than $160 million but less than $180 million; and $1,200,000 if the
Aggregate Consideration is equal to or greater than $180 million. In the
event of a business combination involving less than a majority of the stock
or assets of the Company is consummated, a minority investment transaction
fee will be payable to the Advisors as determined at the time that such
transaction is negotiated. In connection with the Offer and the Merger, the
Advisors will be entitled to a transaction fee of $1,000,000 of which
$500,000 became due on delivery of the fairness opinion with the remainder
due upon consummation of the transaction. In addition, the Company has agreed
to reimburse the Advisors for their out-of-pocket and incidental expenses,
including the fees and disbursements of their counsel, and to indemnify the
Advisors against certain liabilities and expenses incurred in connection with
their engagement, including liabilities under federal securities laws.
Except as set forth above, neither the Company nor any person acting on
its behalf currently intends to employ, retain or compensate any other person
to make solicitations or recommendations to stockholders on its behalf with
respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) No transactions in the Shares have been effected in the past 60 days
by the Company or any subsidiary of the Company or, to the best knowledge of
the Company, any affiliate or any executive officer or director of the
Company, with the following exception:
Israel Niv, the General Manager, Executive Vice President of Sales and
Marketing and a Director of the Company, made bona fide gifts of 77,800
Shares, which he either directly or beneficially owned, on November 1, 1996,
to members of his family.
(b) To the best knowledge of the Company, each of the Company's executive
officers, directors, affiliates and subsidiaries currently intend to tender
their Shares pursuant to the Offer, except to the extent that the tender of
such Shares might subject such persons to liability under the provisions of
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Section 16(b) of the Exchange Act. Reference is also made to the Stockholder
Agreements referred to in Item 3(b)(2), which are filed herewith as Exhibits
E, F, G and H.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth in Item 3(b) herein, the Company is not engaged in
any negotiation in response to the Offer which relates to or would result in
(i) an extraordinary transaction, such as a merger or reorganization,
involving the Company or any of its subsidiaries; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any of its
subsidiaries; (iii) a tender offer for or other acquisition of securities by
or of the Company; or (iv) any material change in the present capitalization
or dividend policy of the Company.
(b) Except as set forth in Item 3(b) and Item 4 herein, there are no
transactions, board resolutions, agreements in principle or signed contracts
in response to the Offer which relate to or would result in one or more of
the matters referred to in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
(a) As a Delaware corporation, the Company is subject to section 203
("Section 203") of the General Corporation Law of the State of Delaware.
Section 203 prevents an "Interested Stockholder" (generally defined as a
person beneficially owning 15% or more of a corporation's voting stock) from
engaging in a "Business Combination" (as defined in Section 203) with a
Delaware corporation for three years following the date such person became an
Interested Stockholder unless: (i) before such person became an Interested
Stockholder, the board of directors of the corporation approved the
transaction in which the Interested Stockholder became an Interested
Stockholder or approved the Business Combination, (ii) upon consummation of
the transaction which resulted in the Interested Stockholder becoming an
Interested Stockholder, the Interested Stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding stock held by directors who are also officers and by
employee stock ownership plans that do not allow plan participants to
determine confidentially whether to tender shares), or (iii) following the
transaction in which such person became an Interested Stockholder, the
Business Combination is (A) approved by the board of directors of the
corporation and (B) authorized at a meeting of stockholders by the
affirmative vote of the holders of at least 66 2/3% of the outstanding voting
stock of the corporation not owned by the Interested Stockholder. In
accordance with the provisions of Section 203, the Company Board has approved
the Merger Agreement, the Stockholder Agreements and the Purchaser's
acquisition of Shares pursuant to the Offer, the Merger and the Stockholder
Agreements and, therefore, Section 203 is inapplicable to such transactions.
(b) The information statement attached as Annex I hereto is being
furnished in accordance with Rule 14f-1 under the Exchange Act, in connection
with the possible designation by Parent, pursuant to the Merger Agreement, of
certain persons to be appointed to the Company Board other than at a meeting
of the Company's stockholders.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
The following Exhibits are filed herewith:
<TABLE>
<CAPTION>
<S> <C>
Exhibit A -- Agreement and Plan of Merger, dated as of November 24, 1996, among the Company,
Parent and the Purchaser.
Exhibit B -- Opal, Inc. Class B Common Stock Option Plan
Exhibit C -- Employee Stock Option Plan
Exhibit D -- 1995 Employee Stock Purchase Plan
Exhibit E -- Stockholder Agreement, dated as of November 24, 1996, by and among Parent, the
Purchaser and Rafi Yizhar
Exhibit F -- Stockholder Agreement, dated as of November 24, 1996, by and among Parent, the
Purchaser and Israel Niv
Exhibit G -- Stockholder Agreement, dated as of November 24, 1996, by and among Parent, the
Purchaser and Clal Electronics Industries Ltd.
Exhibit H -- Stockholder Agreement, dated as of November 24, 1996, by and among Parent, the
Purchaser and Orbotech Ltd.
Exhibit I -- Confidentiality and Nondisclosure Agreement dated October 21, 1996
Exhibit J -- Press Release, dated November 24, 1996
Exhibit K -- Letter to Stockholders*
Exhibit L -- Opinion of Robertson, Stephens & Company LLC dated November 24, 1996*
</TABLE>
- ---------------
* Included in copies mailed to stockholders
15
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
November 26, 1996
OPAL, INC.
By: /s/ Henry Schwarzbaum
-------------------------
Henry Schwarzbaum
Chief Financial Officer,
Vice President of Finance and
Secretary
16
<PAGE>
ANNEX I
TO SCHEDULE 14D-9
OPAL, INC.
3203 SCOTT BOULEVARD
SANTA CLARA, CA 95054
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
This Information Statement, which is being mailed on or about November 26,
1996 to the holders of shares of the Common Stock, par value $.01 per share
(the "Shares"), of Opal, Inc., a Delaware corporation (the "Company"), is
being furnished in connection with the possible election of persons
("Parent's Designees") designated by Applied Materials, Inc., a Delaware
corporation ("Parent"), to the Board of Directors of the Company (the
"Company Board"). Such designation is to be made pursuant to an Agreement and
Plan of Merger, dated as of November 24, 1996 (the "Merger Agreement"), by
and among the Company, Parent and Orion Corp. I, a Delaware corporation that
is a wholly owned subsidiary of Parent (the "Purchaser"). In accordance with
the Merger Agreement, Parent caused the Purchaser to commence an offer to
purchase all of the issued and outstanding Shares at $18.50 per Share, net to
the seller in cash (the "Offer"), on November 26, 1996. The obligation of the
Purchaser to accept for payment and pay for Shares tendered pursuant to the
Offer is subject to the condition that at least a majority of outstanding
Shares on a fully diluted basis (as defined in the Merger Agreement) are
validly tendered and not withdrawn prior to the expiration of the Offer and
to certain other conditions. The Merger Agreement provides that, subject to
(i) the consummation of the Offer, (ii) the approval of the Merger Agreement
at a meeting of the Company's stockholders, if required by applicable law,
and (iii) the satisfaction or waiver of certain other conditions, the
Purchaser will be merged with and into the Company (the "Merger") with the
Company being the surviving corporation (the "Surviving Corporation"). At the
effective time of the Merger (the "Effective Time"), each Share issued and
outstanding immediately prior to the Effective Time (other than Shares held
in the treasury of the Company or Shares owned by Parent, the Purchaser or
any wholly owned subsidiary of Parent, or Shares which are held by
stockholders who have complied with the procedures for appraisal set forth in
Section 262 of the General Corporation Law of the State of Delaware) will, by
virtue of the Merger and without any action on the part of Parent, the
Purchaser, the Company or the holder thereof, be converted into the right to
receive $18.50 in cash, or any higher price paid per Share in the Offer (the
"Merger Price"), payable to the holders thereof without interest thereon upon
the surrender of the certificates representing such Shares. All Shares owned
by the Company as treasury stock and any Shares owned by Parent, the
Purchaser or any other wholly owned subsidiary of Parent, will be canceled in
the Merger. Each share of common stock of the Purchaser issued and
outstanding immediately prior to the Effective Time will, at the Effective
Time, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and become one validly issued, fully paid
and nonassessable share of the common stock of the Surviving Corporation.
Pursuant to the Merger Agreement, effective as of the Effective Time, and
subject to the receipt of certain Israeli governmental approvals and
exemptions, Parent and the Company will cause each outstanding unvested
employee stock option to purchase Shares (the "Unvested Options") granted
under the Company's stock option plans (collectively, the "Option Plan") to
be assumed by Parent and
I-1
<PAGE>
converted into an option (or a new substitute option will be granted) (a
"Parent Option") to purchase shares of common stock, par value $.01 per share
(the "Parent Common Stock"), of Parent. Pursuant to the Merger Agreement (i)
the number of shares of Parent Common Stock subject to each such Parent
Option will be determined by multiplying the number of Shares subject to the
Unvested Option to be cancelled by the Option Exchange Ratio (as defined
below), rounding any fractional share up to the nearest whole share, and (ii)
the exercise price per share of such Parent Option will be determined by
dividing the exercise price per share under the Unvested Option in effect
immediately prior to the Effective Time by the Option Exchange Ratio, and
rounding the exercise price thus determined up to the nearest whole cent,
subject to appropriate adjustments for stock splits and other similar events.
Except as provided above, the converted or substituted Parent Options will be
subject to the same terms and conditions (including, without limitation,
expiration date, vesting and exercise provisions) as were applicable to the
Unvested Options immediately prior to the Effective Time. The issuance of
Parent Options as provided above is subject to, and conditioned upon,
obtaining an exemption by the Israeli Securities Authority from the
prospectus delivery requirement under Israeli securities laws. In the event
such exemption is not obtained, unless Parent elects to comply with the
applicable requirements of the Israeli securities laws, all Unvested Options
held by the 35 persons holding the greatest aggregate amount of Unvested
Options will be treated as described above and exchanged for Parent Options
and the remaining Unvested Options will be treated in the same manner as the
Vested Options (as defined below) described below. For purposes of the Merger
Agreement, the "Option Exchange Ratio" is (x) the Offer Price divided by (y)
the average of the closing prices of the Parent Common Stock on the Nasdaq
National Market System during the ten trading days preceding the fifth
trading day prior to the Closing Date.
Immediately before the Effective Time, each outstanding fully vested
employee stock option to purchase Shares (a "Vested Option," and together
with an Unvested Option, a "Company Option") granted under the Option Plan,
subject to certain limited exceptions and subject to the receipt of certain
Israeli governmental approvals and exemptions, will be surrendered to the
Company and will be cancelled and the Company or the Surviving Corporation
will pay to each holder of a Vested Option, by check, an amount equal to (i)
the product of the number of the Shares which are issuable upon exercise of
such Vested Option, multiplied by the Offer Price, less (ii) the aggregate
exercise price of such Vested Option.
In addition, except as may be otherwise agreed to by Parent or the
Purchaser and the Company, the Option Plan and the Company's 1995 Employee
Stock Purchase Plan (the "Stock Purchase Plan") will terminate as of the
Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any of its subsidiaries will be deleted as of
the Effective Time. However, each participant in the Stock Purchase Plan will
be entitled to receive, pursuant to the Stock Purchase Plan, a number of
Shares based upon such participant's contributions in accordance with the
provisions of the Stock Purchase Plan for the Purchase Period (as defined in
the Stock Purchase Plan) ending December 31, 1996, or such part of such
Purchase Period as has been completed at the Effective Time, and at the
applicable purchase price per Share determined in accordance with the
provisions of the Stock Purchase Plan for such Purchase Period, provided that
no such participant will be entitled to increase his or her rate of
contribution after the date of the Merger Agreement, and the Shares so
purchased will immediately be exchanged for cash pursuant to the Merger.
The Merger Agreement provides that promptly after the purchase by Parent
of at least a majority of the outstanding Shares (on a fully diluted basis),
Parent will be entitled to designate such number of directors, rounded up to
the next whole number, on the Company Board as is equal to the product of the
total number of directors on the Company Board multiplied by the percentage
that the number of Shares so accepted for payment bears to the total number
of Shares then outstanding. The Company will, upon request of the Purchaser,
use its best reasonable efforts promptly to either increase the size of the
Company Board or secure the resignations of such number of its incumbent
directors as is necessary to enable Parent's designees to be elected to the
Company Board. The Company's obligation to appoint the Purchaser's designees
to the Board of Directors is subject to compliance with Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder.
The Merger Agreement also provides that, in the event that Parent's Designees
are elected to the Company Board, until the Effective Time, the Company Board
will have at least three directors who were
I-2
<PAGE>
directors on the date of the Merger Agreement (the "Independent Directors"),
provided that, in such event, if the number of Independent Directors is
reduced below three for any reason whatsoever, any remaining Independent
Directors (or Independent Director, if there be only one remaining) will be
entitled to designate persons to fill such vacancies who will be deemed to be
Independent Directors for purposes of the Merger Agreement or, if no
Independent Director then remains, the other directors will designate three
persons to fill such vacancies who will not be stockholders, affiliates or
associates of Parent or the Purchaser and such persons will be deemed to be
Independent Directors for purposes of the Merger Agreement. In the event that
Parent's Designees are elected to the Company Board, after the acceptance for
payment of Shares pursuant to the Offer and prior to the Effective Time, the
Merger Agreement provides that the affirmative vote of a majority of the
Independent Directors will be required to (i) amend or terminate the Merger
Agreement by the Company, (ii) exercise or waive any of the Company's rights,
benefits or remedies under the Merger Agreement, (iii) extend the time for
performance of Parent's and the Purchaser's respective obligations under the
Merger Agreement, (iv) take any other action by the Company Board under or in
connection with the Merger Agreement or the Stockholder Agreements, or (v)
approve any other action by the Company which could adversely affect the
interests of the stockholders of the Company (other than Parent, the
Purchaser and their affiliates other than the Company and its subsidiaries)
with respect to the transactions contemplated by the Merger Agreement.
The terms of the Merger Agreement, a summary of the events leading up to
the Offer and the execution of the Merger Agreement and the Stockholder
Agreements and other information concerning the Offer and the Merger are
contained in the Offer to Purchase, dated November 26, 1996, the related
Letter of Transmittal, dated November 26, 1996, and the
Solicitation/Recommendation Statement on Schedule 14D-9 of the Company, dated
November 26, 1996, as amended from time to time (the "Schedule 14D-9") with
respect to the Offer, copies of which have been previously delivered to
stockholders of the Company. Certain other documents (including the Merger
Agreement and the Stockholder Agreements) were filed with the Securities and
Exchange Commission (the "SEC") as exhibits to the Tender Offer Statement on
Schedule 14D-1, dated November 26, 1996, as amended from time to time (the
"Schedule 14D-1") of Parent and the Purchaser and as exhibits to the Schedule
14D-9. The exhibits to the Schedule 14D-1 and the Schedule 14D-9 may be
examined at and copies thereof may be obtained from the SEC (except that the
exhibits thereto cannot be obtained from the regional offices of the SEC).
The discussion of any such document included herein is qualified in its
entirety by reference to the text of such document.
NO ACTION IS REQUIRED BY THE STOCKHOLDERS OF THE COMPANY IN CONNECTION
WITH THE ELECTION OF PARENT'S DESIGNEES TO THE BOARD. HOWEVER, SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT")
REQUIRES THE MAILING TO THE COMPANY'S STOCKHOLDERS OF THE INFORMATION SET
FORTH IN THIS INFORMATION STATEMENT PRIOR TO A CHANGE IN A MAJORITY OF THE
COMPANY'S DIRECTORS.
The information contained in this Information Statement concerning Parent,
the Purchaser and Parent's Designees has been furnished to the Company by
such persons, and the Company assumes no responsibility for the accuracy or
completeness of such information. The principal executive offices of Parent
and the Purchaser are located at 3050 Bowers Avenue, Santa Clara, CA 95054.
I-3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
GENERAL
The outstanding voting securities of the Company as of November 24, 1996
consisted of 8,743,583 Shares, each of which is entitled to one vote.
STOCK OWNERSHIP
The following table sets forth certain information regarding the ownership
of the Company's outstanding Shares as of November 24, 1996 (i) by each
person who is known to the Company to own beneficially more than 5% of the
outstanding Shares, (ii) by each Director and executive officer, and (iii) by
all Directors and executive officers as a group. Unless otherwise indicated,
the address of each person is c/o Opal, Inc., 3203 Scott Boulevard, Santa
Clara, CA 95054.
<TABLE>
<CAPTION>
AMOUNT PERCENT OF
NAME AND ADDRESS OF BENEFICIAL BENEFICIALLY OUTSTANDING
TITLE OF CLASS OWNER OWNED COMMON STOCK(1)
- -------------- ---------------------------------- --------------- ---------------
<S> <C> <C> <C>
Common Stock Clal Electronics Industries Ltd. 2,692,327 30.2%
$.01 par value 5 Druyanov Street
Tel Aviv, Israel
Orbotech Ltd. 1,241,650 13.9
Yavne, Israel
Mendy Erad 2,692,327(2) 30.2
Meir Ben-Shoshan 2,692,327(3) 30.2
Robert Brill 10,791(4) *
Uzia Galil 1,242,650(5) 13.9
Zvi Lapidot 1,241,650(6) 13.9
Dan Maydan 0 *
Israel Niv 157,830(7) 1.8
Amram Rasiel 73,672 *
Rafi Yizhar 327,732(8) 3.7
Mannie Dorfan 81,174(9) *
Henry Schwarzbaum 45,506(10) *
Michael Sheinfeld 60,407(11) *
All current executive officers and 4,692,089(12) 52.6
Directors as a group (12 persons)
</TABLE>
- ------------
Less than 1% *
(1) Percentage of ownership in each case is based upon 8,743,583 Shares
outstanding as of November 24, 1996 together with applicable options for each
stockholder determined in accordance with Rule 13d-3 promulgated under the
Exchange Act.
(2) Includes 2,692,327 shares beneficially owned by Clal Electronics Industries
Ltd. ("Clal Electronics"), of which Mr. Erad is the Managing Director. Mr.
Erad disclaims beneficial ownership of such shares.
(3) Includes 2,692,327 shares beneficially owned by Clal Electronics, of which
Mr. Ben-Shoshan is a Vice President. Mr. Ben-Shoshan disclaims beneficial
ownership of such shares.
(4) Includes 10,791 shares beneficially owned by Poly Ventures Associates,
L.P., of which Dr. Brill is a Managing General Partner. Dr. Brill disclaims
beneficial ownership of such shares except as to his proportionate
partnership interest therein.
(5) Includes 1,241,650 shares beneficially owned by Orbotech Ltd., of which Mr.
Galil is a director. Mr. Galil disclaims beneficial ownership of such shares.
I-4
<PAGE>
(6) Includes 1,241,650 shares beneficially owned by Orbotech Ltd., of which Mr.
Lapidot is the Chairman of the Board of Directors. Mr. Lapidot disclaims
beneficial ownership of such shares.
(7) Includes 55,952 shares subject to outstanding stock options held by Dr. Niv
that are currently exercisable or exercisable within 60 days of November 24,
1996.
(8) Includes 73,810 shares subject to outstanding stock options held by Mr.
Yizhar that are currently exercisable or exercisable within 60 days of
November 24, 1996.
(9) Includes 19,881 shares subject to outstanding stock options held by Mr.
Dorfan that are currently exercisable or exercisable within 60 days of
November 24, 1996.
(10) Includes 17,738 shares subject to outstanding stock options held by Mr.
Schwarzbaum that are currently exercisable or exercisable within 60 days of
November 24, 1996. Also includes 19,286 shares owned by Mr. Schwarzbaum's
wife and 8,000 shares owned by Mr. Schwarzbaum's children.
(11) Includes 13,810 shares subject to outstanding stock options held by Mr.
Sheinfeld that are currently exercisable or exercisable within 60 days of
November 24, 1996.
(12) Includes 181,191 shares subject to outstanding stock options held by
executive officers that are currently exercisable or exercisable within 60
days of November 24, 1996.
I-5
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
PARENT'S DESIGNEES
Parent has informed the Company that it will choose the Parent Designees
from its directors and executive officers listed in Schedule I to the Offer
to Purchase, a copy of which is being mailed to the Company's stockholders
together with this Schedule 14D-9. Parent has informed the Company that each
of the directors and executive officers listed in Schedule I to the Offer to
Purchase has consented to act as a Director, if so designated. The
information on such Schedule I is incorporated herein by reference.
With the exception of Dan Maydan, the President of the Parent and a
Director of the Company, none of Parent's Designees or their associates
currently is a Director of, or holds any position with, the Company. To the
best knowledge of the Company, none of Parent's Designees or their associates
beneficially owns any equity securities, or rights to acquire any equity
securities, of the Company or has been involved in any transactions with the
Company or any of its Directors or executive officers that are required to be
disclosed pursuant to the rules and regulations of the SEC.
CURRENT DIRECTORS
The following table sets forth certain information with respect to the
current Directors of the Company as of November 24, 1996.
<TABLE>
<CAPTION>
EXPIRATION DIRECTOR
NAME AGE DATE OF TERM PRINCIPAL OCCUPATION SINCE
- ---------------- ----- ------------ ---------------------------------------- ----------
<S> <C> <C> <C> <C>
Rafi Yizhar ..... 48 1998 Chief Executive Officer and 1991
President of the Company
Israel Niv ...... 43 1999 General Manager and Executive Vice 1995
President of Sales and Marketing of
the Company
Meir Ben-Shoshan 66 1997 Vice President of Clal Electronics 1993
Robert Brill ... 50 1997 Managing General Partner of Poly 1990
Ventures Associates, L.P.
Mendy Erad ...... 48 1998 Managing Director of Clal Electronics 1995
Uzia Galil ...... 71 1999 Chairman, President and Chief Executive 1986
Officer of Elron Electronic Industries, Ltd.
Zvi Lapidot ..... 52 1998 Chairman of Orbot Instruments Ltd. 1993
Dan Maydan ...... 60 1999 President of Applied Materials, Inc. and 1995
Co-Chairman of Applied Komatsu
Technology, Inc.
Amram Rasiel ... 66 1997 Private Investor 1987
</TABLE>
Rafi Yizhar has served as Chief Executive Officer and President of the
Company since February 1991 and has been a Director of the Company since
January 1991. Mr. Yizhar served as Operations Manager of the Company from
August 1988 to January 1991. Mr. Yizhar was a co-founder of Optrotech Ltd.,
which merged with Orbot Systems Ltd. in 1992, forming Orbotech Ltd., a
manufacturer of automatic inspection equipment for the printed circuit board
industry. From October 1981 to August 1988, Mr. Yizhar held various senior
managerial positions, including Operations Manager, at Optrotech, Ltd. From
1974 to 1981, Mr. Yizhar held various managerial positions at Electro Optics
Industries, Ltd. ("El Op"), a defense-based advanced electro-optics supplier.
Israel Niv, a co-founder of the Company, has served as General Manager and
Executive Vice President of Sales and Marketing since August 1991, and has
been a Director of the Company since February 1995. Dr. Niv served as head of
the physics department of the Company from January 1987 to July 1990. From
January 1990 to May 1990, Dr. Niv served as Vice President of Research and
Development, and from June 1990 to July 1991, he served as Vice President of
Marketing of the Company.
I-6
<PAGE>
From April 1985 to December 1986, Dr. Niv was a senior physicist at
Optrotech, Ltd. From 1982 to 1985, Dr. Niv was an assistant professor at the
University of Southern California.
Meir Ben-Shoshan has been a Director of the Company since May 1993. Mr.
Ben-Shoshan has been Vice President of Clal Electronics since January 1986.
From 1983 to 1985, Mr. Ben-Shoshan served as manager of strategic planning at
Bank Leumi. From 1974 to 1980, Mr. Ben-Shoshan served a manager of long range
planning at Tadiran Ltd., a diversified electronics manufacturer. Mr.
Ben-Shoshan serves as a director of ECI Telecom Ltd., a telecommunications
equipment manufacturer, ITL International Technologies (Lasers) Ltd., a
defense-based advanced electro-optics supplier, and a number of privately
held companies.
Robert Brill has been a Director of the Company since August 1990. Dr.
Brill also served as a Director of the Company from January 1989 to March
1990. Since 1988, Dr. Brill has served as a Managing General Partner for Poly
Ventures Associates, L.P. ("Poly Ventures"), a technology-based venture
capital firm. Since 1991, Dr. Brill has also been a Managing General Partner
of Poly Ventures Associates II, L.P. Prior to joining Poly Ventures, Dr.
Brill was the Chief Executive Officer of several high technology companies,
and held executive and technical positions with Harris Corporation and
International Business Machines Corporation. Dr. Brill serves as a director
of Standard Microsystems Corporation, a worldwide supplier of local area
networks system products, and a number of privately held companies.
Mendy Erad has been a Director of the Company since February 1995 and
Chairman of the Board of Directors since March 1995. Mr. Erad has been
Managing Director of Clal Electronics since February 1995. From October 1993
to January 1995, Mr. Erad served as General Manager of Koor Tourist
Enterprises Ltd., a tour organizer and hotel management firm. From May 1988
to September 1993, Mr. Erad served a Division Manager at Tadiran Ltd. Mr.
Erad serves as a director of Scitex Corporation Ltd., a manufacturer of color
electronic prepress systems, ECI Telecom Ltd., a telecommunications equipment
manufacturer, and a number of privately held companies.
Uzia Galil has been a Director of the Company since December 1986. Mr.
Galil served as Chairman of the Board of Directors of the Company from May
1991 to November 1993. Mr. Galil is the founder and Chairman of the Board of
Directors of Elron Electronic Industries Ltd. ("Elron"), a high technology
holding company, and has served as its President and Chief Executive Officer
since its formation in 1962. Mr. Galil serves as Chairman of the Board of
Directors of Elbit Ltd. ("Elbit"), a manufacturer of advanced defense,
communication and medical diagnostic systems. Mr. Galil served as President
of Elbit from 1967 to 1978. Mr. Galil is a director of Elscint Ltd., a
manufacturer of computer-based medical diagnostic imaging systems, Orbotech
Ltd., Net Manage Inc., an internetworking software supplier, Zoran Corp., a
supplier of integrated circuits for digital video and audio compression
applications, and a number of private companies held by Elron. From 1980 to
1990, Mr. Galil served as Chairman of the International Board of Governors of
the Technion-Israel Institute of Technology.
Zvi Lapidot has been a Director of the Company since August 1993. Mr.
Lapidot is Chairman of the Board of Directors of Orbot Instruments Ltd. and a
director of Orbotech Ltd. Mr. Lapidot was a co-founder of Orbot Systems Ltd.
and served as Co-Chief Executive Officer from its formation in June 1983
until its merger with Optrotech Ltd. in October 1992. Mr. Lapidot served as
Co-Chief Executive Officer of Orbotech Ltd. from October 1992 to November
1994.
Dan Maydan has been a Director of the Company since November 20, 1995. He
has been President of Parent since January 1994 and a Co-Chairman of Applied
Komatsu Technology, Inc. since September 1993. From 1990 through December
1993, he was Executive Vice President of Parent. During 1989 and 1990, Dr.
Maydan was a Group Vice President of Parent. From March 1984 through 1989,
Dr. Maydan was a Vice President of Parent.
Amram Rasiel has been a Director of the Company since January 1987. Dr.
Rasiel is a private investor and, from December 1989 to May 1990, was
Co-Chief Executive Officer of ENSR Corporation, an environmental engineering
firm. Dr. Rasiel is currently a director of PRI Automation, Inc., a
manufacturer of factory automation systems for the fabrication of integrated
circuits, Progress Software Corporation, a supplier of application
development software, and a number of privately held companies.
I-7
<PAGE>
COMPENSATION OF DIRECTORS
Directors are not currently compensated by the Company for service as
Directors.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Company Board held five meetings and acted twice by unanimous consent
during the fiscal year ended December 31, 1995. Each of the Directors of the
Company attended at least 75% of the meetings of the Company Board, with the
exception of Messrs. Niv and Lapidot, who attended three meetings of the
Company Board.
The Company Board has a standing Audit Committee, Compensation Committee
and Executive Committee. The Audit Committee held three meetings, the
Compensation Committee held one meeting and acted three times by unanimous
consent, and the Executive Committee held one meeting, during the fiscal year
ended December 31, 1995. Each of the Directors of the Company attended at
least 75% of the meetings of the committees on which such Director served,
with the exception of Mr. Lapidot, who attended one meeting of the Audit
Committee.
The Audit Committee reviews internal auditing procedures, the adequacy of
internal controls, the results and scope of annual audits, and other services
provided by the Company's independent accountants. The Audit Committee meets
periodically with management and the independent accountants. During the
fiscal year ended December 31, 1995, Messrs. Ben-Shoshan, Brill (from August
3, 1995 through December 31, 1995), Fiaklov (from January 1, 1995 through
August 2, 1995) and Lapidot comprised the Audit Committee.
The Compensation Committee establishes salaries, incentives and other
forms of compensation for officers and other employees of the Company and
administers the incentive compensation and benefit plans of the Company.
During the fiscal year ended December 31, 1995, Messrs. Erad, Fialkov and
Galil comprised the Compensation Committee.
With the exception of certain matters specified by Delaware law, the
Executive Committee has authority to exercise all the powers and authority of
the full Company Board. During the fiscal year ended December 31, 1995,
Messrs. Yizhar, Erad, Fialkov and Lapidot comprised the Executive Committee.
EXECUTIVE OFFICERS
The following table sets forth certain other information with respect to
the current executive officers of the Company as of November 24, 1996.
<TABLE>
<CAPTION>
SERVED AS AN
OFFICER
NAME AGE TITLE SINCE
- ----------------- ----- ----------------------------------- ------------
<S> <C> <C> <C>
Rafi Yizhar ...... 48 President, Chief Executive Officer 1988
and Director
Israel Niv ....... 43 General Manager, Executive Vice 1990
President of Sales and Marketing
and Director
Henry Schwarzbaum 40 Chief Financial Officer, Vice 1990
President of Finance and Secretary
Mannie Dorfan ... 49 Vice President of Research and 1990
Development
Michael Sheinfeld 46 Vice President of Operations 1991
</TABLE>
Biographical information concerning Messrs. Yizhar and Niv is set forth
above.
Henry Schwarzbaum has been Chief Financial Officer and Vice President of
Finance since joining the Company in June 1990. Mr. Schwarzbaum has served as
Secretary of the Company since November 1991. From June 1989 to May 1990, Mr.
Schwarzbaum served as the Vice President of Finance and Administration of
Gelman Technologies Ltd., a microporous membrane manufacturer. From November
1986 to May 1989, Mr. Schwarzbaum was employed by Bio-Technologies General
Corp., a genetic
I-8
<PAGE>
engineering company, holding the position of Principal Financial and
Accounting Officer from June 1988 to May 1989. From 1979 through 1986, Mr.
Schwarzbaum held various financial positions at General Foods Corporation.
Mannie Dorfan has been Vice President of Research and Development since
joining the Company in May 1990. Mr. Dorfan served as a Project Manager at
Optrotech Ltd. from December 1984 to April 1990. From 1976 to 1984, Mr.
Dorfan held various positions at El Op, including Product Development Manager
from 1983 to 1984.
Michael Sheinfeld, a co-founder of the Company, has been Vice President of
Operations since February 1991. Mr. Sheinfeld served as head of the mechanics
department of the Company from January 1987 to January 1991. Mr. Sheinfeld
headed several mechanics development groups at El Op from 1982 to 1987. From
1974 through 1981, Mr. Sheinfeld managed a research and development group at
Kulso Ltd., a tool manufacturer for the semiconductor equipment industry.
Section 16(a) of the Exchange Act requires the Company's Directors,
executive officers and holders of more than 10% of the outstanding Shares to
file initial reports of ownership and reports of changes in ownership of
Shares with the SEC. Based solely on a review of its files, and the
representation of its officers and directors, the Company notes that all
required filings have been made.
I-9
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding cash
compensation paid for services rendered to the Company during the fiscal year
ended December 31, 1995 ("Fiscal 1995") and the prior fiscal year of the
Company by the Chief Executive Officer and each of the other four highest
paid executive officers of the Company.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION ($) COMPENSATION
--------------------------------------- ---------------
NAME AND OTHER ANNUAL NUMBER OF STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- ------------------------------ ------ ------------ --------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Rafi Yizhar ................... 1995 $113,861 $58,046 -- 0 $51,595(1)
Director, President and 1994 91,864 41,418 -- 88,572 16,449(2)
Chief Executive Officer
Israel Niv .................... 1995 563,659(3) 30,000 -- 0 15,476(4)
Director and Executive Vice 1994 341,754(5) 20,000 -- 67,143 15,240(6)
President of Sales and
Marketing
Henry Schwarzbaum ............. 1995 100,663 41,487 -- 20,000 20,817(7)
Chief Financial Officer, 1994 73,274 12,425 -- 11,286 8,997(2)
Vice President of Finance and
Secretary
Mannie Dorfan ................. 1995 100,663 41,487 -- 0 20,448(8)
Vice President of Research 1994 80,376 24,851 -- 23,858 19,346(9)
and Development
Michael Sheinfeld ............. 1995 100,663 41,487 -- 0 19,900(10)
Vice President of Operations 1994 80,528 24,851 -- 16,572 15,859(11)
</TABLE>
- ------------
(1) Represents $18,874 of contributions by the Company to severance and pension
funds and $32,721 for redemption of accrued vacation leave.
(2) Represents contributions by the Company to severance and pension funds.
(3) Includes $212,723 of compensation earned in 1995 and paid in 1996, and
excludes $103,305 of compensation earned in 1994 and paid in 1995. Also
includes $17,725 of compensation earned in 1995 and paid in 1994, and
excludes $52,868 of compensation earned in 1996 and paid in 1995.
(4) Represents $10,976 of contributions by the Company to severance and pension
funds and $4,500 contributed by the Company to the Company's 401(k) Plan.
(5) Includes $103,305 of compensation earned in 1994 and paid in 1995, and
excludes $26,190 of compensation earned in 1993 and paid in 1994. Also
excludes $17,725 of compensation earned in 1995 and paid in 1994. Also
excludes $17,725 of compensation earned in 1995 and paid in 1994.
(6) Represents $10,740 of contributions by the Company to severance and pension
funds and $4,500 contributed by the Company to the Company's 401(k) Plan.
(7) Represents $11,993 of contributions by the Company to severance and pension
funds and $8,824 for redemption of accrued vacation leave.
(8) Represents $11,993 of contributions by the Company to severance and pension
funds and $8,455 for redemption of accrued vacation leave.
(9) Represents $9,514 of contributions by the Company to severance and pension
funds and $9,832 for redemption of accrued vacation leave.
(10) Represents $11,993 of contributions by the Company to severance and pension
funds and $7,907 for redemption of accrued vacation leave.
(11) Represents $9,514 of contributions by the Company to severance and pension
funds and $6,345 for redemption of accrued vacation leave.
I-10
<PAGE>
RECENT STOCK OPTION GRANTS
The following table sets forth information regarding options granted
during Fiscal 1995. None of the other named executive officers were granted
any options in Fiscal 1995.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL STOCK ANNUAL RATE OF STOCK
STOCK OPTIONS GRANTED TO PRICE APPRECIATION
OPTIONS EMPLOYEES IN PER SHARE EXPIRATION FOR OPTION TERM(1)
NAME GRANTED FISCAL YEAR EXERCISE PRICE($) DATE 5%($) 10%($)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Rafi Yizhar ...... 0 -- -- -- -- --
Israel Niv ....... 0 -- -- -- -- --
Henry Schwarzbaum 20,000 6.8% 9.75 5/18/06 122,634 310,780
Mannie Dorfan ... 0 -- -- -- -- --
Michael Sheinfeld 0 -- -- -- -- --
</TABLE>
- ------------
(1) This column shows the hypothetical gains or "option spreads" of the options
granted based on assumed annual compound stock appreciation rates of 5% and
10% over the full term of the options and based on the fair market value of
$9.75 per Share on the date of pricing of such options. The 5% and 10%
assumed rates of appreciation are mandated by the rules of the SEC and do not
represent the Company's estimate or projection of future Share prices.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information regarding the total number and
value (based on the December 31, 1995 closing price of the Shares of $12.75)
of all outstanding unexercised stock options having an exercise price less
than such closing price, held by the named executive officers as of December
31, 1995. No stock options were exercised by any of the named executive
officers in Fiscal 1995.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF VALUE OF VALUE OF
UNEXERCISED UNEXERCISED UNEXERCISED UNEXERCISED
STOCK OPTIONS STOCK OPTIONS STOCK OPTIONS STOCK OPTIONS
AT 12/31/95 AT 12/31/95 AT 12/31/95 AT 12/31/95
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Rafi Yizhar ...... $49,821 $38,751 $617,780 $480,512
Israel Niv ....... 37,768 29,375 468,323 364,250
Henry Schwarzbaum 6,348 24,938 78,715 61,231
Mannie Dorfan ... 13,420 10,438 166,408 129,431
Michael Sheinfeld 9,321 7,251 115,580 89,912
</TABLE>
For a description of the treatment of Company Options in the Merger, see
"The Merger Agreement--Options" in the Schedule 14D-9.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONS
The Compensation Committee of the Company Board for 1996 consists of
Messrs. Erad and Galil. Mr. Fialkov was a member of the Compensation
Committee until his departure in April, 1996. Mr. Erad is Managing Director
of Clal Electronics, an investor in the Company, Mr. Fialkov is a General
Partner of Poly Ventures, an investor in the Company, and Mr. Galil is a
director of Orbotech Ltd., an investor in the Company. No member of the
Compensation Committee was an officer or employee of the Company or any of
its subsidiaries. No executive officer of the Company serves as a member of
the board of directors or compensation committee of any entity which has one
or more executive officers serving as a member of the Company Board or the
Compensation Committee.
REPORT ON EXECUTIVE COMPENSATION
The following is the report of the Compensation Committee of the Company
Board, describing the compensation policies and rationale applicable to the
Company's executive officers with respect to the
I-11
<PAGE>
compensation paid to such executive officers for the year ended December 31,
1995. The information contained in the report shall not be deemed to be
"soliciting material" or to be "filed" with the SEC, nor shall such
information be incorporated by reference into any future filing under the
Securities Act, or the Exchange Act, except to the extent that the Company
specifically incorporates it by reference into such filing.
The Compensation Committee of the Company Board is charged with the
responsibility of administering all aspects of the Company's executive
compensation programs. The members of the Compensation Committee for the year
ended December 31, 1995 were Messrs. Erad, Fialkov and Galil, who were
non-employee Directors of the Company during such period.
The objectives of the compensation program are: (1) to provide a means for
the Company to attract and retain high-quality executives; (2) to tie
executive compensation directly to the Company's business and performance
objectives; and (3) to reward outstanding performance that contributes to the
long-term success of the Company.
The Company has a simple total compensation program that consists of (1)
cash compensation in the form of base salary and bonuses and (2) equity
compensation in the form of stock options.
Base Salary and Bonuses. The Compensation Committee considers specifically
the following factors in determining base compensation: (1) a comparison of
the Company's growth and financial performance relative to the performance of
competitors; (2) salary levels for comparable positions in companies in
comparable industries; and (3) each executive's responsibility level and
financial and strategic objectives for the subsequent year.
Annual bonuses for officers are based on the Company's performance
compared to goals. Other qualitative factors are also included in determining
the bonuses, including achievements within the organization for which an
executive is responsible and bonuses given by other similarly situated
companies.
Mr. Yizhar's salary and bonus were determined using the same analyses
applicable to the other executive officers. Thus, in determining Mr. Yizhar's
compensation, the Compensation Committee evaluated Mr. Yizhar's individual
performance and that of the Company in achieving growth and financial
performance relative to the performance of competitors. The Compensation
Committee also examined the compensation packages provided to chief executive
officers of companies in comparable industries.
Equity Participation. The Company has adopted a stock option plan to
provide employees with additional incentives to work to maximize stockholder
value. Stock options are granted to executive officers at the discretion of
the Compensation Committee, taking into account each officer's performance by
examining criteria similar to those involved in determining cash bonuses. To
create incentives for high levels of performance over the long term, stock
options generally vest over a period of four years.
Company Options have been awarded to various Company employees. During the
fiscal year ended December 31, 1995, an option to purchase 20,000 Shares was
granted to Henry Schwarzbaum. The Company believes that the grant of stock
options aligns the interests of executive officers closely with the interests
of other stockholders because of the direct benefits executive officers
receive through improved stock performance.
I-12
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C>
Exhibit A -- Agreement and Plan of Merger, dated as of November 24, 1996, among the Company,
Parent and the Purchaser.
Exhibit B -- Opal, Inc. Class B Common Stock Option Plan
Exhibit C -- Employee Stock Option Plan
Exhibit D -- 1995 Employee Stock Purchase Plan
Exhibit E -- Stockholder Agreement, dated as of November 24, 1996, by and among Parent, the
Purchaser and Rafi Yizhar
Exhibit F -- Stockholder Agreement, dated as of November 24, 1996, by and among Parent, the
Purchaser and Israel Niv
Exhibit G -- Stockholder Agreement, dated as of November 24, 1996, by and among Parent, the
Purchaser and Clal Electronics Industries Ltd.
Exhibit H -- Stockholder Agreement, dated as of November 24, 1996, by and among Parent, the
Purchaser and Orbotech Ltd.
Exhibit I -- Confidentiality and Nondisclosure Agreement dated October 21, 1996
Exhibit J -- Press Release, dated November 24, 1996
Exhibit K -- Letter to Stockholders*
Exhibit L -- Opinion of Robertson, Stephens & Company LLC dated November 24, 1996*
</TABLE>
- ---------------
* Included in copies mailed to stockholders
--------------------------------------------------
AGREEMENT AND PLAN OF MERGER
by and among
APPLIED MATERIALS, INC.,
ORION CORP. I,
and
OPAL, INC.
dated as of
November 24, 1996
--------------------------------------------------
<PAGE>
Index of Defined Terms
----------------------
<TABLE>
<CAPTION>
Defined Term Section No.
- ------------ -----------
<S> <C>
Agreement.............................................. Recitals
Acquisition Proposal................................... 5.4
Appointment Date....................................... 5.1
Balance Sheet.......................................... 3.10(a)
Benefit Plans.......................................... 3.9(a)
By-laws................................................ 1.4
Certificate of Incorporation........................... 1.4
Certificates........................................... 2.2(b)
Chief Scientist........................................ 3.10(p)
Closing................................................ 1.6
Closing Date........................................... 1.6
Code................................................... 3.9(a)
Company................................................ Recitals
Company Agreements..................................... 3.4
Company Disclosure Schedule............................ 3.0
Company Option......................................... 2.4(b)
Company SEC Documents.................................. 3.5
Confidentiality Agreement.............................. 5.2
Copyrights............................................. 3.12(l)
DGCL................................................... 1.2(a)
Dissenting Stockholders................................ 2.1(c)
D&O Insurance.......................................... 5.9(b)
Effective Time......................................... 1.5
Encumbrances........................................... 3.2(b)
ERISA.................................................. 3.9(a)
ERISA Affiliate........................................ 3.9(a)
Exchange Act........................................... 1.1(a)
Financial Statements................................... 3.5
fully diluted basis.................................... 1.1(a)
GAAP................................................... 3.5
Governmental Entity.................................... 3.4
HSR Act................................................ 3.4
ICT.................................................... 3.15
ICT Agreements......................................... 3.15
Indemnified Party...................................... 5.9(a)
Independent Directors.................................. 1.3
Intellectual Property.................................. 3.12(l)
Licenses............................................... 3.12(l)
Mask Works............................................. 3.12(l)
Merger................................................. 1.4
Merger Consideration................................... 2.1(c)
Minimum Condition...................................... 1.1(a)
Offer.................................................. 1.1(a)
Offer Documents........................................ 1.1(b)
Offer Price............................................ 1.1(a)
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Defined Term Section No.
- ------------ -----------
<S> <C>
Offer to Purchase...................................... 1.1(a)
Option Exchange Ratio.................................. 2.4(a)
Option Plan............................................ 2.4(a)
Parent................................................. Recitals
Parent Common Stock.................................... 2.4(a)
Parent Option.......................................... 2.4(a)
Parent Option Plan..................................... 2.4(a)
Patents................................................ 3.12(l)
Paying Agent........................................... 2.2(a)
Preferred Stock........................................ 3.2(a)
Proxy Statement........................................ 1.8(a)
Purchaser.............................................. Recitals
Purchaser Common Stock................................. 2.1
Schedule 14D-1......................................... 1.1(b)
Schedule 14D-9......................................... 1.2(b)
SEC.................................................... 1.1(b)
Secretary of State..................................... 1.5
Securities Act......................................... 3.5
Service................................................ 3.9(g)
Shares................................................. 1.1(a)
Special Meeting........................................ 1.8(a)
Stockholder Agreements................................. Recitals
Subsidiary............................................. 3.1
Superior Proposal...................................... 5.4(a)
Surviving Corporation.................................. 1.4
Tax.................................................... 3.10(r)
Taxes.................................................. 3.10(r)
Tax Return............................................. 3.10(r)
Termination Fee........................................ 8.1(b)
Trademarks............................................. 3.12(l)
Transactions........................................... 1.2(a)
Trustee................................................ 2.4(a)
Unvested Company Option................................ 2.4(a)
Vested Company Option.................................. 2.4(b)
Voting Debt............................................ 3.2(a)
1995 Plan.............................................. 2.4(c)
1995 Premium........................................... 5.9(b)
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
ARTICLE I
<S> <C> <C>
THE OFFER AND MERGER....................................................... 1
Section 1.1 The Offer........................................................................ 1
Section 1.2 Company Actions.................................................................. 4
Section 1.3 Directors........................................................................ 7
Section 1.4 The Merger....................................................................... 8
Section 1.5 Effective Time................................................................... 9
Section 1.6 Closing.......................................................................... 9
Section 1.7 Directors and Officers of the Surviving Corporation.............................. 9
Section 1.8 Stockholders' Meeting............................................................ 10
Section 1.9 Merger Without Meeting of Stockholders........................................... 11
ARTICLE II
CONVERSION OF SECURITIES.................................................... 11
Section 2.1 Conversion of Capital Stock...................................................... 11
Section 2.2 Exchange of Certificates......................................................... 12
Section 2.3 Dissenters' Rights............................................................... 14
Section 2.4 Company Plans.................................................................... 14
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................... 17
Section 3.1 Organization..................................................................... 18
Section 3.2 Capitalization................................................................... 18
Section 3.3 Authorization; Validity of Agreement; Company Action............................. 20
Section 3.4 Consents and Approvals; No Violations............................................ 20
Section 3.5 SEC Reports and Financial Statements............................................. 21
Section 3.6 Absence of Certain Changes....................................................... 22
Section 3.7 No Undisclosed Liabilities....................................................... 23
Section 3.8 Litigation....................................................................... 23
Section 3.9 Employee Benefit Plans; ERISA.................................................... 23
Section 3.10 Tax Matters; Government Benefits................................................. 26
Section 3.11 Title and Condition of Properties............................................... 31
Section 3.12 Intellectual Property........................................................... 32
Section 3.13 Employment Matters.............................................................. 37
Section 3.14 Compliance with Laws............................................................ 37
Section 3.15 Contracts....................................................................... 37
Section 3.16 Potential Conflicts of Interest................................................. 38
Section 3.17 Vote Required................................................................... 39
Section 3.18 Suppliers and Customers......................................................... 39
Section 3.19 Information in Proxy Statement.................................................. 40
Section 3.20 Opinion of Financial Advisor.................................................... 40
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
ARTICLE IV
<S> <C> <C>
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER................................................. 40
Section 4.1 Organization..................................................................... 40
Section 4.2 Authorization; Validity of Agreement; Necessary Action........................... 41
Section 4.3 Consents and Approvals; No Violations............................................ 41
Section 4.4 Information in Proxy Statement................................................... 42
Section 4.5 Financing........................................................................ 42
Section 4.6 Options.......................................................................... 43
Section 4.7 Company Shares................................................................... 43
ARTICLE V
COVENANTS........................................................... 43
Section 5.1 Interim Operations of the Company................................................ 43
Section 5.2 Access; Confidentiality.......................................................... 46
Section 5.3 Consents and Approvals........................................................... 47
Section 5.4 No Solicitation.................................................................. 47
Section 5.5 Brokers or Finders............................................................... 50
Section 5.6 Additional Agreements............................................................ 50
Section 5.7 Publicity........................................................................ 51
Section 5.8 Notification of Certain Matters.................................................. 51
Section 5.9 Directors' and Officers' Insurance and Indemnification........................... 51
Section 5.10 Purchaser Compliance............................................................. 53
Section 5.11 Actions of Parent and the Purchaser.............................................. 53
Section 5.12 ICT Action....................................................................... 53
ARTICLE VI
CONDITIONS.......................................................... 53
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger....................... 53
Section 6.2. Condition to Parent's and the Purchaser's Obligations to Effect the Merger....... 54
ARTICLE VII
TERMINATION.......................................................... 55
Section 7.1 Termination...................................................................... 55
Section 7.2 Effect of Termination............................................................ 57
ARTICLE VIII
MISCELLANEOUS......................................................... 57
Section 8.1 Fees and Expenses................................................................ 57
Section 8.2 Amendment and Modification....................................................... 58
Section 8.3 Nonsurvival of Representations and Warranties.................................... 58
Section 8.4 Notices.......................................................................... 58
Section 8.5 Interpretation................................................................... 59
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 8.6 Counterparts..................................................................... 60
Section 8.7 Entire Agreement; No Third Party Beneficiaries................................... 60
Section 8.8 Severability..................................................................... 60
Section 8.9 Governing Law.................................................................... 60
Section 8.10 Assignment....................................................................... 60
Section 8.11 Transfer and Similar Taxes....................................................... 61
Certain Conditions of the Offer....................................................................Annex A
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated as of November 24, 1996, by and among Applied Materials,
Inc., a Delaware corporation ("Parent"), Orion Corp. I, a Delaware corporation
and a wholly owned subsidiary of Parent (the "Purchaser"), and Opal, Inc., a
Delaware corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, the
Purchaser and the Company has approved, and deems it advisable and in the best
interests of its respective stockholders to consummate, the acquisition of the
Company by Parent upon the terms and subject to the conditions set forth
herein; and
WHEREAS, concurrently with the execution of this Agreement,
and as an inducement to Parent and the Purchaser to enter into this Agreement,
certain stockholders of the Company have each entered into a Stockholder
Agreement, dated as of the date hereof (collectively, the "Stockholder
Agreements"), among Parent, the Purchaser and the stockholder named therein
providing, among other things, that such stockholders will vote in favor of the
Merger and will grant a proxy to Parent for that purpose;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
(a) As promptly as practicable (but in no
event later than five business days after the public announcement of the
execution hereof), the Purchaser shall commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) a tender offer (the "Offer") for all of the outstanding shares of Common
Stock, par value $.01
<PAGE>
per share (the "Shares"), of the Company at a price of $18.50 per Share, net to
the seller in cash (such price, or such other price per Share as may be paid in
the Offer, being referred to herein as the "Offer Price"), subject to there
being validly tendered and not withdrawn prior to the expiration of the Offer,
that number of Shares which represents at least a majority of the Shares
outstanding on a fully diluted basis (the "Minimum Condition") and to the other
conditions set forth in Annex A hereto, and shall consummate the Offer in
accordance with its terms ("fully diluted basis" means issued and outstanding
Shares and Shares subject to issuance under Vested Company Options (as defined
in Section 2.4(b)) and Shares subject to issuance upon exercise of outstanding
warrants, calls, subscriptions or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock
of the Company or securities convertible or exchangeable for such capital
stock, but shall not include Unvested Company Options). The obligations of the
Purchaser to accept for payment and to pay for any Shares validly tendered on
or prior to the expiration of the Offer and not withdrawn shall be subject only
to the Minimum Condition and the other conditions set forth in Annex A hereto.
The Offer shall be made by means of an offer to purchase (the "Offer to
Purchase") containing the terms set forth in this Agreement, the Minimum
Condition and the other conditions set forth in Annex A hereto. The Purchaser
shall not amend or waive the Minimum Condition and shall not decrease the Offer
Price or decrease the number of Shares sought, or amend any other condition of
the Offer in any manner adverse to the holders of the Shares (other than with
respect to insignificant changes or amendments, not including changes in the
form of consideration payable under the Offer, in any of the conditions in
Annex A, or in the expiration date of the Offer, and subject to the last
sentence of this Section 1.1(a)) without the written consent of the Company
(such consent to be authorized by the Board of Directors of the Company or a
duly authorized committee thereof); provided, however, that if on the initial
scheduled expiration date of the Offer which shall be 20 business days after
the date the Offer is commenced, all conditions to the Offer shall not have
been satisfied or waived, the Purchaser may, from time to time, in its sole
discretion, extend the expiration date. The Purchaser shall, on the terms and
subject to the prior satisfaction or waiver of the conditions of the
2
<PAGE>
Offer, accept for payment and pay for Shares tendered as soon as it is legally
permitted to do so under applicable law; provided, however, that if,
immediately prior to the initial expiration date of the Offer (as it may be
extended), the Shares tendered and not withdrawn pursuant to the Offer equal
less than 90% of the outstanding Shares, the Purchaser may extend the Offer for
a period not to exceed thirty business days, notwithstanding that all
conditions to the Offer are satisfied as of such expiration date of the Offer,
provided that upon such extension Parent and the Purchaser shall be deemed to
have waived all of the conditions set forth in Annex A other than the Minimum
Condition; provided, however, that if at the initial expiration date for the
Offer, any or all of the conditions set forth in clauses (i), (iii), (iv), (v)
or (vi) of Annex A shall not have been satisfied or waived or, as a result of
any statute, rule, regulation, judgment, order or injunction having been
enacted, entered, enforced, promulgated or deemed applicable, pursuant to an
authoritative interpretation by or on behalf of a Governmental Entity, to the
Offer or the Merger, or any other action shall be taken by any Governmental
Entity, which shall not have become final and non-appealable, the conditions
set forth in clause (vii) paragraph (b) of Annex A shall not have been
satisfied or waived and at such time all of the other conditions to the
Purchaser's obligation to consummate the Offer have been satisfied or waived,
the Purchaser shall be obligated to extend the Offer for a period of up to ten
business days, which extension shall be repeated one time further if necessary;
provided, however, that the Purchaser may, in any such event, extend the
expiration date of the Offer beyond such ten day period in its sole discretion.
(b) As soon as practicable on the date
the Offer is commenced, Parent and the Purchaser shall file with the United
States Securities and Exchange Commission (the "SEC") a Tender Offer Statement
on Schedule 14D-1 with respect to the Offer (together with all amendments and
supplements thereto and including the exhibits thereto, the "Schedule 14D-1").
The Schedule 14D-1 will include, as exhibits, the Offer to Purchase and a form
of letter of transmittal and summary advertisement (collectively, together with
any amendments and supplements thereto, the "Offer Documents"). The Offer
Documents will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published, sent
3
<PAGE>
or given to the Company's stockholders, shall not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by Parent or the Purchaser with respect to information
furnished by the Company to Parent or the Purchaser, in writing, expressly for
inclusion in the Offer Documents. The information supplied by the Company to
Parent or the Purchaser, in writing, expressly for inclusion in the Offer
Documents and by Parent or the Purchaser to the Company, in writing, expressly
for inclusion in the Schedule 14D-9 (as hereinafter defined) will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of Parent and the Purchaser will take all steps necessary to
cause the Offer Documents 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. Each of Parent and the 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 the Purchaser will take
all steps necessary to cause the Offer Documents as so corrected to be filed
with the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent required by applicable federal securities laws. The Company
and its counsel shall be given the opportunity to review the Schedule 14D-1
before it is filed with the SEC. In addition, Parent and the Purchaser will
provide the Company and its counsel in writing with any comments, whether
written or oral, Parent, the 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.
Section 1.2 Company Actions.
(a) The Company hereby approves of and
consents to the Offer and represents that the Board of Directors, at a meeting
duly called and held, has (i) unanimously (with the abstention of Rafi Yizhar,
Israel
4
<PAGE>
Niv, Dan Maydan and Zvi Lapidot) determined that each of the Agreement, the
Offer and the Merger (as defined in Section 1.4) are fair to and in the best
interests of the stockholders of the Company, (ii) approved this Agreement and
the Stockholder Agreements and the transactions contemplated hereby and
thereby, including the Offer and the Merger (collectively, the "Transactions"),
and such approval constitutes approval of the Offer, this Agreement, the
Stockholders Agreement and the transactions contemplated hereby and thereby,
including the Merger, for purposes of Section 203 of the Delaware General
Corporation Law, as amended (the "DGCL")), such that Section 203 of the DGCL
will not apply to the transactions contemplated by this Agreement or the
Stockholder Agreements, and (iii) resolved to recommend that the stockholders
of the Company accept the Offer, tender their Shares thereunder to the
Purchaser and approve and adopt this Agreement and the Merger; provided, that
such recommendation may be withdrawn, modified or amended if, in the opinion of
the Board of Directors, only after receipt of written advice from outside legal
counsel, failure to withdraw, modify or amend such recommendation could
reasonably be expected to result in the Board of Directors violating its
fiduciary duties to the Company's stockholders under applicable law. The
Company represents that the actions set forth in this Section 1.2(a) and all
other actions it has taken in connection therewith are sufficient to render the
relevant provisions of such Section 203 of the DGCL inapplicable to the Offer,
the Merger and the Stockholders Agreement.
(b) Concurrently with the commencement of
the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto and including the exhibits thereto, the "Schedule 14D-9") which shall,
subject to the provisions of Section 5.4(b), contain the recommendation
referred to in clause (iii) of Section 1.2(a) hereof. The Schedule 14D-9 will
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
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except that no representation is made by the Company with respect to
information furnished by Parent or the Purchaser for inclusion in the Schedule
14D-9. The Company further agrees to take all steps necessary to cause the
Schedule 14D-9 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. Each of the Company, on the one hand, and Parent and the
Purchaser, on the other hand, agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false and misleading in any material respect and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given the opportunity to
review the Schedule 14D-9 before it is filed with the SEC. In addition, the
Company agrees to provide Parent, the Purchaser and their counsel with any
comments, whether written or oral, that the Company or its counsel may receive
from time to time from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments or other communications.
(c) In connection with the Offer, the
Company will promptly furnish or cause to be furnished to the Purchaser mailing
labels, security position listings and any available listing or computer file
containing the names and addresses of all recordholders of the Shares as of a
recent date, and shall furnish the Purchaser with such additional information
(including, but not limited to, updated lists of holders of the Shares and
their addresses, mailing labels and lists of security positions) and assistance
as the Purchaser or its agents may reasonably request in communicating the
Offer to the record and beneficial holders of the Shares. Except for such steps
as are necessary to disseminate the Offer Documents, Parent and the Purchaser
shall hold in confidence the information contained in any of such labels and
lists and the additional information referred to in the preceding sentence,
will use such information only in connection with the Offer, and, if this
Agreement is terminated, will upon request of the Company deliver or cause to
be delivered to the Company all copies of such
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information then in its possession or the possession of its agents or
representatives.
Section 1.3 Directors. Promptly upon the purchase of and
payment for any Shares by Parent or any of its subsidiaries which represents at
least a majority of the outstanding Shares (on a fully diluted basis, as
defined in Section 1.1(a)), Parent shall be entitled to designate such number
of directors, rounded up to the next whole number, on the Board of Directors of
the Company as is equal to the product of the total number of directors on such
Board (giving effect to the directors designated by Parent pursuant to this
sentence) multiplied by the percentage that the number of Shares so accepted
for payment bears to the total number of Shares then outstanding. In
furtherance thereof, the Company shall, upon request of the Purchaser, use its
best reasonable efforts promptly either to increase the size of its Board of
Directors or secure the resignations of such number of its incumbent directors,
or both, as is necessary to enable Parent's designees to be so elected to the
Company's Board, and shall take all actions available to the Company to cause
Parent's designees to be so elected. At such time, the Company shall also cause
persons designated by Parent to constitute at least the same percentage
(rounded up to the next whole number) as is on the Company's Board of Directors
of (i) each committee of the Company's Board of Directors, (ii) each board of
directors (or similar body) of each Subsidiary (as defined in Section 3.1) of
the Company and (iii) each committee (or similar body) of each such board. The
Company shall promptly take all actions required pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its
obligations under this Section 1.3(a), including mailing to stockholders the
information required by such Section 14(f) and Rule 14f-1 as is necessary to
enable Parent's designees to be elected to the Company's Board of Directors.
Parent or the Purchaser will supply the Company and be solely responsible for
any information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1. The
provisions of this Section 1.3(a) are in addition to and shall not limit any
rights which the Purchaser, Parent or any of their affiliates may have as a
holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise. In the event
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that Parent's designees are elected to the Company's Board of Directors, until
the Effective Time, the Company's Board shall have at least three directors who
are directors on the date hereof (the "Independent Directors"), provided that,
in such event, if the number of Independent Directors shall be reduced below
three for any reason whatsoever, any remaining Independent Directors (or
Independent Director, if there be only one remaining) shall be entitled to
designate persons to fill such vacancies who shall be deemed to be Independent
Directors for purposes of this Agreement or, if no Independent Director then
remains, the other directors shall designate three persons to fill such
vacancies who shall not be stockholders, affiliates or associates of Parent or
the Purchaser and such persons shall be deemed to be Independent Directors for
purposes of this Agreement. Notwithstanding anything in this Agreement to the
contrary, in the event that Parent's designees are elected to the Company's
Board, after the acceptance for payment of Shares pursuant to the Offer and
prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (a) amend or terminate this
Agreement by the Company, (b) exercise or waive any of the Company's rights,
benefits or remedies hereunder, (c) extend the time for performance of Parent's
and the Purchaser's respective obligations hereunder, (d) take any other action
by the Company's Board under or in connection with this Agreement or the
Stockholder Agreements, or (e) approve any other action by the Company which
could adversely affect the interests of the stockholders of the Company (other
than Parent, the Purchaser and their affiliates other than the Company and the
Subsidiaries) with respect to the transactions contemplated hereby.
Section 1.4 The Merger. Subject to the terms and conditions
of this Agreement, at the Effective Time, the Company and the Purchaser shall
consummate a merger (the "Merger") pursuant to which (a) the Purchaser shall be
merged with and into the Company and the separate corporate existence of the
Purchaser shall thereupon cease, (b) the Company shall be the successor or
surviving corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware, and (c) the separate corporate existence of the Company with
all its rights, privileges, immunities,
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powers and franchises shall continue unaffected by the Merger, except as set
forth in this Section 1.4. Pursuant to the Merger, (x) the Certificate of
Incorporation of the Purchaser (the "Certificate of Incorporation"), as in
effect immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation, and (y) the Bylaws of the
Purchaser (the "By-laws"), as in effect immediately prior to the Effective Time
(as defined in Section 1.5), shall be the By-laws of the Surviving Corporation
until thereafter amended as provided by law, by such Certificate of
Incorporation or by such By-laws. The Merger shall have the effects specified
in the DGCL.
Section 1.5 Effective Time. Parent, the Purchaser and the
Company will cause a Certificate of Merger to be executed and filed on the
Closing Date (as defined in Section 1.6) (or on such other date as Parent and
the Company may agree) with the Secretary of State of Delaware (the "Secretary
of State") as provided in the DGCL. The Merger shall become effective on the
date on which the Certificate of Merger is duly filed with the Secretary of
State or such time as is agreed upon by the parties and specified in the
Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time."
Section 1.6 Closing. The closing of the Merger (the
"Closing") shall take place at 10:00 a.m. on a date to be specified by the
parties, which shall be no later than the second business day after
satisfaction or waiver of all of the conditions set forth in Article VI hereof
(the "Closing Date"), at the offices of Skadden, Arps, Slate, Meagher & Flom
LLP, 919 Third Avenue, New York, New York 10022, unless another date or place
is agreed to in writing by the parties hereto.
Section 1.7 Directors and Officers of the Surviving
Corporation. The directors and officers of the Purchaser at the Effective Time
shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors shall have
been duly elected or appointed or qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
the By-laws.
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Section 1.8 Stockholders' Meeting.
(a) If required by applicable law in
order to consummate the Merger, the Company, acting through its Board of
Directors, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting") as
promptly as practicable following the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer for the
purpose of considering and taking action upon the approval of the
Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this
Agreement and use its best efforts (x) to obtain and furnish the
information required to be included by the SEC in the Proxy Statement
(as hereinafter defined) and, after consultation with Parent, to
respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive
proxy or information statement, including any amendment or supplement
thereto (the "Proxy Statement") to be mailed to its stockholders,
provided that no amendment or supplement to the Proxy Statement will
be made by the Company without consultation with Parent and its
counsel and (y) to obtain the necessary approvals of the Merger and
this Agreement by its stockholders; and
(iii) subject to the provisions of Section 5.4(b),
include in the Proxy Statement the recommendation of the Board that
stockholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to
be voted, all of the Shares then owned by it, the Purchaser or any of its other
subsidiaries and affiliates in favor of the approval of the Merger and the
adoption of this Agreement.
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Section 1.9 Merger Without Meeting of Stockholders.
Notwithstanding Section 1.8 hereof, in the event that Parent, the Purchaser and
any other Subsidiaries of Parent shall acquire in the aggregate at least 90% of
the outstanding shares of each class of capital stock of the Company, pursuant
to the Offer or otherwise, the parties hereto shall, at the request of Parent
and subject to Article VI hereof, take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of stockholders of the Company, in accordance
with Section 253 of the DGCL.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any Shares or holders of common stock, par value $.01 per share, of the
Purchaser (the "Purchaser Common Stock"):
(a) the Purchaser Common Stock. Each
issued and outstanding share of the Purchaser Common Stock shall be converted
into and become one fully paid and nonassessable share of common stock of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and
Parent-Owned Stock. All Shares that are owned by the Company as treasury stock
and any Shares owned by Parent, the Purchaser or any other wholly owned
Subsidiary of Parent shall be cancelled and retired and shall cease to exist
and no consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and
outstanding Share (other than Shares to be cancelled in accordance with Section
2.1(b) and any Shares which are held by stockholders exercising appraisal
rights pursuant to Section 262 of the DGCL ("Dissenting Stockholders")) shall
be converted into the right to receive the Offer Price, payable to the holder
thereof, without interest (the "Merger Consideration"), upon surrender of
the certificate formerly representing such Share in the manner provided in
Section 2.2. All such Shares, when so
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<PAGE>
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 2.2, without interest,
or the right, if any, to receive payment from the Surviving Corporation of the
"fair value" of such Shares as determined in accordance with Section 262 of the
DGCL.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate
a bank or trust company reasonably acceptable to the Company to act as agent
for the holders of the Shares in connection with the Merger (the "Paying
Agent") to receive in trust the funds to which holders of the Shares
shall become entitled pursuant to Section 2.1(c). Such funds shall be invested
by the Paying Agent as directed by Parent or the Surviving Corporation.
(b) Exchange Procedures. As soon as rea-
sonably practicable after the Effective Time, the Paying Agent shall mail to
each holder of record of a certificate or certificates, which immediately prior
to the Effective Time represented outstanding Shares (the "Certificates"),
whose Shares were converted pursuant to Section 2.1 into the right to
receive the Merger Consideration (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in such form and have such other provisions as Parent and
the Company may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration for
each Share formerly represented by such Certificate and the Certificate so
surrendered shall forthwith be cancelled. If payment of the Merger
Consideration is to be made to a person other than the person in whose name the
surrendered Certificate is registered,
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<PAGE>
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that
the person requesting such payment shall have paid any transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the Certificate surrendered or shall have
established to the satisfaction of the Surviving Corporation that such tax
either has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger Consideration
in cash as contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership
Rights in the Shares. At the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration
of transfers of the Shares on the records of the Company. From and after the
Effective Time, the holders of Certificates evidencing ownership of the Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares, except as otherwise provided for herein or
by applicable law. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be cancelled and exchanged
as provided in this Article II.
(d) Termination of Fund; No Liability.
At any time following twelve months after the Effective Time, the Surviving
Corporation shall be entitled to require the Paying Agent to deliver to it any
funds (including any interest received with respect thereto) which had been
made available to the Paying Agent and which have not been disbursed to holders
of Certificates, and thereafter such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat or other similar
laws) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates, without any
interest thereon. Notwithstanding the foregoing, neither the Surviving
Corporation nor the Paying Agent shall be liable to any holder of a Certificate
for Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
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<PAGE>
Section 2.3 Dissenters' Rights. If any Dissenting
Stockholder shall be entitled to be paid the "fair value" of such holder's
Shares, as provided in Section 262 of the DGCL, the Company shall give Parent
notice thereof and Parent shall have the right to participate in all
negotiations and proceedings with respect to any such demands. Neither the
Company nor the Surviving Corporation shall, except with the prior written
consent of Parent, voluntarily make any payment with respect to, or settle or
offer to settle, any such demand for payment. If any Dissenting Stockholder
shall fail to perfect or shall have effectively withdrawn or lost the right
to dissent, the Shares held by such Dissenting Stockholder shall thereupon be
treated as though such Shares had been converted into the Merger Consideration
pursuant to Section 2.1.
Section 2.4 Company Plans.
(a) Parent and the Company shall, effec-
tive as of the Effective Time, cause each outstanding unvested employee stock
option to purchase Shares (an "Unvested Company Option") granted under the
Company's 1993 Employee Stock Option Plan and under prior plans included in the
representation in Section 3.2(a)(iv) (collectively, the "Option Plan") to be
assumed by Parent and converted into an option (or a new substitute option
shall be granted) (a "Parent Option") to purchase shares of common stock, par
value $.01 per share, of Parent ("Parent Common Stock") issued under and
pursuant to the terms and conditions of Parent's 1995 Equity Incentive Plan, as
amended, or any other stock option plan of Parent adopted specifically for
employees of the Company in order to issue Parent Options as provided in this
Section 2.4(a) (the "Parent Option Plan"). The issuance of shares of Parent
Common Stock under the Parent Options shall be registered under the Securities
Act pursuant to a Registration Statement of Parent on Form S-8. The parties
agree that (i) the number of shares of Parent Common Stock subject to such
Parent Option will be determined by multiplying the number of Shares subject to
the Unvested Company Option to be cancelled by the Option Exchange Ratio (as
hereinafter defined), rounding any fractional share up to the nearest whole
share, and (ii) the exercise price per share of such Parent Option will be
determined by dividing the exercise price per share under the Company Option in
effect immediately prior to the Effec-
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<PAGE>
tive Time by the Option Exchange Ratio, and rounding the exercise price thus
determined up to the nearest whole cent, subject to appropriate adjustments for
stock splits and other similar events. Except as provided above, the converted
or substituted Parent Options shall be subject to the same terms and conditions
(including, without limitation, expiration date, vesting and exercise
provisions) as were applicable to the Unvested Company Options immediately
prior to the Effective Time. The Company, the trustee under the Option Plan
that holds Shares and Company options on behalf of employees of the Company and
its Subsidiaries (the "Trustee") and Parent shall take all necessary action to
facilitate and effect the substitution described in this Section 2.4(a). Based
upon and subject to the accuracy of the Company's representation and warranty
set forth in Section 3.9(h), Parent will apply to qualify such Parent Options
issued to employees of the Company who are residents of Israel under Section
102 or another similar provision of the Israeli Income Tax Ordinance and will
obtain confirmation from the Israeli tax authorities that tacking shall be
allowed with respect to the two-year holding period required under Section 102
for such periods in which the Unvested Company Options were held before the
Effective Time; provided, that Parent shall not be required to agree to any
change in any of the economic terms of such options as established by this
Section 2.4(a) (including, without limitation, identity of employer, number of
shares, exercise price and vesting provisions) in order to obtain such
qualification. The issuance of Parent Options as provided herein shall be
subject to, and conditioned upon, obtaining an exemption by the Israeli
Securities Authority from the registration and prospectus delivery requirements
of the Israeli Securities laws. In the event such exemption is not obtained,
unless Parent elects to comply with the requirements of the Israeli Securities
laws, all Unvested Company Options held by the 35 persons holding the greatest
aggregate amount of Unvested Company Options shall be treated as provided in
this Section 2.4(a) and exchanged for Parent Options and the remaining Unvested
Company Options shall be treated in the same manner as the Vested Options
pursuant to Section 2.4(b). For purposes of this Agreement, the "Option
Exchange Ratio" shall be (x) the Offer Price divided by (y) the average of the
closing prices of the Parent Common Stock on the Nasdaq National Market System
during
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<PAGE>
the ten trading days preceding the fifth trading day prior to the Closing Date.
(b) At the Closing, immediately before
the Effective Time, each outstanding fully vested employee stock option to
purchase Shares (a "Vested Company Option", and together with an Unvested
Company Option, a "Company Option") granted under the Option Plan, except for
the Vested Company Options set forth in Section 2.4(b) of the Company
Disclosure Schedule (as defined in Article III) which shall be treated in the
same manner as the Unvested Company Options pursuant to Section 2.4(a), shall
be surrendered to the Company and shall be forthwith cancelled and the Company
or the Surviving Corporation shall pay to each holder of a Vested Company
Option, by check, an amount equal to (i) the product of the number of the
Shares which are issuable upon exercise of such Vested Company Option,
multiplied by the Offer Price, less (ii) the aggregate exercise price of such
Vested Company Option; provided that the foregoing cancellation and payment
shall be subject to the obtaining of any necessary consents of holders of
Vested Company Options and that any such payment may be withheld in respect of
any Vested Company Option until any necessary consents or releases are
obtained. From and after the Effective Time, each outstanding Vested Company
Option held by a holder who has failed to so consent shall be treated as
provided in Section 2.4(a). The Company and the Trustee shall take all
necessary action to facilitate the surrender, cancellation and payment in
consideration for the Vested Company Options described in this Section 2.4(b).
The Company or the Trustee shall withhold all income or other taxes as required
under applicable law prior to distribution of the cash amount received under
this Section 2.4(b) to the holders of Vested Company Options.
(c) Except as may be otherwise agreed to
by Parent or the Purchaser and the Company, the Option Plan and the Company's
1995 Employee Stock Purchase Plan (the "1995 Plan") shall terminate as of the
Effective Time and the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any of its Subsidiaries shall be deleted as of
the Effective Time. Each participant in the 1995 Plan shall be entitled to
receive, pursuant to the 1995 Plan,
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<PAGE>
a number of Shares based upon such participant's contributions in accordance
with the provisions of the 1995 Plan for the Purchase Period (as defined in the
1995 Plan) ending December 31, 1996, or such part of such Purchase Period as
has been completed at the Effective Time, and at the applicable purchase price
per Share determined in accordance with the provisions of the 1995 Plan for
such Purchase Period, provided that no such participant shall be entitled to
increase his or her rate of contribution after the date hereof, and the Shares
so purchased shall immediately be exchanged for cash pursuant to the Merger.
After the expiration of the Purchase Period ending December 31, 1996, no such
purchaser shall have any further right under the 1995 Plan to acquire any
equity securities of the Company, the Surviving Corporation or any subsidiary
thereof.
(d) For purposes of Sections 2.4(a) and
(b), any partially vested Company Option shall be treated as two separate
Company Options, one consisting of the vested portion and the other consisting
of the unvested portion of such Company Option.
(e) Holders of Company Options and par-
ticipants in the 1995 Plan shall be beneficiaries of the
agreements in this Section 2.4.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the
Purchaser that all of the statements contained in this Article III are true and
correct as of the date of this Agreement (or, if made as of a specified date,
as of such date), and will be true and correct in all material respects as of
the Closing Date as though made on the Closing Date, except as set forth in the
schedule attached to this Agreement setting forth exceptions to the Company's
representations and warranties set forth herein (the "Company Disclosure
Schedule"). The Company Disclosure Schedule will be arranged in sections
corresponding to the sections of this Agreement to be modified by such
disclosure schedule, provided that any disclosure made in any section of the
Company Disclosure Schedule shall be deemed incorporated in all other sections
thereof.
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Section 3.1 Organization. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate its properties and
to carry on its business as now being conducted, except where the failure to be
so organized, existing and in good standing or to have such power, authority,
and governmental approvals would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole. As used in this Agreement, the
term "Subsidiary" shall mean all corporations or other entities in which the
Company or the Parent, as the case may be, owns a majority of the issued and
outstanding capital stock or similar interests. As used in this Agreement, any
reference to any event, change or effect being material or having a material
adverse effect on or with respect to any entity (or group of entities taken as
a whole) means such event, change or effect is materially adverse to (i) the
consolidated financial condition, businesses, prospects or results of
operations of such entity as a whole (or, if used with respect thereto, of such
group of entities taken as a whole) or (ii) the ability of such entity (or
group) to consummate the transactions contemplated hereby. The Company and each
of its Subsidiaries is duly qualified or licensed to do business and in good
standing in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not individually or in the aggregate have a
material adverse effect on the Company and its Subsidiaries, taken as a whole.
Except as set forth in Section 3.1 of the Company Disclosure Schedule, the
Company does not own (i) any equity interest in any corporation or other entity
or (ii) marketable securities where the Company's equity interest in any entity
exceeds five percent of the outstanding equity of such entity on the date
hereof.
Section 3.2 Capitalization. (a) The authorized capital stock
of the Company consists of 12,500,000 Shares and 1,000,000 shares of preferred
stock, par value $.01 per share (the "Preferred Stock"). As of the date hereof,
(i) 8,743,583 Shares are issued and outstanding, (ii) no Shares are issued and
held in the treasury of the
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Company, (iii) no shares of Preferred Stock are issued and outstanding, (iv)
351,050 Shares are reserved for issuance upon exercise of Vested Company
Options and 859,533 Shares are reserved for issuance upon exercise of Unvested
Company Options, in each case under the Option Plan, and (vi) 298,278 Shares
remain reserved for issuance under the 1995 Plan, of which up to 40,000 Shares
will be issued in respect of outstanding employee contributions for the
Purchase Period ending December 31, 1996. All the outstanding shares of the
Company's capital stock are, and all Shares which may be issued pursuant to the
exercise of outstanding Company Options will be, when issued in accordance with
the respective terms thereof, duly authorized, validly issued, fully paid and
non-assessable. There are no bonds, debentures, notes or other indebtedness
having general voting rights (or convertible into securities having such
rights) ("Voting Debt") of the Company or any of its Subsidiaries issued and
outstanding. Except as set forth above and except for the transactions
contemplated by this Agreement, as of the date hereof, (i) there are no shares
of capital stock of the Company authorized, issued or outstanding (ii) there
are no existing options, warrants, calls, pre-emptive rights, subscriptions or
other rights, agreements, arrangements or commitments of any character,
relating to the issued or unissued capital stock of the Company or any of its
Subsidiaries, obligating the Company or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or
any of its Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests, or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment and (iii)
except as set forth in Section 3.2(a) of the Company Disclosure Schedule, there
are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or the
capital stock of the Company, or any Subsidiary or affiliate of the Company or
to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary or any other entity.
(b) All of the outstanding shares of
capital stock of each of the Subsidiaries are beneficial-
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<PAGE>
ly owned by the Company, directly or indirectly, and all such shares have been
validly issued and are fully paid and nonassessable and are owned by either the
Company or one of its Subsidiaries free and clear of all liens, charges, claims
or encumbrances ("Encumbrances").
(c) There are no voting trusts or other
agreements or understandings to which the Company or any of its Subsidiaries is
a party with respect to the voting of the capital stock of the Company or any
of the Subsidiaries.
Section 3.3 Authorization; Validity of Agreement; Company
Action. The Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by the Company of this Agreement, and
the consummation by it of the transactions contemplated hereby, have been duly
authorized by its Board of Directors and, except for obtaining the approval of
its stockholders as contemplated by Section 1.8 hereof, no other corporate
action on the part of the Company is necessary to authorize the execution and
delivery by the Company of this Agreement and the consummation by it of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming due and valid authorization, execution
and delivery hereof by Parent and the Purchaser, is a valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms.
Section 3.4 Consents and Approvals; No Violations. Except for
the filings set forth in Section 3.4 of the Company Disclosure Schedule and the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), state securities or blue sky laws, and the DGCL, none of the execution,
delivery or performance of this Agreement by the Company, the consummation by
the Company of the transactions contemplated hereby or compliance by the
Company with any of the provisions hereof will (i) conflict with or result in
any breach of any provision of the Certificate of Incorporation, the By-laws or
similar organizational documents of the Company or of any of its
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Subsidiaries, (ii) require any filing with, or permit, authorization, consent
or approval of, any court, arbitral tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency (a
"Governmental Entity"), (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, amendment, cancellation or acceleration) under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound (the
"Company Agreements") or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, excluding from the foregoing clauses
(ii), (iii) and (iv) such violations, breaches or defaults which would not,
individually or in the aggregate, have a material adverse effect on the Company
and its Subsidiaries, taken as a whole. Section 3.4 of the Company Disclosure
Schedule sets forth a list of all third party consents and approvals required
to be obtained in connection with this Agreement under the Company Agreements
prior to the consummation of the transactions contemplated by this Agreement.
Section 3.5 SEC Reports and Financial Statements. The Company
has filed with the SEC, and has heretofore made available to Parent, true and
complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it under the Exchange Act or the Securities
Act of 1933, as amended (the "Securities Act") (as such documents have been
amended since the time of their filing, collectively, the "Company SEC
Documents"). As of their respective dates or, if amended, as of the date of the
last such amendment, the Company SEC Documents, including, without limitation,
any financial statements or schedules included therein (a) did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading and (b)
complied in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may
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be, and the applicable rules and regulations of the SEC thereunder. None of the
Company's Subsidiaries is required to file any forms, reports or other
documents with the SEC. The financial statements of the Company included in the
Company SEC Documents (the "Financial Statements") have been prepared from, and
are in accordance with, the books and records of the Company and its
consolidated Subsidiaries, comply in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position and the consolidated
results of operations and cash flows (and changes in financial position, if
any) of the Company and its consolidated Subsidiaries as of the times and for
the periods referred to therein. The financial statements of Opal Technologies
Ltd. and of ICT Integrated Circuit Testing GmbH have been prepared from, and
are in accordance with, their respective books and records, comply in all
material respects with applicable accounting requirements, have been prepared
in accordance with Israeli and German generally accepted accounting principals,
respectively, applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present the financial
position, results of operations and cash flows (and changes in financial
position, if any) of Opal Technologies Ltd. and ICT Integrated Circuit Testing
GmbH as of the times and for the periods referred to therein.
Section 3.6 Absence of Certain Changes. Except as disclosed
in Section 3.6 of the Company Disclosure Schedule, since December 31, 1995, the
Company and its Subsidiaries have conducted their respective businesses only in
the ordinary and usual course and (i) there has not occurred any events or
changes (including the incurrence of any liabilities of any nature, whether or
not accrued, contingent or otherwise) having or reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Company and
its Subsidiaries, taken as a whole, other than such events or changes which
relate to general conditions in the economy or in the Company's industry or
arise solely from the Company's execution and delivery of this Agreement, and
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(ii) the Company has not taken any action which would have been prohibited
under Section 5.1 hereof.
Section 3.7 No Undisclosed Liabilities. Except (a) as
disclosed in the Financial Statements and (b) for liabilities and obligations
(x) incurred in the ordinary course of business and consistent with past
practice (y) pursuant to the terms of this Agreement or (z) as set forth in
Section 3.7 of the Company Disclosure Schedule, since December 31, 1995,
neither the Company nor any of its Subsidiaries has incurred any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise,
that have, or would be reasonably likely to have, a material adverse effect on
the Company and its Subsidiaries, taken as a whole, or would be required by
GAAP to be reflected on a consolidated balance sheet of the Company and its
Subsidiaries (including the notes thereto).
Section 3.8 Litigation. Except as set forth in Section 3.8 of
the Company Disclosure Schedule, as of the date hereof, there are no suits,
claims, actions, proceedings, including, without limitation, arbitration
proceedings or alternative dispute resolution proceedings, or investigations
pending or, to the Company's knowledge, threatened against the Company or any
of its Subsidiaries before any Governmental Entity. Except as disclosed in
Section 3.8 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries is subject to any outstanding order, writ, injunction or
decree.
Section 3.9 Employee Benefit Plans; ERISA.
(a) Section 3.9(a) of the Company Disclo-
sure Schedule sets forth a true and complete list (or, in the case of an
unwritten plan, a description) of all material employee benefit plans,
arrangements, contracts or agreements (including employment agreements,
severance agreements and managers' insurance plans) of any type, statutory or
otherwise, (including but not limited to plans described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
maintained by the Company, any of its Subsidiaries or any trade or business,
whether or not incorporated (an "ERISA Affiliate"), which together with the
Company would be deemed a "single employer" within the meaning of Section
23
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414(b), 414(c) or 414(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), or the regulations, issued under Section 414(o) of the Code ("Benefit
Plans"). Except as disclosed in Section 3.9 of the Company Disclosure Schedule,
neither the Company nor any ERISA Affiliate has any formal plan or commitment,
whether legally binding or not, to create any additional Benefit Plan or modify
or change any existing Benefit Plan that would affect any employee or
terminated employee of the Company or any of its Subsidiaries.
(b) With respect to each Benefit Plan:
(i) if intended to qualify under Section 401(a) of the Code, such plan so
qualifies, and its trust is exempt from taxation under Section 501(a) of the
Code, there have been no amendments to any such Benefit Plan which are not the
subject of a favorable determination letter, and no condition exists that would
reasonably be expected to affect such qualification; (ii) such plan has been
administered in all material respects in accordance with its terms and
applicable statutes, orders or governmental rules or regulations, including but
not limited to ERISA and the Code, no notice has been issued by any
Governmental Entity questioning or challenging such compliance, and no
condition exists that would be expected to affect such compliance; (iii) no
breaches of fiduciary duty have occurred which might reasonably be expected to
give rise to material liability on the part of the Company; (iv) no disputes
are pending, or, to the Company's knowledge, threatened that might reasonably
be expected to give rise to material liability on the part of the Company; (v)
no prohibited transaction (within the meaning of Section 406 of ERISA) has
occurred that would give rise to material liability on the part of the Company
or any ERISA Affiliate; and (vi) all contributions and premiums due as of the
date hereof in respect of any Benefit Plan (taking into account any extensions
for such contributions and premiums) have been made in full or accrued on the
Company's balance sheet.
(c) Except as set forth in Section 3.9(c)
of the Company Disclosure Schedule, neither the Company nor any ERISA Affiliate
(i) has incurred an accumulated funding deficiency, as defined in the Code and
ERISA, or (ii) has any material liability under Title IV of ERISA with respect
to any employee benefit plan that is subject to Title IV of ERISA.
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<PAGE>
(d) With respect to each Benefit Plan
that provides employee benefits other than pension benefits (including but not
limited to each Benefit Plan that is a "welfare plan" (as defined in section
3(1) of ERISA)), except as disclosed in Section 3.9(d) of the Company
Disclosure Schedule, no such plan provides medi-cal or death benefits with
respect to current or former employees of the Company or any of its
Subsidiaries beyond their termination of employment, other than as required by
law.
(e) Except as set forth in Section 3.9(e)
of the Company Disclosure Schedule, neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will (i) entitle any
individual to severance pay or accelerate the time of payment or vesting, or
increase the amount, of compensation or benefits due to any individual, (ii)
constitute or result in a prohibited transaction under Section 4975 of the Code
or Section 406 of ERISA or (iii) subject the Company, any of its Subsidiaries,
any ERISA Affiliate, any of the Benefit Plans, any related trust, any trustee
or administrator of any thereof, or any party dealing with the Benefit Plans or
any such trust to either a civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a tax imposed pursuant to Section 4975 of the Code.
(f) There is no Benefit Plan that is a
"multiemployer plan," as such term is defined in Section 3(37) of ERISA.
(g) With respect to each Benefit Plan,
the Company has previously delivered to Parent or its representatives accurate
and complete copies of all plan documents, summary plan descriptions, summary
of material modifications, trust agreements and other related agreements,
including all amendments to the foregoing; the most recent annual report; the
annual and periodic accounting of plan assets in respect of the two most recent
plan years; the most recent determination letter received from the United
States Internal Revenue Service (the "Service"); and the actuarial valuation,
to the extent any of the foregoing may be applicable to a particular Benefit
Plan, in respect of the two most recent plan years.
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(h) The Option Plan is qualified under
Section 102 of the Israeli Income Tax Ordinance and all steps necessary to
maintain such qualification have been taken.
Section 3.10 Tax Matters; Government Benefits.
(a) The Company and each of its Subsid-
iaries have filed all Tax Returns (as hereinafter defined) that are required to
be filed and have paid or caused to be paid all Taxes (as hereinafter defined)
that are either shown on such Tax Returns as due and payable or otherwise due
or claimed to be due by any taxing authority, in each case excluding only such
Tax Returns or Taxes as to which any failure to file or pay does not have a
material adverse effect on the Company and its Subsidiaries taken as a whole.
All such Tax Returns are correct and complete in all material respects and
accurately reflect all liability for Taxes for the periods covered thereby. All
Taxes owed and due by the Company and each of its Subsidiaries for results of
operations through December 31, 1995 (whether or not shown on any Tax Return)
have been paid or have been adequately reflected on the Company's balance sheet
as of December 31, 1995 included in the Financial Statements (the "Balance
Sheet"). Since December 31, 1995, the Company has not incurred liability for
any Taxes other than in the ordinary course of business. Neither the Company
nor any of its Subsidiaries has received written notice of any claim made by an
authority in a jurisdiction where neither the Company nor any of its
Subsidiaries file Tax Returns, that the Company is or may be subject to
taxation by that jurisdiction.
(b) Neither the Company nor any of its
Subsidiaries has violated any applicable law of any jurisdiction relating to
the payment and withholding of Taxes, including, without limitation, (x)
withholding of Taxes pursuant to Sections 1441 and 1442 of the Code or similar
provisions under non-U.S. law and (y) withholding of Taxes in respect of
amounts paid or owing to any employee, creditor, independent contractor, or
other third party, excluding unintended violations which do not have a material
adverse effect on the Company and its Subsidiaries taken as a whole. The
Company and each of its Subsidiaries have, in the manner prescribed by law,
26
<PAGE>
withheld and paid when due all Taxes required to have been withheld and paid
under all applicable laws.
(c) There are no Encumbrances upon the
shares of capital stock of any of the Company's Subsidiaries or any of the
assets or properties of the Company or any of its Subsidiaries or, to the
Company's knowledge, on any of the Shares that arose in connection with any
failure (or alleged failure) to pay any Tax when due.
(d) Neither the Company nor any of its
Subsidiaries has waived any statute of limitations in any jurisdiction in
respect of Taxes or Tax Returns or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(e) No federal, state, local or foreign
audits, examinations or other administrative proceedings have been commenced
or, to the Company's knowledge, are pending with regard to any Taxes or Tax
Returns of the Company or of any of its Subsidiaries. No written notification
has been received by the Company or by any of its Subsidiaries that such an
audit, examination or other proceeding is pending or threatened with respect to
any Taxes due from or with respect to or attributable to the Company or any of
its Subsidiaries or any Tax Return filed by or with respect to the Company or
any of its Subsidiaries. To the Company's knowledge, there is no dispute or
claim concerning any Tax liability of the Company or any of its Subsidiaries
either claimed or raised by any taxing authority in writing.
(f) During their most recent five taxable
years respectively, neither the Company nor any of its Subsidiaries has made a
change in tax accounting methods, received a ruling from any taxing authority
or signed an agreement with any taxing authority which could have a material
adverse effect on the Company or any of its Subsidiaries. Neither the Company
nor any of its Subsidiaries is required to include in income any adjustment
pursuant to Section 481(a) of the Code or any similar provision of foreign,
state or local law, by reason of a voluntary change in tax accounting method
(nor has any taxing authority proposed in writing any such adjustment or change
of accounting method).
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(g) Neither the Company nor any of its
Subsidiaries is a party to, is bound by or has any obligation under any Tax
sharing agreement, Tax indemnification agreement or similar contract or
arrangement (other than contracts or arrangements among the Company and its
Subsidiaries). Neither the Company nor any of its Subsidiaries is aware of any
potential liability or obligation to any person as a result of, or pursuant to,
any such agreement, contract or arrangement. Neither the Company nor any of its
Subsidiaries has any liability for Taxes of another person by contract or
otherwise.
(h) No power of attorney with respect to
any matter relating to Taxes or Tax Returns has been granted by or with respect
to the Company or any of its Subsidiaries.
(i) Neither the Company nor any of its
Subsidiaries is a party to any agreement, plan, contract or arrangement that
could result, separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code.
(j) During the most recent five taxable
years of the Company and of each of its Subsidiaries, no closing agreement
pursuant to Section 7121 of the Code (or any predecessor provision, or any
similar provision of any state, local or foreign law) has been entered into by
or with respect to the Company or any of its Subsidiaries.
(k) Neither the Company nor any of its
Subsidiaries has filed a consent pursuant to Section 341(f) of the Code (or any
predecessor provision) concerning collapsible corporations, or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a "subsection (f)
asset" (as such term is defined in Section 341(f)(4) of the Code) owned by the
Company or any of its Subsidiaries.
(l) The Company has never been a United
States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. The Company has never been a member of an
Affiliated Group within the meaning of Section 1504 of the Code. None of the
Subsidiaries of the Company is a
28
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foreign personal holding company within the meaning of Section 552 of the Code
or a passive foreign investment company within the meaning of Section 1296 of
the Code.
(m) No taxing authority is asserting or
threatening to assert a claim against the Company or any of its Subsidiaries
under or as a result of Section 482 of the Code or any similar provision of
state, local or foreign law.
(n) Section 3.10(n) of the Company Dis-
closure Schedule lists all United States federal, state, local, and foreign Tax
Returns in respect of which an audit is in progress or is, to the Company's
knowledge, pending, which was filed by, on behalf of or with respect to the
Company and its Subsidiaries. The Company has delivered to Parent complete and
accurate copies of each of: (A) all audit, examination and similar reports and
all letter rulings and technical advice memoranda relating to United States
federal, state, local, and foreign Taxes due from or with respect to the
Company and its Subsidiaries; (B) all United States federal, state and local,
and foreign Tax Returns, Tax examination reports and similar documents filed by
the Company and its Subsidiaries; and (C) all closing agreements entered into
by the Company and its Subsidiaries with any taxing authority and all
statements of Tax deficiencies assessed against or agreed to by the Company and
its Subsidiaries. The Company will deliver to the Purchaser all materials with
respect to the foregoing for all matters arising after the date hereof.
(o) Section 3.10(o) of the Company Disc-
losure Schedule lists each tax incentive, other than incentives generally
available by operation of law without application or governmental action, given
to the Company or any of its Subsidiaries under the laws of the State of
Israel, including but not limited to tax benefits granted under the Law for the
Encouragement of Capital Investments, 1959, the period for which such tax
incentive applies, and the nature of such tax incentive. The Company and each
of its Subsidiaries have complied with all requirements of Israeli law to be
entitled to claim each such tax incentive. Subject to the receipt of the
approvals listed in Section 3.4 of the Company Disclosure Schedule, the
consummation of the transactions contemplated hereby will not adversely affect
the ability
29
<PAGE>
of the Company or any of its Subsidiaries to claim the benefit of any tax
incentive for the remaining duration of the incentive or require any recapture
of any previously claimed incentive, and, except as set forth in Section
3.10(o) of the Company Disclosure Schedule, no consent or approval of any
Governmental Entity is required in order to preserve the entitlement of the
Company to any such incentive and, to the Company's knowledge, there is no
intention to change the terms of such tax incentives.
(p) Section 3.10(p) of the Company Dis-
closure Schedule lists with respect to each grant that the Company or any of
its Subsidiaries received or is entitled pursuant to outstanding grant awards
to receive from the Office of the Chief Scientist in the Israeli Ministry of
Industry and Trade (the "Chief Scientist"), the German Minister of Research and
Technology and any other similar organization, the following information: (A)
the total amount of the grant received by the Company or any of its
Subsidiaries and the amount available for future use by the Company or any of
its Subsidiaries; (B) the time period in which the Company or any of its
Subsidiaries received, or will be entitled to receive, each grant; (C) a
general description of the research and development program for which such
grant was approved; (D) the royalty repayment schedule applicable to such grant
and the total repayment due; (E) the type of revenues from which royalty
payments should be made; and (F) the total amount of royalties paid as of a
recent date and the total royalty obligations due as of such date.
(q) The Company and each of its Subsid-
iaries have complied in all material respects with all applicable laws and
regulations, agreements, letters of commitments and any other requirements with
respect to the terms and conditions of each of the grants listed in Section
3.10(p) of the Company Disclosure Schedule and no claim was made by the Chief
Scientist or any other person with respect to compliance by the Company or any
of its Subsidiaries with such terms and conditions or for any repayment in
excess of the amounts specified in Section 3.10(p) of the Company Disclosure
Schedule and, to the Company's knowledge, there is no threatened or possible
claim for any breach of such terms and conditions or any intention to change
such terms and conditions.
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(r) As used in this Agreement, the fol-
lowing terms shall have the following meanings:
(i) "Tax" or "Taxes" shall mean all taxes, charges,
fees, duties, levies, penalties or other assessments imposed by any
federal, state, local or foreign governmental authority, including,
but not limited to, income, gross receipts, excise, property, sales,
gain, use, license, custom duty, unemployment, capital stock,
transfer, franchise, payroll, withholding, social security, minimum
estimated, and other taxes, and shall include interest, penalties or
additions attributable thereto; and
(ii) "Tax Return" shall mean any return,
declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
Section 3.11 Title and Condition of Properties. Neither the
Company nor any of its Subsidiaries own any real property. The Company and its
Subsidiaries own good and marketable title, free and clear of all Encumbrances,
to all of the personal property and assets shown on the Balance Sheet or
acquired after December 31, 1995, except for (A) assets which have been
disposed of to nonaffiliated third parties since December 31, 1995 in the
ordinary course of business, (B) Encumbrances reflected in the Balance Sheet or
in the notes thereto, (C) Encumbrances or imperfections of title which are not,
individually or in the aggregate, material in character, amount or extent and
which do not materially detract from the value or materially interfere with the
present or presently contemplated use of the assets subject thereto or affected
thereby, and (D) Encumbrances for current Taxes not yet due and payable. All of
the machinery, equipment and other tangible personal property and assets owned
or used by the Company and its Subsidiaries are in good condition and repair,
except for ordinary wear and tear not caused by neglect, and are useable in the
ordinary course of business. The personal property and assets reflected on the
Balance Sheet or acquired after December 31, 1995, the rights under the Company
Agreements and the Intellectual Property (as defined in Section 3.12) owned or
used by the Company under valid Li-
31
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cense (as defined in Section 3.12), collectively include all assets necessary
to provide, produce, sell and license the services and products currently
provided, produced, sold and licensed by the Company and its Subsidiaries and
to conduct the business of the Company and its Subsidiaries as presently
conducted or as currently contemplated to be conducted, provided that the
Company makes no warranty with respect to infringement of intellectual property
rights of third parties except as expressly provided in Section 3.12(e).
Section 3.12 Intellectual Property.
(a) Section 3.12(a) of the Company Disclosure Schedule
contains an accurate and complete listing setting forth (x) all registered
Trademarks, Patents, registered Copyrights and registered Mask Works (as each
such term is hereinafter defined) which are owned by the Company or any of its
Subsidiaries and (y) all Licenses to which the Company or any of its
Subsidiaries is a party (other than shrink-wrap software and databases licensed
to the Company or to any of its Subsidiaries under non-exclusive software
licenses granted to end-user customers by third parties in the ordinary course
of business of such third parties' businesses), such schedule indicating, as to
each such License, whether the Company or any of its Subsidiaries is the
licensee or licensor, whether it is royalty bearing, the territory, whether it
is exclusive or non-exclusive, and the nature of the licensed property.
(b) Except as set forth in Section 3.12(b)(i) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is under
any obligation to pay any royalty or other compensation to any third party or
to obtain any approval or consent for the use of any Intellectual Property used
in or necessary for its business as currently conducted or as currently
proposed to be conducted. None of the Intellectual Property owned by the
Company or by any of its Subsidiaries, or to the Company's knowledge, licensed
to the Company or to any of its Subsidiaries, is subject to any outstanding
judgment, order, decree, stipulation, injunction or charge. Except as set forth
in Section 3.12(b)(ii) of the Company Disclosure Schedule, there is no claim,
charge, complaint, action, suit, proceeding, hearing, investigation or demand
pending or, to the Company's knowledge, threat-
32
<PAGE>
ened, which challenges the legality, validity, enforceability, or the
Company's or any of its Subsidiaries' use or ownership of any of the
Intellectual Property owned by the Company or any of its Subsidiaries or, to
the Company's knowledge, licensed to the Company or to any of its Subsidiaries.
Neither the Company nor any of its Subsidiaries has agreed to indemnify any
person for or against any interference, infringement, misappropriation, or
other conflict with respect to any Intellectual Property, except as may be
contained within agreements for the sale of the Company's products in the
ordinary course or the Licenses set forth in Section 3.12(a) of the Company
Disclosure Schedule.
(c) No material breach or default (or event which with notice
or lapse of time or both would result in a material event of default) by the
Company or any of its Subsidiaries exists or has occurred under any License or
other agreement pursuant to which the Company or any of its Subsidiaries uses
any Intellectual Property owned by a third party or has granted any third party
the right to use its Intellectual Property, and the consummation of the
transactions contemplated by this Agreement will not violate or conflict with
or constitute a material default (or an event which, with notice or lapse of
time or both, would constitute a material default), result in a forfeiture
under, or constitute a basis for termination of any such License or other
agreement.
(d) The Company and its Subsidiaries own all items of
Intellectual Property set forth in Schedule 3.12(a) and own or have the right
to use all items of Intellectual Property necessary to provide, produce, sell
and license the services and products currently provided, produced, sold and
licensed by the Company and its Subsidiaries and to conduct the business of the
Company and its Subsidiaries as presently conducted or as currently proposed to
be conducted, free and clear of all Encumbrances, provided that the Company
makes no warranty with respect to infringement of intellectual property rights
of third parties except as expressly provided in Section 3.12(e).
(e) To the Company's knowledge, except as set forth in
Section 3.12(e) of the Company Disclosure Schedule, the conduct of the
Company's and its Subsidiaries' business, the Intellectual Property owned or
used by the
33
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Company and its Subsidiaries, and the products or services produced, sold or
licensed by or under development by the Company and its Subsidiaries do not
infringe any Intellectual Property rights or any other proprietary right of any
person or give rise to any obligations to any person as a result of
co-authorship, co-inventorship, or an express or implied contract for any use
or transfer. The Company and its Subsidiaries have received no notice of any
allegations or threats that the Company's and its Subsidiaries' use of any of
the Intellectual Property infringes upon or is in conflict with any
Intellectual Property or proprietary rights of any third party, and to the
Company's knowledge, no basis exists for any such allegations or threats.
(f) Except as set forth on Section 3.12(f) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has sent
or otherwise communicated to any other person any notice, charge, claim or
assertion of any present, impending or threatened infringement by any other
person of any Intellectual Property of the Company and its Subsidiaries.
(g) None of the Company's and its Subsidiaries' products or
services incorporate, are based upon or are derived or adapted from, any
Intellectual Property of any other person in violation of any statutory or
other legal obligation or any agreement to which the Company and its
Subsidiaries is a party or by which it is bound.
(h) All of the Company's and its Subsidiaries' Patents,
Trademarks and Copyrights issued by, registered with or filed with the United
States Patent and Trademark Office or Register of Copyrights or the
corresponding offices of other countries have been so duly registered, filed in
or issued, as the case may be, have been properly maintained and renewed in
accordance with all applicable provisions of law and administrative
regulations, and the Company and its Subsidiaries, as the case may be, are the
record owners thereof. The Company and its Subsidiaries have taken reasonable
steps in accordance with normal industry practice to maintain the
confidentiality of its trade secrets and other confidential Intellectual
Property, and, to the Company's knowledge, there have been no acts or omissions
by the Company or its Subsidiaries, the result of which would be to compromise
the rights of the Company or its Subsidiaries to apply for or
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enforce appropriate legal protection of such Intellectual Property.
(i) Except as described in Section 3.12(i) of the Company
Disclosure Schedule, each of the Company's and its Subsidiaries' employees,
officers, agents, directors and each independent contractor retained by the
Company or any of its Subsidiaries has entered into a written agreement with
the Company or any of its Subsidiaries (x) providing that all of the Company's
and its Subsidiaries' Intellectual Property is confidential and proprietary to
the Company or any of its Subsidiaries, and (y) obligating the disclosure and
transfer to the Company or any of its Subsidiaries, in consideration for no
more than normal salary and continued employment or consultant fees, as the
case may be, of all inventions, developments and work product which during the
period of his or her employment or consultancy with the Company or any of its
Subsidiaries, as the case may be, such employee, officer, agent, director or
independent contractor made or makes that related or relate to any subject
matter with which such employee's, officer's, agent's, director's or
independent contractor's work for the Company or any of its Subsidiaries was
concerned, or, in the case of employees, officers, agents and directors, are
made during such person's period of employment (or contractual relationship) or
in connection therewith. No former employees, officers, directors or
independent contractors of the Company or any of its Subsidiaries have asserted
any claim, or have any, valid claim or valid right to any of the Company's or
any of its Subsidiaries' Intellectual Property used in or necessary for the
conduct of the Company's or its Subsidiaries' business as now conducted or as
currently proposed to be conducted. To the Company's knowledge, no employee,
officer, agent or director of the Company or any of its Subsidiaries is a party
to or otherwise bound by any agreement with or obligated to any other person
(including, any former employer) which conflicts with any obligation or
commitment of such employee to the Company or any of its Subsidiaries under any
agreement to which he or she is a party or otherwise.
(j) Section 3.12(j) of the Company Disclosure Schedule
identifies each person to whom the Company or any of its Subsidiaries has sold
or otherwise transferred any interest or rights to any Intellectual Property
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(other than end users under licenses for computer software and related
documentation transferred in the ordinary course of business) or purchased
rights in any Intellectual Property, and the date, if applicable, of each such
sale, transfer or purchase.
(k) The Company and each of its Subsidiaries have taken
reasonable steps in accordance with normal industry practice to preserve and
maintain, reasonably complete notes and records (including, without limitation,
drawings, flow-charts, prototypes and models) relating to its know-how,
inventions, processes, procedures, drawings, specifications, designs, plans,
written proposals, technical data, works of authorship and other proprietary
technical information, sufficient to cause such proprietary information to be
readily identified, understood and available.
(l) As used in this Agreement, "Intellectual Property" means
all of the following: (i) U.S., Israeli and foreign registered and unregistered
trademarks, trade dress, service marks, logos, trade names, corporate names and
all registrations and applications to register the same (the "Trademarks");
(ii) issued U.S., Israeli and foreign patents and pending patent applications,
patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and extension thereof, any
counterparts claiming priority therefrom, utility models, patents of importa-
tion/confirmation, certificates of invention and like statutory rights (the
"Patents"); (iii) U.S., Israeli and foreign registered and unregistered
copyrights (including, but not limited to, those in computer software and
databases) rights of publicity and all registrations and applications to
register the same (the "Copyrights"); (iv) U.S., Israeli and foreign rights in
any semi-conductor chip product works or "mask works" as such term is defined
in 17 U.S.C. 901, et seq. and any registrations or applications therefor ("Mask
Works"); (v) all categories of trade secrets as defined in the Uniform Trade
Secrets Act including, but not limited to, business information; (vi) all
licenses and agreements pursuant to which the Company has acquired rights in or
to any Trademarks, Patents, Copyrights or Mask Works, or licenses and
agreements pursuant to which the Company has licensed or transferred the right
to use any of the foregoing ("Licenses").
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Section 3.13 Employment Matters. To the Company's knowledge,
no key employee or group of employees has any plans to terminate their
employment with the Company or any of its Subsidiaries as a result of the
transactions contemplated hereby or otherwise. Neither the Company nor any of
its Subsidiaries has experienced any strikes, collective labor grievances,
other collective bargaining disputes or Claims of unfair labor practices in the
last five years. To the Company's knowledge, there is no organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company and its Subsidiaries.
Section 3.14 Compliance with Laws. The Company and its
Subsidiaries are in substantial compliance with, and have not violated any
applicable law, rule or regulation of any United States federal, state, local,
Israeli or other foreign government or agency thereof which materially affects
the business, properties or assets of the Company and its Subsidiaries, and no
notice, charge, claim, action or assertion has been received by the Company or
any of its Subsidiaries or has been filed, commenced or, to the Company's
knowledge, threatened against the Company or any of its Subsidiaries alleging
any such violation, except for any matter otherwise covered by this sentence
which does not have a material adverse effect on the Company and its
Subsidiaries taken as a whole. All licenses, permits and approvals required
under such laws, rules and regulations are in full force and effect except
where the failure to be in full force and effect would not have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
Section 3.15 Contracts. Each Company Agreement is legally
valid and binding and in full force and effect, except where failure to be
legally valid and binding and in full force and effect would not have a
material adverse effect on the Company and its Subsidiaries, taken as a whole,
and there are no defaults by the Company or any of its Subsidiaries thereunder,
except those defaults that would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole. The Company has previously made
available for inspection by Parent or the Purchaser or their representatives
all of the Company Agreements. Set forth in
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Section 3.15 of the Company Disclosure Schedule is a true and complete list
of all agreements, contracts or other arrangements, written or oral, to which
ICT Integrated Circuit Testing GmbH ("ICT") or any of its Subsidiaries is a
party or by which ICT or any of its Subsidiaries or any of its or their assets
may be bound (the "ICT Agreements") concerning or relating to (i) Intellectual
Property, (ii) the spin-off or other disposition of assets, (iii) which are
necessary to provide, produce, sell and license the services and products
currently provided, produced, sold and licensed by ICT and its Subsidiaries and
to conduct the business of ICT and its Subsidiaries as presently conducted or
as currently contemplated to be conducted. Each ICT Agreement is valid,
binding, enforceable and in full force and effect. None of the execution,
delivery or performance of this Agreement by the Company, the consummation by
the Company of the transactions contemplated hereby or compliance by the
Company with any of the provisions hereof will result in a breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any ICT Agreement. None of
ICT or any of its Subsidiaries is or, to the Company's knowledge, any other
party is in breach or default (including, with respect to any express or
implied warranty), and no event has occurred which with notice or lapse of time
or both would constitute a material breach or default or permit termination,
modification or acceleration under any ICT Agreement, except for any breaches,
defaults, terminations, modifications or accelerations which have been cured or
waived; and no party has, to the Company's knowledge, repudiated any provision
of any such ICT Agreement.
Section 3.16 Potential Conflicts of Interest. Except as set
forth in Section 3.16 of the Company Disclosure Schedule or in the Company SEC
Reports, to the Company's knowledge, no officer of the Company or any of its
Subsidiaries owns, directly or indirectly, any interest in (excepting not more
than 1% stock holdings for investment purposes in securities of publicly held
and traded companies) or is an officer, director, employee or consultant of any
person which is a competitor, lessor, lessee, customer or supplier of the
Company or any of its Subsidiaries; and no officer or director of the Company
or any of its Subsidiaries (i) owns, directly or indi-
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rectly, in whole or in part, any Intellectual Property which the Company or any
of its Subsidiaries is using or the use of which is necessary for the business
of the Company or any of its Subsidiaries; (ii) has any claim, charge, action
or cause of action against the Company or any of its Subsidiaries, except for
claims for accrued vacation pay, accrued benefits under the Benefit Plans and
similar matters and agreements existing on the date hereof; (iii) has made, on
behalf of the Company or any of its Subsidiaries, any payment or commitment to
pay any commission, fee or other amount to, or to purchase or obtain or
otherwise contract to purchase or obtain any goods or services from, any other
person of which any officer or director of the Company, or, to the Company's
knowledge, a relative of any of the foregoing, is a partner or stockholder
(except stock holdings solely for investment purposes in securities of publicly
held and traded companies); (iv) owes any money to the Company or any of its
Subsidiaries; or (v) is owed any money by the Company or any of its
Subsidiaries. Opal Technologies Ltd. is not a party to any contract with an
"interested party" or any contract in which an "officer" has a "personal
interest" (as each of such terms is defined in Chapter 4A of the Israeli
Companies Ordinance, 1983).
Section 3.17 Vote Required. The affirmative vote of the
holders of a majority of the outstanding Shares are the only votes of the
holders of any class or series of the Company's capital stock necessary to
approve this Agreement and the transactions contemplated hereby.
Section 3.18 Suppliers and Customers. From December 31, 1995
to the date of this Agreement, no material licensor, vendor, supplier, licensee
or customer of the Company or any of its Subsidiaries has cancelled or
otherwise modified its relationship with the Company or its Subsidiaries and,
to the Company's knowledge, no such person has any intention to do so. Except
as set forth in Section 3.18 of the Company Disclosure Schedule, no material
customer of the Company or any of its Subsidiaries has expressed to the Company
any material dissatisfaction with any of the products of the Company or any of
its Subsidiaries, respectively, which is likely to result in an adverse impact
on such customer's continuing relationship with the Company or any of its
Subsidiaries, and the Company and its Subsidiaries have not experienced any
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complaints of a recurring nature with respect to any of their products.
Section 3.19 Information in Proxy Statement. The Proxy
Statement, if any (or any amendment thereof or supplement thereto), will, at
the date mailed to Company stockholders and at the time of the meeting of
Company stockholders to be held in connection with the Merger, not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, except
that no representation is made by the Company with respect to statements made
therein based on information supplied by Parent or the Purchaser for inclusion
in the Proxy Statement. The Proxy Statement will comply in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder.
Section 3.20 Opinion of Financial Advisor. The Company has
received the opinion of Robertson Stephens & Company, dated the date hereof, to
the effect that, as of such date, the consideration to be received in the Offer
and the Merger by the Company's stockholders is fair to the Company's
stockholders from a financial point of view, a copy of which opinion has been
delivered to Parent and the Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company
that the statements contained in this Article IV are true and correct as of the
date of this Agreement and will be correct and complete as of the Closing Date
as though made on the Closing Date.
Section 4.1 Organization. Each of Parent and the Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of Delaware and has all requisite corporate or other power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its
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business as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power, authority, and
governmental approvals would not have a material adverse effect on Parent and
its Subsidiaries, taken as a whole. Parent and each of its Subsidiaries is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing would not, individually or in the aggregate, have a material adverse
effect on Parent and its Subsidiaries, taken as a whole.
Section 4.2 Authorization; Validity of Agreement; Necessary
Action. Each of Parent and the Purchaser has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Parent and the
Purchaser of this Agreement, and the consummation of the Merger and of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Parent and the Purchaser and by Parent as the sole stockholder of
the Purchaser and no other corporate action on the part of Parent and the
Purchaser is necessary to authorize the execution and delivery by Parent and
the Purchaser of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and the Purchaser, as the case may be, and, assuming due and valid
authorization, execution and delivery hereof by the Company, is a valid and
binding obligation of each of Parent and the Purchaser, as the case may be,
enforceable against each of them in accordance with its respective terms.
Section 4.3 Consents and Approvals; No Violations. Except as
set forth in Section 4.3 of the schedule attached to this Agreement setting
forth exceptions to Parent's representations and warranties set forth herein
and except for filings, permits, authorizations, consents and approvals as may
be required under, and other applicable requirements of, the Exchange Act, the
HSR Act, state securities or blue sky laws and the DGCL, none of the execution,
delivery or performance of this Agreement by Parent or the Purchaser, the
consummation by
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Parent or the Purchaser of the transactions contemplated hereby or compliance
by Parent or the Purchaser with any of the provisions hereof will (i) conflict
with or result in any breach of any provision of the respective certificate of
incorporation or by-laws of Parent or the Purchaser, (ii) require any filing
with, or permit, authorization, consent or approval of, any Governmental Entity,
(iii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Parent, or any of its
Subsidiaries or the Purchaser is a party or by which any of them or any of their
respective properties or assets may be bound, or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
Subsidiaries or any of their properties or assets, excluding from the foregoing
clauses (ii),(iii) and (iv) such violations, breaches or defaults which would
not, individually or in the aggregate, have a material adverse effect on Parent
and its Subsidiaries, taken as a whole.
Section 4.4 Information in Proxy Statement. None of the
information supplied by Parent or the Purchaser specifically for inclusion or
incorporation by reference in the Proxy Statement will, at the date mailed to
stockholders and at the time of the meeting of stockholders to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
Section 4.5 Financing. Parent and the Purchaser (i) have bank
facilities in place which, either alone or with cash presently on hand, will
provide sufficient funds to purchase and pay for the Shares pursuant to the
Offer and the Merger in accordance with the terms of this Agreement and to
consummate the other transactions contemplated hereby and (ii) will have on the
expiration date of the Offer and the Effective Date sufficient funds to
purchase and pay for the Shares pursuant to the Offer and the Merger,
respectively, in
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accordance with the terms of this Agreement. The Parent's bank facilities permit
Parent to borrow money under such facilities and use such funds to purchase and
pay for the Shares pursuant to the Offer and the Merger in accordance with the
terms of this Agreement and to consummate the other transactions contemplated
hereby.
Section 4.6 Options. The Parent Options to be granted by
Parent under Section 2.4(a) shall be duly authorized, valid and enforceable in
accordance with the terms of said Section 2.4(a), and any shares of Parent
Common Stock issued upon proper exercise thereof shall be duly and validly
issued, fully paid and non-assessable.
Section 4.7 Company Shares. As of the date of this Agreement,
neither Parent nor any of its Subsidiaries owns any Shares or is acting
together with any other person in connection with the Offer.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company
covenants and agrees that, except (i) as expressly contemplated by this
Agreement, (ii) as set forth in Section 5.1 of the Company Disclosure Schedule,
or (iii) as agreed in writing by Parent, after the date hereof, and prior to
the time the directors of the Purchaser have been elected to, and shall
constitute a majority of, the Board of Directors of the Company pursuant to
Section 1.3 (the "Appointment Date"):
(a) the business of the Company and its
Subsidiaries shall be conducted only in the ordinary and usual course and, to
the extent consistent therewith, each of the Company and its Subsidiaries shall
use its best reasonable efforts to preserve its business organization intact
and maintain its existing relations with customers, suppliers, employees,
creditors and business partners;
(b) the Company will not, directly or
indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge
any treasury stock of the Company or any capital stock of any of its
Subsidiaries beneficially owned by it, (ii) amend its Certificate of
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Incorporation or By-laws or similar organizational documents; or (iii) split,
combine or reclassify the outstanding Shares or Preferred Stock or any
outstanding capital stock of any of the Subsidiaries of the Company;
(c) neither the Company nor any of its
Subsidiaries shall: (i) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to its capital
stock; (ii) issue, sell, pledge, dispose of or encumber any additional shares
of, or securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital
stock of any class of the Company or its Subsidiaries, other than Shares
reserved for issuance on the date hereof pursuant to the exercise of Company
Options outstanding on the date hereof or pursuant to the 1995 Plan as
permitted in Section 2.4 hereof; (iii) transfer, lease, license, sell,
mortgage, pledge, dispose of, or encumber any material assets other than in the
ordinary and usual course of business and consistent with past practice, or
incur or modify any material indebtedness or other liability, other than in the
ordinary and usual course of business and consistent with past practice; or
(iv) redeem, purchase or otherwise acquire directly or indirectly any of its
capital stock except pursuant to stock restriction agreements with employees
existing at the date hereof and set forth in Section 3.2(a) of the Company
Disclosure Schedule;
(d) neither the Company nor any of its
Subsidiaries shall: (i) grant any increase in the compensation payable or to
become payable by the Company or any of its Subsidiaries to any of its
executive officers or key employees except inflationary increases given in
accordance with past practice; or (ii)(A) adopt any new, or (B) amend or
otherwise increase, or accelerate the payment or vesting of the amounts payable
or to become payable under any existing bonus, incentive compensation, deferred
compensation, severance, profit sharing, stock option, stock purchase,
insurance, pension, retirement or other employee benefit plan, agreement or
arrangement, including, without limitation, the Option Plan and the 1995 Plan;
or (iii) enter into any employment or severance agreement with or, except in
accordance with the existing written policies of the Company, grant any
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severance or termination pay to any officer, director or employee of the
Company or any its Subsidiaries;
(e) neither the Company nor any of its
Subsidiaries shall modify, amend or terminate any of its material contracts or
waive, release or assign any material rights or claims, except in the ordinary
course of business and consistent with past practice;
(f) neither the Company nor any of its
Subsidiaries shall permit any material insurance policy naming it as a
beneficiary or a loss payable payee to be cancelled or terminated without
notice to Parent, except in the ordinary course of business and consistent with
past practice;
(g) neither the Company nor any of its
Subsidiaries shall: (i) incur or assume any long-term debt, or except in the
ordinary course of business, incur or assume any short-term indebtedness in
amounts not 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 in the ordinary
course of business and consistent with past practice; (iii) make any loans,
advances or capital contributions to, or investments in, any other person
(other than to wholly owned Subsidiaries of the Company); or (iv) enter into
any material commitment or transaction (including, but not limited to, any
material capital expenditure or purchase or lease of assets or real estate
other than the purchase of products for inventory and supplies in the ordinary
course of business);
(h) neither the Company nor any of its
Subsidiaries shall change any of the accounting methods
used by it unless required by GAAP;
(i) neither the Company nor any of its
Subsidiaries shall pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice, of claims, liabilities or
obligations reflected or reserved against in, or contemplated by, the
consolidated financial state-
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ments (or the notes thereto) of the Company and its consolidated Subsidiaries;
(j) neither the Company nor any of its
Subsidiaries will adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its Subsidiaries (other than the Merger);
(k) neither the Company nor any of its
Subsidiaries will take, or agree to commit to take, any action that would or is
reasonably likely to result in any of the conditions to the Offer set forth in
Annex A or any of the conditions to the Merger set forth in Article VI not
being satisfied, or would make any representation or warranty of the Company
contained herein inaccurate in any respect at, or as of any time prior to, the
Effective Time, or that would materially impair the ability of the Company to
consummate the Offer or the Merger in accordance with the terms hereof or
materially delay such consummation; and
(l) neither the Company nor any of its
Subsidiaries will enter into an agreement, contract, commitment or arrangement
to do any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
Section 5.2 Access; Confidentiality. Upon reasonable notice,
the Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, access, during normal business hours during the
period prior to the Appointment Date, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to the Parent (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of federal
securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. After the
Appointment Date the Company shall provide Parent and such persons as Parent
shall designate with all such information, at such time as Parent shall request.
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Unless otherwise required by law and until the Appointment Date, Parent will
hold any such information which is nonpublic in confidence in accordance with
the provisions of a letter agreement dated October 21, 1996 between the Company
and the Parent (the "Confidentiality Agreement").
Section 5.3 Consents and Approvals. (a) Each of the Company,
Parent and the Purchaser will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on it with respect to
this Agreement and the transactions contemplated hereby (which requirements
shall include, without limitation, those identified in Section 5.3(a) of the
Company Disclosure Schedule attached to this Agreement, and which actions shall
include, without limitation, furnishing all information required under the HSR
Act and in connection with approvals of or filings with any other Governmental
Entity) and will promptly cooperate with and furnish information to each other
in connection with any such requirements imposed upon any of them or any of
their Subsidiaries in connection with this Agreement and the transactions
contemplated hereby. Each of the Company, Parent and the Purchaser will, and
will cause its Subsidiaries to, take all reasonable actions necessary to obtain
(and will cooperate with each other in obtaining) any consent, authorization,
order or approval of, or any exemption by, any Governmental Entity or other
public or private third party required to be obtained or made by Parent, the
Purchaser, the Company or any of their Subsidiaries in connection with the
Merger or the taking of any action contemplated thereby or by this Agreement.
(b) The Company and Parent shall take all
reasonable actions necessary to file as soon as practicable notifications under
the HSR Act and to respond as promptly as practicable to any inquiries received
from the Federal Trade Commission and the Antitrust Division of the Department
of Justice for additional information or documentation and to respond as
promptly as practicable to all inquiries and requests received from any State
Attorney General or other Governmental Entity in connection with antitrust
matters.
Section 5.4 No Solicitation. (a) Neither the Company nor
any of its Subsidiaries shall (and the Company shall use its best efforts to
cause its officers, directors, employees, representatives and agents, includ-
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ing, but not limited to, investment bankers, attorneys and accountants, not to),
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
any of its affiliates or representatives) concerning any proposal or offer to
acquire all or a substantial part of the business and properties of the Company
or any of its Subsidiaries or any capital stock of the Company or any of its
Subsidiaries, whether by merger, tender offer, exchange offer, sale of assets or
similar transactions involving the Company or any Subsidiary, division or
operating or principal business unit of the Company (an "Acquisition Proposal"),
except that nothing contained in this Section 5.4 or any other provision hereof
shall prohibit the Company or the Company's Board from (i) taking and disclosing
to the Company's stockholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act, or (ii) making such disclosure to the Company's stockholders as,
in the good faith judgment of the Board, after receiving advice from outside
counsel, is required under applicable law, provided that the Company may not,
except as permitted by Section 5.4(b), withdraw or modify, or propose to
withdraw or modify, its position with respect to the Offer or the Merger or
approve or recommend, or propose to approve or recommend, any Acquisition
Proposal, or enter into any agreement with respect to any Acquisition Proposal.
The Company will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. Notwithstanding the foregoing, the Company may furnish information
concerning its business, properties or assets to any corporation, partnership,
person or other entity or group pursuant to appropriate confidentiality
agreements, and may negotiate and participate in discussions and negotiations
with such entity or group concerning an Acquisition Proposal if (x) such entity
or group has on an unsolicited basis submitted a bona fide written proposal to
the Board of Directors of the Company relating to any such transaction which
the Board determines in good faith, represents a superior transaction to the
Offer and the Merger and which is not conditioned upon obtaining additional
financing and (y) in the opinion of the Board of Directors of the Company, only
after receipt of advice from outside legal counsel to the
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Company, the failure to provide such information or access or to engage in such
discussions or negotiations could reasonably be expected to cause the Board of
Directors to violate its fiduciary duties to the Company's stockholders under
applicable law (an Acquisition Proposal which satisfies clauses (x) and (y)
being referred to herein as a "Superior Proposal"). The Company will immediately
notify Parent of the existence of any proposal or inquiry received by the
Company and the identity of the party making such proposal or inquiry which it
may receive in respect of any such transaction.
(b) Except as set forth herein, neither
the Board of Directors of the Company nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or the Purchaser, the approval or recommendation by such Board of
Directors or any such committee of the Offer, this Agreement or the Merger,
(ii) approve or recommend, or propose to approve or recommend, any Acquisition
Proposal or (iii) enter into any agreement with respect to any Acquisition
Proposal. Notwithstanding the foregoing, prior to the time of acceptance for
payment of Shares in the Offer, the Board of Directors of the Company may
(subject to the terms of this and the following sentence) withdraw or modify
its approval or recommendation of the Offer, this Agreement or the Merger,
approve or recommend a Superior Proposal, or enter into an agreement with
respect to Superior Proposal, in each case at any time after the second
business day following Parent's receipt of written notice advising Parent that
the Board of Directors has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal; provided that the Company shall not enter
into an agreement with respect to a Superior Proposal unless the Company shall
have furnished Parent with written notice not later than 12:00 noon one day in
advance of any date that it intends to enter into such agreement and shall have
caused its financial and legal advisors to negotiate with Parent to make such
adjustments in the terms and conditions of this Agreement as would enable the
Company to proceed with the transactions contemplated herein on such adjusted
terms. In addition, if the Company proposes to enter into an agreement with
respect to any Acquisition Proposal, it shall concurrently with entering into
such agreement pay, or cause to be paid, to
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Parent the Termination Fee (as defined in Section 8.1(b)) subject to the
provisions of Section 8.1(b).
Section 5.5 Brokers or Finders. The Company represents, as to
itself and its Subsidiaries and affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee from the
Company or any of its Subsidiaries in connection with any of the transactions
contemplated by this Agreement except for Robertson, Stephens & Company LLC and
Evergreen Capital Markets Ltd., whose engagement letter is attached as Section
5.5 of the Company Disclosure Schedule.
Section 5.6 Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to achieve the satisfaction of the Minimum Condition and all
conditions set forth in Annex A and Article VI, and to consummate and make
effective the Merger and the other transactions contemplated by this Agreement.
Without limitation of the foregoing, Parent, Purchaser and the Company shall
take such steps and provide and comply with such undertakings as may be
required by any Governmental Entity whose approval or consent, or with respect
to which a waiting period must expire, to satisfy the conditions set forth in
Annex A and to assure that the Parent Options may properly be issued under
Section 2.4(a); provided that such steps and undertakings shall not impose upon
the Company or Parent and the Purchaser any terms or conditions which Parent
determines reasonably and in good faith to be unreasonably burdensome to Parent
or the Purchaser or to the operations of the Company on a going-forward basis.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of the Company, Parent and the Purchaser shall use all reasonable
efforts to take, or cause to be taken, all such necessary actions.
Section 5.7 Publicity. The initial press release with respect
to the execution of this Agreement
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shall be a joint press release acceptable to Parent and the Company. Thereafter,
so long as this Agreement is in effect, neither the Company, Parent nor any of
their respective affiliates shall issue or cause the publication of any press
release or other announcement with respect to the Merger, this Agreement or the
other transactions contemplated hereby without the prior consultation of the
other party, except as may be required by law or by any listing agreement with
a national securities exchange or trading market.
Section 5.8 Notification of Certain Matters. The Company
shall give prompt notice to Parent and Parent shall give prompt notice to the
Company, of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior
to the Effective Time and (ii) any material failure of the Company, Parent or
the Purchaser, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 5.8
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
Section 5.9 Directors' and Officers' Insurance and
Indemnification. (a) For seven years after the Effective Time, Parent shall,
and shall cause the Surviving Corporation (or any successor to the Surviving
Corporation) to, (i) retain all provisions of the Company's Certificate of
Incorporation as now in effect respecting the limitation of liabilities of
directors and officers, and (ii) indemnify, defend and hold harmless the
present and former officers and directors of the Company and its Subsidiaries,
and persons who become any of the foregoing prior to the Effective Time (each
an "Indemnified Party") against all losses, claims, damages, liabilities,
costs, fees and expenses (including reasonable fees and disbursements of
counsel and judgments, fines, losses, claims, liabilities and amounts paid in
settlement (provided that any such settlement is effected with the written
consent of the Parent or the Surviving Corporation which consent shall not
unreasonably be withheld)) arising out of actions or omissions occurring at or
prior to the Effective Time to the full extent permitted under
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Delaware law, subject to the terms of the Company's Certificate of Incorporation
or the By-laws, as in effect at the date hereof, including provisions relating
to advancement of expenses incurred in the defense of any action or suit;
provided that, in the event any claim or claims are asserted or made within
such seven year period, all rights to indemnification in respect of any such
claim or claims shall continue until disposition of any and all such claims;
provided, further, that any determination required to be made with respect to
whether an Indemnified Party's conduct complies with the standards set forth
under Delaware law, the Certificate of Incorporation or the By-Laws, as the
case may be, shall be made by independent counsel mutually acceptable to Parent
and the Indemnified Party and; provided, further, that nothing herein shall
impair any rights or obligations of any present or former directors or officers
of the Company. In the event the Surviving Corporation or any of its successors
or assigns consolidates with or merges into any other person or entity and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or transfers or conveys all or substantially all of its properties and
assets to any person or entity, then, and in each such case, proper provision
shall be made so that the successors and assigns of the Surviving Corporation
assume the obligations set forth in this Section 5.9.
(b) Parent or the Surviving Corporation
shall maintain the Company's existing officers' and directors' liability
insurance ("D&O Insurance") for a period of not less than seven years after the
Effective Date; provided, that the Parent may substitute therefor policies of
substantially equivalent coverage and amounts containing terms no less
favorable to such former directors or officers; provided, further, if the
existing D&O Insurance expires, is terminated or cancelled during such period,
Parent or the Surviving Corporation will use all reasonable efforts to obtain
substantially similar D&O Insurance; provided, further, however, that in no
event shall the Company be required to pay aggregate premiums for insurance
under this Section in excess of 150% of the aggregate premiums paid by the
Company in 1995 on an annualized basis for such purpose (the "1995 Premium");
and provided, further, that if the Parent or the Surviving Corporation is unable
to obtain the amount of insurance required by this Section 5.9(b) for such
aggregate
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premium, Parent or the Surviving Corporation shall obtain as much insurance as
can be obtained for an annual premium not in excess of 150% of the 1995 Premium.
Section 5.10 Purchaser Compliance. Parent shall cause the
Purchaser to comply with all of its obligations under or related to this
Agreement.
Section 5.11 Actions of Parent and the Purchaser. Neither
Parent nor the Purchaser will take, or agree to commit to take, any action that
would or is reasonably likely to result in any of the conditions to the Offer
set forth in Annex A or any of the conditions to the Merger set forth in
Article VI not being satisfied, or would make many representation or warranty
of Parent or the Purchaser contained herein inaccurate in any respect at, or as
of any time prior to, the Effective Time, or that would materially impair the
ability of the parties to consummate the Offer or the Merger in accordance with
the terms hereof or materially delay such consummation. Neither Parent nor the
Purchaser will enter into an agreement, contract, commitment or arrangement to
do any of the foregoing, or to authorize, recommend, propose or announce an
intention to do any of the foregoing.
Section 5.12 ICT Action. The Company agrees that, prior to
the Closing Date, it shall cause its representatives and agents to consult with
Parent on an ongoing basis with respect to any decisions and other matters in
respect of ICT's discussions with Carl Zeiss and Advantest Corporation and
neither the Company nor any of its representatives shall enter into any
contractual obligation or waive any rights in respect thereof without Parent's
prior written consent.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger
shall be subject to the satisfaction on or prior to the Closing Date of
each of the following conditions, any and all of which may be waived in whole
or in part by the Company, Parent
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or the Purchaser, as the case may be, to the extent permitted by applicable law:
(a) Stockholder Approval. This Agreement
shall have been approved and adopted by the requisite vote of the holders of
the Shares, if required by applicable law, in order to consummate the Merger;
(b) Statutes; Consents. No law, statute,
rule, order, decree or regulation shall have been enacted or promulgated by any
Governmental Entity of competent jurisdiction which declares this Agreement
invalid or unenforceable in any material respect or which prohibits
consummation of the Merger and all governmental consents, orders and approvals
(including, without limitation, those identified in Section 5.3(a) of the
Schedule attached to this Agreement) required for the consummation of the
Merger and the other transactions contemplated hereby shall have been obtained
and shall be in effect at the Effective Time;
(c) Purchase of Shares in Offer. Parent,
the Purchaser or their affiliates shall have purchased Shares pursuant to the
Offer, except that this condition shall not apply if Parent, the Purchaser or
their affiliates shall have failed to purchase Shares pursuant to the Offer in
breach of their obligations under this Agreement; and
(d) HSR Approval. The applicable waiting
period under the HSR Act shall have expired or been
terminated.
Section 6.2. Condition to Parent's and the Purchaser's
Obligations to Effect the Merger. The obligations of Parent and the Purchaser
to consummate the Merger are further subject to the fulfillment of the
condition that all actions contemplated by Section 2.4 hereof shall have been
taken, which may be waived in whole or in part by Parent and the Purchaser.
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ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and
the transaction contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after stockholder approval thereof:
(a) By the mutual written consent of the
Board of Directors of Parent or the Purchaser and the Board of Directors of the
Company.
(b) By either of the Board of Directors
of the Company or the Board of Directors of Parent or the
Purchaser:
(i) if (x) the Offer shall have expired without any
Shares being purchased therein or (y) the Purchaser shall not have
accepted for payment any Shares pursuant to the Offer by August 24,
1997; provided, however, that the right to terminate this Agreement
under this Section 7.1(b)(i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of Parent or the Purchaser, as
the case may be, to purchase the Shares pursuant to the Offer on or
prior to such date; or
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their best
efforts to lift), which permanently restrains, enjoins or otherwise
prohibits the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such order, decree, ruling or
other action shall have become final and non-appealable.
(c) By the Board of Directors of the
Company:
(i) if Parent, the Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to five
business days following the date of the initial public announcement of
the
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Offer; provided, that the Company may not terminate this Agreement
pursuant to this Section 7.1(c)(i) if the Company is at such time in
material breach of its obligations under this Agreement;
(ii) in connection with entering into a definitive
agreement in accordance with Section 5.4(b), provided it has complied
with all provisions thereof, including the notice provisions therein,
and that it makes simultaneous payment of the Termination Fee; or
(iii) if Parent or the Purchaser shall have breached
in any material respect any of their respective representations,
warranties, covenants or other agreements contained in this Agreement,
which breach cannot be or has not been cured within 30 days after the
giving of written notice to Parent or the Purchaser, as applicable.
(d) By the Board of Directors of Parent
or the Purchaser:
(i) if, due to an occurrence, not involving a breach
by Parent or the Purchaser of their obligations hereunder, which makes
it impossible to satisfy any of the conditions set forth in Annex A
hereto, Parent, the Purchaser, or any of their affiliates shall have
failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer;
(ii) if prior to the purchase of Shares pursuant to
the Offer, the Company shall have breached any representation,
warranty, covenant or other agreement contained in this Agreement
which (A) would give rise to the failure of a condition set forth in
paragraph (f) or (g) of Annex A hereto and (B) cannot be or has not
been cured within 30 days after the giving of written notice to the
Company; or
(iii) if either Parent or the Purchaser is entitled
to terminate the Offer as a result of the occurrence of any event set
forth in paragraph (e) of Annex A hereto.
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Section 7.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to its terms, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void, and there shall be no liability on the part of
the Parent or the Company except (A) for fraud or for breach of this Agreement
prior to such termination and (B) as set forth in Section 8.1.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. (a) Except as contemplated by
this Agreement, including Section 8.1(b) hereof, all costs and expenses
incurred in connection with this Agreement and the consummation of the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
(b) If (x) the Board of Directors of the
Company shall terminate this Agreement pursuant to Section 7.1(c)(ii), (y) the
Board of Directors of Parent or the Purchaser shall terminate this Agreement
pursuant to Section 7.1(d)(iii) hereof, or (z) prior to the termination of this
Agreement (other than by the Board of Directors of the Company pursuant to
Section 7.1(c)(i) or 7.1(c)(iii)), an Acquisition Proposal shall have been made
and within one year of such termination, the Company enters into an agreement
with respect to, approves or recommends or takes any action to facilitate an
Acquisition Proposal with the person making such original Acquisition Proposal
and at a price and on terms at least as favorable to the stockholders of the
Company as the Offer and the Merger and such later Acquisition Proposal is
consummated, the Company shall pay to Parent (concurrently with such
termination, in the case of clauses (x) or (y) above, and not later than the
consummation of such later Acquisition Proposal, in the case of clause (z)
above) an amount equal to $4,000,000 (the "Termination Fee"); provided that no
Termination Fee shall be payable if the Purchaser or Parent was in material
breach of its representations, warranties or obligations under this Agreement
at the time of its termination.
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Section 8.2 Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action
taken by their respective Boards of Directors (which in the case of the Company
shall include approvals as contemplated in Section 1.3(b)), at any time prior
to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the
stockholders of the Company, no such amendment, modification or supplement
shall reduce the amount or change the form of the Merger Consideration.
Section 8.3 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
schedule, instrument or other document delivered pursuant to this Agreement
shall survive the Effective Time.
Section 8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed) or sent by an overnight courier
service, such as Federal Express, to the parties at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
Applied Materials, Inc.
Attention: Joseph J. Sweeney
Telephone No.: (408) 748-5420
Telecopy No.: (408) 563-4635
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox, Esq.
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000
and
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(b) if to the Company, to:
Opal, Inc.
3203 Scott Boulevard
Santa Clara, CA 95054
Attention: Israel Niv
Telephone No.: (408) 727-6060
Telecopy No.: (408) 727-6332
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Thomas P. Storer, P.C.
Telephone No.: (617) 570-1145
Telecopy No.: (617) 523-1231
and
Goldfarb, Levy, Eran & Co.
Eliahu House
2 Ibn Gvirol Street
Tel Aviv 64077
Israel
Attention: Yehuda M. Levy, Adv.; Marc
A. Rabin, Adv.; and Shirin
Halpern-Herzog, Adv.
Telephone No.: (972-3) 695-4343
Telecopy No.: (972-3) 695-4344
Section 8.5 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation". As used in this Agreement, (a) the term
"affiliate(s)" shall have the meaning set forth in Rule l2b-2 of the Exchange
Act, and (b) the term "Company's knowledge" means the actual knowledge after
due inquiry of any of Rafi Yizhar, Henry Schwartzbaum or Israel Niv, provided
that none of the foregoing individuals shall have any personal liability to the
Parent or the Purchaser by reason of the foregoing.
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Section 8.6 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 8.7 Entire Agreement; No Third Party Beneficiaries.
This Agreement and the Confidentiality Agreement (including the documents and
the instruments referred to herein and therein): (a) constitute the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Sections 2.4 and 5.9 is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 8.8 Severability. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section 8.9 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
Section 8.10 Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the
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prior written consent of the other parties, except that the Purchaser may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
Subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
Section 8.11 Transfer and Similar Taxes. Notwithstanding any
other provision of this Agreement to the contrary, each of the Company's
stockholders shall be responsible for the payment of any sales, use, privilege,
transfer, documentary, gains, stamp, duties, recording and similar Taxes and
fees (including any penalties, interest and additions to such fees) incurred in
connection with such stockholder's sale of Shares to the Purchaser pursuant to
this Agreement and for the accurate filing of all necessary Tax Returns and
other documentation with respect to any transfer Tax.
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company
have caused this Agreement to be signed by their respective officers thereunto
duly authorized as of the date first written above.
APPLIED MATERIALS, INC.
By: /s/ James C. Morgan
--------------------------------------
Name: James C. Morgan
Title: Chairman and Chief Executive Officer
ORION CORP. I
By: /s/ Joseph J. Sweeney
--------------------------------------
Name: Joseph J. Sweeney
Title: Vice President
OPAL, INC.
By: /s/ Mendy Erad
--------------------------------------
Name: Mendy Erad
Title: Chairman of the Board
By: /s/ Rafi Yizhar
--------------------------------------
Name: Rafi Yizhar
Title: President and Chief Executive
Officer
<PAGE>
ANNEX A
Certain Conditions of the Offer. Notwithstanding any other
provisions of the Offer, and in addition to (and not in limitation of) the
Purchaser's rights to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Merger Agreement), the Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to the Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Shares, and may terminate or amend the Offer as
to any Shares not then paid for, if (i) any applicable waiting period under the
HSR Act has not expired or terminated, (ii) the Minimum Condition has not been
satisfied, (iii) the approval of the Offer and the Merger by the Israeli
Investments Center shall not have been obtained, (iv) any applicable waiting
period under the Israeli Restrictive Trade Practices Act of 1988 has not
expired or terminated, (v) the approval of the Offer and the Merger by the
Israeli Office of Chief Scientist shall not have been obtained, (vi) the
exemption by the Israeli Securities Authority from the registration and
prospectus delivery requirements of the Israeli Securities laws for the
issuance of the Parent Options pursuant to Section 2.4(a) shall not have been
obtained or (vii) at any time on or after the date of the Merger Agreement and
before the time of acceptance for payment for any such Shares, any of the
following events shall occur or shall be determined by the Purchaser to have
occurred:
(a) there shall be threatened or pending any
suit, action or proceeding by any Governmental Entity against the Purchaser,
Parent, the Company or any Subsidiary of the Company (i) seeking to prohibit or
impose any material limitations on Parent's or the Purchaser's ownership or
operation (or that of any of their respective Subsidiaries or affiliates) of
all or a material portion of their or the Company's businesses or assets, or to
compel Parent or the Purchaser or their respective Subsidiaries and affiliates
to dispose of or hold separate any material portion of the business or assets
of the Company or Parent and their respective Subsidiaries, in each case taken
as a whole, (ii) challenging the acquisi-
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tion by Parent or the purchaser of any Shares under the Offer or pursuant to
the Stockholder Agreements, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or the performance of any of the other
transactions contemplated by this Agreement or the Stockholder Agreements
(including the voting provisions thereunder), or seeking to obtain from the
Company, Parent or the Purchaser any damages that are material in relation to
the Company and its Subsidiaries taken as a whole, (iii) seeking to impose
material limitations on the ability of the Purchaser, or render the Purchaser
unable, to accept for payment, pay for or purchase some or all of the Shares
pursuant to the Offer and the Merger, (iv) seeking to impose material
limitations on the ability of the Purchaser or Parent effectively to exercise
full rights of ownership of the Shares, including, without limitation, the
right to vote the Shares purchased by it on all matters properly presented to
the Company's stockholders, or (v) which otherwise is reasonably likely to have
a material adverse affect on the consolidated financial condition, businesses
or results of operations of the Company and its Subsidiaries, taken as a whole;
(b) there shall be any statute, rule, regula-
tion, judgment, order or injunction enacted, entered, enforced, promulgated, or
deemed applicable, pursuant to an authoritative interpretation by or on behalf
of a Government Entity, to the Offer or the Merger, or any other action shall
be taken by any Governmental Entity, other than the application to the Offer or
the Merger of applicable waiting periods under HSR Act, that is reasonably
likely to result, directly or indirectly, in any of the consequences referred
to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange or in the NASDAQ National Market System, for a period in
excess of 24 hours (excluding suspensions or limitations resulting solely from
physical damage or interference with such exchanges not related to market
conditions), (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory),
(iii) a commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States or
involving Israel and, in the case of armed hostilities involving Israel,
having, or which could reasonably be expected to have, a substantial continuing
general effect on business and financial conditions in Isra-
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<PAGE>
el, (iv) any limitation (whether or not mandatory) by any United States or
Israeli governmental authority on the extension of credit generally by banks or
other financial institutions, or (v) a change in general financial bank or
capital market conditions which materially and adversely affects the ability of
financial institutions in the United States and in Israel to extend credit or
syndicate loans or (vi) in the case of any of the foregoing existing at the
time of the commencement of the Offer, a material acceleration or worsening
thereof;
(d) there shall have occurred any material
adverse change (or any development that, insofar as reasonably can be foreseen,
is reasonable likely to result in any material adverse change) in the
consolidated financial condition, businesses, results of operations or
prospects of the Company and its Subsidiaries, taken as a whole, other than any
such change which relates to general conditions in the economy or in the
Company's industry or arises solely from the Company's execution and delivery
of this Agreement;
(e)(i) the Board of Directors of the Company
or any committee thereof shall have withdrawn or modified in a manner adverse
to Parent or the Purchaser its approval or recommendation of the Offer, the
Merger or this Agreement, or approved or recommended any Acquisition Proposal
or (ii) the Company shall have entered into any agreement with respect to any
Superior Proposal in accordance with Section 5.4(b) of this Agreement;
(f) any of the representations and warranties
of the Company set forth in this Agreement that are qualified as to materiality
shall not be true and correct and any such representations and warranties that
are not so qualified shall not be true and correct in any material respect, in
each case (i) as of the date referred to in any representation or warranty
which addresses matters as of a particular date, or (ii) as to all other
representations and warranties, as of the date of this Agreement and as of the
scheduled expiration of the Offer;
(g) the Company shall have failed to perform
in any material respect any material obligation or to comply in any material
respect with any material agreement or covenant of the Company to be performed
or complied with by it under this Agreement; or
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(h) the Agreement shall have been terminated
in accordance with its terms;
which in the reasonable good faith judgment of Parent or the Purchaser, in any
such case, and regardless of the circumstances (including any action or
inaction by Parent or the Purchaser) giving rise to such condition makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment
of or payment for Shares.
The foregoing conditions are for the sole benefit of Parent
and the Purchaser and may be waived by Parent or the Purchaser, in whole or in
part at any time and from time to time in the sole discretion of Parent or the
Purchaser. The failure by Parent or the Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
4
EXHIBIT B
ORION, INC. CLASS B COMMON STOCK OPTION PLAN
OPAL, INC.
CLASS B COMMON STOCK OPTION PLAN
1. Purpose. The Opal, Inc. Class B Common Stock Option (the "Plan") is
intended (a) to provide a method whereby employees (including employees who
are officers and directors) of Opal, Inc. (the "Company") and its subsidiaries
who are making and are expected to continue making substantial contributions
to the successful management and growth of the Company and its subsidiaries
may be offered an opportunity to acquire shares of Class B Common Stock, par
value $.0001 per share, of the Company (the "Class B Common Stock"), in order
to acquire or increase their proprietary interests in the Company and their
incentive to remain, and to advance, in the employ of the Company and its
subsidiaries and (b) to attract and retain personnel of experience and ability
by granting such persons an opportunity to acquire a proprietary interest in
the Company. Accordingly, the Company may, from time to time, grant to such
employees as may be selected in the manner hereinafter provided, incentive
stock options ("Incentive Stock Options"), as defined in Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code"), non-qualified stock
options ("Non-Qualified Stock Options") and restricted stock options
("Restricted Stock Options"), to purchase shares of Class B Common Stock of
the Company on the terms and conditions hereinafter established. The Incentive
Stock Options, Non-Qualified Stock Options and Restricted Stock Options are
sometimes referred to herein individually as an "Option" and collectively as
the "Options".
2. Administration. The Plan shall be administered by a Stock Option
Committee (the "Committee") appointed by the Board of Directors of the
Company. The Committee shall consist of not fewer than three (3)
"disinterested persons," as that term is defined in subparagraph (d)(3) of
Rule 16b-3 ("Rule 16b-3"), as in effect from time to time under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Subject to the terms
and conditions of the Plan, the Committee shall have full authority in its
discretion, from time to time, and at any time, to select the employees to
whom Options shall be granted, to determine the number of shares to be covered
by each Option, the time at which the Option shall be granted and the terms
and conditions of Option Agreements (as hereinafter defined), and, except as
hereinafter provided, the Option exercise price and the term during which the
Options may be exercised.
The Board may at any time appoint or remove members of the Committee and
may fill vacancies, however caused, in the Committee. The Committee shall
select one of its members as its Chairman, and shall hold its meetings at such
times and places as it shall deem advisable. A majority of its members shall
constitute a quorum. All actions of the Committee shall be taken by a majority
of its members and can be taken by written consent in lieu of a meeting. The
Committee shall make such rules and regulations for the conduct of its
business as it shall deem advisable.
3. Interpretation and Amendment. The interpretation, construction or
determination of any provision of the Plan by the Committee shall be final
conclusive. No
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member of the Board of Directors or the Committee shall be liable for an
action or determination made in good faith with respect to the Plan.
The Board of Directors may, at any time, amend, alter, suspend or
terminate the Plan; provided, however, that any such action shall not impair
Options theretofore granted under the Plan, and provided further that without
the approval of the holders of at least the majority of the voting stock of
the Company voting at a duly held meeting: (a) the total number of shares of
Class B Common Stock in respect of which Options may be granted shall not be
increased (except as permitted by Paragraph 12); (b) the minimum option
exercise price shall not changed (except as permitted by Paragraph 12); and
(c) the option period during which outstanding Options granted under the Plan
may be exercised shall not be extended.
4. Participants. Options may be granted under the Plan to key employees
of the Company and its subsidiaries (including employees who are also
directors or officers of the Company or its subsidiaries). Solely for the
purposes of granting Restricted Stock Options under the Plan, the term
"employees" shall also include consultants to the Company or any subsidiary.
The term "subsidiary" shall mean "subsidiary corporation" as defined in
Section 425 of the Code. Members of the Committee shall not be eligible to
participate in the Plan. No Incentive Stock Option shall be granted to an
employee who, at the time the Incentive Stock Option is granted, owns stock
possessing more than ten percent (10%) of the total combined voting power of
all classes of capital stock of the Company or any subsidiary of the Company;
provided, however, that an Incentive Stock Option may be granted to such an
employee if, at the time such Incentive Stock Option is granted, the option
exercise price is at least 110 percent (110%) of the fair market value of the
Class B Common Stock subject to the Incentive Stock Option, and such Incentive
Stock Option is by its terms not exercisable after the expiration of five (5)
years from the date such Incentive Stock Option is granted.
Subject to the preceding paragraph, receipt of stock options under any
other stock option plan maintained by the Company or any subsidiary shall not,
for that reason, preclude an employee from receiving Options under the Plan.
5. Amount of Shares of Class B Common Stock. The amount of shares of
Class B Common Stock which may be issued and sold pursuant to Options under
the Plan from time to time shall not exceed, in the aggregate 6,167,187 shares
of the Class B Common Stock of the Company, which shares of Class B Common
Stock may be issued and sold pursuant to Incentive Stock Options,
Non-Qualified Stock Options or Restricted Stock Options, as the Committee, in
its sole discretion, may determine. The number of shares of Class B Common
Stock issuable under the Plan may be increased to allow for the reissuance or
disposition of shares that have been issued upon the exercise of Options
granted under the Plan and reacquired by the Company in a manner not causing a
reduction in the capital of the Company. The shares of Class B Common Stock
reissued and sold under the Plan may be the Company's authorized but unissued
shares, or shares held in the Company's treasury.
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Should any Option expire or terminate for any reason without having been
exercised in full, the unsold shares covered thereby shall be added to the
shares otherwise available for option hereunder.
6. Terms and Conditions of Options. Option Agreements evidencing Options
granted pursuant to the Plan shall be in such form and on such terms as the
Committee shall, from time to time, approve, but subject, nevertheless, to the
following terms and conditions:
(a) The Option Agreement shall state the total number of shares of
Class B Common Stock to which it relates and no fractional
shares of Class B Common Stock shall be issued.
(b) The option exercise price per share of Class B Common Stock
issuable upon the exercise of an Incentive Stock Option shall
not be less than one hundred percent (100%) of the fair market
value of the Class B Common Stock covered by such Option at the
date such Option is granted.
(c) The option exercise price per share of Class B Common Stock
issuable upon the exercise of a Non-Qualified Stock Option
shall be determined by the Committee in its sole and absolute
judgment.
(d) The option exercise price per share of Class B Common Stock
issuable upon the exercise of a Restricted Stock Option shall
be the par value thereof.
(e) Notwithstanding any provision of the Plan, the term of an
Incentive Stock Option shall be for a period of not more than
ten (10) years from the date such Incentive Stock Option is
granted and the term of a Restricted Stock Option shall be for
a period of not more than ten (10) years and one (1) day from
the date such Restricted Stock Option is granted.
(f) An Option must be granted within ten (10) years of the earlier
of the date the Plan is adopted or the date this Plan is
approved by the Company's stockholders in accordance with
Paragraph 22.
7. Issuance of Shares in Trust; Vesting of Shares; Dividends and Voting
Rights.
(a) Any other provision herein to the contrary notwithstanding, each
share of Class B Common Stock with respect to which a Restricted Stock
Option (or any part thereof) has been exercised by an employee who is a
resident of Israel shall be issued by the Company to, and held in a trust
(the "Trust") by, a trustee (the "Trustee") designated by the Board, for
the benefit of such employee, until such time as such employee shall have
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instructed the Trustee, in writing, to release such share from the Trust;
provided, however, that such share shall be so released only upon the latter
of (a) two (2) years after the issuance thereof to the Trustee, or (b) the
time such share is vested (as provided in Section 7(b) below); provided
further that such share shall be released from the Trust only upon the full
payment of the option exercise price thereof, whether by discharge of the
"Note" (as hereinafter defined) or otherwise.
(b) (i) Unless otherwise provided by the Committee in any Option
Agreement, twenty five percent (25%) of the shares of
Class B Common Stock covered by an Option shall vest in
the employee on the first anniversary of the exercise date
of such Option, and 2.0833% of such shares shall vest in
such employee on the first day of each month following
such first anniversary. For purposes of this Section 7(b),
fractional shares shall be disregarded, and all remaining
unvested shares shall vest on the last such month.
(ii) Any other provision herein to the contrary
notwithstanding, if any of the following occurs at any
time after the date hereof: (x) the liquidation of the
Company, (y) the sale or exchange of all or substantially
all of the assets of the Company, or (z) a merger or
consolidation of the Company with another corporation in
which the Company is not the surviving corporation or its
outstanding stock is converted into cash or securities of
a third party, then, in each such case, all the shares of
Class B Common Stock covered by Options shall vest in the
grantees thereof on the effective date of any such
transaction, or the record date on which shareholders of
the Company are entitled to participate in such
transaction shall be determined, whichever shall first
occur. Thereafter, all such shares of Class B Common Stock
shall be deemed "Free Shares" (as hereinafter defined),
and shall be free of any and all obligations of resale to
the Company.
(c) Employee shall be deemed to have waived his rights with respect
to any and all dividends and distributions payable on, or accrued with
respect to, shares of Class B Common Stock which have not yet vested as
of the date such dividend or distribution is declared or made. Subject to
compliance with the applicable provisions of the Israel Currency Control
Law - 1978 (the "Control Law"), all dividends (in cash or in kind)
payable as shares of Class B Common Stock which vest on or before the
date such dividend is declared (whether or not such shares were released
from the trust) shall be remitted by the Company to the employee.
(d) To the extent shares of Class B Common Stock are entitled to
vote, the Trustee shall vote all such shares which are not yet vested
pursuant to Section 7(b) hereof in
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such manner as may be directed by a person selected by the Committee. Each
Option Agreement shall include an irrevocable proxy by the employee who is a
party thereto in favor of such person covering all the shares subject to such
Option Agreement which are not yet vested pursuant to Section 7(b) hereof and
granting such person power to vote all such shares in his discretion.
8. Restrictions on Disposition and Obligation of Resale.
(a) Subject to the provisions of Section 7(b)(ii) hereof, shares of
Class B Common Stock acquired by an employee pursuant to the exercise of
a Restricted Stock Option under the Plan shall not be sold, transferred,
or otherwise disposed of and shall not be pledged or otherwise
hypothecated, except as provided in this Section 8 and Section 9 herein.
(Any such sale, transfer or other disposition, or any pledge or other
hypothecation shall hereinafter be referred to as a "disposition"). In
the event of the termination of employment for any reason except
retirement with the consent of the Company or death, such shares shall,
except as provided below, and except with respect to shares fully vested
pursuant to Section 7(b)(ii), be offered for resale to the Company at
their original acquisition price. Shares as to which the vesting period
referred to in Section 7(b) above, and the obligation of resale to the
Company as provided in Section 8(b) herein, have lapsed in accordance
with the provisions of the Plan and the applicable Option Agreement shall
be referred to as "Free Shares." Shares as to which the vesting period
referred to in Section 7(b) above, and obligation of resale to the
Company as provided in Section 8(b) herein, did not lapse in accordance
with the provisions of the Plan and the applicable Option Agreement shall
be referred to as "Restricted Shares."
(b) In the event of the termination of employment for any reason,
shares of Class B Common Stock issued to the employee pursuant to the
exercise of a Restated Stock Option under the Plan, which shares have not
as of the date of termination of employment, become Free Shares pursuant
to Section 7(b)(ii), or as otherwise defined in Section 8(a) above, shall
become subject to an obligation of immediate resale to the Company within
thirty (30) days following the termination of employment. Within sixty
(60) days following a timely delivery of such shares, the Company will
compensate the employee (at the original acquisition price) for such
number of shares as the Company elects to purchase and will return to the
employee any shares not so purchased. Restricted Shares that are not
delivered to the Company within thirty (30) days following the
termination of employment shall remain subject to the restrictions
against disposition, and such restrictions shall not lapse as otherwise
provided in this Section 8 and in the employee's Option Agreement.
Nothing in this Section 8 shall require the Company to repurchase shares
issued to employees under the Plan.
(c) Notwithstanding any of the foregoing restrictions, any
Restricted Shares acquired under the Plan may at any time be pledge or
otherwise hypothecated to secure borrowing by the employee to obtain the
acquisition price to be paid by the employee for such shares; provided,
however, that the amount of such borrowing may not exceed the acquisition
price of such shares.
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(d) The provisions of this Paragraph 8 and the provisions of any
Option Agreement between the Company and employee relating to the vesting
period and the obligation of resale to the Company shall be applied
according to their term or according to such other terms and conditions,
or at such other times and dates, as the Board of Directors or the
Committee may from time to time establish.
9. Notice of Election under Section 83(b). With respect to the exercise
of Non- Qualified Stock Options or Restricted Stock Options, each employee
making an election under Section 83(b) of the Code and Regulations and Rulings
promulgated thereunder will provide a copy thereof to the Company within
thirty (30) days of the filing of such election with the Internal Revenue
Service.
10. Termination of Employment. In the event that the holder of an Option
granted pursuant to the Plan shall cease to be employed by the Company or by
the subsidiaries of the Company for any reason other than disability (as
determined by the Committee in its sole discretion), retirement with the
consent of the Company, dismissal by the Company without cause, or death, any
Options granted to such holders pursuant to the Plan shall terminate
immediately; provided, that the Committee may in its sole discretion determine
that the holder of any Option may, if he ceases to be employed by the Company
or any subsidiary as a result of his dismissal for cause (as determined by the
Board of Directors in its sole discretion), exercise any Options that are
exercisable by him at the time he ceases to be employed by the Company or its
subsidiaries, and only to the extent such Options are exercisable as of such
time, within thirty (30) days after the date he ceases to be employed by the
Company or its subsidiaries. If the holder of an Option ceases to be employed
by the Company or any subsidiary as a result of his disability or his
retirement with the consent of the Company, then any Options that are
exercisable by him at the time he ceases to be employed by the Company or its
subsidiaries, and only to the extent such Options are exercisable as of such
time, may be exercised by him within two (2) years after the date of
disability or one (1) year after the date of retirement with the consent of
the Company (as determined by the Committee), respectively. If the holder of
an Option ceases to be employed by the Company or any subsidiary as result of
his dismissal without cause, then any Options that are exercisable by him at
the time he ceases to be employed by the Company or its subsidiaries, and only
to the extent such Options are exercisable as of such time, may be exercised
by him within sixty (60) days after the date he ceases to be employed by the
Company or its subsidiaries.
Solely for purposes of the Plan, the transfer of an employee from the
employ of the Company to a subsidiary of the Company, or vice-versa, shall not
be deemed a termination of employment.
11. Death. If a holder of an Option shall die while in the employ of the
Company or any subsidiary of the Company, his estate, personal representative
or beneficiary shall have the right to exercise any Options granted to the
optionholder pursuant to the Plan at any time within two (2) years from the
date of his death (or within such shorter period as may be
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specified in the Option Agreement), in respect of the total number of Shares
as to which he would have been entitled to exercise an Option at the time of
his death.
12. Stock Splits, Mergers, etc. In case of any stock split, stock
dividend or similar transaction which increases or decreases the number of
outstanding shares of Class B Common Stock, appropriate adjustment shall be
made by the Board of Directors, whose determination shall be final, to the
number of shares of Class B Common Stock which may be purchased under the Plan
and the number and option exercise price per share of Class B Common Stock,
which may be purchased under any outstanding Options. Without derogating from
the provisions of Section 7(b)(ii), in the case of a merger, sale of assets or
similar transaction which results in a replacement of the Class B Common Stock
with stock of another corporation, the Company will make a reasonable effort,
but shall not required, to replace any outstanding Options granted under the
Plan with comparable options to purchase the stock of such other corporation,
or will provide for immediate maturity of all outstanding Options, with all
Options not being exercised within the time period specified by the Board of
Directors being terminated.
13. Transferability. Options are not assignable or transferable except by
will or the laws of descent and distribution to the extent set forth in
paragraph 11 and during an optionholder's lifetime, may be exercised only by
him.
14. Exercise of Options. An optionholder electing to exercise an Option
shall give written notice to the Company of such election and of the number of
shares of Class B Common Stock that he has elected to acquire. An optionholder
shall have no rights of a stockholder with respect to shares of Class B Common
Stock covered by his Option until after the date of issuance of a stock
certificate to him (or, on his behalf, to an "Authorized Dealer" (as
hereinafter defined) upon partial or complete exercise of his Option and the
payment of the exercise price thereof.
15. Written Option Agreement. Agreements granting Options under the Plan
("Option Agreements") shall be in writing, duly executed and delivered by or
on behalf of the Company and the optionholder and shall contain such terms and
conditions as the Committee deems advisable. Unless otherwise specified in any
Option Agreement, if there is any conflict between the terms and conditions of
any Option Agreement and of the Plan, the terms and conditions of the Plan
shall control.
16. Payment. The option exercise price shall be payable upon the exercise
of the Option in cash, by check or in shares of Class B Common Stock or, at
the discretion of the Board of Directors, by paying in cash, at the minimum,
the par value of the shares of Class B Common Stock being acquired and
executing a promissory note for the balance of the option exercise price (the
"Note"). If shares of Class B Common Stock are tendered as payment of the
option exercise price, the value of such shares shall be their fair market
value as of the date of exercise. If such tender would result in the issuance
of fractional shares of Class B
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Common Stock, the Company shall instead return the difference in cash or by
check to the employee.
17. Term of Plan. The Plan shall terminate ten (10) years after the Plan
is adopted by the Board of Directors, and no Option shall be granted pursuant
to the Plan after their date.
18. Application of Funds. The proceeds received by the Company from the
sale of shares of Class B Common Stock pursuant to the exercise of Options
granted under the Plan will be used for general corporate purposes.
19. Obligation to Exercise Option. The granting of an Option shall impose
no obligation on the optionholder to exercise such option.
20. Continuance of Employment. Neither the Plan nor any Option Agreement
shall impose any obligation on the Company or on any subsidiary of the Company
to continue the employment of any optionholder, any nothing in the Plan or in
any Option Agreement shall confer upon any optionholder any right to continue
in the employ of the Company or the subsidiary of the Company or conflict with
the right of either to terminate such employment at any time.
21. Compliance with Securities Laws.
(a) The Committee may, in its sole discretion, require that at the
time an employee elects to exercise an Option, he shall furnish a written
statement to the Company that he is acquiring the shares of Class B
Common Stock for investment and without a view toward resale or other
disposition of such shares.
(b) The Committee may, in its sole discretion or acquired by law,
require that an appropriate restrictive legend be placed upon each stock
certificate representing shares of Class B Common Stock purchased by an
employee pursuant to the Plan.
22. Effectiveness of Plan. The Plan shall become effective on the date of
its adoption by the Board of Directors, but subject, nevertheless, to (a)
approval, within twelve (12) months thereof, by the shareholders representing
at least a majority of the voting stock of the Company or by such greater
percentage as may from to time be required under the laws of the State of
Delaware, and applicable rules or regulations under Rule 16b-3 and (a) such
approvals as may be required by any other public authorities.
23. Tax Matters. All tax consequences under any applicable law which may
arise from the grant or exercise of an Option, from the payment for shares of
Class B Common Stock covered by an Option, from the resale of shares of Class
B Common Stock by an employee or from any other act of the employee in
connection therewith shall be borne solely by such employee, and such employee
shall indemnify the Company and each of its
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subsidiaries, and hold them harmless, against and from any liability for any
such tax or penalty thereon.
24. Special Provisions Affecting Employees Resident in Israel. So long
as, and to the extent that, the Control Law shall so require, the following
provisions shall apply with respect to employees resident in Israel:
(a) Delivery of certificates representing shares of Class B Common
Stock shall be to a bank which is an authorized dealer (or its nominee
company) in Israel ("Authorized Dealer") to hold for the benefit of the
employee pursuant to the terms of the Plan and any applicable Option
Agreement, and in conformity with the requirements of the Controller of
Foreign Currency;
(b) All payments of option exercise price by the employee, to the
extent the same are made in currency other than New Israeli Shekels,
shall be effected through an Authorized Dealer; and
(c) The proceeds of any sale or transfer by an employee of shares of
Class B Common Stock acquired by him pursuant to the exercise of an
Option shall be remitted to Israel, and, to the extent the same were paid
in currency other than New Israeli Shekels, shall be deposited with an
Authorized Dealer immediately upon receipt thereof, and in all events not
later than sixty (60) days after the date at which the certificate
representing such shares was delivered to such employee for the resale
thereof.
9
EXHBIT C
EMPLOYEE STOCK OPTION PLAN
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OPAL INC.
EMPLOYEE STOCK OPTION PLAN
A. NAME AND PURPOSE
1. NAME: This plan, as amended from time to time, shall be known as the
"Opal Inc. Employee Stock Option Plan" (the "Plan").
2. PURPOSE: The purpose and intent of the Plan is to provide incentives
to employees (including officers and directors who are employees) of Opal Inc.
(the "Company") and to employees (including officers and directors who are
employees) of Opal Technologies, Ltd., a wholly-owned subsidiary of the
Company (the "Israeli Company"), by providing them with opportunities to
purchase Common Shares, par value $0.01 each (the "Shares"), of the Company,
pursuant to the exercise of options ("Options") granted under the Plan. At the
discretion of the Board of Directors of the Company (the "Board"), Options
granted under the Plan may qualify as incentive stock options ("Incentive
Stock Options") under Section 422 of the International Revenue Code of 1986,
as amended (the "Code"), or may be Options which are not described in Sections
422 or 423 of the Code ("Nonqualified Stock Options"). At the discretion of
the Board, Options granted under the Plan may alternatively be subject to
certain provisions applicable only to such grantees who are, or might become,
subject to the payment of income tax in Israel ("Israel Grantees").
B. GENERAL TERMS AND CONDITIONS OF THE PLAN
3. ADMINISTRATION:
3.1 The Plan will be administered by the Board or by a committee
appointed by the Board (the "Committee"), which, if appointed, will
consist of such number of the
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Directors of the Company as may be fixed, from time to time, by the
Board. If a Committee is not appointed, the term "Committee", whenever
used herein, shall mean "the Board". The Board shall appoint the members
of the Committee, and may from time to time remove members from, or add
members to, the Committee and shall fill vacancies in the Committee
however caused.
3.2 The Committee shall select one of its members as its Chairman
and shall hold its meetings at such times and places as it shall
determine. Actions taken by a majority of the members of the Committee,
at a meeting at which a majority of its members is present, or acts
reduced to or approved in writing by all members of the Committee, shall
be the valid acts of the Committee. The Committee may appoint a
Secretary, who shall keep records of its meetings and shall make such
rules and regulations for the conduct of its business as it shall deem
advisable.
3.3 Subject to the general terms and conditions of this Plan, the
Committee shall have the full authority in its discretion, from time to
time and at any time, to determine (a) the persons ("Grantees") to whom
Options to purchase Shares shall be granted, (b) whether or not such
Options be qualified as Incentive Stock Options, be Nonqualified Stock
Options or other forms of Options, (c) the number of Shares to be covered
by each Option, (d) the time or times at which the same shall be granted,
(e) the price, schedule and conditions on which such Options may be
exercised and on which such Shares shall be paid for, and/or (f) any
other matter which is necessary or desirable for, or incidental to, the
administration of the Plan. In determining the number of Shares covered
by the Option to be granted to each Grantee, the
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Committee may consider, among other things, the Grantee's salary and the
duration of the Grantee's employment by the Company or the Israeli
Company, as the case may be.
3.4 The Committee may, from time to time, adopt such rules and
regulations for carrying out the Plan as it may deem necessary. No member
of the Board or the Committee shall be liable for any act or
determination made in good faith with respect to the Plan or any Option
granted thereunder.
3.5 The interpretation and construction by the Committee of any
provision of the Plan or of any Option thereunder shall be final and
conclusive unless otherwise determined by the Board.
3.6 In the event that the Company becomes subject to the
requirements of Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended ("Rule 16b-3"), then, notwithstanding the provisions
of Sections 3.1 - 3.5 hereof, (a) the Committee shall consist of two or
more members of the Board or such lesser number of members of the Board
as permitted by Rule 16b-3, and (b) none of the members of the Committee
shall receive, while serving on the Committee, or during the one-year
period preceding appointment to the Committee, a grant or award of equity
securities under (i) the Plan or (ii) any other plan of the Company or
the Israeli Company under which the participants are entitled to acquire
shares, stock options, stock bonuses or related rights of the Company or
the Israeli Company, other than pursuant to transactions in any such
other plan which do not disqualify a director from being a disinterested
person under Rule 16b-3. The limitations set forth in this Section 3.6
shall automatically incorporate any additional requirements that may in
the future be necessary for the Plan to comply with Rule 16b-3.
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4. ELIGIBLE GRANTEES: Subject to Section 3.6 hereof, the Committee, at
its discretion, may grant Options to any employee of the Company and to any
employee of the Israeli Company (including directors who are employees of
either the Company or the Israeli Company). Anything in this Plan to the
contrary notwithstanding, to the extent necessary under any applicable Israeli
law, all grants of Options to Office Holders ("Nosei Isra") - as such term is
defined in the Israeli Companies Ordinance (New Version), 1983, as amended rom
time to time (the "Companies Ordinance") - of the Israeli Company shall be
authorized and implemented only in accordance with the provisions of the
Companies Ordinance. Subject to the terms of the Plan, the grant of an Option
to a Grantee hereunder, shall neither entitle such Grantee to participate, nor
disqualify him from participating, in any other grant of options pursuant to
this Plan or any other stock option plan of the Company or the Israeli
Company, as the case may be.
5. GRANT OF OPTIONS AND ISSUANCE OF SHARES IN TRUST: DIVIDEND AND VOTING
RIGHTS
5.1 Grant of Options and Issuance of Shares in Trust.
(a) Subject to Section 7.1 hereof, the effective date of
the grant of an Option (the "Date of Grant") shall be the date
specified by the Committee in its determination relating to the
award of such Option. The Committee shall promptly give the
Grantee written notice (the "Notice of Grant") of the grant of
an Option.
(b) Anything herein to the contrary notwithstanding, to
the extent so determined by the Committee, Options granted
under the Plan to Israeli Grantees shall be granted by the
Company to a trustee designated by the Board and approved by
the Israeli Commissioner of Income Tax (the "Trustee"), and the
Trustee shall hold each
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such Option and the Shares issued upon exercise thereof in
trust (the "Trust") for the benefit of the Israeli Grantee in
respect of whom such Option was granted (the "Beneficial
Grantee"). All certificates representing Shares issued to the
Trustee under the Plan shall be deposited with the Trustee, and
shall be held by the Trustee until such time that such Shares
are released from the Trust as herein provided. Thereafter,
such certificate shall be deposited with an Authorized Dealer
Bank in accordance with Israel's Currency Control Law, 1978
(the "Control law").
(c) Anything herein to the contrary notwithstanding, no
Options or Shares granted under the Plan to the Trustee on
behalf of Israeli Grantees shall be released from the Trust
until the later of (i) two (2) years after the Date of Grant,
and (ii) the vesting of such Shares pursuant to Section 7.3
hereof (such later date being hereinafter referred to as the
"Release Date").
(d) Subject to the terms hereof, at any time after the
Release Date with respect to any Options or Shares held in the
Trust, the following shall apply:
(i) From and after the Release Date, upon the written
request of any Beneficial Grantee, the Trustee shall
release from the Trust the Options granted, and/or the
Shares issued, on behalf of such Beneficial Grantee, by
executing and delivering to the Company such instrument(s)
as the Company may require, giving due notice of such
release to such Beneficial Grantee, provided, however,
that the Trustee shall not so release any such Options
and/or Shares to such Beneficial Grantee unless the
latter, prior to, or concurrently with, such release,
provides the Trustee with evidence, satisfactory
5
<PAGE>
in form and substance to the Trustee, that all Israeli
taxes, if any, required to be paid upon such release have,
in fact, been paid.
(ii) Alternatively, from and after the Release Date,
upon the written instructions of the Beneficial Grantee to
sell any Shares issued upon exercise of Options, the
Trustee shall use its best efforts to effect such sale and
shall transfer such Shares to the purchaser thereof
concurrently with the receipt, or after having made
suitable arrangements to secure the payment of the
proceeds, of the purchase price in such transaction. The
Trustee shall withhold from such proceeds any and all
taxes required to be paid in respect of such sale, shall
remit the amount so withheld to the appropriate Israeli
tax authorities and shall pay the balance thereof directly
to the Beneficial Grantee, reporting to such Beneficial
Grantee and to the Company the amount so withheld and paid
to said tax authorities.
5.2 Dividend and Voting Rights. All Shares issued upon the exercise
of Options granted under the Plan shall entitle the Grantee thereof to
receive dividends with respect thereto, and to vote the same at any
meeting of the shareholders of the Company. For so long as Shares issued
to the Trustee on behalf of a Beneficial Grantee are held in the Trust,
the dividends paid or distributed with respect thereto shall be remitted
to the Trustee for the benefit of such Beneficial Grantee, and the
Trustee shall vote all such Shares in accordance with the instructions of
such Grantee.
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<PAGE>
6. RESERVED SHARES: The Company has reserved two million two hundred and
ninety thousand (2,290,000)* authorized but unissued Shares for purposes of
the Plan, subject to adjustments as provided in Section 11 hereof. All Shares
under the Plan, in respect of which the right hereunder of a Grantee to
purchase the same shall, for any reason, terminate, expire or otherwise cease
to exist, shall again be available for grant through Options under the Plan.
7. GRANT OF OPTIONS:
7.1 Options may be granted to Israeli Grantees only after the
passage of thirty (30) days following the delivery by the Company to the
appropriate income tax authorities of a notice pertaining to the
appointment of the Trustees and the adoption of the Plan.
7.2 The Notice of Grant shall state, inter alia, the number of
Shares covered thereby, the dates when the Option may be exercised, the
exercise price, and such other terms and conditions as the Committee at
its discretion may prescribe, provided that they are consistent with this
Plan. Anything herein to the contrary notwithstanding, in the case of an
Incentive Stock Option granted to a person possessing more than ten
percent (10%) of the voting power of the Company, the term of each
Incentive Stock Option shall be for no more than five (5) years. In
addition, in the case of Incentive Stock Options, the aggregate fair
market value (determined as of the time such Option is granted) of the
Shares with respect to which Incentive Stock Options are exercisable for
the first time by a Grantee in any calendar
- --------
* Number of shares eligible for issuance under the Plan increased to
5,790,099 pursuant to vote of Board of Directors dated December 13, 1995
(without giving effect to 1-for-7 reverse stock split).
7
<PAGE>
year (under this Plan and any other plans of the Company) shall not
exceed one hundred thousand dollars ($100,00).
7.3 Without derogating form the rights and powers of the Committee
under Section 7.2 hereof, unless otherwise specified in the Plan or in
the Notice of Grant, each Option under the Plan shall be for a term of
ten (10) years, and the schedule pursuant to which such Options shall
vest, and the Grantee thereof who shall be entitled to pay for, and
acquire, the Shares, shall be such that twenty-five percent (25%) of such
Options shall vest on the first anniversary of the Date of Grant, and an
additional two point zero eight there percent (2.083%) of such Options
shall vest at the end of each month after the first anniversary of the
Date of Grant, until all Options are fully vested.
8. EXERCISE PRICE: The exercise price per Share covered by each Option
shall be determined by the Committee in its sole and absolute discretion.
Notwithstanding the foregoing, (a) in the case of an Incentive Stock Option
granted to a person possessing more than ten percent (10%) of the voting power
of the company, the exercise price shall be not less than one hundred ten
percent (110%) of the fair market value of the Shares on the Date of Grant and
(b) in the case of an Incentive Stock Option granted to any other person, the
exercise price shall not be less than the fair market value of the Shares on
the Date of Grant. The exercise price shall be paid in Israeli currency,
unless otherwise specified in the Notice of Grant. To the extent that the
exercise price is payable in Israeli currency, the appropriate amount payable
shall be determined based on the last available Representative Rate of
Exchange of U.S. dollars into Israeli currency.
8
<PAGE>
9. EXERCISE OF OPTIONS:
9.1 Options shall be exercisable pursuant to the terms under which
they were awarded and subject to the terms and conditions of the Plan.
9.2 The exercise of an Option shall be made by a written notice of
exercise (the "Notice of Exercise") delivered by the Grantee (or, with
respect to Options held in the Trust, by the Trustee upon receipt of
written instructions from the Beneficial Grantee) to the Company at its
principal executive office in the United States, specifying the number of
Shares to be purchased and accompanied by the payment therefor, and
containing such other terms and conditions as the Committee shall
prescribe from time to time.
9.3 Anything herein to the contrary notwithstanding, but without
derogating from the provisions of Section 9 hereof, if any Option has not
been exercised and the Shares covered thereby not paid for within ten
(10) years after the Date of Grant (or any shorter period set forth in
the Notice of Grant), such Option and the right to acquire such Shares
shall terminate, all interests and rights of the Grantee in and to the
same shall ipso facto expire, and, in the event that in connection
therewith any Options are still held in the Trust as aforesaid, the Trust
with respect thereto shall ipso facto expire and the Trustee shall
thereafter hold such Options in an unallocated pool until instructed by
the Company that some or all of such Options are again to be held in
trust for one or more Israeli Grantees.
9.4 Each payment for Shares shall be in respect of a whole number of
Shares, and shall be effected in cash or by a cashier's check payable to
the order of the Company, or such other method of payment acceptable to
the Company. Not less than one hundred (100) Shares may be purchased at
any time upon the exercise of an Option unless the
9
<PAGE>
number of Shares so purchased constitutes the total number of Shares then
purchasable under such Option. 10. TERMINATION OF EMPLOYMENT:
10.1 In the event that a Grantee ceases, for any reason, to be
employed by the Company or by the Israeli Company, as the case may be,
all Options theretofore granted to such Grantee shall terminate as
follows:
(a) If the Grantee's termination of employment is due to such
Grantee's death or "Disability" (as hereinafter defined), such
Options (to the extent exercisable at the time of the Grantee's
termination of employment) shall be exercisable by the Grantee's
legal representative, estate of other person to whom the Grantee's
rights are transferred by will or by laws of descent or distribution
for a period of six (6) months following such termination of
employment (but in no event after the expiration date of such
Option), and shall thereafter terminate. For purposes hereof,
"Disability" shall mean the inability, due to illness or injury, to
engage in any gainful occupation for which the individual is suited
by education, training or experience, which condition continues for
at least six (6) months.
(b) If the Grantee's termination of employment is for nay other
reason, such Options (to the extent exercisable at the time of the
Grantee's termination of employment) shall be exercisable for a
period of thirty (30) days following such termination of employment,
and shall thereafter terminate; provided, however, that if the
Grantee dies within such thirty-day period, such Options (to the
extent exercisable at the time of the Grantee's termination of
employment) shall be exercisable by the
10
<PAGE>
Grantee's legal representative, estate or other person to whom the
Grantee's rights are transferred by will or by laws of descent or
distribution for a period of six (6) months following the Grantee's
death (but in no event after the expiration date of such Option), and
shall thereafter terminate.
10.2 Notwithstanding the foregoing provisions of Section 10.1, the
Committee may provide, either at the time an Option is granted or
thereafter, that such Option may be exercised after the periods provided
for in Section 10.1, but in no event beyond the term of the Option.
11. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
11.1 Subject to any required action by the shareholders of the
Company, the number of Shares covered by each outstanding Option, and the
number of Shares which have been authorized for issuance under the Plan
but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as
well as the price per share of Shares covered by each such outstanding
Option, shall be proportionately adjusted for any increase or decrease in
the number of issued Shares resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Shares or
the payment of a stock dividend (bonus shares) with respect to the Shares
or any other increase or decrease in the number of issued Shares effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be
deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Committee, whose determination in that
respect shall be final, binding and conclusive. Except as expressly
provided herein, no
11
<PAGE>
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of Shares subject to an Option.
11.2 In the event of the proposed dissolution or liquidation of the
Company, the Committee shall notify each Grantee at least fifteen (15)
days prior to such proposed action. To the extent it has not been
previously exercised, each Option shall terminate immediately prior to
the consummation of such proposed action. In the event of a consolidation
or the merger of the Company with or into another corporation, then, if
so determined by the Board at such time, each Option shall be assumed or
an equivalent option shall be substituted by such successor corporation
or a parent or subsidiary of such successor corporation.
12. NON-TRANSFERABILITY:
No Option shall be assignable or transferable by the Grantee to whom
granted otherwise than by will or the laws of descent and distribution, and an
Option may be exercised during the lifetime of the Grantee only by such
Grantee or by such Grantee's guardian or legal representative. The terms of
such Option shall be binding upon the beneficiaries, executors,
administrators, heirs and successors of such Grantee.
13. TERM AND AMENDMENT OF THE PLAN:
13.1 The Plan was authorized by the Board on November 10, 1993, and
shall expire on November 9, 2003 (except as to Options outstanding on
that date), but such expiration shall not affect the instructions
contained herein or in any applicable law with respect to the Options and
Shares outstanding at such time of expiration. Anything herein to
12
<PAGE>
the contrary notwithstanding, the Plan shall only become effective with
regard to Incentive Stock Options upon its approval by a majority of the
stockholders voting (in person or by proxy) at a stockholders' meeting
held within 12 months of the Board's adoption of the Plan. The Committee
may grant Incentive Stock Options under the Plan prior to the
stockholders' meeting, but until stockholder approval of the Plan is
obtained, no Incentive Stock Option shall be exercisable.
13.2 The Board may at any time amend, suspend or terminate the Plan
as it deems advisable; provided that such amendment, suspension or
termination complies with all applicable legal requirements, including
any applicable requirement that the Plan or an amendment to the Plan be
approved by the stockholders, and provided further that, except as
provided in Section 11 above, the Board shall in no event amend the Plan
in the following respects without the consent of stockholders then
sufficient to approve the Plan in the first instance: (i) To increase the
maximum number of Shares subject to Incentive Stock Options issued under
the Plan; or
(ii) To change the designation or class of persons
eligible to receive Incentive Stock Options under the Plan.
13.3 In no event may any action of the Company alter or impair the
rights of a Grantee, without his consent, under any Option previously
granted to him.
14. TAX CONSEQUENCES: All tax consequences arising from the grant or
exercise of any Option, from the payment for, or the subsequent disposition
of, Shares covered thereby or from any other event or act (of the Company or
the Grantee) hereunder, shall be borne solely
13
<PAGE>
by the Grantee, and the Grantee shall indemnify the Company, the Israeli
Company and the Trustee and hold them harmless against and from any and all
liability for any such tax or interest or penalty thereon, including without
limitation, liabilities relating to the necessity to withhold, or to have
withheld, any such tax from any payment made to the Grantee.
15. MISCELLANEOUS:
15.1 Continuance of Employment. Neither the Plan nor the grant of an
Option thereunder shall impose any obligation on the Company or the
Israeli Company, as the case may be, to continue the employment of any
Grantee, and nothing in the Plan or in any Option granted pursuant
thereto shall confer upon any Grantee any right to continue in the employ
of the Company or the Israeli Company, as the case may be, or restrict
the right of the Company or the Israeli Company, as the case may be, to
terminate such employment at any time.
15.2 Governing Law. The Plan and all instruments issued thereunder,
or in connection therewith, shall be governed by, and interpreted in
accordance with, the laws of the State of Delaware. Regarding the Israeli
Grantees, the Plan and all instruments issued thereunder or in connection
therewith, shall be governed by, and interpreted in accordance with, the
laws of the State of Israel.
15.3 Application of Funds. The proceeds received by the Company from
the sale of Shares pursuant to Options granted under the Plan will be
used for general corporate purposes of the Company.
15.4 Multiple Agreements. The terms of each Option may differ from
other Options granted under the Plan at the same time, or at any other
time. The Committee may
14
<PAGE>
also grant more than one Option to a given Grantee during the term of the
Plan, either in addition to, or in substitution for, one or more Options
previously granted to that Grantee. The grant of multiple Options may be
evidenced by a single Notice of Grant or multiple Notices of Grant, as
determined by the Committee.
15.5 Non-Exclusivity of the Plan. The adoption of the Plan by the
Board shall not be construed as amending, modifying or rescinding any
previously approved incentive arrangement or as creating any limitations
on the power of the Board to adopt such other incentive arrangements as
it may deem desirable, including, without limitation, the granting of
stock options otherwise than under the Plan, and such arrangements may be
either applicable generally or only in specific cases.
15.6 Currency Control Provisions. For so long as, and to the extent
that, the Control Law shall so require, the following provisions shall
apply:
(i) From and after the Release Date, certificates, if any,
representing Shares issued hereunder to Israeli Grantees shall
be delivered to an Authorized Dealer Bank in Israel to hold the
same for the benefit of such Israel Grantees pursuant to the
terms of the Plan, and in conformity with the applicable
requirements of the Controller of Foreign Currency in the Bank
of Israel;
(ii) All payments of the purchase price shall be effected
by the Israeli Grantees through an Authorized Dealer Bank; and
(iii) The proceeds of any sale by any Israeli Grantee (or
by the Trustee at the direction and on behalf of any Israeli
Grantee) of Shares which is
15
<PAGE>
effected in foreign currency shall be remitted to Israel, and
deposited with an Authorized Dealer Bank, immediately upon
receipt thereof, and in all events not later than sixty (60)
days after the date on which the certificate, if any,
representing such Shares is received by the Trustee (on behalf
of such Israeli Grantee for purposes of sale.
16
EXHIBIT D
1995 EMPLOYEE STOCK PURCHASE PLAN
<PAGE>
OPAL, INC.
1995 EMPLOYEE STOCK PURCHASE PLAN
The purpose of this Plan is to provide eligible employees of Opal, Inc.
(the "Company") and certain of its Subsidiaries (as defined in Section 10
below) with opportunities to purchase shares of the Company's common stock,
$.01 par value (the "Common Stock"). 350,000 shares of Common Stock in the
aggregate (after giving effect to a proposed one-for- seven reverse split of
the Common Stock to take place in connection with the Company's initial public
offering of shares of Common Stock) have been approved for this purpose. The
Plan is intended to constitute an "employee stock purchase plan" within the
meaning of Section 423(b) of the Internal Revenue Code of 1986 (the "Code")
and shall be interpreted in accordance with that intent.
1. Administration. The Plan will be administered by the Company's Board
of Directors or by a Committee appointed by the Board of Directors (the
"Committee"). The Board of Directors or the Committee has authority to make
rules and regulations for the administration of the Plan and its
interpretations and decisions with regard thereto shall be final and
conclusive.
2. Eligibility. All employees of the Company, including Directors who are
employees, and all employees of Subsidiaries of the Company designated by the
Board of Directors or the Committee from time to time ("Designated
Subsidiaries"), are eligible to participate in any one or more of the
offerings to purchase Common Stock under the Plan ("Offerings"), provided that
as of the first day of the applicable Offering (the "Offering Date") they are
regularly employed by the Company or a Designated Subsidiary for more than 20
hours a week.
Participation in the Plan will neither be permitted nor denied contrary
to the requirements of the Code. No employee may be granted an option
hereunder if such employee, immediately after the option is granted, owns
stock possessing 5% or more of the total combined voting power or value of all
classes of stock of the Company or any Parent (as defined in Section 10) or
Subsidiary. For purposes of the preceding sentence, the attribution rules of
Section 424(d) of the Code shall apply in determining the stock ownership of
an employee, and all stock which the employee has a contractual right to
purchase shall be treated as stock owned by the employee.
3. Offerings. The initial Offering will begin on the first day of the
Company's initial public offering (the "Initial Offering Date") and will end
on June 30, 1997 (the "Initial Offering"). Additional Offerings will begin on
the first business day occurring on or after January 1, 1996 and each July 1
and January 1 thereafter and will end on the June 30 or December 31
immediately preceding the second anniversary of the applicable Offering Date.
Except for the Initial Offering, each Offering will comprise four six-month
periods ("Purchase Periods") during which payroll deductions will be
accumulated and applied to purchase Common Stock under the Plan; a Purchase
Period will begin on the Offering Date and on each January 1 and July 1
thereafter during the Offering and will end on the following June 30 or
1
<PAGE>
December 31. The Initial Offering will comprise a long initial Purchase Period
and three six-month Purchase Periods. The first Purchase Period will begin on
the Initial Offering Date and will end on December 31, 1995; subsequent
Purchase Periods will begin on each January 1 and July 1 thereafter during the
Initial Offering and will end on the following June 30 or December 31.
4. Participation; Automatic Re-enrollment. An employee eligible on the
Offering Date of any Offering may participate in such Offering by completing
and forwarding an enrollment form to the employee's appropriate payroll
location at least 10 business days prior to the first day of any Purchase
Period under the Offering (or by such other deadline as shall be established
for the Offering). The form will (a) state the percentage to be deducted from
his Compensation per pay period during the Offering, (b) authorize the
purchase of Common Stock for him in each Purchase Period of the Offering in
accordance with the terms of the Plan and (c) specify the exact name or names
in which shares of Common Stock purchased for him are to be issued pursuant to
Section 9.
Unless an employee files a new payroll deduction authorization form or
withdraws under Section 7, his deductions and purchases will continue at the
same percentage of Compensation for future Purchase Periods under that
Offering, or under other Offerings as provided in this paragraph. As of the
first business day of each subsequent Purchase Period, the Initial Option
Prices (as defined in Section 8) for all Offerings in which the employee is
eligible to participate (including any Offering commencing on such date) will
be compared, and the employee's enrollment form and payroll deduction
authorization for the preceding Purchase Period will be treated as an
enrollment and authorization for the current Purchase Period under the
Offering having the lowest Initial Option Price, unless his enrollment form
and payroll deduction authorization expressly provide otherwise. If two or
more Offerings have the same Initial Option Price, the enrollment and
authorization shall be applied to the earliest of such Offerings unless they
expressly provide otherwise.
5. Employee Contributions. For any Purchase Period of an Offering, each
participating employee may authorize payroll deductions at a minimum of 2% up
to a maximum of 10% of his Compensation for each pay period. An employee's
aggregate payroll deductions under the Plan at any time may not exceed 10% of
his Compensation for each pay period. The Company shall maintain book accounts
showing the amount of payroll deductions made by each participating employee
for each Purchase Period under an Offering. No interest shall be paid on
payroll deductions. In the case of any employee whose Compensation is paid in
a currency other than U.S. dollars, deductions from such Compensation shall be
converted to U.S. dollars at the applicable currency conversion rate in effect
on the applicable payroll date.
6. Deduction Changes. An employee may not increase his payroll deduction
during any Purchase Period of an Offering. An employee may decrease his
payroll deduction (other than by withdrawing under Section 7) no more than
once during any Purchase Period of an Offering, but not below 2% of
Compensation. An employee may increase or decrease his
2
<PAGE>
payroll deduction with respect to the next Purchase Period of the Offering by
filing a new payroll deduction authorization form in accordance with Section
4.
7. Withdrawal. An employee may withdraw from participation in an Offering
at any time by delivering a written notice of withdrawal to his appropriate
payroll location. Notice of withdrawal will cancel any outstanding enrollment
form and payroll deduction authorization applicable to that Offering.
Following an employee's withdrawal, his entire account balance under the
Offering (after payment of the purchase price for shares purchased on prior
Exercise Dates in the Offering) will be promptly refunded. In the case of any
employee whose Compensation is paid in a currency other than U.S. dollars,
such account balance shall be converted from U.S. dollars at the applicable
currency conversion rate in effect on the date of withdrawal. An employee who
has withdrawn from an Offering may enroll in any subsequent Purchase Period
under such Offering in accordance with Section 4.
8. Purchase of Shares. On each Offering Date, the Company will grant to
each eligible employee an option ("Option") to purchase a maximum of such
number of whole shares of Common Stock reserved for the purposes of the Plan
as does not exceed the number of shares equal in value to $50,000 on the
Offering Date. The purchase price for each share purchased under an Option
(the "Option Price") will be the lesser of (a) 85% of the fair market value of
the Common Stock (as defined in Section 10) on the Offering Date (the "Initial
Option Price"), and (b) 85% of the fair market value of the Common Stock on
the Exercise Date.
Subject to the maximum number of shares determined under the preceding
paragraph and any other limitations and conditions contained in the Plan, an
employee's right to purchase Common Stock under an Option will accrue on the
last business day of each Purchase Period during the Offering (each an
"Exercise Date") with respect to such number of whole shares of Common Stock
as his accumulated payroll deductions on such date under such Offering will
purchase at the Option Price. No employee, however, may be granted an Option
which permits his rights to purchase stock under this Plan, and any other
employee stock purchase plan of the Company and its Parents and Subsidiaries,
to accrue at a rate which exceeds $25,000 of the fair market value of such
stock (determined on the date or dates that such rights were granted) for each
calendar year in which the Option is outstanding at any time. The purpose of
the limitation in the preceding sentence is to comply with Section 423(b)(8)
of the Code. If, on any Exercise Date, the aggregate of an employee's
accumulated payroll deductions under one or more Offerings are such that the
employee's rights to purchase Common Stock would accrue, under the rule
provided in the first sentence of this paragraph, at a rate that exceeds the
rate permitted under Section 423(b)(8), such employee's rights will accrue
first under an Option having a lower Option Price, to the extent such accrual
does not exceed the limitation, before any rights accrue under an Option
having a higher Option Price; if Options have the same Option Price, the
employee's rights will accrue under an earlier granted Option before any
rights accrue under any later granted Option having the same Option Price.
3
<PAGE>
Each employee who continues to be a participant in an Offering at the
close of business on any Exercise Date shall be deemed to have exercised on
such date the Option granted to him under such Offering to the extent such
Option is then exercisable; provided that, with respect to the Initial
Offering, the exercise of each Option shall be conditioned on the closing of
the Company's initial public offering on or before such Exercise Date.
Any balance remaining in an employee's account under any Offering at the
end of a Purchase Period by reason of the inability to purchase a fractional
share shall be carried forward to the next Purchase Period and applied to the
employee's account for the Offering to which his enrollment form and payroll
deduction authorization will apply in accordance with Section 4, or as
otherwise requested by the employee. Any other balance remaining in an
employee's account under any Offering at the end of a Purchase Period will
promptly be paid to the employee. In the case of any employee whose
Compensation is paid in a currency other than U.S. dollars, such account
balance shall be converted from U.S. dollars at the applicable currency
conversion rate in effect on the Exercise Date for such Purchase Period.
Each Option shall lapse, at the end of the calendar year immediately
preceding the calendar year in which the applicable Offering ends, with
respect to the excess, if any, of the number of unexercised shares remaining
subject to such Option over one-half of the maximum determined under the first
paragraph of this section.
9. Issuance of Certificates. Certificates representing shares of Common
Stock purchased under the Plan may be issued only in the name of the employee,
in the name of the employee and another person of legal age as joint tenants
with rights of survivorship or in the name of a broker authorized by the
employee to be his, or their, nominee for such purpose. If so required by
applicable law, such certificate shall be delivered, on behalf of the
employee, to an Authorized Dealer Bank in Israel.
10. Definitions. The "fair market value of the Common Stock" means: (a)
for the Initial Offering Date, the offering price to the public of the Common
Stock on the Initial Offering Date; and (b) for any other day, the last
reported sale price of the Common Stock on the Nasdaq National Market
("Nasdaq") or, if no sales of Common Stock were made on that day, the last
reported sale price of the Common Stock on the next preceding day on which
sales were made.
The term "Parent" means a "parent corporation" with respect to the
Company, as defined in Section 424(e) of the Code.
The term "Subsidiary" means a "subsidiary corporation" with respect to
the Company, as defined in Section 424(f) of the Code.
The term "Compensation" means the amount of base pay payable in cash,
prior to salary reduction pursuant to either Section 125 or Section 401(k) of
the Code, but excluding overtime, commissions, incentive or bonus awards,
allowances and reimbursements for
4
<PAGE>
expenses such as relocation allowances for travel expenses, income or gains on
the exercise of Company stock options, and similar items.
11. Rights on Retirement, Death, or Termination of Employment. In the
event of a participating employee's termination of employment, no payroll
deduction shall be taken from any pay due and owing to the employee and the
balance in the employee's account under each Offering shall be paid to the
employee or, in the event of the employee's death, to the employee's
designated beneficiary as if the employee had withdrawn from each Offering
under Section 7 on the date of such termination. If the Subsidiary by which an
employee is employed shall cease to be a Subsidiary of the Company, or if the
employee is transferred to a Subsidiary of the Company that is not a
Designated Subsidiary, it shall be deemed that the employee has terminated
employment for the purposes of this Plan.
12. Optionees Not Stockholders. Neither the granting of an Option to an
employee nor the deductions from his pay shall constitute such employee a
stockholder of the shares of Common Stock covered by an Option under this Plan
until such shares have been purchased by and issued to him.
13. Rights Not Transferable. Rights under this Plan are not transferable
by a participating employee other than by will or the laws of descent and
distribution, and are exercisable during the employee's lifetime only by the
employee.
14. Application of Funds. All funds received or held by the Company under
this Plan may be combined with other corporate funds and may be used for any
corporate purpose.
15. Adjustment in Case of Changes Affecting Common Stock. In the event of
a subdivision of outstanding shares of Common Stock, or the payment of a
dividend in Common Stock, the number of shares approved for this Plan, and the
share limitations and determinations set forth in Section 8, shall be
increased proportionately, and such other adjustment shall be made as may be
deemed equitable by the Board of Directors or the Committee. In the event of
any other change affecting the Common Stock, such adjustment shall be made as
may be deemed equitable by the Board of Directors or the Committee to give
proper effect to such event. The 350,000 shares of stock authorized for
issuance under the Plan reflect the number of shares available after taking
into effect the one-for-seven reverse stock split occurring on or prior to the
effective date of the Plan.
16. Amendment of the Plan. The Board of Directors or the Committee may at
any time, and from time to time, amend this Plan in any respect, except that
without the approval, within twelve months of such Board or Committee action,
by the holders of a majority of the shares of stock of the Company present or
represented and entitled to vote at a meeting of stockholders, no amendment
shall be made (a) increasing the number of shares approved for this Plan or
(b) changing the designation of corporations or classes of corporations whose
employees are eligible to receive Options under the Plan.
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<PAGE>
17. Insufficient Shares. In the event that the total number of shares of
Common Stock that would otherwise be purchased on any Exercise Date plus the
number of shares purchased on previous Exercise Dates under the Plan exceeds
the maximum number of shares issuable under this Plan, the shares then
available shall be apportioned among participants in proportion to the amount
of payroll deductions accumulated on behalf of each participant that would
otherwise be used to purchase Common Stock on such Exercise Date.
18. Termination of the Plan. This Plan may be terminated at any time by
the Company's Board of Directors. Upon termination of this Plan all amounts in
the accounts of participating employees shall be promptly refunded.
19. Governmental Regulations. The Company's obligation to sell and
deliver Common Stock under this Plan is subject to listing on Nasdaq and the
approval of all governmental authority required in connection with the
authorization, issuance, or sale of such stock.
The Plan shall be governed by Delaware law except to the extent that such
law is preempted by federal law or, with respect to employees of Opal
Technologies Ltd., by Israeli law.
The Plan is intended to comply with the provisions of Rule 16b-3
promulgated under the Securities Exchange Act of 1934. Any provision
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.
20. Issuance of Shares. Shares may be issued upon exercise of an Option
from authorized but unissued Common Stock, from shares held in the Treasury of
the Company, or from any other proper source.
21. Tax Withholding. Participation in the Plan is subject to any required
tax withholding on income of the participant in connection with the Plan. Each
employee agrees, by entering the Plan, that the Company and its Subsidiaries
shall have the right to deduct any such taxes from any payment of any kind
otherwise due to the participant, including shares issuable under the Plan.
22. Notification upon Sale of Shares. Each employee agrees, by entering
the Plan, to promptly give the Company notice of any disposition of shares
purchased under the Plan where such disposition occurs within two years after
the date of grant of the Option pursuant to which such shares were purchased
or within one year after the Exercise Date on which such shares were
purchased.
23. Effective Date and Approval of Shareholders. The Plan shall take
effect on the first day of the Company's public offering subject to approval
by the holders of a majority of the shares of stock of the Company present or
represented and entitled to vote at a meeting of
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<PAGE>
stockholders, which approval must occur within twelve months of the adoption
of the Plan by the Board of Directors.
7
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of November 24, 1996, among Applied
Materials, Inc., a Delaware corporation ("Parent"), Orion Corp. I, a Delaware
corporation and a wholly owned subsidiary of Parent (the "Purchaser"), and Rafi
Yizhar (the "Stockholder").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and Opal, Inc., a Delaware corporation (the
"Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Purchaser will be merged with and into the Company (the
"Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company
desire that as soon as practicable (and not later than five business days)
after the execution and delivery of the Merger Agreement, the Purchaser shall
commence a cash tender offer (the "Offer") to purchase at a price of $18.50 per
share all outstanding shares of Company Common Stock (as defined in Section 1
hereof) including all of the Shares (as defined in Section 2 hereof)
beneficially owned by the Stockholder; and
WHEREAS, as an inducement and a condition to entering into
the Merger Agreement, Parent has required that the Stockholder agree, and the
Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained herein,
the parties hereto agree as follows:
1. Definitions. For purposes of this Agree-
ment:
(a) "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Securities Exchange Act
<PAGE>
of 1934, as amended (the "Exchange Act")), including pursuant to any agreement,
arrangement or understanding, whether or not in writing. Without duplicative
counting of the same securities by the same holder, securities Beneficially
Owned by a Person shall include securities Beneficially Owned by all other
Persons with whom such Person would constitute a "group" as within the meaning
of Section 13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean at any
time the Common Stock, $.01 par value, of the Company.
(c) "Person" shall mean an individual, corpo-
ration, partnership, joint venture, association, trust,
unincorporated organization or other entity.
(d) Capitalized terms used and not defined
herein have the respective meanings ascribed to them in
the Merger Agreement.
2. Tender of Shares.
(a) In order to induce Parent and the Purchaser to enter into
the Merger Agreement, the Stockholder hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer pursuant to Section 1.1 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of
shares of Company Common Stock set forth opposite such Stockholder's name on
Schedule I hereto (the "Existing Shares", and together with any shares acquired
by such Stockholder in any capacity after the date hereof and prior to the
termination of this Agreement whether upon the exercise of Company Options or
by means of purchase, dividend, distribution or otherwise, the "Shares"), all
of which are Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that Parent's and the Purchaser's obligation to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
(b) The transfer by the Stockholder of the
Shares to Purchaser in the Offer shall pass to and uncon-
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<PAGE>
ditionally vest in the Purchaser good and valid title to the Shares, free and
clear of all Encumbrances.
(c) The Stockholder hereby permits Parent and the Purchaser
to publish and disclose in the Offer Documents and, if approval of the
Company's stockholders is required under applicable law, the Proxy Statement
(including all documents and schedules filed with the SEC) his identity and
ownership of the Company Common Stock and the nature of his commitments,
arrangements and understandings under this Agreement.
3. Options.
(a) Exercise of Stock Option. In order to induce Parent and
the Purchaser to enter into the Merger Agreement, the Stockholder hereby grants
to Parent an irrevocable option (a "Stock Option") to purchase such
Stockholder's Shares (the "Option Shares") at an amount (the "Purchase Price")
equal to the Offer Price. If (i) the Offer is terminated, abandoned or
withdrawn by Parent or the Purchaser (whether due to the failure of any of the
conditions thereto or otherwise), other than at a time when Parent or the
Purchaser is in material breach of the terms of the Merger Agreement, or (ii)
the Merger Agreement is terminated in accordance with its terms, other than a
termination pursuant to Section 7.1(c)(i) or 7.1(c)(iii), each Stock Option
shall, in any such case, become exercisable, in whole but not in part, upon the
first to occur of any such event and remain exercisable in whole until the date
which is 60 days after the date of the occurrence of such event (the "60 Day
Period"), so long as: (i) all waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), required for
the purchase of the Option Shares upon such exercise shall have expired or been
waived; (ii) all other applicable consents of any Governmental Entity required
for the purchase or sale of the Option Shares upon such exercise and identified
on Schedule 5(c) attached hereto (if applicable) shall have been granted or
otherwise satisfied; and (iii) there shall not be in effect any preliminary
injunction or other order issued by any Governmental Entity prohibiting the
exercise of the Stock Option pursuant to this Agreement; provided that if (i)
all HSR Act waiting periods shall not have expired or been waived, (ii) all
other applicable consents of any Governmental Entity required for the
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<PAGE>
purchase or sale of the Option Shares and identified on Schedule 5(c)
attached hereto (if applicable) shall not have been granted or otherwise
satisfied, or (iii) there shall be in effect any such injunction or order, in
each case on the expiration of the 60 Day Period, the 60 Day Period shall be
extended until 5 business days after the later of (A) the date of expiration or
waiver of all HSR Act waiting periods, (B) the grant or other satisfaction of
such required consents, and (C) the date of removal or lifting of such
injunction or order; provided, however, that in no event shall the Stock Option
be exercisable after the date which is six months after the date on which the
Stock Option first becomes exercisable; provided, further, that the Stock
Option shall terminate if any Governmental Entity shall issue an order, decree
or ruling or take any other action (which order, decree, ruling or other action
the parties hereto shall use their best efforts to lift), which permanently
restrains, enjoins or otherwise prohibits Parent's exercise of the Stock Option
or the sale of the Option Shares to Parent by the Stockholder. In the event
that Parent wishes to exercise a Stock Option, Parent shall send a written
notice (the "Notice") to the Stockholder identifying the place and date (not
less than two nor more than 10 business days from the date of the Notice) for
the closing of such purchase.
(b) Resale of Option Shares. If, within 12 months following
the acquisition by Parent of the Option Shares, Parent or any of its affiliates
sells, transfers or otherwise disposes of any or all of the Option Shares to
any third party (other than to an affiliate of Parent) (a "Subsequent Sale")
and realizes a Profit (as defined below) from such Subsequent Sale, then Parent
shall pay to the Stockholder an amount equal to 95% of the Profit promptly upon
receipt of the proceeds from such Subsequent Sale. For purposes of this Section
3(b), "Profit" shall mean (A) the amount of the excess, if any, of (x) the
aggregate consideration received by Parent or its affiliates in connection with
a Subsequent Sale over (y) the product of (i) the number of Shares sold,
transferred or disposed of multiplied by (ii) the Purchase Price less (B) any
taxes or any other payment of any nature due or payable by Parent with respect
to the amount specified in clause (A), other than Parent's or the Purchaser's
expenses incurred in connection with the negotiation, execution and delivery of
this Agreement and the Merger
4
<PAGE>
Agreement. In the event the consideration received by Parent in a Subsequent
Sale is other than cash, the Stockholder shall be entitled to the same form of
consideration as received by Parent in such Subsequent Sale or, at Parent's
election, an amount in cash equal to the fair market value of such other
consideration that the Stockholder would have been entitled to pursuant to this
Section 3(b).
4. Additional Agreements.
(a) Voting Agreement. The Stockholder shall, at any meeting
of the holders of Company Common Stock, however called, or in connection with
any written consent of the holders of Company Common Stock, vote (or cause to
be voted) the Shares (if any) then held of record or Beneficially Owned by such
Stockholder, (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the other actions contemplated by the Merger Agreement and this Agreement
and any actions required in furtherance thereof and hereof; and (ii) against
any Acquisition Proposal and against any action or agreement that would impede,
frustrate, prevent or nullify this Agreement, or result in a breach in any
respect of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or which would result in
any of the conditions set forth in Annex A to the Merger Agreement or set forth
in Article VI of the Merger Agreement not being fulfilled.
(b) No Inconsistent Arrangements. The Stockholder hereby
covenants and agrees that, except as contemplated by this Agreement and the
Merger Agreement, it shall not (i) transfer (which term shall include, without
limitation, any sale, gift, pledge or other disposition), or consent to any
transfer of, any or all of such Stockholder's Shares, Company Options or any
interest therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares,
Company Options or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares or
Company Options, (iv) deposit such Shares or Company Options into a voting
trust or enter into a voting agreement or arrangement with respect to such
Shares or Compa-
5
<PAGE>
ny Options, or (v) take any other action that would in any way restrict, limit
or interfere with the performance of its obligations hereunder or the
transactions contemplated hereby or by the Merger Agreement.
(c) Grant of Irrevocable Proxy; Appointment of
Proxy.
(i) The Stockholder hereby irrevocably grants to, and
appoints, Parent and Nancy H. Handel and Joseph J. Sweeney, or either of them,
in their respective capacities as officers of Parent, and any individual who
shall hereafter succeed to any such office of Parent, and each of them
individually, such Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Stockholder, to
vote such Stockholder's Shares, or grant a consent or approval in respect of
the Shares in favor of the various transactions contemplated by the Merger
Agreement (the "Transactions") and against any Acquisition Proposal.
(ii) The Stockholder represents that any proxies heretofore
given in respect of such Stockholder's Shares are not irrevocable, and that any
such proxies are hereby revoked.
(iii) The Stockholder understands and acknowledges that
Parent is entering into the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement. The Stockholder hereby
affirms that the irrevocable proxy set forth in this Section 4(c) is given in
connection with the execution of the Merger Agreement, and that such
irrevocable proxy is given to secure the performance of the duties of such
Stockholder under this Agreement. The Stockholder hereby further affirms that
the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked. The Stockholder hereby ratifies and confirms all that
such irrevocable proxy may lawfully do or cause to be done by virtue hereof.
Such irrevocable proxy is executed and intended to be irrevocable in accordance
with the provisions of Section 212(e) of the Delaware General Corporation Law.
(d) No Solicitation. The Stockholder hereby
agrees, in its or his capacity as a stockholder of the Company, that neither
such Stockholder nor any of its
6
<PAGE>
Subsidiaries or affiliates shall (and such Stockholder shall use its best
efforts to cause its officers, directors, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
any of its affiliates or representatives) concerning any Acquisition Proposal.
The Stockholder will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. The Stockholder will immediately communicate to Parent
the terms of any proposal, discussion, negotiation or inquiry such Stockholder,
in its or his capacity as a stockholder of the Company, receives (and will
disclose any written materials received by such Stockholder, in its or his
capacity as a stockholder of the Company, in connection with such proposal,
discussion, negotiation or inquiry) and the identity of the party making such
proposal or inquiry which it may receive in respect of any such transaction.
(e) Company Options. If the Stockholder holds Company Options
to acquire shares of Company Common Stock, he shall, if requested by the
Company, consent to the cancellation or substitution of his Company Options in
accordance with the terms of the Merger Agreement and shall execute all
appropriate documentation in connection with such cancellation or substitution.
(f) Best Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use its best
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement and the Merger Agreement. Each party shall
promptly consult with the other and provide any necessary information and
material with respect to all filings made by such party with any Governmental
Entity in connection with this Agreement and the Merger Agreement and the
transactions contemplated hereby and thereby.
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<PAGE>
(g) Waiver of Appraisal Rights. The Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger that it or
he may have.
(h) Acquisition of Remaining Shares. Parent agrees that,
in the event that within three years following Parent's exercise of the Stock
Option, Parent, the Purchaser or any of their Subsidiaries acquires any addi-
tional shares of Company Common Stock from, or pursuant to an offer made to all
of the Company's stockholders, whether by merger, consolidation, tender offer
or other similar transaction, the price paid per share of Company Common Stock
shall be no less than the Purchase Price.
5. Representations and Warranties of the Stockholder.
The Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the record and
Beneficial Owner of the Existing Shares, as set forth on Schedule I. On the
date hereof, the Existing Shares constitute all of the Shares owned of record
or Beneficially Owned by such Stockholder. Such Stockholder has sole voting
power and sole power to issue instructions with respect to the matters set
forth in Sections 2, 3 and 4 hereof, sole power of disposition, sole power of
conversion, sole power to demand appraisal rights and sole power to agree to
all of the matters set forth in this Agreement, in each case with respect to
all of the Existing Shares with no limitations, qualifications or restrictions
on such rights, subject to applicable securities laws and the terms of this
Agreement.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, proxy arrangement, pledge agreement, shareholders
agreement or voting trust. This Agreement has been duly and validly executed
and delivered by such Stockholder and constitutes a valid and binding agreement
of such Stockholder, enforceable against such Stockholder in accordance with
its terms. There is no beneficiary or holder of a voting trust certificate or
other interest of
8
<PAGE>
any trust of which such Stockholder is a trustee whose consent is required for
the execution and delivery of this Agreement or the consummation by such
Stockholder of the transactions contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act, the
Exchange Act and as set forth on Schedule 5(c) attached hereto, (i) no filing
with, and no permit, authorization, consent or approval of, any Governmental
Entity for the execution of this Agreement by such Stockholder and the
consummation by such Stockholder of the transactions contemplated hereby and
(ii) none of the execution and delivery of this Agreement by such Stockholder,
the consummation by such Stockholder of the transactions contemplated hereby or
compliance by such Stockholder with any of the provisions hereof shall (A)
conflict with or result in any breach of any organizational documents
applicable to the Stockholder, (B) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which such Stockholder is a party or by which such
Stockholder or any of its properties or assets may be bound, or (C) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of its properties or assets.
(d) No Encumbrances. Except as permitted by this Agreement,
the Existing Shares and the certificates representing such Shares are now, and
at all times during the term hereof will be, held by such Stockholder, or by a
nominee or custodian for the benefit of such Stockholder, free and clear of all
Encumbrances, proxies, voting trusts or agreements, understandings or
arrangements or any other rights whatsoever, except for any such Encumbrances
or proxies arising hereunder.
(e) No Finder's Fees. No broker, investment
banker, financial advisor or other person is entitled to any broker's,
finder's, financial adviser's or other similar fee or commission in connection
with the transac-
9
<PAGE>
tions contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
(f) Reliance by Parent. The Stockholder understands and
acknowledges that Parent is entering into, and causing Purchaser to enter into,
the Merger Agreement in reliance upon such Stockholder's execution and delivery
of this Agreement.
6. Representations and Warranties of Parent and the
Purchaser. Each of Parent and the Purchaser hereby represents and warrants to
the Stockholder as follows:
(a) Power; Binding Agreement. Parent and the Purchaser each
has the corporate power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by each of Parent and the Purchaser will not violate any other
agreement to which either of them is a party. This Agreement has been duly and
validly executed and delivered by each of Parent and the Purchaser and
constitutes a valid and binding agreement of each of Parent and the Purchaser,
enforceable against each of Parent and the Purchaser in accordance with its
terms.
(b) No Conflicts. Except for filings under the HSR Act and
the Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution of this
Agreement by each of Parent and the Purchaser and the consummation by each of
Parent and the Purchaser of the transactions contemplated hereby and (ii) none
of the execution and delivery of this Agreement by each of Parent and the
Purchaser, the consummation by each of Parent and the Purchaser of the
transactions contemplated hereby or compliance by each of Parent and the
Purchaser with any of the provisions hereof shall (A) conflict with or result
in any breach of any organizational documents applicable to either of Parent or
the Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
loan agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agree-
10
<PAGE>
ment or other instrument or obligation of any kind to which either of Parent or
the Purchaser is a party or by which either of Parent or the Purchaser or any
of their properties or assets may be bound, or (C) violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
either of Parent or the Purchaser or any of their properties or assets.
7. Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement.
8. Stop Transfer. The Stockholder shall not
request that the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of the Shares, unless
such transfer is made in compliance with this Agreement. In the event of a stock
dividend or distribution, or any change in the Company Common Stock by reason of
any stock dividend, split-up, recapitalization, combination, exchange of shares
or the like, the term "Shares" shall refer to and include the Shares as well as
all such stock dividends and distributions and any shares into which or for
which any or all of the Shares may be changed or exchanged.
9. Termination. Except as provided in Section 3 hereof,
the covenants, agreements and proxy shall terminate upon the termination of the
Merger Agreement in accordance with its terms.
10. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the
obligations hereunder shall attach to the Shares and shall be binding upon any
person or entity to which legal
11
<PAGE>
or beneficial ownership of such Shares shall pass, whether by operation of law
or otherwise, including, without limitation, a Stockholder's heirs, guardians,
administrators or successors. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations of the
transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties, provided that Parent may assign, in its sole discretion, its rights
and obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations
hereunder if such assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with
a confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the
Stockholder: c/o Opal Technologies, Inc.
Industrial Zone B
POB 416
Nes Ziona, Israel 70451
Telephone No.: 972-8-938-3522
Telecopy No.: 972-8-940-9902
If to Parent or
the Purchaser: Applied Materials, Inc.
3050 Bowers Avenue
Santa Clara, CA 95405-3299
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<PAGE>
Attention: Joseph J. Sweeney
Telephone No.: (408) 727-5555
Telecopy No.: (408) 563-4635
Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore in the event of any such breach the aggrieved party shall be entitled
to the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and
remedies provided under this Agreement or otherwise available in respect hereof
at law or in equity shall be cumulative and not alternative, and the exercise
of any
13
<PAGE>
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any
other party hereto with its obligations hereunder, and any custom or practice
of the parties at variance with the terms hereof, shall not constitute a waiver
by such party of its right to exercise any such or other right, power or remedy
or to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to
the exclusive jurisdiction of the Court of Chancery in the State of Delaware
and the United States District Court for the Southern District of New York in
any action, suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding shall be brought only in such
court (and waives any objection based on forum non conveniens or any other
objection to venue therein). Each party hereto hereby waives any right to a
trial by jury in connection with any such action, suit or proceeding.
(m) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
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<PAGE>
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholder
have caused this Agreement to be duly executed as of the day and year first
above written.
APPLIED MATERIALS, INC.
By: /s/ James C. Morgan
--------------------------------
Name: James C. Morgan
Title: Chairman and Chief Executive
Officer
ORION CORP. I
By: /s/ Joseph J. Sweeney
--------------------------------
Name: Joseph J. Sweeney
Title: Vice President
By: /s/ Rafi Yizhar
--------------------------------
Name: Rafi Yizhar
15
<PAGE>
Schedule I
Number of Shares
and Company Options
Name of Stockholder Beneficially Owned
- ------------------- ------------------
Rafi Yizhar 253,922 Shares
148,572 Company
Options
16
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of November 24, 1996, among Applied
Materials, Inc., a Delaware corporation ("Parent"), Orion Corp. I, a Delaware
corporation and a wholly owned subsidiary of Parent (the "Purchaser"), and
Israel Niv (the "Stockholder").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and Opal, Inc., a Delaware corporation (the
"Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Purchaser will be merged with and into the Company (the
"Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company
desire that as soon as practicable (and not later than five business days)
after the execution and delivery of the Merger Agreement, the Purchaser shall
commence a cash tender offer (the "Offer") to purchase at a price of $18.50 per
share all outstanding shares of Company Common Stock (as defined in Section 1
hereof) including all of the Shares (as defined in Section 2 hereof)
beneficially owned by the Stockholder; and
WHEREAS, as an inducement and a condition to entering into
the Merger Agreement, Parent has required that the Stockholder agree, and the
Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained herein,
the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Securities Exchange Act
<PAGE>
of 1934, as amended (the "Exchange Act")), including pursuant to any agreement,
arrangement or understanding, whether or not in writing. Without duplicative
counting of the same securities by the same holder, securities Beneficially
Owned by a Person shall include securities Beneficially Owned by all other
Persons with whom such Person would constitute a "group" as within the meaning
of Section 13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean at any time the
Common Stock, $.01 par value, of the Company.
(c) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
(d) Capitalized terms used and not defined herein have
the respective meanings ascribed to them in the Merger Agreement.
2. Tender of Shares.
(a) In order to induce Parent and the Purchaser to enter into
the Merger Agreement, the Stockholder hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer pursuant to Section 1.1 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of
shares of Company Common Stock set forth opposite such Stockholder's name on
Schedule I hereto (the "Existing Shares", and together with any shares acquired
by such Stockholder in any capacity after the date hereof and prior to the
termination of this Agreement whether upon the exercise of Company Options or
by means of purchase, dividend, distribution or otherwise, the "Shares"), all
of which are Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that Parent's and the Purchaser's obligation to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
(b) The transfer by the Stockholder of the Shares to
Purchaser in the Offer shall pass to and uncon-
2
<PAGE>
ditionally vest in the Purchaser good and valid title to the Shares, free and
clear of all Encumbrances.
(c) The Stockholder hereby permits Parent and the Purchaser
to publish and disclose in the Offer Documents and, if approval of the
Company's stockholders is required under applicable law, the Proxy Statement
(including all documents and schedules filed with the SEC) his identity and
ownership of the Company Common Stock and the nature of his commitments,
arrangements and understandings under this Agreement.
3. Options.
(a) Exercise of Stock Option. In order to induce Parent and
the Purchaser to enter into the Merger Agreement, the Stockholder hereby grants
to Parent an irrevocable option (a "Stock Option") to purchase such
Stockholder's Shares (the "Option Shares") at an amount (the "Purchase Price")
equal to the Offer Price. If (i) the Offer is terminated, abandoned or
withdrawn by Parent or the Purchaser (whether due to the failure of any of the
conditions thereto or otherwise), other than at a time when Parent or the
Purchaser is in material breach of the terms of the Merger Agreement, or (ii)
the Merger Agreement is terminated in accordance with its terms, other than a
termination pursuant to Section 7.1(c)(i) or 7.1(c)(iii), each Stock Option
shall, in any such case, become exercisable, in whole but not in part, upon the
first to occur of any such event and remain exercisable in whole until the date
which is 60 days after the date of the occurrence of such event (the "60 Day
Period"), so long as: (i) all waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), required for
the purchase of the Option Shares upon such exercise shall have expired or been
waived; (ii) all other applicable consents of any Governmental Entity required
for the purchase or sale of the Option Shares upon such exercise and identified
on Schedule 5(c) attached hereto (if applicable) shall have been granted or
otherwise satisfied; and (iii) there shall not be in effect any preliminary
injunction or other order issued by any Governmental Entity prohibiting the
exercise of the Stock Option pursuant to this Agreement; provided that if (i)
all HSR Act waiting periods shall not have expired or been waived, (ii) all
other applicable consents of any Governmental Entity required for the
3
<PAGE>
purchase or sale of the Option Shares and identified on Schedule 5(c)
attached hereto (if applicable) shall not have been granted or otherwise
satisfied, or (iii) there shall be in effect any such injunction or order, in
each case on the expiration of the 60 Day Period, the 60 Day Period shall be
extended until 5 business days after the later of (A) the date of expiration or
waiver of all HSR Act waiting periods, (B) the grant or other satisfaction of
such required consents, and (C) the date of removal or lifting of such
injunction or order; provided, however, that in no event shall the Stock Option
be exercisable after the date which is six months after the date on which the
Stock Option first becomes exercisable; provided, further, that the Stock
Option shall terminate if any Governmental Entity shall issue an order, decree
or ruling or take any other action (which order, decree, ruling or other action
the parties hereto shall use their best efforts to lift), which permanently
restrains, enjoins or otherwise prohibits Parent's exercise of the Stock Option
or the sale of the Option Shares to Parent by the Stockholder. In the event
that Parent wishes to exercise a Stock Option, Parent shall send a written
notice (the "Notice") to the Stockholder identifying the place and date (not
less than two nor more than 10 business days from the date of the Notice) for
the closing of such purchase.
(b) Resale of Option Shares. If, within 12 months following
the acquisition by Parent of the Option Shares, Parent or any of its affiliates
sells, transfers or otherwise disposes of any or all of the Option Shares to
any third party (other than to an affiliate of Parent) (a "Subsequent Sale")
and realizes a Profit (as defined below) from such Subsequent Sale, then Parent
shall pay to the Stockholder an amount equal to 95% of the Profit promptly upon
receipt of the proceeds from such Subsequent Sale. For purposes of this Section
3(b), "Profit" shall mean (A) the amount of the excess, if any, of (x) the
aggregate consideration received by Parent or its affiliates in connection with
a Subsequent Sale over (y) the product of (i) the number of Shares sold,
transferred or disposed of multiplied by (ii) the Purchase Price less (B) any
taxes or any other payment of any nature due or payable by Parent with respect
to the amount specified in clause (A), other than Parent's or the Purchaser's
expenses incurred in connection with the negotiation, execution and delivery of
this Agreement and the Merger
4
<PAGE>
Agreement. In the event the consideration received by Parent in a Subsequent
Sale is other than cash, the Stockholder shall be entitled to the same form of
consideration as received by Parent in such Subsequent Sale or, at Parent's
election, an amount in cash equal to the fair market value of such other
consideration that the Stockholder would have been entitled to pursuant to this
Section 3(b).
4. Additional Agreements.
(a) Voting Agreement. The Stockholder shall, at any meeting
of the holders of Company Common Stock, however called, or in connection with
any written consent of the holders of Company Common Stock, vote (or cause to
be voted) the Shares (if any) then held of record or Beneficially Owned by such
Stockholder, (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the other actions contemplated by the Merger Agreement and this Agreement
and any actions required in furtherance thereof and hereof; and (ii) against
any Acquisition Proposal and against any action or agreement that would impede,
frustrate, prevent or nullify this Agreement, or result in a breach in any
respect of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or which would result in
any of the conditions set forth in Annex A to the Merger Agreement or set forth
in Article VI of the Merger Agreement not being fulfilled.
(b) No Inconsistent Arrangements. The Stockholder hereby
covenants and agrees that, except as contemplated by this Agreement and the
Merger Agreement, it shall not (i) transfer (which term shall include, without
limitation, any sale, gift, pledge or other disposition), or consent to any
transfer of, any or all of such Stockholder's Shares, Company Options or any
interest therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares,
Company Options or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares or
Company Options, (iv) deposit such Shares or Company Options into a voting
trust or enter into a voting agreement or arrangement with respect to such
Shares or Compa-
5
<PAGE>
ny Options, or (v) take any other action that would in any way restrict, limit
or interfere with the performance of its obligations hereunder or the
transactions contemplated hereby or by the Merger Agreement.
(c) Grant of Irrevocable Proxy; Appointment of
Proxy.
(i) The Stockholder hereby irrevocably grants to, and
appoints, Parent and Nancy H. Handel and Joseph J. Sweeney, or either of them,
in their respective capacities as officers of Parent, and any individual who
shall hereafter succeed to any such office of Parent, and each of them
individually, such Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Stockholder, to
vote such Stockholder's Shares, or grant a consent or approval in respect of
the Shares in favor of the various transactions contemplated by the Merger
Agreement (the "Transactions") and against any Acquisition Proposal.
(ii) The Stockholder represents that any proxies heretofore
given in respect of such Stockholder's Shares are not irrevocable, and that any
such proxies are hereby revoked.
(iii) The Stockholder understands and acknowledges that
Parent is entering into the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement. The Stockholder hereby
affirms that the irrevocable proxy set forth in this Section 4(c) is given in
connection with the execution of the Merger Agreement, and that such
irrevocable proxy is given to secure the performance of the duties of such
Stockholder under this Agreement. The Stockholder hereby further affirms that
the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked. The Stockholder hereby ratifies and confirms all that
such irrevocable proxy may lawfully do or cause to be done by virtue hereof.
Such irrevocable proxy is executed and intended to be irrevocable in accordance
with the provisions of Section 212(e) of the Delaware General Corporation Law.
(d) No Solicitation. The Stockholder hereby agrees, in
its or his capacity as a stockholder of the Company, that neither such
Stockholder nor any of its
6
<PAGE>
Subsidiaries or affiliates shall (and such Stockholder shall use its best
efforts to cause its officers, directors, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
any of its affiliates or representatives) concerning any Acquisition Proposal.
The Stockholder will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. The Stockholder will immediately communicate to Parent
the terms of any proposal, discussion, negotiation or inquiry such Stockholder,
in its or his capacity as a stockholder of the Company, receives (and will
disclose any written materials received by such Stockholder, in its or his
capacity as a stockholder of the Company, in connection with such proposal,
discussion, negotiation or inquiry) and the identity of the party making such
proposal or inquiry which it may receive in respect of any such transaction.
(e) Company Options. If the Stockholder holds Company Options
to acquire shares of Company Common Stock, he shall, if requested by the
Company, consent to the cancellation or substitution of his Company Options in
accordance with the terms of the Merger Agreement and shall execute all
appropriate documentation in connection with such cancellation or substitution.
(f) Best Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use its best
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement and the Merger Agreement. Each party shall
promptly consult with the other and provide any necessary information and
material with respect to all filings made by such party with any Governmental
Entity in connection with this Agreement and the Merger Agreement and the
transactions contemplated hereby and thereby.
7
<PAGE>
(g) Waiver of Appraisal Rights. The Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger that it or
he may have.
(h) Acquisition of Remaining Shares. Parent agrees that,
in the event that within three years following Parent's exercise of the Stock
Option, Parent, the Purchaser or any of their Subsidiaries acquires any addi-
tional shares of Company Common Stock from, or pursuant to an offer made to all
of the Company's stockholders, whether by merger, consolidation, tender offer
or other similar transaction, the price paid per share of Company Common Stock
shall be no less than the Purchase Price.
5. Representations and Warranties of the Stockholder.
The Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the record and
Beneficial Owner of the Existing Shares, as set forth on Schedule I. On the
date hereof, the Existing Shares constitute all of the Shares owned of record
or Beneficially Owned by such Stockholder. Such Stockholder has sole voting
power and sole power to issue instructions with respect to the matters set
forth in Sections 2, 3 and 4 hereof, sole power of disposition, sole power of
conversion, sole power to demand appraisal rights and sole power to agree to
all of the matters set forth in this Agreement, in each case with respect to
all of the Existing Shares with no limitations, qualifications or restrictions
on such rights, subject to applicable securities laws and the terms of this
Agreement.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, proxy arrangement, pledge agreement, shareholders
agreement or voting trust. This Agreement has been duly and validly executed
and delivered by such Stockholder and constitutes a valid and binding agreement
of such Stockholder, enforceable against such Stockholder in accordance with
its terms. There is no beneficiary or holder of a voting trust certificate or
other interest of
8
<PAGE>
any trust of which such Stockholder is a trustee whose consent is required for
the execution and delivery of this Agreement or the consummation by such
Stockholder of the transactions contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act, the
Exchange Act and as set forth on Schedule 5(c) attached hereto, (i) no filing
with, and no permit, authorization, consent or approval of, any Governmental
Entity for the execution of this Agreement by such Stockholder and the
consummation by such Stockholder of the transactions contemplated hereby and
(ii) none of the execution and delivery of this Agreement by such Stockholder,
the consummation by such Stockholder of the transactions contemplated hereby or
compliance by such Stockholder with any of the provisions hereof shall (A)
conflict with or result in any breach of any organizational documents
applicable to the Stockholder, (B) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which such Stockholder is a party or by which such
Stockholder or any of its properties or assets may be bound, or (C) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of its properties or assets.
(d) No Encumbrances. Except as permitted by this Agreement,
the Existing Shares and the certificates representing such Shares are now, and
at all times during the term hereof will be, held by such Stockholder, or by a
nominee or custodian for the benefit of such Stockholder, free and clear of all
Encumbrances, proxies, voting trusts or agreements, understandings or
arrangements or any other rights whatsoever, except for any such Encumbrances
or proxies arising hereunder.
(e) No Finder's Fees. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transac-
9
<PAGE>
tions contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
(f) Reliance by Parent. The Stockholder understands and
acknowledges that Parent is entering into, and causing Purchaser to enter into,
the Merger Agreement in reliance upon such Stockholder's execution and delivery
of this Agreement.
6. Representations and Warranties of Parent and the
Purchaser. Each of Parent and the Purchaser hereby represents and warrants to
the Stockholder as follows:
(a) Power; Binding Agreement. Parent and the Purchaser each
has the corporate power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by each of Parent and the Purchaser will not violate any other
agreement to which either of them is a party. This Agreement has been duly and
validly executed and delivered by each of Parent and the Purchaser and
constitutes a valid and binding agreement of each of Parent and the Purchaser,
enforceable against each of Parent and the Purchaser in accordance with its
terms.
(b) No Conflicts. Except for filings under the HSR Act and
the Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution of this
Agreement by each of Parent and the Purchaser and the consummation by each of
Parent and the Purchaser of the transactions contemplated hereby and (ii) none
of the execution and delivery of this Agreement by each of Parent and the
Purchaser, the consummation by each of Parent and the Purchaser of the
transactions contemplated hereby or compliance by each of Parent and the
Purchaser with any of the provisions hereof shall (A) conflict with or result
in any breach of any organizational documents applicable to either of Parent or
the Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
loan agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agree-
10
<PAGE>
ment or other instrument or obligation of any kind to which either of Parent or
the Purchaser is a party or by which either of Parent or the Purchaser or any
of their properties or assets may be bound, or (C) violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
either of Parent or the Purchaser or any of their properties or assets.
7. Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement.
8. Stop Transfer. The Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Shares, unless such transfer is
made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Company Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall refer to and include the Shares as well as all
such stock dividends and distributions and any shares into which or for which
any or all of the Shares may be changed or exchanged.
9. Termination. Except as provided in Section 3 hereof, the
covenants, agreements and proxy shall terminate upon the termination of the
Merger Agreement in accordance with its terms.
10. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations
hereunder shall attach to the Shares and shall be binding upon any person or
entity to which legal
11
<PAGE>
or beneficial ownership of such Shares shall pass, whether by operation of law
or otherwise, including, without limitation, a Stockholder's heirs, guardians,
administrators or successors. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations of the
transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties, provided that Parent may assign, in its sole discretion, its rights
and obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations
hereunder if such assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with
a confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the
Stockholder: c/o Opal, Inc.
3203 Scott Boulevard
Santa Clara, CA 95054
Telephone No.: (408) 727-6060
Telecopy No.: (408) 727-6332
If to Parent or
the Purchaser: Applied Materials, Inc.
3050 Bowers Avenue
Santa Clara, CA 95405-3299
Attention: Joseph J. Sweeney
12
<PAGE>
Telephone No.: (408) 727-5555
Telecopy No.: (408) 563-4635
Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore in the event of any such breach the aggrieved party shall be entitled
to the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous
13
<PAGE>
or later exercise of any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any
other party hereto with its obligations hereunder, and any custom or practice
of the parties at variance with the terms hereof, shall not constitute a waiver
by such party of its right to exercise any such or other right, power or remedy
or to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to
the exclusive jurisdiction of the Court of Chancery in the State of Delaware
and the United States District Court for the Southern District of New York in
any action, suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding shall be brought only in such
court (and waives any objection based on forum non conveniens or any other
objection to venue therein). Each party hereto hereby waives any right to a
trial by jury in connection with any such action, suit or proceeding.
(m) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same Agreement.
14
<PAGE>
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholder
have caused this Agreement to be duly executed as of the day and year first
above written.
APPLIED MATERIALS, INC.
By: /s/ James C. Morgan
-------------------------------
Name: James C. Morgan
Title: Chairman and Chief Executive
Officer
ORION CORP. I
By: /s/ Joseph J. Sweeney
-------------------------------
Name: Joseph J. Sweeney
Title: Vice President
By: /s/ Israel Niv
-------------------------------
Name: Israel Niv
15
<PAGE>
Schedule I
Number of Shares
and Company Options
Name of Stockholder Beneficially Owned
- ------------------- ------------------
Israel Niv 101,878 Shares
107,143 Company
Options
16
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of November 24, 1996, among Applied
Materials, Inc., a Delaware corporation ("Parent"), Orion Corp. I, a Delaware
corporation and a wholly owned subsidiary of Parent (the "Purchaser"), and Clal
Electronics Industries Ltd. (the "Stockholder").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and Opal, Inc., a Delaware corporation (the
"Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Purchaser will be merged with and into the Company (the
"Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company
desire that as soon as practicable (and not later than five business days)
after the execution and delivery of the Merger Agreement, the Purchaser shall
commence a cash tender offer (the "Offer") to purchase at a price of $18.50 per
share all outstanding shares of Company Common Stock (as defined in Section 1
hereof) including all of the Shares (as defined in Section 2 hereof)
beneficially owned by the Stockholder; and
WHEREAS, as an inducement and a condition to entering into
the Merger Agreement, Parent has required that the Stockholder agree, and the
Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained herein,
the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Securities Exchange Act
<PAGE>
of 1934, as amended (the "Exchange Act")), including pursuant to any agreement,
arrangement or understanding, whether or not in writing. Without duplicative
counting of the same securities by the same holder, securities Beneficially
Owned by a Person shall include securities Beneficially Owned by all other
Persons with whom such Person would constitute a "group" as within the meaning
of Section 13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean at any
time the Common Stock, $.01 par value, of the Company.
(c) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
(d) Capitalized terms used and not defined herein have
the respective meanings ascribed to them in the Merger Agreement.
2. Tender of Shares.
(a) In order to induce Parent and the Purchaser to enter into
the Merger Agreement, the Stockholder hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer pursuant to Section 1.1 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of
shares of Company Common Stock set forth opposite such Stockholder's name on
Schedule I hereto (the "Existing Shares", and together with any shares acquired
by such Stockholder in any capacity after the date hereof and prior to the
termination of this Agreement whether upon the exercise of Company Options or
by means of purchase, dividend, distribution or otherwise, the "Shares"), all
of which are Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that Parent's and the Purchaser's obligation to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
(b) The transfer by the Stockholder of the Shares to
Purchaser in the Offer shall pass to and uncon-
2
<PAGE>
ditionally vest in the Purchaser good and valid title to the Shares, free and
clear of all Encumbrances.
(c) The Stockholder hereby permits Parent and the Purchaser
to publish and disclose in the Offer Documents and, if approval of the
Company's stockholders is required under applicable law, the Proxy Statement
(including all documents and schedules filed with the SEC) its identity and
ownership of the Company Common Stock and the nature of its commitments,
arrangements and understandings under this Agreement.
3. Options.
(a) Exercise of Stock Option. In order to induce Parent and
the Purchaser to enter into the Merger Agreement, the Stockholder hereby grants
to Parent an irrevocable option (a "Stock Option") to purchase such
Stockholder's Shares (the "Option Shares") at an amount (the "Purchase Price")
equal to the Offer Price. If (i) the Offer is terminated, abandoned or
withdrawn by Parent or the Purchaser (whether due to the failure of any of the
conditions thereto or otherwise), other than at a time when Parent or the
Purchaser is in material breach of the terms of the Merger Agreement, or (ii)
the Merger Agreement is terminated in accordance with its terms, other than a
termination pursuant to Section 7.1(c)(i) or 7.1(c)(iii), each Stock Option
shall, in any such case, become exercisable, in whole but not in part, upon the
first to occur of any such event and remain exercisable in whole until the date
which is 60 days after the date of the occurrence of such event (the "60 Day
Period"), so long as: (i) all waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), required for
the purchase of the Option Shares upon such exercise shall have expired or been
waived; (ii) all other applicable consents of any Governmental Entity required
for the purchase or sale of the Option Shares upon such exercise and identified
on Schedule 5(c) attached hereto (if applicable) shall have been granted or
otherwise satisfied; and (iii) there shall not be in effect any preliminary
injunction or other order issued by any Governmental Entity prohibiting the
exercise of the Stock Option pursuant to this Agreement; provided that if (i)
all HSR Act waiting periods shall not have expired or been waived, (ii) all
other applicable consents of any Governmental Entity required for the
3
<PAGE>
purchase or sale of the Option Shares and identified on Schedule 5(c)
attached hereto (if applicable) shall not have been granted or otherwise
satisfied, or (iii) there shall be in effect any such injunction or order, in
each case on the expiration of the 60 Day Period, the 60 Day Period shall be
extended until 5 business days after the later of (A) the date of expiration or
waiver of all HSR Act waiting periods, (B) the grant or other satisfaction of
such required consents, and (C) the date of removal or lifting of such
injunction or order; provided, however, that in no event shall the Stock Option
be exercisable after the date which is six months after the date on which the
Stock Option first becomes exercisable; provided, further, that the Stock
Option shall terminate if any Governmental Entity shall issue an order, decree
or ruling or take any other action (which order, decree, ruling or other action
the parties hereto shall use their best efforts to lift), which permanently
restrains, enjoins or otherwise prohibits Parent's exercise of the Stock Option
or the sale of the Option Shares to Parent by the Stockholder. In the event
that Parent wishes to exercise a Stock Option, Parent shall send a written
notice (the "Notice") to the Stockholder identifying the place and date (not
less than two nor more than 10 business days from the date of the Notice) for
the closing of such purchase.
(b) Resale of Option Shares. If, within 12 months following
the acquisition by Parent of the Option Shares, Parent or any of its affiliates
sells, transfers or otherwise disposes of any or all of the Option Shares to
any third party (other than to an affiliate of Parent) (a "Subsequent Sale")
and realizes a Profit (as defined below) from such Subsequent Sale, then Parent
shall pay to the Stockholder an amount equal to 95% of the Profit promptly upon
receipt of the proceeds from such Subsequent Sale. For purposes of this Section
3(b), "Profit" shall mean (A) the amount of the excess, if any, of (x) the
aggregate consideration received by Parent or its affiliates in connection with
a Subsequent Sale over (y) the product of (i) the number of Shares sold,
transferred or disposed of multiplied by (ii) the Purchase Price less (B) any
taxes or any other payment of any nature due or payable by Parent with respect
to the amount specified in clause (A), other than Parent's or the Purchaser's
expenses incurred in connection with the negotiation, execution and delivery of
this Agreement and the Merger
4
<PAGE>
Agreement. In the event the consideration received by Parent in a Subsequent
Sale is other than cash, the Stockholder shall be entitled to the same form of
consideration as received by Parent in such Subsequent Sale or, at Parent's
election, an amount in cash equal to the fair market value of such other
consideration that the Stockholder would have been entitled to pursuant to this
Section 3(b).
4. Additional Agreements.
(a) Voting Agreement. The Stockholder shall, at any meeting
of the holders of Company Common Stock, however called, or in connection with
any written consent of the holders of Company Common Stock, vote (or cause to
be voted) the Shares (if any) then held of record or Beneficially Owned by such
Stockholder, (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the other actions contemplated by the Merger Agreement and this Agreement
and any actions required in furtherance thereof and hereof; and (ii) against
any Acquisition Proposal and against any action or agreement that would impede,
frustrate, prevent or nullify this Agreement, or result in a breach in any
respect of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or which would result in
any of the conditions set forth in Annex A to the Merger Agreement or set forth
in Article VI of the Merger Agreement not being fulfilled.
(b) No Inconsistent Arrangements. The Stockholder hereby
covenants and agrees that, except as contemplated by this Agreement and the
Merger Agreement, it shall not (i) transfer (which term shall include, without
limitation, any sale, gift, pledge or other disposition), or consent to any
transfer of, any or all of such Stockholder's Shares, Company Options or any
interest therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares,
Company Options or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares or
Company Options, (iv) deposit such Shares or Company Options into a voting
trust or enter into a voting agreement or arrangement with respect to such
Shares or Compa-
5
<PAGE>
ny Options, or (v) take any other action that would in any way restrict, limit
or interfere with the performance of its obligations hereunder or the
transactions contemplated hereby or by the Merger Agreement.
(c) Grant of Irrevocable Proxy; Appointment of
Proxy.
(i) The Stockholder hereby irrevocably grants to, and
appoints, Parent and Nancy H. Handel and Joseph J. Sweeney, or either of them,
in their respective capacities as officers of Parent, and any individual who
shall hereafter succeed to any such office of Parent, and each of them
individually, such Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Stockholder, to
vote such Stockholder's Shares, or grant a consent or approval in respect of
the Shares in favor of the various transactions contemplated by the Merger
Agreement (the "Transactions") and against any Acquisition Proposal.
(ii) The Stockholder represents that any proxies heretofore
given in respect of such Stockholder's Shares are not irrevocable, and that any
such proxies are hereby revoked.
(iii) The Stockholder understands and acknowledges that
Parent is entering into the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement. The Stockholder hereby
affirms that the irrevocable proxy set forth in this Section 4(c) is given in
connection with the execution of the Merger Agreement, and that such
irrevocable proxy is given to secure the performance of the duties of such
Stockholder under this Agreement. The Stockholder hereby further affirms that
the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked. The Stockholder hereby ratifies and confirms all that
such irrevocable proxy may lawfully do or cause to be done by virtue hereof.
Such irrevocable proxy is executed and intended to be irrevocable in accordance
with the provisions of Section 212(e) of the Delaware General Corporation Law.
(d) No Solicitation. The Stockholder hereby agrees, in
its or his capacity as a stockholder of the Company, that neither such
Stockholder nor any of its
6
<PAGE>
Subsidiaries or affiliates shall (and such Stockholder shall use its best
efforts to cause its officers, directors, employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
any of its affiliates or representatives) concerning any Acquisition Proposal.
The Stockholder will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. The Stockholder will immediately communicate to Parent the
terms of any proposal, discussion, negotiation or inquiry such Stockholder, in
its or his capacity as a stockholder of the Company, receives (and will disclose
any written materials received by such Stockholder, in its or his capacity as a
stockholder of the Company, in connection with such proposal, discussion,
negotiation or inquiry) and the identity of the party making such proposal or
inquiry which it may receive in respect of any such transaction.
(e) Company Options. If the Stockholder holds Company Options
to acquire shares of Company Common Stock, he shall, if requested by the
Company, consent to the cancellation or substitution of his Company Options in
accordance with the terms of the Merger Agreement and shall execute all
appropriate documentation in connection with such cancellation or substitution.
(f) Best Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use its best
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement and the Merger Agreement. Each party shall
promptly consult with the other and provide any necessary information and
material with respect to all filings made by such party with any Governmental
Entity in connection with this Agreement and the Merger Agreement and the
transactions contemplated hereby and thereby.
7
<PAGE>
(g) Waiver of Appraisal Rights. The Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger that it or
he may have.
(h) Acquisition of Remaining Shares. Parent agrees that,
in the event that within three years following Parent's exercise of the Stock
Option, Parent, the Purchaser or any of their Subsidiaries acquires any addi-
tional shares of Company Common Stock from, or pursuant to an offer made to all
of the Company's stockholders, whether by merger, consolidation, tender offer
or other similar transaction, the price paid per share of Company Common Stock
shall be no less than the Purchase Price.
5. Representations and Warranties of the Stockholder.
The Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the record and
Beneficial Owner of the Existing Shares, as set forth on Schedule I. On the
date hereof, the Existing Shares constitute all of the Shares owned of record
or Beneficially Owned by such Stockholder. Such Stockholder has sole voting
power and sole power to issue instructions with respect to the matters set
forth in Sections 2, 3 and 4 hereof, sole power of disposition, sole power of
conversion, sole power to demand appraisal rights and sole power to agree to
all of the matters set forth in this Agreement, in each case with respect to
all of the Existing Shares with no limitations, qualifications or restrictions
on such rights, subject to applicable securities laws and the terms of this
Agreement.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, proxy arrangement, pledge agreement, shareholders
agreement or voting trust. This Agreement has been duly and validly executed
and delivered by such Stockholder and constitutes a valid and binding agreement
of such Stockholder, enforceable against such Stockholder in accordance with
its terms. There is no beneficiary or holder of a voting trust certificate or
other interest of
8
<PAGE>
any trust of which such Stockholder is a trustee whose consent is required for
the execution and delivery of this Agreement or the consummation by such
Stockholder of the transactions contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act, the
Exchange Act and as set forth on Schedule 5(c) attached hereto, (i) no filing
with, and no permit, authorization, consent or approval of, any Governmental
Entity for the execution of this Agreement by such Stockholder and the
consummation by such Stockholder of the transactions contemplated hereby and
(ii) none of the execution and delivery of this Agreement by such Stockholder,
the consummation by such Stockholder of the transactions contemplated hereby or
compliance by such Stockholder with any of the provisions hereof shall (A)
conflict with or result in any breach of any organizational documents
applicable to the Stockholder, (B) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which such Stockholder is a party or by which such
Stockholder or any of its properties or assets may be bound, or (C) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of its properties or assets.
(d) No Encumbrances. Except as permitted by this Agreement,
the Existing Shares and the certificates representing such Shares are now, and
at all times during the term hereof will be, held by such Stockholder, or by a
nominee or custodian for the benefit of such Stockholder, free and clear of all
Encumbrances, proxies, voting trusts or agreements, understandings or
arrangements or any other rights whatsoever, except for any such Encumbrances
or proxies arising hereunder.
(e) No Finder's Fees. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transac-
9
<PAGE>
tions contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
(f) Reliance by Parent. The Stockholder understands and
acknowledges that Parent is entering into, and causing Purchaser to enter into,
the Merger Agreement in reliance upon such Stockholder's execution and delivery
of this Agreement.
6. Representations and Warranties of Parent
and the Purchaser. Each of Parent and the Purchaser
hereby represents and warrants to the Stockholder as
follows:
(a) Power; Binding Agreement. Parent and the Purchaser each
has the corporate power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by each of Parent and the Purchaser will not violate any other
agreement to which either of them is a party. This Agreement has been duly and
validly executed and delivered by each of Parent and the Purchaser and
constitutes a valid and binding agreement of each of Parent and the Purchaser,
enforceable against each of Parent and the Purchaser in accordance with its
terms.
(b) No Conflicts. Except for filings under the HSR Act and
the Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution of this
Agreement by each of Parent and the Purchaser and the consummation by each of
Parent and the Purchaser of the transactions contemplated hereby and (ii) none
of the execution and delivery of this Agreement by each of Parent and the
Purchaser, the consummation by each of Parent and the Purchaser of the
transactions contemplated hereby or compliance by each of Parent and the
Purchaser with any of the provisions hereof shall (A) conflict with or result
in any breach of any organizational documents applicable to either of Parent or
the Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
loan agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agree-
10
<PAGE>
ment or other instrument or obligation of any kind to which either of Parent or
the Purchaser is a party or by which either of Parent or the Purchaser or any
of their properties or assets may be bound, or (C) violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
either of Parent or the Purchaser or any of their properties or assets.
7. Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement.
8. Stop Transfer. The Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Shares, unless such transfer is
made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Company Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall refer to and include the Shares as well as all
such stock dividends and distributions and any shares into which or for which
any or all of the Shares may be changed or exchanged.
9. Termination. Except as provided in Section 3 hereof, the
covenants, agreements and proxy shall terminate upon the termination of the
Merger Agreement in accordance with its terms.
10. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations
hereunder shall attach to the Shares and shall be binding upon any person or
entity to which legal
11
<PAGE>
or beneficial ownership of such Shares shall pass, whether by operation of law
or otherwise, including, without limitation, a Stockholder's heirs, guardians,
administrators or successors. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations of the
transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties, provided that Parent may assign, in its sole discretion, its rights
and obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations
hereunder if such assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with
a confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the
Stockholder: Clal Electronics Industries Ltd.
5 Druyanov Street
Tel Aviv 63143, Israel
Telephone No.: 972-3-526-3333
Telecopy No.: 972-3-528-5380
If to Parent or
the Purchaser: Applied Materials, Inc.
3050 Bowers Avenue
Santa Clara, CA 95405-3299
Attention: Joseph J. Sweeney
12
<PAGE>
Telephone No.: (408) 727-5555
Telecopy No.:(408) 563-4635
Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore in the event of any such breach the aggrieved party shall be entitled
to the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous
13
<PAGE>
or later exercise of any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any
other party hereto with its obligations hereunder, and any custom or practice
of the parties at variance with the terms hereof, shall not constitute a waiver
by such party of its right to exercise any such or other right, power or remedy
or to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to
the exclusive jurisdiction of the Court of Chancery in the State of Delaware
and the United States District Court for the Southern District of New York in
any action, suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding shall be brought only in such
court (and waives any objection based on forum non conveniens or any other
objection to venue therein). Each party hereto hereby waives any right to a
trial by jury in connection with any such action, suit or proceeding.
(m) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same Agreement.
14
<PAGE>
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholder
have caused this Agreement to be duly executed as of the day and year first
above written.
APPLIED MATERIALS, INC.
By: /s/ James C. Morgan
--------------------------------
Name: James C. Morgan
Title: Chairman and Chief Executive
Officer
ORION CORP. I
By: /s/ Joseph J. Sweeney
--------------------------------
Name: Joseph J. Sweeney
Title: Vice President
CLAL ELECTRONICS INDUSTRIES LTD.
By: /s/ Mendy Erad
--------------------------------
Name: Mendy Erad
Title: Managing Director
By: /s/ Meir Ben Shoshan
--------------------------------
Name: Meir Ben Shoshan
Title: Vice President
15
<PAGE>
Schedule I
Number of Shares
Name of Stockholder Beneficially Owned
- ------------------- ------------------
Clal Electronics Industries Ltd. 2,692,327
16
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of November 24, 1996, among Applied
Materials, Inc., a Delaware corporation ("Parent"), Orion Corp. I, a Delaware
corporation and a wholly owned subsidiary of Parent (the "Purchaser"), and
Orbotech Ltd. (the "Stockholder").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and Opal, Inc., a Delaware corporation (the
"Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which Purchaser will be merged with and into the Company (the
"Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company
desire that as soon as practicable (and not later than five business days)
after the execution and delivery of the Merger Agreement, the Purchaser shall
commence a cash tender offer (the "Offer") to purchase at a price of $18.50 per
share all outstanding shares of Company Common Stock (as defined in Section 1
hereof) including all of the Shares (as defined in Section 2 hereof)
beneficially owned by the Stockholder; and
WHEREAS, as an inducement and a condition to entering into
the Merger Agreement, Parent has required that the Stockholder agree, and the
Stockholder has agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual representations, warranties, covenants and agreements contained herein,
the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Securities Exchange Act
<PAGE>
of 1934, as amended (the "Exchange Act")), including pursuant to any agreement,
arrangement or understanding, whether or not in writing. Without duplicative
counting of the same securities by the same holder, securities Beneficially
Owned by a Person shall include securities Beneficially Owned by all other
Persons with whom such Person would constitute a "group" as within the meaning
of Section 13(d)(3) of the Exchange Act.
(b) "Company Common Stock" shall mean at any
time the Common Stock, $.01 par value, of the Company.
(c) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
(d) Capitalized terms used and not defined herein have
the respective meanings ascribed to them in the Merger Agreement.
2. Tender of Shares.
(a) In order to induce Parent and the Purchaser to enter into
the Merger Agreement, the Stockholder hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer pursuant to Section 1.1 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of
shares of Company Common Stock set forth opposite such Stockholder's name on
Schedule I hereto (the "Existing Shares", and together with any shares acquired
by such Stockholder in any capacity after the date hereof and prior to the
termination of this Agreement whether upon the exercise of Company Options or
by means of purchase, dividend, distribution or otherwise, the "Shares"), all
of which are Beneficially Owned by such Stockholder. The Stockholder hereby
acknowledges and agrees that Parent's and the Purchaser's obligation to accept
for payment and pay for the Shares in the Offer, including the Shares
Beneficially Owned by such Stockholder, is subject to the terms and conditions
of the Offer.
(b) The transfer by the Stockholder of the Shares to
Purchaser in the Offer shall pass to and uncon-
2
<PAGE>
ditionally vest in the Purchaser good and valid title to the Shares, free and
clear of all Encumbrances.
(c) The Stockholder hereby permits Parent and the Purchaser
to publish and disclose in the Offer Documents and, if approval of the
Company's stockholders is required under applicable law, the Proxy Statement
(including all documents and schedules filed with the SEC) its identity and
ownership of the Company Common Stock and the nature of its commitments,
arrangements and understandings under this Agreement.
3. Options.
(a) Exercise of Stock Option. In order to induce Parent and
the Purchaser to enter into the Merger Agreement, the Stockholder hereby grants
to Parent an irrevocable option (a "Stock Option") to purchase such
Stockholder's Shares (the "Option Shares") at an amount (the "Purchase Price")
equal to the Offer Price. If (i) the Offer is terminated, abandoned or
withdrawn by Parent or the Purchaser (whether due to the failure of any of the
conditions thereto or otherwise), other than at a time when Parent or the
Purchaser is in material breach of the terms of the Merger Agreement, or (ii)
the Merger Agreement is terminated in accordance with its terms, other than a
termination pursuant to Section 7.1(c)(i) or 7.1(c)(iii), each Stock Option
shall, in any such case, become exercisable, in whole but not in part, upon the
first to occur of any such event and remain exercisable in whole until the date
which is 60 days after the date of the occurrence of such event (the "60 Day
Period"), so long as: (i) all waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), required for
the purchase of the Option Shares upon such exercise shall have expired or been
waived; (ii) all other applicable consents of any Governmental Entity required
for the purchase or sale of the Option Shares upon such exercise and identified
on Schedule 5(c) attached hereto (if applicable) shall have been granted or
otherwise satisfied; and (iii) there shall not be in effect any preliminary
injunction or other order issued by any Governmental Entity prohibiting the
exercise of the Stock Option pursuant to this Agreement; provided that if (i)
all HSR Act waiting periods shall not have expired or been waived, (ii) all
other applicable consents of any Governmental Entity required for the
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<PAGE>
purchase or sale of the Option Shares and identified on Schedule 5(c)
attached hereto (if applicable) shall not have been granted or otherwise
satisfied, or (iii) there shall be in effect any such injunction or order, in
each case on the expiration of the 60 Day Period, the 60 Day Period shall be
extended until 5 business days after the later of (A) the date of expiration or
waiver of all HSR Act waiting periods, (B) the grant or other satisfaction of
such required consents, and (C) the date of removal or lifting of such
injunction or order; provided, however, that in no event shall the Stock Option
be exercisable after the date which is six months after the date on which the
Stock Option first becomes exercisable; provided, further, that the Stock
Option shall terminate if any Governmental Entity shall issue an order, decree
or ruling or take any other action (which order, decree, ruling or other action
the parties hereto shall use their best efforts to lift), which permanently
restrains, enjoins or otherwise prohibits Parent's exercise of the Stock Option
or the sale of the Option Shares to Parent by the Stockholder. In the event
that Parent wishes to exercise a Stock Option, Parent shall send a written
notice (the "Notice") to the Stockholder identifying the place and date (not
less than two nor more than 10 business days from the date of the Notice) for
the closing of such purchase.
(b) Resale of Option Shares. If, within 12 months following
the acquisition by Parent of the Option Shares, Parent or any of its affiliates
sells, transfers or otherwise disposes of any or all of the Option Shares to
any third party (other than to an affiliate of Parent) (a "Subsequent Sale")
and realizes a Profit (as defined below) from such Subsequent Sale, then Parent
shall pay to the Stockholder an amount equal to 95% of the Profit promptly upon
receipt of the proceeds from such Subsequent Sale. For purposes of this Section
3(b), "Profit" shall mean (A) the amount of the excess, if any, of (x) the
aggregate consideration received by Parent or its affiliates in connection with
a Subsequent Sale over (y) the product of (i) the number of Shares sold,
transferred or disposed of multiplied by (ii) the Purchase Price less (B) any
taxes or any other payment of any nature due or payable by Parent with respect
to the amount specified in clause (A), other than Parent's or the Purchaser's
expenses incurred in connection with the negotiation, execution and delivery of
this Agreement and the Merger
4
<PAGE>
Agreement. In the event the consideration received by Parent in a Subsequent
Sale is other than cash, the Stockholder shall be entitled to the same form of
consideration as received by Parent in such Subsequent Sale or, at Parent's
election, an amount in cash equal to the fair market value of such other
consideration that the Stockholder would have been entitled to pursuant to this
Section 3(b).
4. Additional Agreements.
(a) Voting Agreement. The Stockholder shall, at any meeting
of the holders of Company Common Stock, however called, or in connection with
any written consent of the holders of Company Common Stock, vote (or cause to
be voted) the Shares (if any) then held of record or Beneficially Owned by such
Stockholder, (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the other actions contemplated by the Merger Agreement and this Agreement
and any actions required in furtherance thereof and hereof; and (ii) against
any Acquisition Proposal and against any action or agreement that would impede,
frustrate, prevent or nullify this Agreement, or result in a breach in any
respect of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or which would result in
any of the conditions set forth in Annex A to the Merger Agreement or set forth
in Article VI of the Merger Agreement not being fulfilled.
(b) No Inconsistent Arrangements. The Stockholder hereby
covenants and agrees that, except as contemplated by this Agreement and the
Merger Agreement, it shall not (i) transfer (which term shall include, without
limitation, any sale, gift, pledge or other disposition), or consent to any
transfer of, any or all of such Stockholder's Shares, Company Options or any
interest therein, (ii) enter into any contract, option or other agreement or
understanding with respect to any transfer of any or all of such Shares,
Company Options or any interest therein, (iii) grant any proxy,
power-of-attorney or other authorization in or with respect to such Shares or
Company Options, (iv) deposit such Shares or Company Options into a voting
trust or enter into a voting agreement or arrangement with respect to such
Shares or Compa-
5
<PAGE>
ny Options, or (v) take any other action that would in any way restrict, limit
or interfere with the performance of its obligations hereunder or the
transactions contemplated hereby or by the Merger Agreement.
(c) Grant of Irrevocable Proxy; Appointment of Proxy.
(i) The Stockholder hereby irrevocably grants to, and
appoints, Parent and Nancy H. Handel and Joseph J. Sweeney, or either of them,
in their respective capacities as officers of Parent, and any individual who
shall hereafter succeed to any such office of Parent, and each of them
individually, such Stockholder's proxy and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of such Stockholder, to
vote such Stockholder's Shares, or grant a consent or approval in respect of
the Shares in favor of the various transactions contemplated by the Merger
Agreement (the "Transactions") and against any Acquisition Proposal.
(ii) The Stockholder represents that any proxies heretofore
given in respect of such Stockholder's Shares are not irrevocable, and that any
such proxies are hereby revoked.
(iii) The Stockholder understands and acknowledges that
Parent is entering into the Merger Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement. The Stockholder hereby
affirms that the irrevocable proxy set forth in this Section 4(c) is given in
connection with the execution of the Merger Agreement, and that such
irrevocable proxy is given to secure the performance of the duties of such
Stockholder under this Agreement. The Stockholder hereby further affirms that
the irrevocable proxy is coupled with an interest and may under no
circumstances be revoked. The Stockholder hereby ratifies and confirms all that
such irrevocable proxy may lawfully do or cause to be done by virtue hereof.
Such irrevocable proxy is executed and intended to be irrevocable in accordance
with the provisions of Section 212(e) of the Delaware General Corporation Law.
(d) No Solicitation. The Stockholder hereby
agrees, in its or his capacity as a stockholder of the Company, that neither
such Stockholder nor any of its
6
<PAGE>
Subsidiaries or affiliates shall (and such Stockholder shall use its best
efforts to cause its officers, directors, employees, representatives and
agents, including, but not limited to, investment bankers, attorneys and
accountants, not to), directly or indirectly, encourage, solicit, participate
in or initiate discussions or negotiations with, or provide any information to,
any corporation, partnership, person or other entity or group (other than
Parent, any of its affiliates or representatives) concerning any Acquisition
Proposal. The Stockholder will immediately cease any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal. The Stockholder will immediately communicate to
Parent the terms of any proposal, discussion, negotiation or inquiry such
Stockholder, in its or his capacity as a stockholder of the Company, receives
(and will disclose any written materials received by such Stockholder, in its
or his capacity as a stockholder of the Company, in connection with such
proposal, discussion, negotiation or inquiry) and the identity of the party
making such proposal or inquiry which it may receive in respect of any such
transaction.
(e) Company Options. If the Stockholder holds Company Options
to acquire shares of Company Common Stock, he shall, if requested by the
Company, consent to the cancellation or substitution of his Company Options in
accordance with the terms of the Merger Agreement and shall execute all
appropriate documentation in connection with such cancellation or substitution.
(f) Best Reasonable Efforts. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use its best
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement and the Merger Agreement. Each party shall
promptly consult with the other and provide any necessary information and
material with respect to all filings made by such party with any Governmental
Entity in connection with this Agreement and the Merger Agreement and the
transactions contemplated hereby and thereby.
7
<PAGE>
(g) Waiver of Appraisal Rights. The Stockholder hereby
waives any rights of appraisal or rights to dissent from the Merger that it or
he may have.
(h) Acquisition of Remaining Shares. Parent agrees that,
in the event that within three years following Parent's exercise of the Stock
Option, Parent, the Purchaser or any of their Subsidiaries acquires any addi-
tional shares of Company Common Stock from, or pursuant to an offer made to all
of the Company's stockholders, whether by merger, consolidation, tender offer
or other similar transaction, the price paid per share of Company Common Stock
shall be no less than the Purchase Price.
5. Representations and Warranties of the Stockholder.
The Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the record and
Beneficial Owner of the Existing Shares, as set forth on Schedule I. On the
date hereof, the Existing Shares constitute all of the Shares owned of record
or Beneficially Owned by such Stockholder. Such Stockholder has sole voting
power and sole power to issue instructions with respect to the matters set
forth in Sections 2, 3 and 4 hereof, sole power of disposition, sole power of
conversion, sole power to demand appraisal rights and sole power to agree to
all of the matters set forth in this Agreement, in each case with respect to
all of the Existing Shares with no limitations, qualifications or restrictions
on such rights, subject to applicable securities laws and the terms of this
Agreement.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, proxy arrangement, pledge agreement, shareholders
agreement or voting trust. This Agreement has been duly and validly executed
and delivered by such Stockholder and constitutes a valid and binding agreement
of such Stockholder, enforceable against such Stockholder in accordance with
its terms. There is no beneficiary or holder of a voting trust certificate or
other interest of
8
<PAGE>
any trust of which such Stockholder is a trustee whose consent is required for
the execution and delivery of this Agreement or the consummation by such
Stockholder of the transactions contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act, the
Exchange Act and as set forth on Schedule 5(c) attached hereto, (i) no filing
with, and no permit, authorization, consent or approval of, any Governmental
Entity for the execution of this Agreement by such Stockholder and the
consummation by such Stockholder of the transactions contemplated hereby and
(ii) none of the execution and delivery of this Agreement by such Stockholder,
the consummation by such Stockholder of the transactions contemplated hereby or
compliance by such Stockholder with any of the provisions hereof shall (A)
conflict with or result in any breach of any organizational documents
applicable to the Stockholder, (B) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which such Stockholder is a party or by which such
Stockholder or any of its properties or assets may be bound, or (C) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of its properties or assets.
(d) No Encumbrances. Except as permitted by this Agreement,
the Existing Shares and the certificates representing such Shares are now, and
at all times during the term hereof will be, held by such Stockholder, or by a
nominee or custodian for the benefit of such Stockholder, free and clear of all
Encumbrances, proxies, voting trusts or agreements, understandings or
arrangements or any other rights whatsoever, except for any such Encumbrances
or proxies arising hereunder.
(e) No Finder's Fees. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transac-
9
<PAGE>
tions contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.
(f) Reliance by Parent. The Stockholder understands and
acknowledges that Parent is entering into, and causing Purchaser to enter into,
the Merger Agreement in reliance upon such Stockholder's execution and delivery
of this Agreement.
6. Representations and Warranties of Parent and the
Purchaser. Each of Parent and the Purchaser hereby represents and warrants to
the Stockholder as follows:
(a) Power; Binding Agreement. Parent and the Purchaser each
has the corporate power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by each of Parent and the Purchaser will not violate any other
agreement to which either of them is a party. This Agreement has been duly and
validly executed and delivered by each of Parent and the Purchaser and
constitutes a valid and binding agreement of each of Parent and the Purchaser,
enforceable against each of Parent and the Purchaser in accordance with its
terms.
(b) No Conflicts. Except for filings under the HSR Act and
the Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the execution of this
Agreement by each of Parent and the Purchaser and the consummation by each of
Parent and the Purchaser of the transactions contemplated hereby and (ii) none
of the execution and delivery of this Agreement by each of Parent and the
Purchaser, the consummation by each of Parent and the Purchaser of the
transactions contemplated hereby or compliance by each of Parent and the
Purchaser with any of the provisions hereof shall (A) conflict with or result
in any breach of any organizational documents applicable to either of Parent or
the Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
loan agreement, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agree-
10
<PAGE>
ment or other instrument or obligation of any kind to which either of Parent or
the Purchaser is a party or by which either of Parent or the Purchaser or any
of their properties or assets may be bound, or (C) violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
either of Parent or the Purchaser or any of their properties or assets.
7. Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further lawful
action as may be necessary or desirable to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement.
8. Stop Transfer. The Stockholder shall not request that the
Company register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Shares, unless such transfer is
made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Company Common Stock by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall refer to and include the Shares as well as all
such stock dividends and distributions and any shares into which or for which
any or all of the Shares may be changed or exchanged.
9. Termination. Except as provided in Section 3 hereof, the
covenants, agreements and proxy shall terminate upon the termination of the
Merger Agreement in accordance with its terms.
10. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations
hereunder shall attach to the Shares and shall be binding upon any person or
entity to which legal
11
<PAGE>
or beneficial ownership of such Shares shall pass, whether by operation of law
or otherwise, including, without limitation, a Stockholder's heirs, guardians,
administrators or successors. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations of the
transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties, provided that Parent may assign, in its sole discretion, its rights
and obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations
hereunder if such assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with
a confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the
Stockholder: Orbotech Ltd.
Yavne Industrial Zone
P.O. Box 601
Yavne 81106, Israel
Attention: President
Telephone No.: 972-8-942-5633
If to Parent or
the Purchaser: Applied Materials, Inc.
3050 Bowers Avenue
Santa Clara, CA 95405-3299
12
<PAGE>
Attention: Joseph J. Sweeney
Telephone No.: (408) 727-5555
Telecopy No.:(408) 563-4635
Copy to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: David Fox
Telephone No.: (212) 735-3000
Telecopy No.: (212) 735-2000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore in the event of any such breach the aggrieved party shall be entitled
to the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative and not alternative, and the exercise of any
13
<PAGE>
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any
other party hereto with its obligations hereunder, and any custom or practice
of the parties at variance with the terms hereof, shall not constitute a waiver
by such party of its right to exercise any such or other right, power or remedy
or to demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
(l) Jurisdiction. Each party hereby irrevocably submits to
the exclusive jurisdiction of the Court of Chancery in the State of Delaware
and the United States District Court for the Southern District of New York in
any action, suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding shall be brought only in such
court (and waives any objection based on forum non conveniens or any other
objection to venue therein). Each party hereto hereby waives any right to a
trial by jury in connection with any such action, suit or proceeding.
(m) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same Agreement.
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<PAGE>
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholder
have caused this Agreement to be duly executed as of the day and year first
above written.
APPLIED MATERIALS, INC.
By: /s/ James C. Morgan
-------------------------------
Name: James C. Morgan
Title: Chairman and Chief Executive
Officer
ORION CORP. I
By: /s/ Joseph J. Sweeney
-------------------------------
Name: Joseph J. Sweeney
Title: Vice President
ORBOTECH LTD.
By: /s/ Shlomo Barak
-------------------------------
Name: Dr. Shlomo Barak
Title: Chairman of the Board
By: /s/ Yochai Richter
-------------------------------
Name: Yochai Richter
Title: President and Chief Executive
Officer
15
<PAGE>
Schedule I
Number of Shares
Name of Stockholder Beneficially Owned
- ------------------- ------------------
Orbotech Ltd. 1,241,650
16
EXHIBIT I
CONFIDENTIALITY AGREEMENT
<PAGE>
CONFIDENTIALITY AND NONDISCLOSURE AGREEMENT
THIS CONFIDENTIALITY AND NONDISCLOSURE AGREEMENT (the "Agreement") is
made and entered into as of October 21, 1996, by and between Applied
Materials, Inc. ("Buyer"), a corporation organized under the laws of the State
of Delaware, and Opal, Inc. ("Orion"), a company organized under the laws of
the State of Delaware, with reference to the following facts:
RECITALS
A. WHEREAS, Buyer and Orion intend to enter into discussions and transfer
information regarding the possible acquisition by Buyer of the share capital
of Orion (the "Proposed Share Acquisition"); and
B. WHEREAS, in the course of the discussions, Buyer and Orion may
disclose or may have disclosed to one another, orally or in writing, certain
confidential and proprietary technical, financial and business information;
and
C. WHEREAS, Buyer and Orion wish to provide for the confidential
treatment of their discussions and written disclosures regarding the Proposed
Share Acquisition and all information related thereto.
AGREEMENT
NOW THEREFORE, the parties mutually agree to the following:
1. For the purpose of this Agreement, "Confidential Information" shall
mean (a) the existence or status of, or any other information relating to, the
discussions between Buyer and Orion (directly or through representatives)
relating to the Proposed Share Acquisition, and (b) any information or
materials disclosed by Buyer or Orion (in which case such party shall be
considered the "Disclosing Party") or by any directors, employees,
representatives, agents or professional advisors of the Disclosing Party, to
the other party (in which case such other party shall be considered the
"Recipient") or to any directors, employees, representatives, agents or
professional advisors of the Recipient, relating to the financial and business
information of the Disclosing Party or the design, development, manufacturing
or marketing of the Disclosing Party's products or services, or otherwise to
the business or technology of the Disclosing Party; provided, however, that
any oral information disclosed to the Recipient by the Disclosing Party must
be identified in writing to the Recipient as confidential within 30 days
following such disclosure in order for such oral information to be deemed
"Confidential Information" hereunder.
2. Subject to Section 3 hereof, Recipient agrees to hold in confidence
and not to reveal, report, publish, disclose or transfer, directly or
indirectly, any of the Confidential Information of the Disclosing Party
(including, without limitation, the Confidential Information referenced in
clause (a) of Section 1 above, as to which information both parties shall be
considered the "Recipient") to any third party or use any of the Confidential
Information of the
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<PAGE>
Disclosing party for any purpose at any time except as necessary to evaluate
and implement the Proposed Share Acquisition; provided that the Recipient may
disclose the Confidential Information referenced in clause (a) of Section 1
above to the extent it reasonably deems necessary in order to comply with
securities laws and/or stock exchange regulations; and provided further that
the Recipient shall, if practicable within the context of applicable legal and
stock exchange requirements, give the Disclosing Party prompt prior notice and
first allow the Disclosing Party reasonable time to comment on the
Confidential Information the Recipient proposes to disclose prior to its
disclosure and, if permitted by law, stock exchange regulations and if
practicable within the context of applicable legal and stock exchange
requirements, use reasonable efforts to accept the good faith comments of the
other party. Confidential Information referenced in clause (b) of Section 1
above shall remain the sole property of the Disclosing Party. At the request
of the Disclosing Party, Recipient will promptly return to the Disclosing
Party all Confidential Information of the Disclosing Party referenced in
Section 1 above that is in tangible form, including any copies, and, with
respect to abstracts or summaries of Confidential Information that Recipient
may have made, Recipient will destroy such abstracts or summaries and will
provide a written declaration from an authorized officer of the Recipient
certifying to the Disclosing Party that it has done so.
3. Recipient agrees to be responsible for the conduct of its directors,
employees, representatives, agents and professional advisors regarding the
confidentiality and use of the Confidential Information. In furtherance and
not in limitation thereof, Recipient agrees that without the written consent
of the Disclosing Party, disclosure of or access to the Confidential
Information shall be permitted only to the directors, key employees,
representatives, agents and professional advisors of Recipient who have a need
to know in connection with the Proposed Share Acquisition, and who have agreed
to hold such information in confidence and to comply with all of the
requirements of Section 2 above. Notwithstanding anything contained herein to
the contrary, Confidential Information referenced in clause (a) of Section 1
above may be disclosed by Buyer to the directors, key employees and
professional advisors of Orbot Instruments Ltd. who have a need to know such
Confidential Information in connection with Buyer's possible acquisition of
Orbot Instruments Ltd.'s share capital and who have agreed to hold such
information in confidence and not to use such information for any purpose
except in connection with such possible acquisition. Orion agrees that
information disclosed to it by Buyer as to the existence or status of, or any
other information relating to, the discussions between Buyer and Orbot
Instruments Ltd. shall be considered "Confidential Information" under clause
(a) of Section 1 above and treated as such hereunder.
4. Because of the unique confidential, proprietary and valuable nature of
the Confidential Information, Recipient understands and agrees that in the
event Recipient fails to comply with Recipient's obligations under Section 2
and 3 above the monetary damages may be inadequate to compensate the
Disclosing Party for such failure. Accordingly, Recipient agrees that the
Disclosing Party will, in addition to any other remedies available to it by
law or in equity, be entitled to seek injunctive relief to enforce the terms
of Sections 2 and 3 above.
2
<PAGE>
5. Notwithstanding Section 2, Confidential Information shall not include
any information which (a) at the time of its disclosure or thereafter is
generally available to and known by the public other than as a result of a
disclosure by the Recipient or its directors, employees, representatives,
agents or professional advisors in violation of this Agreement, (b) was or
becomes available to the Recipient, on a nonconfidential basis from a source
other than the Disclosing Party without, to the knowledge of the Recipient, a
duty to the Disclosing Party having been breached, or (c) is shown by written
record to have been independently acquired or developed by Recipient without
violating this Agreement. If the Recipient or any of its directors, employees,
representatives, agents or professional advisors becomes legally compelled to
disclose any Confidential Information, Recipient shall provide the Disclosing
Party with prompt written notice of such required disclosures so that the
Disclosing Party may seek a protective order or other appropriate remedy
and/or may waive compliance with the confidentiality obligations hereof. In
the event that such protective order or other remedy is not obtained, or that
compliance is waived, Recipient shall disclose the minimum amount of
Confidential Information legally required and shall use its best efforts to
obtain assurance that confidential treatment will be accorded such
information.
6. So long as discussions are taking place with respect to the Proposed
Share Acquisition, Buyer shall not initiate contact with any officer, employee
or agent of Orion regarding its business, operations, prospects or finances,
except with the express written permission of Orion and except that Buyer
shall have the right to initiate contact with Messrs. Henry Schwarzbaum, Avner
Hermoni and Israel Niv without such permission. It is understood that Henry
Schwarzbaum will arrange for appropriate contacts for due diligence purposes,
which contacts shall include Messrs. Hermoni and Niv. Buyer shall submit or
direct all requests for additional information, requests for facility tours or
management meetings and discussions or questions regarding procedures, to Mr.
Schwarzbaum. So long as active discussions between the parties regarding the
Proposed Share Acquisition are being conducted, Orion agrees to promptly
provide any information reasonably requested by Buyer in connection with
Buyer's consideration of the Proposed Share Acquisition.
7. This Agreement shall be binding upon and inure to the benefit of the
parties, their subsidiaries, and their respective successors. No assignment of
this Agreement may be made by Recipient without the prior written consent of
the Disclosing Party, which consent may be withheld or granted in the
Disclosing Party's sole discretion.
8. Any communications, transmissions, correspondences or notices shall be
in writing, sent by hand delivery or postage prepaid, certified mail or by
telecopier, to the authorized representative of each party at the address set
forth below, or to such other address as to which notice is given in
accordance with this provision. Notices shall be deemed received seven
business days after mailing certified mail, or upon receipt if given by hand
or by telecopier.
3
<PAGE>
If to Buyer:
Applied Materials, Inc.
3050 Bowers Avenue
Santa Clara, California 95054-3299
U.S.A.
Attention: Joseph J. Sweeney
Facsimile No. (408) 563-4635
Confirmation No. (408) 748-5420
If to Orion:
Opal, Inc.
c/o Opal Technologies Ltd.
Industrial Zone B
Nes Ziona, 70451
Israel
Attention: Henry Schwarzbaum
Facsimile No. (International) 972 (8) 940-5683
Confirmation No. (International) 972 (8) 938-3524
With a copy to:
Thomas P. Storer, P.C.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
9. The parties hereto are independent contractors and nothing herein
shall be construed as creating any agency, joint venture, partnership or other
form of business association between the parties.
10. (a) The obligations of Buyer and Orion under this Agreement shall be
governed by New York law applicable to contracts fully executed and performed
in New York, without regard to the principles of conflicts of laws thereof.
(b) This Agreement contains the full and complete understanding of
the parties with respect to the subject matter hereof and supersedes all
prior representations and understandings regarding the subject matter
hereof, whether oral or written.
(c) In the event that any provision hereof or any obligation
hereunder is found invalid or unenforceable pursuant to a judicial decree
or decision, any such provision or obligation shall be deemed and
construed to extend to and only to the maximum extent permitted by law,
and the remainder of this Agreement shall remain valid and enforceable
according to its terms.
4
<PAGE>
(d) Obligations hereunder shall apply to any item of Confidential
Information for a period of three (3) years following its disclosure to
Recipient by the Disclosing Party, and with respect to the Confidential
Information referenced in clause (a) of Section 1 above, for a period of
one (1) year from the date hereof, subject to any longer period of
confidentiality to which the Disclosing Party is bound by agreement with
a third party.
(e) Failure to exercise or delay in exercising any remedy hereunder
shall not be deemed a waive thereof.
(f) Each party represents that this Agreement is being signed by a
duly authorized officer.
(g) The parties intend to be mutually bound hereunder and understand
and agree that each of them is subject to all of the obligations of the
"Recipient" hereunder with respect to the Confidential Information
referenced in clause (a) of Section 1 of this Agreement and with respect
to the Confidential Information of the other party reference in clause
(b) of Section 1 above.
(h) This Agreement may be signed in counterparts, each of which
shall for all purposes be deemed as original, and together shall
constitute one and the same instruments.
IN WITNESS WHEREOF the undersigned have executed this Agreement as
of the date first written above.
APPLIED MATERIALS, INC. OPAL, INC.
By: /s/ Joseph J. Sweeney By: /s/ Henry Schwarzbaum
------------------------------- ---------------------------------
Title: Vice President Title: Chief Financial Officer
---------------------------- ------------------------------
By: /s/ Rafi Yizhar
5 -------------------------------
Title: Chief Executive Officer
----------------------------
OPAL
The Measure of Excellence
FOR IMMEDIATE RELEASE
Company Contacts:
Henry Schwarzbaum Helene Kamm Lillian Armstrong
CFO, Opal, Inc. Controller, Opal, Inc. VP, Lippert/Heilshorn & Assoc.
Tel. 011-972-8-938-3524 Tel. 408-727-6060 Tel. 415-433-3777
OPAL, INC. ANNOUNCES ACQUISITION BY APPLIED MATERIALS, INC.
SANTA CLARA, CA -- November 24, 1996 -- Opal, Inc. (NASDAQ/NM Symbol: OPAL)
announced today that it has entered into a merger agreement with Applied
Materials, Inc. providing for the acquisition of Opal by Applied Materials for
$18.50 per share in cash. Pursuant to the merger agreement, Applied Materials is
expected to commence a cash tender offer for any and all outstanding shares of
Opal stock at $18.50 per share net to the seller in cash on or before Wednesday,
November 27. Any Opal shares not purchased in the offer will be acquired for the
same price in cash in a second-step merger.
Applied Materials' acquisition of Opal has been approved by the boards of
directors of both companies. Applied Materials also entered into an agreement
with certain shareholders of Opal, Clal Electronics Industries Ltd. and Orbotech
Ltd., and two officers of Opal, representing 49 percent of Opal's shares
outstanding, whereby they have agreed to tender shares into Applied Materials'
offer and have granted Applied Materials an option to purchase their shares. The
offer and merger are subject to the purchase of a majority of the outstanding
shares of Opal's common stock, as well as other customary conditions.
Robertson, Stephens & Company is acting as financial advisor to Opal in
connection with the transaction.
"Together with the Opal Board of Directors, I believe that this merger
represents a strategic opportunity with significant benefits to our customers,
our shareholders and our employees," said Mendy Erad, chairman of Opal.
"Leveraging Israel's strong technology talent, our world-class technology
together with Applied Materials' global infrastructure will allow us to provide
advanced metrology systems and services to meet our customers' emerging
requirements. The joint strengths of Applied Materials and Opal will enhance our
commitment to our customers and enable us to supply them with faster and better
solutions, accompanied by first-class support."
Opal develops, manufactures, sells and services high-speed automatic wafer
metrology systems used by semiconductor makers to verify critical dimensions
during the production of integrated circuits (ICs). These measurements help
manufacturers maximize and sustain the yields of ICs at the highest performance
levels attainable by a production line.
Applied Materials is a Fortune 500 global growth company and the world's largest
supplier of wafer fabrication systems and services to the global semiconductor
industry. Applied Materials is traded on the NASDAQ National Market under the
symbol "AMAT."
####
<PAGE>
[OPAL LOGO]
November 26, 1996
Dear Stockholder:
We are pleased to inform you that, on November 24, 1996, Opal, Inc. (the
"Company") and Applied Materials, Inc. ("Applied Materials") entered into a
merger agreement (the "Merger Agreement"). Pursuant to the terms of the
Merger Agreement, a wholly-owned subsidiary of Applied Materials is
commencing a cash tender offer for all of the outstanding shares of Common
Stock of the Company at a price of $18.50 per share, net to the seller in
cash (the "Offer Price"). Promptly following the completion of the tender
offer, this subsidiary, Orion Corp. I, will be merged into the Company, and
all shares of Common Stock of the Company (not owned by the Company, Applied
Materials or its subsidiaries or dissenting stockholders of the Company) will
be converted into the right to receive $18.50 in cash.
Your Board of Directors has approved the tender offer and the merger and
recommends that stockholders accept the offer and tender their shares. In
arriving at its decision, the Board gave careful consideration to a number of
factors described in the attached Schedule 14D-9 that is being filed today
with the Securities and Exchange Commission. Among other factors, the Board
considered the opinion dated November 24, 1996 of Robertson, Stephens &
Company LLC, the Company's financial advisor, which provides that, based upon
and subject to the matters set forth in the opinion, as of such date the
Offer Price is fair to the stockholders of the Company from a financial point
of view.
Accompanying this letter, in addition to the attached Schedule 14D-9
relating to the tender offer, is Applied Materials' Offer to Purchase, dated
November 26, 1996, together with related materials including a Letter of
Transmittal to be used for tendering your shares. These documents set forth
the terms and conditions of the tender offer and the merger and provide
instructions as to how to tender your shares. We urge you to read the
enclosed materials carefully.
Your Board of Directors believes that the proposed acquisition of the
Company by Applied Materials is fair to and in the best interest of our
stockholders.
Sincerely,
/s/ Mendy Erad
---------------------
Mendy Erad
Chairman of the Board of Directors
/s/ Rafi Yizhar
---------------------
Rafi Yizhar
President and
Chief Executive Officer
[ROBERTSON STEPHENS & COMPANY LETTERHEAD]
November 24, 1996
Board of Directors
Opal, Inc.
3203 Scott Boulevard
Santa Clara, California 95054
United States of America
Dear Members of the Board:
You have asked our opinion with respect to the fairness to the stockholders of
Opal, Inc., ("Opal" or the "Company"), from a financial point of view and as of
the date hereof, of the Offer Price of $18.50 in cash per share of Opal common
stock (the "Offer Price") to be received by the stockholders of Opal in
connection with the proposed merger of Opal with a wholly-owned subsidiary
("Orion Corp. I") of Applied Materials, Inc. ("Applied Materials"), pursuant to
the Agreement and Plan of Merger, dated as of November 24, 1996 (the "Merger
Agreement"). Under the terms of the Merger Agreement, Applied Materials will
commence a cash tender offer (the "Tender Offer") for all of the outstanding
shares of the common stock of Opal at the Offer Price of $18.50 per share.
Following such Tender Offer, Orion Corp. I will be merged with and into Opal
(the "Merger"). Outstanding unvested employee stock options generally will be
converted into comparable options to acquire Applied Materials common stock.
Vested employee stock options shall be exchanged for a cash amount (subject to
certain exceptions) equal to the Offer Price less the exercise price of each
such option. The terms and conditions of the Merger are set out more fully in
the Merger Agreement. We also understand that certain stockholders of the
Company will enter into stockholder agreements, dated as of November 24, 1996
(the "Stockholders Agreements").
For purposes of this opinion we have: (i) reviewed financial information
furnished to us by Opal, including certain internal financial analyses and
forecasts prepared by the management of Opal; (ii) reviewed publicly available
information; (iii) held discussions with the management of Opal concerning the
business, past and current business operations, financial condition and future
prospects of the Company; (iv) reviewed the Merger Agreement and Stockholder
Agreements; (v) reviewed the stock price and trading history of the common stock
of Opal; (vi) reviewed the valuations of publicly traded companies which we
deemed comparable to Opal; (vii) compared the financial terms of the Merger with
other transactions which we deemed relevant; (viii) prepared a discounted cash
flow analysis of Opal; (ix) reviewed the contribution by each company to pro
forma combined revenue, operating income, pre-tax income and net income; (x)
analyzed the pro forma earnings per share of the combined company; and (xi) made
such other studies and inquiries, and reviewed such other data, as we deemed
customary and relevant.
555 CALIFORNIA STREET SAN FRANCISCO 94104 415-781-9700
INVESTMENT BANKERS MEMBER OF ALL MAJOR EXCHANGES
A LIMITED LIABILITY COMPANY
<PAGE>
Board of Directors
Opal, Inc.
November 24, 1996
Page Two
In connection with our opinion, we have not independently verified any of the
foregoing information and have relied on all such information being complete and
accurate in all material respects. Furthermore, we did not obtain any
independent appraisal of the properties or assets and liabilities of Opal. With
respect to the financial and operating forecasts (and the assumptions and bases
thereof) of the Company which we have reviewed, we have assumed that such
forecasts have been reasonably prepared in good faith on the basis of reasonable
assumptions, reflect the best available estimates and judgments of the
management of Opal and that such projections and forecasts will be realized in
the amounts and in the time periods currently estimated by the management of
Opal. Further, we have assumed that the historical financial statements of Opal
that we have reviewed have been prepared and presented in accordance with
generally accepted accounting principles. While we believe that our review, as
described within, is an adequate basis for the opinion that we express, this
opinion is necessarily based on market, economic, and other conditions that
exist and can be evaluated as of the date of this letter, and on information
available to us as of such date.
Our opinion is limited to the fairness of the Offer Price to the stockholders of
Opal. We do not express any opinion regarding the fairness of the Merger to
Applied Materials or to its stockholders.
Robertson, Stephens & Company may, from time to time, trade in the shares of the
common stock of Opal and Applied Materials. Furthermore, Robertson, Stephens &
Company will receive a fee in connection with the rendering of this opinion, a
portion of which is contingent upon closing of the Merger.
Our opinion is for the use of the Board of Directors of the Company in
connection with its evaluation of the Offer Price and is not intended and does
not constitute a recommendation to any stockholder of the Company as to whether
such stockholder should tender such stockholder's shares of Opal common stock in
the Tender Offer. We hereby consent, however, to the inclusion of this opinion
as an exhibit to the Company's Solicitation/Recommendation Statement on Schedule
14D-9 relating to the Tender Offer.
Based on and subject to the foregoing considerations, it is our opinion, as
investment bankers, that, as of the date hereof, the Offer Price is fair to the
stockholders of Opal from a financial point of view.
Very truly yours,
ROBERTSON, STEPHENS & COMPANY LLC
By: Robertson, Stephens & Company Group, L.L.C.
/s/ J. Misha Petkevich
-----------------------------------------------
Authorized Signatory
