\nGovernmental Entity………………………………….. Section 3.6……….. 14
\nHazardous Material…………………………………… Section 3.13(a)……. 22
\nHSR Act…………………………………………….. Section 3.6……….. 14
\nInbound License Agreements……………………………. Section 3.15(e)……. 26
\ninclude…………………………………………….. Section 8.8(g)…….. 58
\nIndemnified Liabilities………………………………. Section 5.7(a)…….. 43
\nIndemnified Persons………………………………….. Section 5.7(a)…….. 43
\nInsurance Policies…………………………………… Section 3.16………. 30
\nInsured Parties……………………………………… Section 5.7(c)…….. 44
\nIntellectual Property………………………………… Section 3.15(a)……. 25
\nISRA……………………………………………….. Section 3.6……….. 14
\nknowledge or known…………………………………… Section 8.8(f)…….. 57
\nLien……………………………………………….. Section 3.2(b)…….. 12
\nMaterial Adverse Effect on Parent……………………… Section 4.1(b)…….. 33
\nMaterial Adverse Effect on the Company…………………. Section 3.1(b)…….. 10
\nMeeting…………………………………………….. Section 5.3(c)…….. 40
\nMerger Consideration…………………………………. Section 2.8(a)…….. 7
\nMerger……………………………………………… Section 2.1……….. 6
\nNJDEP………………………………………………. Section 5.14………. 46
\nNotice of Superior Proposal…………………………… Section 5.2(b)…….. 39
\nOther Interests……………………………………… Section 3.1(c)…….. 11
\nOutbound License Agreements…………………………… Section 3.15(e)……. 27
\nParent Common Stock………………………………….. Section 2.11………. 9
\nParent……………………………………………… Preamble………….. 1
\nPatents…………………………………………….. Section 3.15(a)……. 25
\nPension Plans……………………………………….. Section 3.11(a)……. 17
\nperson……………………………………………… Section 8.8(h)…….. 58
\nProxy Statement……………………………………… Section 3.5……….. 14
\nSEC………………………………………………… Section 3.4(a)…….. 13
\nSecurities Act………………………………………. Section 3.4(a)…….. 13
\nSoftware……………………………………………. Section 3.15(l)……. 28
\nStock Option Agreement……………………………….. Section 8.8(i)…….. 58
\nsubsidiary or subsidiaries……………………………. Section 8.8(j)…….. 58
\nSuperior Proposal……………………………………. Section 5.2(c)…….. 39
\nSupply Contracts…………………………………….. Section 3.15(p)……. 30
\nSurviving Corporation………………………………… Section 2.1……….. 6
\nTax or Taxes………………………………………… Section 3.14(a)(i)…. 23
\nTax Return………………………………………….. Section 3.14(a)(ii)… 23
\nThird Party Acquisition………………………………. Section 5.2(c)…….. 39
\nThird Party…………………………………………. Section 5.2(c)…….. 39
\nTrade Secrets……………………………………….. Section 3.15(a)……. 25
\nTrademarks………………………………………….. Section 3.15(a)……. 25
\nYear 2000 Capable……………………………………. Section 3.15(o)(i)…. 29
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n v
\n 7<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of May 31,
\n1999, is by and among Dialogic Corporation, a New Jersey corporation (the
\n“Company”), Intel Corporation, a Delaware corporation (“Parent”), and Intel LMH
\nAcquisition Corporation, a New Jersey corporation and a wholly owned subsidiary
\nof Parent (“Acquisition”). Initially capitalized and certain other terms not
\notherwise defined herein shall have the meanings ascribed to such terms in
\nSection 8.8 of this Agreement.<\/p>\n
WHEREAS, the Boards of Directors of the Company, Parent and Acquisition
\nhave each (i) determined that the Merger (as defined below) is advisable and
\nfair and in the best interests of their respective stockholders and (ii)
\napproved the Merger upon the terms and subject to the conditions set forth in
\nthis Agreement; and<\/p>\n
WHEREAS, in furtherance thereof, it is proposed that Acquisition shall,
\nwithin five (5) business days after the public announcement hereof, commence a
\ntender offer (the “Offer”) to acquire all of the outstanding shares (the
\n“Shares”) of common stock, no par value, of the Company (the “Company Common
\nStock”), at a price of Forty-Four Dollars ($44.00) per Share, net to the seller
\nin cash, less any required withholding taxes (such amount, or any greater amount
\nper share paid pursuant to the Offer, being hereinafter referred to as the
\n“Offer Price”), in accordance with the terms and subject to the conditions
\nprovided herein.<\/p>\n
NOW, THEREFORE, in consideration of the foregoing premises and the
\nrepresentations, warranties, covenants and agreements herein contained, and
\nintending to be legally bound hereby, the Company, Parent and Acquisition hereby
\nagree as follows:<\/p>\n
ARTICLE 1<\/p>\n
THE OFFER<\/p>\n
SECTION 1.1. The Offer.<\/p>\n
(a) Provided that this Agreement shall not have been terminated and
\nsubject to the terms hereof, as promptly as practicable, but in no event later
\nthan five (5) business days after the public announcement of the execution
\nhereof by the parties, Acquisition shall (and Parent shall cause Acquisition to)
\ncommence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
\n1934, as amended (the “Exchange Act”)), the Offer for any and all of the Shares,
\nat the Offer Price. The obligation of Acquisition to accept for payment and to
\npay for any Shares tendered (and the obligation of Parent to cause Acquisition
\nto accept for payment and to pay for any Shares tendered) shall be subject only
\nto (i) the condition that at least a majority of Shares on a fully-diluted basis
\n(including for purposes of such calculation all Shares issuable upon exercise of
\nall vested Company Stock Options (as defined in Section 3.2(a)) and unvested
\nCompany Stock Options that vest prior to the Final Date, but excluding any
\nShares held by the Company or any of its subsidiaries) be validly tendered (the
\n“Minimum Condition”), and (ii) the other conditions set forth in Annex A.
\nAcquisition expressly reserves the right to increase the Offer Price or to make
\nany other changes in the terms and conditions of the Offer; provided, however,
\nthat unless previously approved by the Company in writing, no change may be made
\nthat (i) decreases the Offer Price, (ii) changes the form of consideration to be
\npaid in the Offer, (iii) reduces the maximum number of Shares to be purchased in
\nthe Offer, (iv) imposes conditions to the Offer in addition to those set forth
\nin Annex A, (v) amends the conditions set forth in Annex A to broaden the scope
\nof such conditions, (vi) extends the Offer except as provided in Section 1.1(b),
\nor (vii) amends the Minimum Condition. It is agreed that the conditions set
\nforth in Annex A are for the sole benefit of Parent and Acquisition and may be
\nwaived by Parent and Acquisition, in whole or in part at any time and from time
\nto time, in their sole discretion, other than the Minimum Condition, as to which
\nprior written Company approval is required. The failure by Parent and
\nAcquisition at any time to exercise any of the foregoing rights shall not be
\ndeemed a waiver of any such right, and each such right shall be deemed an
\nongoing right that may be asserted at any time and from time to time. The
\nCompany agrees that no Shares held by the Company or any of its subsidiaries
\nwill be tendered in the Offer.
\n 8<\/p>\n
(b) Subject to the terms and conditions thereof, the Offer shall expire
\nat midnight, New York City time, on the date that is twenty (20) business days
\nafter the date the Offer is commenced; provided, however, that without the
\nconsent of the Company’s Board of Directors (the “Company Board”), Acquisition
\nmay (i) from time to time extend the Offer, if at the scheduled expiration date
\nof the Offer any of the conditions to the Offer shall not have been satisfied or
\nwaived, until such time as such conditions are satisfied or waived; (ii) extend
\nthe Offer for any period required by any rule, regulation, interpretation or
\nposition of the Securities and Exchange Commission (the “SEC”) or the staff
\nthereof applicable to the Offer; or (iii) extend the Offer for any reason on one
\nor more occasions for an aggregate period of not more than twenty (20) business
\ndays beyond the latest expiration date that would otherwise be permitted under
\nclause (i) or (ii) of this sentence if on such expiration date there shall not
\nhave been tendered at least 90% of the outstanding Shares. Parent and
\nAcquisition agree that, if any one or more of the conditions to the Offer set
\nforth on Annex A are not satisfied and none of the events set forth in
\nparagraphs (a) through (f) of Annex A that would permit Acquisition not to
\naccept tendered Shares for payment has occurred and is continuing at the time of
\nany scheduled expiration date of the Offer, then, provided, that such conditions
\nare reasonably capable of being satisfied and no such event has occurred on or
\nprior to (and is continuing on) September 15, 1999, Acquisition shall extend the
\nOffer from time to time unless any such condition is no longer reasonably
\ncapable of being satisfied or any such event has occurred; provided, however,
\nthat in no event shall Acquisition be required to extend the Offer beyond
\nSeptember 15, 1999. Subject to the terms and conditions of the Offer and this
\nAgreement, Acquisition shall (and Parent shall cause Acquisition to) accept for
\npayment, and pay for, all Shares validly tendered and not withdrawn pursuant to
\nthe Offer, as promptly as practicable after the expiration of the Offer.<\/p>\n
(c) As soon as practicable on the date the Offer is commenced, Parent
\nand Acquisition shall file with the SEC a Tender Offer Statement on Schedule
\n14D-1 (together with all amendments and supplements thereto, and including all
\nexhibits thereto, the “Schedule 14D-1”) with respect to the Offer. The Schedule
\n14D-1 shall contain as an exhibit or incorporate by reference the Offer to
\nPurchase (or portions thereof) and forms of the related letter of transmittal
\nand summary advertisement. Parent and Acquisition agree that they shall cause
\nthe Schedule 14D-1, the Offer to Purchase and all amendments or supplements
\nthereto (which together constitute the “Offer Documents”) to comply in all
\nmaterial respects with the Exchange Act and the rules and regulations thereunder
\nand other Applicable Laws. Parent and Acquisition further agree that the Offer
\nDocuments, on the date first published, sent or given to the Company’s
\nstockholders, shall not contain any untrue statement of a material fact or omit
\nto state any material fact required to be stated therein or necessary in order
\nto make the statements therein, in light of the circumstances under which they
\nwere made, not misleading, except that no representation or warranty is made by
\nParent or Acquisition with respect to information supplied by the Company or any
\nof its stockholders in writing specifically for inclusion or incorporation by
\nreference in the Offer Documents. The Company agrees that the information
\nprovided by the Company in writing specifically for inclusion or incorporation
\nby reference in the Offer Documents shall not contain any untrue statement of a
\nmaterial fact or omit to state any material fact required to be stated therein
\nor necessary in order to make the statements therein, in light of the
\ncircumstances under which they were made, not misleading. Each of Parent,
\nAcquisition and the Company agrees promptly to correct any information provided
\nby it for use in the Offer Documents if and to the extent that such information
\nshall have become false or misleading in any material respect, and Parent and
\nAcquisition further agree to take all steps necessary to cause the Schedule
\n14D-1 as so corrected to be filed with the SEC and the other Offer Documents as
\nso corrected to be disseminated to the Company’s stockholders, in each case as
\nand to the extent required by applicable federal securities laws. The Company
\nand its counsel shall be given reasonable opportunity to review and comment on
\nthe Offer Documents prior to the filing thereof with the SEC. Parent and
\nAcquisition agree to provide in writing the Company and its counsel with any
\ncomments Parent, Acquisition or their counsel may receive from the SEC or its
\nstaff with respect to the Offer Documents promptly after receipt of such
\ncomments.<\/p>\n
SECTION 1.2. Company Actions.<\/p>\n
(a) The Company hereby approves of and consents to the Offer and
\nrepresents that the Company Board, at a meeting duly called and held, has,
\nsubject to the terms and conditions set forth herein, (i) after evaluating the
\nMerger, determined that this Agreement and the transactions contemplated hereby,
\nincluding<\/p>\n
2
\n 9<\/p>\n
the Offer and the Merger, taken together, are at a price and on terms that are
\nadequate and are otherwise in the best interests of the Company and its
\nstockholders; (ii) approved this Agreement and the transactions contemplated
\nhereby, including the Offer and the Merger, in all respects and such approval
\nconstitutes approval of the Offer, this Agreement and the Merger for purposes of
\n(x) Sections 14A:10A-4 and 14A:10A-5 of the New Jersey Business Corporation Act
\n(the “NJBCA”) and (y) similar provisions of any other New Jersey statutes that
\nmight be deemed applicable to the transactions contemplated hereby; and (iii)
\nresolved to recommend that the stockholders of the Company accept the Offer,
\ntender their Shares thereunder to Acquisition and approve and adopt this
\nAgreement and the Merger. The Company consents to the inclusion of such
\nrecommendation and approval in the Offer Documents. The Company also represents
\nthat the Company Board has received the opinion of Hambrecht & Quist LLC,
\nfinancial advisor to the Company Board (the “Financial Advisor”), that, as of
\nMay 31, 1999, the consideration to be received pursuant to this Agreement is
\nfair to the stockholders of the Company from a financial point of view (the
\n“Fairness Opinion”). The Company has been authorized by the Financial Advisor to
\npermit, subject to the prior review and consent by the Financial Advisor (such
\nconsent not to be unreasonably withheld), the inclusion of the Fairness Opinion
\n(or a reference thereto) in the Offer Documents, the Schedule 14D-9 and the
\nProxy Statement.<\/p>\n
(b) The Company shall file with the SEC, concurrently with the filing of
\nthe Schedule 14D-1, a Solicitation\/Recommendation Statement on Schedule 14D-9
\n(together with all amendments and supplements thereto, and including all
\nexhibits thereto, the “Schedule 14D-9”) containing the recommendations described
\nin Section 1.2(a) and shall mail the Schedule 14D-9 to the stockholders of the
\nCompany promptly after the commencement of the Offer. The Company agrees that it
\nshall cause the Schedule 14D-9 to comply in all material respects with the
\nExchange Act and the rules and regulations thereunder and other Applicable Laws.
\nThe Company further agrees that the Schedule 14D-9, on the date first published,
\nsent or given to the Company’s stockholders, shall not contain any untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary in order to make the statements therein, in light of
\nthe circumstances under which they were made, not misleading, except that no
\nrepresentation or warranty is made by the Company with respect to information
\nsupplied by Parent or Acquisition in writing specifically for inclusion or
\nincorporation by reference in the Schedule 14D-9. Parent and Acquisition agree
\nthat the information provided by them specifically in writing for inclusion or
\nincorporation by reference in the Schedule 14D-9 shall not contain any untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary in order to make the statements therein, in light of
\nthe circumstances under which they were made, not misleading. Each of the
\nCompany, Parent and Acquisition agrees promptly to correct any information
\nprovided by it for use in the Schedule 14D-9 or the Offer Documents if and to
\nthe extent that such information shall have become false or misleading in any
\nmaterial respect, and the Company further agrees to take all steps necessary to
\ncause the Schedule 14D-9 as so corrected to be filed with the SEC and be
\ndisseminated to the Company’s stockholders, in each case as and to the extent
\nrequired by applicable federal securities laws. Parent and its counsel shall be
\ngiven reasonable opportunity to review and comment on the Schedule 14D-9 prior
\nto the filing thereof with the SEC. The Company agrees to provide in writing to
\nParent and its counsel any comments the Company or its counsel may receive from
\nthe SEC or its staff with respect to the Schedule 14D-9 promptly after receipt
\nof such comments.<\/p>\n
(c) In connection with the Offer, the Company shall, or shall cause its
\ntransfer agent, promptly following a request by Parent, to furnish Parent with
\nsuch information, including updated lists of the stockholders of the Company,
\nmailing labels and updated lists of security positions, and such assistance as
\nParent or its agents may reasonably request in communicating the Offer to the
\nrecord and beneficial holders of Shares. Subject to the requirements of
\nApplicable Law, and except for such steps as are necessary to disseminate the
\nOffer Documents and any other documents necessary to consummate the Merger,
\nParent and Acquisition and their agents shall hold in confidence the information
\ncontained in any such labels, listings and files, will use such information only
\nin connection with the Offer and the Merger and, if this Agreement shall be
\nterminated, will deliver, and will use their reasonable efforts to cause their
\nagents to deliver, to the Company all copies and any extracts or summaries from
\nsuch information then in their possession or control.<\/p>\n
(d) Solely in connection with the tender and purchase of Shares pursuant
\nto the Offer and the consummation of the Merger, the Company hereby waives any
\nand all rights of first refusal it may have with<\/p>\n
3
\n 10<\/p>\n
respect to Shares owned by, or issuable to, any person, other than rights to
\nrepurchase unvested shares, if any, that may be held by persons following
\nexercise of employee stock options.<\/p>\n
SECTION 1.3. Boards of Directors and Committees; Section 14(f) of Exchange
\nAct.<\/p>\n
(a) Promptly upon the purchase by Acquisition of Shares pursuant to the
\nOffer and from time to time thereafter, if the Minimum Condition has been met,
\nand subject to the second to last sentence of this Section 1.3(a), Parent shall
\nbe entitled to designate up to such number of directors, rounded up to the next
\nwhole number, on the Company Board as will give Parent representation on the
\nCompany Board equal to the product of the number of directors on the Company
\nBoard (giving effect to any increase in the number of directors pursuant to this
\nSection 1.3) and the percentage that such number of Shares so purchased bears to
\nthe total number of outstanding Shares on a fully-diluted basis, and the Company
\nshall use its best efforts to, upon request by Parent, promptly, at the
\nCompany’s election, either increase the size of the Company Board or secure the
\nresignation of such number of directors as is necessary to enable Parent’s
\ndesignees to be elected to the Company Board and to cause Parent’s designees to
\nbe so elected. At such times, and subject to the second to last sentence of this
\nSection 1.3(a), the Company shall use its best efforts to cause the individuals
\ndesignated by Parent to constitute the same percentage as is on the Company
\nBoard of (i) each committee of the Company Board (other than any committee of
\nthe Company Board established to take action under this Agreement), (ii) each
\nBoard of Directors of each subsidiary of the Company (subject to Applicable Law
\nand except to the extent described in Section 1.3(a) of the Company Disclosure
\nSchedule) and (iii) each committee of each such Board of Directors.
\nNotwithstanding the foregoing, the Company shall use its best efforts to ensure
\nthat three of the members of the Company Board as of the date hereof (the
\n“Continuing Directors”) shall remain members of such Board until the Effective
\nTime. If a Continuing Director resigns from the Company Board, Parent,
\nAcquisition and the Company shall permit the remaining Continuing Director or
\nDirectors to appoint the resigning Director’s successor who shall be deemed to
\nbe a Continuing Director.<\/p>\n
(b) The Company’s obligation to appoint designees to the Company Board
\nshall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
\nthereunder. The Company shall promptly take all action required pursuant to such
\nSection and Rule in order to fulfill its obligations under this Section 1.3 and
\nshall include in the Schedule 14D-9 such information with respect to the Company
\nand its officers and directors as is required under such Section and Rule in
\norder to fulfill its obligations under this Section 1.3. Parent shall supply to
\nthe Company in writing and be solely responsible for any information with
\nrespect to itself and its nominees, officers, directors and affiliates required
\nby such Section and Rule.<\/p>\n
(c) Following the election or appointment of Parent’s designees to the
\nCompany Board pursuant to this Section 1.3 and prior to the Effective Time, if
\nthere shall be any Continuing Directors, any amendment of this Agreement, any
\ntermination of this Agreement by the Company, any extension by the Company of
\nthe time for the performance of any of the obligations or other acts of Parent
\nor Acquisition or any waiver of any of the Company’s rights hereunder or any
\nother determination with respect to any action to be taken or not to be taken by
\nthe Company relating to this Agreement, will require the concurrence of a
\nmajority of such Continuing Directors.<\/p>\n
ARTICLE 2<\/p>\n
THE MERGER<\/p>\n
SECTION 2.1. The Merger. At the Effective Time and upon the terms and
\nsubject to the conditions of this Agreement and in accordance with the NJBCA,
\nAcquisition shall be merged with and into the Company (the “Merger”). Following
\nthe Merger, the Company shall continue as the surviving corporation (the
\n“Surviving Corporation”) and the separate corporate existence of Acquisition
\nshall cease. Parent, as the sole stockholder of Acquisition, hereby approves the
\nMerger and this Agreement.<\/p>\n
SECTION 2.2. Effective Time. Subject to the terms and conditions set forth
\nin this Agreement, on the Closing Date, (a) a Certificate of Merger
\nsubstantially in the form of Exhibit A (the “Certificate of Merger”) shall be
\nduly executed and acknowledged by Acquisition and the Company and thereafter
\ndelivered for filing<\/p>\n
4
\n 11<\/p>\n
to the Department of Treasury, Division of Commercial Recording of the State of
\nNew Jersey (the “Department of Treasury”) pursuant to Section 14A:10-4.1 or 5.1
\nof the NJBCA; and (b) the parties shall make such other filings with any
\ngovernment office of the State of New Jersey as shall be necessary to effect the
\nMerger. The Merger shall become effective at such time as a properly executed
\ncopy of the Certificate of Merger is duly filed with the Department of Treasury
\nin accordance with Section 14A:10-4.1 or 5.1 of the NJBCA, or such later time as
\nParent and the Company may agree upon and as may be set forth in the Certificate
\nof Merger (the time the Merger becomes effective being referred to herein as the
\n“Effective Time”).<\/p>\n
SECTION 2.3. Closing of the Merger. The closing of the Merger (the
\n“Closing”) will take place at a time and on a date (the “Closing Date”) to be
\nspecified by the parties, which shall be no later than the second business day
\nafter satisfaction (or waiver) of the latest to occur of the conditions set
\nforth in Article 6, at the offices of Gibson, Dunn & Crutcher LLP, One
\nMontgomery Street, San Francisco, California 94104, unless another time, date or
\nplace is agreed to in writing by the parties hereto.<\/p>\n
SECTION 2.4. Effects of the Merger. The Merger shall have the effects set
\nforth in the NJBCA. Without limiting the generality of the foregoing and subject
\nthereto, at the Effective Time, all the properties, rights, privileges, powers
\nand franchises of the Company and Acquisition shall vest in the Surviving
\nCorporation, and all debts, liabilities and duties of the Company and
\nAcquisition shall become the debts, liabilities and duties of the Surviving
\nCorporation.<\/p>\n
SECTION 2.5. Certificate of Incorporation and Bylaws. The Certificate of
\nIncorporation of Acquisition in effect at the Effective Time shall be the
\nCertificate of Incorporation of the Surviving Corporation until amended in
\naccordance with Applicable Law. The bylaws of Acquisition in effect at the
\nEffective Time shall be the bylaws of the Surviving Corporation until amended in
\naccordance with Applicable Law.<\/p>\n
SECTION 2.6. Directors. The directors of Acquisition at the Effective Time
\nshall be the initial directors of the Surviving Corporation, each to hold office
\nin accordance with the Certificate of Incorporation and bylaws of the Surviving
\nCorporation until such director’s successor is duly elected or appointed and
\nqualified.<\/p>\n
SECTION 2.7. Officers. The officers of Acquisition at the Effective Time
\nshall be the initial officers of the Surviving Corporation, each to hold office
\nin accordance with the Certificate of Incorporation and bylaws of the Surviving
\nCorporation until such officer’s successor is duly elected or appointed and
\nqualified.<\/p>\n
SECTION 2.8. Conversion of Shares.<\/p>\n
(a) At the Effective Time, each Share issued and outstanding immediately
\nprior to the Effective Time (other than (i) Shares held in the Company’s
\ntreasury or by any of the Company’s subsidiaries and (ii) Shares held by Parent,
\nAcquisition or any other subsidiary of Parent) shall, by virtue of the Merger
\nand without any action on the part of Acquisition, the Company or the holder
\nthereof, be converted into and shall become the right to receive an amount in
\ncash equal to the Offer Price, without interest (the “Merger Consideration”).<\/p>\n
(b) At the Effective Time, each outstanding share of the common stock of
\nAcquisition shall be converted into one share of common stock of the Surviving
\nCorporation.<\/p>\n
(c) At the Effective Time, each Share held in the treasury of the
\nCompany and each Share held by Parent, Acquisition or any subsidiary of Parent,
\nAcquisition or the Company immediately prior to the Effective Time shall, by
\nvirtue of the Merger and without any action on the part of Acquisition, the
\nCompany or the holder thereof, be canceled, retired and cease to exist, and no
\nMerger Consideration shall be delivered with respect thereto.<\/p>\n
SECTION 2.9. Dissenters’ Rights. In accordance with Section 14A:11-1 of the
\nNJBCA, the holders of the Shares shall not be entitled to dissenters’ or
\nappraisal rights.<\/p>\n
SECTION 2.10. Exchange of Certificates.<\/p>\n
(a) From time to time following the Effective Time, Parent shall deliver
\nto its transfer agent, or a depository or trust institution of recognized
\nstanding selected by Parent and Acquisition and reasonably<\/p>\n
5
\n 12<\/p>\n
satisfactory to the Company (the “Exchange Agent”), for the benefit of the
\nholders of Shares for exchange in accordance with this Article 2, an amount of
\ncash equal to the aggregate Merger Consideration then payable pursuant to
\nSection 2.8 (such amount of cash is hereinafter referred to as the “Exchange
\nFund”), in exchange for outstanding Shares.<\/p>\n
(b) Promptly after the Effective Time, the Exchange Agent shall mail to
\neach holder of record of a certificate or certificates that immediately prior to
\nthe Effective Time represented outstanding Shares (the “Certificates”) and whose
\nshares were converted into the right to receive Merger Consideration pursuant to
\nSection 2.8: (i) a letter of transmittal (which shall specify that delivery
\nshall be effected and risk of loss and title to the Certificates shall pass only
\nupon delivery of the Certificates to the Exchange Agent and shall be in such
\nform and have such other provisions as Parent and the Company may reasonably
\nspecify) and (ii) instructions for use in effecting surrender of the
\nCertificates in exchange for Merger Consideration; provided, however, that such
\nletter of transmittal shall be substantially in the form and substance of a
\nletter of transmittal and instructions approved by the Company at or before the
\nClosing, such approval not to be unreasonably withheld. Upon surrender of a
\nCertificate for cancellation to the Exchange Agent, together with such letter of
\ntransmittal duly executed, the holder of such Certificate shall be entitled to
\nreceive in exchange therefor a check representing the Merger Consideration, and
\nthe Certificate so surrendered shall forthwith be canceled. In the event of a
\ntransfer of ownership of Shares that is not registered in the transfer records
\nof the Company, a check representing the proper amount of Merger Consideration
\nmay be issued to a transferee if the Certificate representing such Shares is
\npresented to the Exchange Agent accompanied by all documents required to
\nevidence and effect such transfer and by evidence that any applicable stock
\ntransfer taxes have been paid. Until surrendered as contemplated by this Section
\n2.10, each Certificate shall be deemed at any time after the Effective Time to
\nrepresent only the right to receive upon such surrender the Merger
\nConsideration.<\/p>\n
(c) In the event that any Certificate for Shares shall have been lost,
\nstolen or destroyed, the Exchange Agent shall issue in exchange therefor upon
\nthe making of an affidavit of that fact by the holder thereof the Merger
\nConsideration; provided, however, that Parent or the Exchange Agent may, in its
\ndiscretion, require the delivery of a suitable bond or indemnity.<\/p>\n
(d) If, after the Effective Time, Certificates are presented to the
\nSurviving Corporation for any reason, they shall be canceled and exchanged as
\nprovided in this Article 2.<\/p>\n
(e) Any portion of the Exchange Fund that remains undistributed to the
\nstockholders of the Company upon the expiration of one hundred eighty (180) days
\nafter the Effective Time shall be delivered to Parent upon demand and any
\nstockholders of the Company who have not theretofore complied with this Article
\n2 shall thereafter look only to Parent as general creditors for payment of their
\nclaims for Merger Consideration.<\/p>\n
(f) Neither Parent nor Acquisition nor the Company shall be liable to
\nany holder of Shares for any amount of cash from the Exchange Fund delivered to
\na public official pursuant to any applicable abandoned property, escheat or
\nsimilar Applicable Law.<\/p>\n
SECTION 2.11. Assumed Stock Options. At the Effective Time, options to
\npurchase shares under the Company’s Amended and Restated 1997 Incentive Benefit
\nPlan (the “1997 Plan”), 1988 Incentive Compensation Plan (the “1988 Plan”), the
\nCompany’s Employee Stock Purchase Plan (the “ESPP”), the GammaLink Stock Option
\nPlans assumed by the Company (the “GammaLink Plans”), the Spectron Microsystems,
\nInc. Stock Option Plan assumed by the Company (the “Spectron Plan”) and the
\nDianaTel Corporation Stock Plan assumed by the Company (the “DianaTel Plan”, and
\ntogether with the 1997 Plan, 1988 Plan, the ESPP, Spectron Plan and GammaLink
\nPlans, the “Assumed Option Plans” and individually as an “Assumed Option Plan”),
\nwhich are then outstanding and unexercised, shall cease to represent a right to
\nacquire Shares and shall be converted automatically into options to purchase
\nshares of common stock, par value $.001 per share, of Parent (“Parent Common
\nStock”), and Parent shall assume each such option (hereinafter, an “Assumed
\nOption”) subject to the terms of the applicable Assumed Option Plan, in each
\ncase as heretofore amended or restated, as the case may be, and the agreement
\nevidencing grants thereunder of such Assumed Option; provided, however, that
\nfrom and after the Effective Time, (i) the number of shares of<\/p>\n
6
\n 13<\/p>\n
Parent Common Stock purchasable upon exercise of such Assumed Option shall be
\nequal to the number of Shares that were purchasable under such Assumed Option
\nimmediately prior to the Effective Time multiplied by the Exchange Ratio (as
\ndefined below), and rounded down to the nearest whole share, and (ii) the per
\nshare exercise price under each such Assumed Option shall be adjusted by
\ndividing the per share exercise price of each such Assumed Option by the
\nExchange Ratio, and rounding up to the nearest cent. The terms of each Assumed
\nOption shall, in accordance with its terms, be subject to further adjustment as
\nappropriate to reflect any stock split, stock dividend, recapitalization or
\nother similar transaction with respect to Parent Common Stock on or subsequent
\nto the Effective Time. The “Exchange Ratio” shall be equal to the ratio obtained
\nby dividing the Offer Price by the closing price of one share of Parent Common
\nStock on the Nasdaq National Market on the trading day immediately preceding the
\nClosing Date.<\/p>\n
ARTICLE 3<\/p>\n
REPRESENTATIONS AND WARRANTIES OF THE COMPANY<\/p>\n
The Company hereby represents and warrants to each of Parent and
\nAcquisition, subject to the exceptions set forth in the Disclosure Schedule (the
\n“Company Disclosure Schedule”) delivered by the Company to Parent in accordance
\nwith Section 5.9 (which exceptions shall specifically identify a Section or
\nsubsection, as applicable, to which such exception relates) that:<\/p>\n
SECTION 3.1. Organization and Qualification; Subsidiaries; Investments.<\/p>\n
(a) Section 3.1(a) of the Company Disclosure Schedule sets forth a true
\nand complete list of all the Company’s directly and indirectly owned
\nsubsidiaries and branch offices, together with the jurisdiction of incorporation
\nof each subsidiary and the percentage of each subsidiary’s outstanding capital
\nstock or other equity interests owned by the Company or another subsidiary of
\nthe Company. Each of the Company and its subsidiaries is duly organized, validly
\nexisting and in good standing under the laws of the jurisdiction of its
\nincorporation or organization and has all requisite corporate power and
\nauthority to own, lease and operate its properties and to carry on its
\nbusinesses as now being conducted. The Company has heretofore delivered to
\nParent accurate and complete copies of the Certificate of Incorporation and
\nbylaws (or similar governing documents), as currently in full force and effect,
\nof the Company and each of its subsidiaries. Section 3.1(a) of the Company
\nDisclosure Schedule specifically identifies each subsidiary of the Company that
\ncontains any material assets or through which the Company conducts any material
\noperations. Except as set forth in Section 3.1(a) of the Company Disclosure
\nSchedule, the Company has no operating subsidiaries other than those
\nincorporated in a state of the United States.<\/p>\n
(b) The Company and its subsidiaries are duly qualified or licensed and
\nin good standing to do business in each jurisdiction in which the property
\nowned, leased or operated by them or the nature of the business conducted by
\nthem makes such qualification or licensing necessary, except in such
\njurisdictions where the failure to be so duly qualified or licensed and in good
\nstanding would not, individually or in the aggregate, have a Material Adverse
\nEffect on the Company. When used in connection with the Company or its
\nsubsidiaries, the term “Material Adverse Effect on the Company” means any
\ncircumstance, change in, or effect on the Company and its subsidiaries, taken as
\na whole, that is, or is reasonably likely in the foreseeable future to be,
\nmaterially adverse to the operations, financial condition, earnings or results
\nof operations, or the business (financial or otherwise), of the Company and its
\nsubsidiaries, taken as a whole, provided that neither of the following shall be
\ndeemed, either alone or in combination, to constitute a Material Adverse Effect
\non the Company: (i) a change in the market price or trading volume of the
\nCompany Common Stock, (ii) conditions affecting the computer-related
\ncommunications equipment and services industry as a whole, or (iii) a failure by
\nthe Company to meet internal earnings or revenue projections or the earnings or
\nrevenue projections of equity analysts, provided that this Section 3.1(b)(iii)
\nshall not exclude any underlying change, effect, event, occurrence, state of
\nfacts or developments that resulted in such failure to meet such projections.<\/p>\n
(c) Section 3.1(c) of the Company Disclosure Schedule sets forth a true
\nand complete list of each equity investment in an amount of One Hundred Thousand
\nDollars ($100,000) or more or that represents a five percent (5%) or greater
\nownership interest in the subject of such investment made by the Company or any<\/p>\n
7
\n 14<\/p>\n
of its subsidiaries in any person other than the Company’s subsidiaries (“Other
\nInterests”). The Other Interests are owned by the Company, by one or more of the
\nCompany’s subsidiaries or by the Company and one or more of its subsidiaries, in
\neach case free and clear of all Liens (as defined below).<\/p>\n
SECTION 3.2. Capitalization of the Company and its Subsidiaries.<\/p>\n
(a) The authorized capital stock of the Company consists of 60,000,000
\nShares, of which, as of the close of business on April 30, 1999, 17,002,649
\nShares were issued and outstanding and 10,000,000 shares of preferred stock, no
\nshares of which are outstanding. All of the outstanding Shares have been validly
\nissued and are fully paid, nonassessable and free of preemptive rights. As of
\nthe close of business on April 30, 1999, approximately 4,566,445 Shares were
\nreserved for issuance and, as of the close of business on April 30, 1999,
\n3,125,364 were issuable upon or otherwise deliverable in connection with the
\nexercise of outstanding Company Stock Options. For purposes hereof, “Company
\nStock Option” means any option, warrant or other right to purchase Shares.
\nBetween the close of business on April 30, 1999 and the date hereof, no shares
\nof the Company’s capital stock have been issued other than pursuant to Company
\nStock Options already in existence on such date and, between the close of
\nbusiness on April 30, 1999 and the date hereof, no stock options have been
\ngranted, except as set forth in Section 3.2(a) of the Company Disclosure
\nSchedule. Except as set forth above or in Section 3.2(a) of the Company
\nDisclosure Schedule, as of the date hereof, there are outstanding (i) no shares
\nof capital stock or other voting securities of the Company, (ii) no securities
\nof the Company or any of its subsidiaries convertible into or exchangeable or
\nexercisable for shares of capital stock or other securities of the Company,
\n(iii) no options, preemptive or other rights to acquire from the Company or any
\nof its subsidiaries, and, except as described in the Company SEC Reports (as
\ndefined below), no obligations of the Company or any of its subsidiaries to
\nissue, any capital stock, voting securities or securities convertible into or
\nexchangeable or exercisable for capital stock or other securities of the Company
\nand (iv) no equity equivalent interests in the ownership or earnings of the
\nCompany or its subsidiaries or other similar rights (collectively “Company
\nSecurities”). As of the date hereof, there are no outstanding rights or
\nobligations of the Company or any of its subsidiaries to repurchase, redeem or
\notherwise acquire any Company Securities. Except as set forth in Section 3.2(a)
\nof the Company Disclosure Schedule, there are no stockholder agreements, voting
\ntrusts or other agreements or understandings to which the Company is a party or
\nby which it is bound relating to the voting or registration of any shares of
\ncapital stock of the Company. The Company has not voluntarily accelerated the
\nvesting of any Company Stock Options as a result of the Offer or the Merger or
\nany other change in control of the Company.<\/p>\n
(b) Except as set forth in Section 3.2(b) of the Company Disclosure
\nSchedule, all of the outstanding capital stock of the Company’s subsidiaries is
\nowned by the Company, directly or indirectly, free and clear of any Lien or any
\nother limitation or restriction (including any restriction on the right to vote
\nor sell the same except as a matter of Applicable Law). Except as set forth in
\nSection 3.2(b) of the Company Disclosure Schedule, any directors qualifying
\nshares issued by a foreign subsidiary of the Company to any director of such
\nsubsidiary are beneficially owned by the Company or another subsidiary of the
\nCompany. Except as set forth in Section 3.2(b) of the Company Disclosure
\nSchedule, there are no securities of the Company or any of its subsidiaries
\nconvertible into or exchangeable or exercisable for, or other rights to acquire
\nfrom the Company or any of its subsidiaries, any capital stock or other
\nownership interests in or any other securities of any subsidiary of the Company,
\nand there exists no other contract, understanding, arrangement or obligation
\n(whether or not contingent) providing for the issuance or sale, directly or
\nindirectly, of any such capital stock. Except as set forth in Section 3.2(b) of
\nthe Company Disclosure Schedule, there are no outstanding contractual
\nobligations of the Company or its subsidiaries to repurchase, redeem or
\notherwise acquire any outstanding shares of capital stock or other ownership
\ninterests in any subsidiary of the Company. With respect to any exception to
\nownership set forth in Section 3.2(b) of the Company Disclosure Schedule, the
\nschedule completely and correctly identifies the record and the beneficial owner
\nof any such shares, whether such record or beneficial owner is an employee,
\nagent or affiliate of the Company, and any agreement, arrangement or
\nunderstanding, whether written or oral, with respect to such ownership. With
\nrespect to any exception to the contractual obligations of the Company set forth
\nin Section 3.2(b) of the Company Disclosure Schedule, the schedule completely
\nand correctly identifies the parties to such obligations and the nature of any
\nrelationship of such party or any third party beneficiary of such obligations to
\nthe Company and<\/p>\n
8
\n 15<\/p>\n
any agreement, arrangement or understanding, whether written or oral, with
\nrespect to such relationship. For purposes of this Agreement, “Lien” means, with
\nrespect to any asset (including any security), any mortgage, lien, pledge,
\ncharge, security interest or encumbrance of any kind in respect of such asset;
\nprovided, however, that the term “Lien” shall not include (i) statutory liens
\nfor Taxes that are not yet due and payable or are being contested in good faith
\nby appropriate proceedings and are disclosed in Section 3.14 of the Company
\nDisclosure Schedule or that are otherwise not material, (ii) statutory or common
\nlaw liens to secure obligations to landlords, lessors or renters under leases or
\nrental agreements confined to the premises rented, (iii) deposits or pledges
\nmade in connection with, or to secure payment of, workers’ compensation,
\nunemployment insurance, old age pension or other social security programs
\nmandated by Applicable Law, (iv) statutory or common law liens in favor of
\ncarriers, warehousemen, mechanics and materialmen, to secure claims for labor,
\nmaterials or supplies and other like liens, and (v) restrictions on transfer of
\nsecurities imposed by applicable state and federal securities laws.<\/p>\n
(c) The Shares constitute the only class of equity securities of the
\nCompany or its subsidiaries registered or required to be registered under the
\nExchange Act.<\/p>\n
SECTION 3.3. Authority Relative to this Agreement; Recommendation.<\/p>\n
(a) The Company has all necessary corporate power and authority to
\nexecute and deliver this Agreement and the Stock Option Agreement, to perform
\nits obligations under this Agreement and the Stock Option Agreement, and to
\nconsummate the transactions contemplated hereby. The execution and delivery of
\nthis Agreement and the Stock Option Agreement, and the consummation of the
\ntransactions contemplated hereby and thereby, have been duly and validly
\nauthorized by the Company Board, and no other corporate proceedings on the part
\nof the Company are necessary to authorize this Agreement or the Stock Option
\nAgreement, or to consummate the transactions contemplated hereby or thereby,
\nexcept the approval of this Agreement by the holders of a majority of the
\noutstanding Shares. This Agreement and the Stock Option Agreement have been duly
\nand validly executed and delivered by the Company and, assuming the due
\nauthorization, execution and delivery by Parent and Acquisition, constitute the
\nvalid, legal and binding agreements of the Company, enforceable against the
\nCompany in accordance with their terms, subject to any applicable bankruptcy,
\ninsolvency, reorganization, moratorium or similar laws now or hereafter in
\neffect relating to creditors’ rights generally or to general principles of
\nequity.<\/p>\n
(b) Without limiting the generality of the foregoing, the Board of
\nDirectors of the Company has unanimously (i) approved this Agreement, the Stock
\nOption Agreement, the Offer, the Merger and the other transactions contemplated
\nhereby, (ii) resolved to recommend approval and adoption of this Agreement, the
\nMerger and the other transactions contemplated hereby by the Company’s
\nstockholders, and (iii) has not withdrawn or modified such approval or
\nresolution to recommend (except as otherwise permitted in this Agreement).<\/p>\n
SECTION 3.4. SEC Reports; Financial Statements.<\/p>\n
(a) The Company has filed all required forms, reports and documents (the
\n“Company SEC Reports”) with the SEC since January 1, 1998, each of which
\ncomplied at the time of filing in all material respects with all applicable
\nrequirements of the Securities Act of 1933, as amended (the “Securities Act”),
\nand the Exchange Act, each law as in effect on the dates such forms, reports and
\ndocuments were filed, except as set forth in Section 3.4 of the Company
\nDisclosure Schedule. None of such Company SEC Reports, including any financial
\nstatements or schedules included or incorporated by reference therein, contained
\nwhen filed any untrue statement of a material fact or omitted to state a
\nmaterial fact required to be stated or incorporated by reference therein or
\nnecessary in order to make the statements therein in light of the circumstances
\nunder which they were made not misleading, except to the extent superseded by a
\nCompany SEC Report filed subsequently and prior to the date hereof. The audited
\nconsolidated financial statements of the Company included in the Company SEC
\nReports fairly present, in conformity in all material respects with generally
\naccepted accounting principles applied on a consistent basis (except as may be
\nindicated in the notes thereto), the consolidated financial position of the
\nCompany and its consolidated subsidiaries as of the dates thereof and their
\nconsolidated results of operations and changes in financial position for the
\nperiods then ended. Notwithstanding the foregoing, the Company shall not be
\ndeemed to be in breach of any of the<\/p>\n
9
\n 16<\/p>\n
representations or warranties in this Section 3.4(a) as a result of any changes
\nto the Company SEC Reports that the Company may make in response to comments
\nreceived from the SEC on the Proxy Statement.<\/p>\n
(b) The Company has heretofore made, and hereafter will make, available to
\nAcquisition or Parent a complete and correct copy of any amendments or
\nmodifications that are required to be filed with the SEC but have not yet been
\nfiled with the SEC to agreements, documents or other instruments that previously
\nhad been filed by the Company with the SEC pursuant to the Exchange Act.<\/p>\n
SECTION 3.5. Information Supplied. None of the information supplied or to
\nbe supplied by the Company for inclusion or incorporation by reference in the
\nproxy statement relating to the meeting of the Company’s stockholders to be held
\nin connection with the Merger (the “Proxy Statement”) will, at the date mailed
\nto stockholders of the Company and at the time of the meeting of stockholders of
\nthe Company to be held in connection with the Merger, contain any untrue
\nstatement of a material fact or omit to state any material fact required to be
\nstated therein or necessary in order to make the statements therein in light of
\nthe circumstances under which they are made not misleading. The Proxy Statement
\ninsofar as it relates to the meeting of the Company’s stockholders to vote on
\nthe Merger will comply as to form in all material respects with the provisions
\nof the Exchange Act and the rules and regulations thereunder. Notwithstanding
\nthe foregoing, the Company makes no representation, warranty or covenant with
\nrespect to any information supplied or required to be supplied by Parent or
\nAcquisition that is contained in or omitted from the Proxy Statement.<\/p>\n
SECTION 3.6. Consents and Approvals; No Violations. Except for filings,
\npermits, authorizations, consents and approvals as may be required under
\napplicable requirements of the Securities Act, the Exchange Act, state
\nsecurities or blue sky laws, and the Hart-Scott-Rodino Antitrust Improvements
\nAct of 1976, as amended (the “HSR Act”), any filings under similar merger
\nnotification laws or regulations of foreign Governmental Entities and the filing
\nand recordation of the Certificate of Merger as required by the NJBCA, and any
\nfilings, authorizations, consents and approvals as may be required under the New
\nJersey Industrial Site Recovery Act, 13:1K, et seq. (“ISRA”), no material filing
\nwith or notice to and no material permit, authorization, consent or approval of
\nany United States (federal, state or local) or foreign court or tribunal, or
\nadministrative, governmental or regulatory body, agency or authority (a
\n“Governmental Entity”) is necessary for the execution and delivery by the
\nCompany of this Agreement or the Stock Option Agreement or the consummation by
\nthe Company of the transactions contemplated hereby or thereby. Neither the
\nexecution, delivery and performance of this Agreement or the Stock Option
\nAgreement by the Company, nor the consummation by the Company of the
\ntransactions contemplated hereby or thereby, will (a) conflict with or result in
\nany breach of any provision of the respective Certificate of Incorporation or
\nbylaws (or similar governing documents) of the Company or any of its
\nsubsidiaries, (b) except as set forth in Section 3.6 of the Company Disclosure
\nSchedule, result in a violation or breach of or constitute (with or without due
\nnotice or lapse of time or both) a default (or give rise to any right of
\ntermination, amendment, cancellation or acceleration or Lien) under any of the
\nterms, conditions or provisions of any material note, bond, mortgage, indenture,
\nlease, license, contract (including any material Supply Contract), agreement or
\nother instrument or obligation to which the Company or any of its subsidiaries
\nis a party or by which any of them or any of their respective properties and
\nassets is bound or (c) except as set forth in Section 3.6 of the Company
\nDisclosure Schedule, violate any material order, writ, injunction, decree, law,
\nstatute, rule or regulation applicable to the Company or any of its subsidiaries
\nor any of their respective properties or assets.<\/p>\n
SECTION 3.7. No Default. Except as set forth in Section 3.7 of the Company
\nDisclosure Schedule, neither the Company nor any of its subsidiaries is in
\nmaterial breach, default or violation (and no event has occurred that with
\nnotice or the lapse of time or both would constitute a material breach, default
\nor violation) of any term, condition or provision of (i) its Certificate of
\nIncorporation or bylaws (or similar governing documents), (ii) any material
\nnote, bond, mortgage, indenture, lease, license, contract (including any
\nmaterial Supply Contract), agreement or other instrument or obligation to which
\nthe Company or any of its subsidiaries is now a party or by which it or any of
\nits properties and assets is bound or (iii) any material order, writ,
\ninjunction, decree, law, statute, rule or regulation applicable to the Company
\nor any of its subsidiaries or any of its properties or assets.<\/p>\n
10
\n 17<\/p>\n
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes. Except as and
\nto the extent publicly disclosed by the Company in the Company SEC Reports or as
\nset forth in Section 3.8 of the Company Disclosure Schedule, neither the Company
\nnor any of its subsidiaries has any material liabilities or obligations of any
\nnature, whether or not accrued, contingent or otherwise, that would be required
\nby generally accepted accounting principles to be reflected on a consolidated
\nbalance sheet of the Company (including the notes thereto), other than
\nliabilities or obligations incurred after March 31, 1999 in the ordinary course
\nof business no one or group of which taken together constitutes a Material
\nAdverse Effect on the Company. Except as publicly disclosed by the Company in
\nthe Company SEC Reports or as set forth in Section 3.8 of the Company Disclosure
\nSchedule, since March 31, 1999, there have been no events, changes or effects
\nwith respect to the Company or its subsidiaries that, individually or in the
\naggregate, constitute a Material Adverse Effect on the Company. Without limiting
\nthe generality of the foregoing, except as and to the extent publicly disclosed
\nby the Company in the Company SEC Reports or as set forth in Section 3.8 of the
\nCompany Disclosure Schedule, since March 31, 1999, the Company and its
\nsubsidiaries have conducted their respective businesses in all material respects
\nonly in, and have not engaged in any material transaction other than according
\nto, the ordinary and usual course of such businesses consistent with past
\npractices, and there has not been any (i) material damage, destruction or other
\ncasualty loss with respect to any material asset or property owned, leased or
\notherwise used by the Company or any of its subsidiaries, not covered by
\ninsurance; (ii) declaration, setting aside or payment of any dividend or other
\ndistribution in respect of the capital stock of the Company or any of its
\nsubsidiaries (other than wholly-owned subsidiaries) or any repurchase,
\nredemption or other acquisition by the Company or any of its subsidiaries of any
\noutstanding shares of capital stock or other securities of, or other ownership
\ninterests in, the Company or any of its subsidiaries; (iii) amendment of any
\nmaterial term of any outstanding security of the Company or any of its
\nsubsidiaries; (iv) incurrence, assumption or guarantee by the Company or any of
\nits subsidiaries of any indebtedness for borrowed money other than in the
\nordinary course of business and in amounts and on terms consistent with past
\npractices; (v) creation or assumption by the Company or any of its subsidiaries
\nof any Lien on any material asset other than in the ordinary course of business
\nconsistent with past practices; (vi) loan, advance or capital contributions made
\nby the Company or any of its subsidiaries to, or investment in, any person other
\nthan (x) loans or advances to employees in connection with business-related
\nexpenses incurred in the ordinary course of business consistent with past
\npractices, (y) loans made to employees consistent with past practices that are
\nnot in the aggregate in excess of Fifty Thousand Dollars ($50,000), and (z)
\nloans, advances or capital contributions to or investments in wholly-owned
\nsubsidiaries, and in each case made in the ordinary course of business
\nconsistent with past practices; (vii) transaction or commitment made, or any
\ncontract or agreement entered into, by the Company or any of its subsidiaries
\nrelating to its assets or business (including the acquisition (by sale, license
\nor otherwise) or disposition (by sale, license or otherwise) of any assets) or
\nany relinquishment by the Company or any of its subsidiaries of any contract,
\nagreement or other right, in any such case, material to the Company and its
\nsubsidiaries, taken as a whole; (viii) any exclusive license, distribution,
\nmarketing, sales or other agreement entered into or any agreement to enter into
\nany exclusive license, distribution, marketing, sales or other agreement; or
\n(ix) change by the Company or any of its subsidiaries in any of its accounting
\nprinciples, practices or methods. Since March 31, 1999, except as disclosed in
\nthe Company SEC Reports filed prior to the date hereof or in Section 3.8 of the
\nCompany Disclosure Schedule or increases in the ordinary course of business
\nconsistent with past practices, there has not been any increase in the
\ncompensation payable or that could become payable by the Company or any of its
\nsubsidiaries to (a) officers of the Company or any of its subsidiaries or (b)
\nany employee of the Company or any of its subsidiaries whose annual cash
\ncompensation is One Hundred Thousand Dollars ($100,000) or more.<\/p>\n
SECTION 3.9. Litigation. Except as publicly disclosed by the Company in the
\nCompany SEC Reports or as set forth in Section 3.9 of the Company Disclosure
\nSchedule, there is no suit, claim, action, arbitration, proceeding or
\ninvestigation pending or, to the knowledge of the Company, threatened against
\nthe Company or any of its subsidiaries or any of their respective properties or
\nassets before any Governmental Entity or brought by any person that is material
\nto the Company and its subsidiaries taken as a whole, or would reasonably be
\nexpected to prevent or delay the consummation of the transactions contemplated
\nby this Agreement beyond the Final Date. Except as publicly disclosed by the
\nCompany in the Company SEC Reports, neither the Company nor any of its
\nsubsidiaries is subject to any outstanding order, writ, injunction or decree
\nthat would<\/p>\n
11
\n 18<\/p>\n
reasonably be expected to be material or would reasonably be expected to prevent
\nor delay the consummation of the transactions contemplated hereby.<\/p>\n
SECTION 3.10. Compliance with Applicable Law. Except as publicly disclosed
\nand specifically identified by the Company in the Company SEC Reports, the
\nCompany and its subsidiaries hold all material permits, licenses, variances,
\nexemptions, orders and approvals of all Governmental Entities necessary for the
\nlawful conduct of their respective businesses (the “Company Permits”). Except as
\npublicly disclosed and specifically identified by the Company in the Company SEC
\nReports, the Company and its subsidiaries are in material compliance with the
\nterms of the Company Permits. Except as publicly disclosed and specifically
\nidentified by the Company in the Company SEC Reports, the businesses of the
\nCompany and its subsidiaries have been and are being conducted in material
\ncompliance with all material Applicable Laws. Except as publicly disclosed by
\nthe Company in the Company SEC Reports, no investigation or review by any
\nGovernmental Entity with respect to the Company or any of its subsidiaries is
\npending or, to the knowledge of the Company, threatened, nor, to the knowledge
\nof the Company, has any Governmental Entity indicated an intention to conduct
\nthe same.<\/p>\n
SECTION 3.11. Employee Benefits.<\/p>\n
(a) For purposes of this Agreement, “Compensation and Benefit Plans”
\nmeans, collectively, each written bonus, deferred compensation, pension,
\nretirement, profit-sharing, thrift, savings, employee stock ownership, stock
\nbonus, stock purchase, restricted stock, stock option, employment, termination,
\nseverance, compensation, medical, health, or other plan, agreement, policy or
\narrangement, that covers employees or directors of the Company or any of its
\nsubsidiaries, or pursuant to which former employees or directors of the Company
\nor any of its subsidiaries are entitled to current or future benefits. To the
\nknowledge of the Company, there are no oral Compensation and Benefit Plans to
\nwhich the Company is a party. The Company has made available to Parent copies of
\nall “employee pension benefit plans” (as defined in Section 3(2) of the Employee
\nRetirement Income Security Act of 1974, as amended (“ERISA”)) (sometimes
\nreferred to herein as “Pension Plans”), “employee welfare benefit plans” (as
\ndefined in Section 3(l) of ERISA) and all other Compensation and Benefit Plans
\nmaintained, or contributed to, by the Company or of its subsidiaries or any
\nperson that, together with the Company and its subsidiaries, is treated as a
\nsingle employer under Section 414(b), (c), (m) or (o) of the Code (the Company
\nand each such other person, a “Commonly Controlled Entity”) for the benefit of
\nany current employees, officers or directors of the Company or any of its
\nsubsidiaries. The Company has also made available to Parent true, complete and
\ncorrect copies of (i) the most recent annual report on Form 5500 filed with the
\nInternal Revenue Service with respect to each Compensation and Benefit Plan (if
\nany such report was required), (ii) the most recent summary plan description for
\neach Compensation and Benefit Plan for which such summary plan description is
\nrequired and (iii) each trust agreement and group annuity contract related to
\nany Compensation and Benefit Plan. Each Compensation and Benefit Plan has been
\nadministered in all material respects in accordance with its terms. Neither the
\nCompany nor any Commonly Controlled Entity maintains or has ever maintained a
\n“defined benefit plan” (as defined in Section 415 of the Code). Each of
\nCompany’s subsidiaries and all the Compensation and Benefit Plans are all in
\ncompliance with applicable provisions of ERISA and the Code. Section 3.11(a)
\nsets forth a complete and correct list of all Compensation and Benefit Plans.<\/p>\n
(b) Except as otherwise provided in Section 3.11(b) of the Company
\nDisclosure Schedule, the Company and its subsidiaries have performed in all
\nmaterial respects their obligations under each Compensation and Benefit Plan;
\neach Compensation and Benefit Plan and each trust or other funding medium, if
\nany, established in connection therewith has at all times been established,
\nmaintained and operated in material compliance with its terms and the
\nrequirements prescribed by Applicable Law, including ERISA and the Code.<\/p>\n
(c) With respect to those Pension Plans that are intended to be
\nqualified under Section 401(a) of the Code, except as set forth in Section
\n3.11(c) of the Company Disclosure Schedule, each such Pension Plan has been the
\nsubject of a determination letters from the Internal Revenue Service to the
\neffect that such Pension Plans are qualified and exempt from Federal income
\ntaxes under Sections 401(a) and 501(a), respectively, of the Code, and no such
\ndetermination letter has been revoked nor has any event occurred since<\/p>\n
12
\n 19<\/p>\n
the date of its most recent determination letter or application therefor that
\nwould materially adversely affect its qualification or materially increase its
\ncosts.<\/p>\n
(d) At all times on and after the effective date of ERISA, neither
\nCompany nor any of its subsidiaries nor any entity which is under “common
\ncontrol” with the Company (within the meaning of Section 4001 of ERISA) has
\nmaintained, contributed to or otherwise had any obligation with respect to any
\n“multiemployer plan” (as defined in Section 3(37) of ERISA).<\/p>\n
(e) Except as disclosed in Section 3.11(e) of the Company Disclosure
\nSchedule, there are no suits, actions, disputes, claims (other than routine
\nclaims for benefits), arbitrations, administrative or other proceedings pending
\nor, to the knowledge of Company, threatened, anticipated or expected to be
\nasserted with respect to any Compensation and Benefits Plan or any related trust
\nor other funding medium thereunder or with respect to Company or its
\nsubsidiaries, as the sponsor or fiduciary thereof or with respect to any other
\nfiduciary thereof.<\/p>\n
(f) No Compensation and Benefit Plan maintained by Company or its
\nsubsidiaries or any related trust or other funding medium thereunder or any
\nfiduciary thereof is, to the knowledge of Company, the subject of a material
\naudit, investigation or examination by an governmental or quasi-governmental
\nagency.<\/p>\n
(g) Except as provided in Section 3.11(g) of the Company Disclosure
\nSchedule, (i) no “reportable event” (as such term is used in Section 4043 of
\nERISA) or “prohibited transaction” (as such term is used in Section 4975 of the
\nCode and\/or Section 406 of ERISA), has occurred with respect to any Compensation
\nand Benefit Plan established or maintained by Company or its subsidiaries
\nprimarily for the benefit of participants employed within the United States;
\n(ii) neither Company nor its subsidiaries has any commitment, intention or
\nunderstanding to create, terminate or adopt any Compensation and Benefit Plan
\nthat would result in any additional liability to Parent, the Company or its
\nsubsidiaries; and (iii) since the beginning of the current fiscal year of any
\nCompensation and Benefit Plan, no event had occurred and no condition or
\ncircumstance has existed that could result in a material increase in the
\nbenefits under or the expense of maintaining such Compensation and Benefit Plan
\nmaintained by Company, and its subsidiaries from the level of benefits or
\nexpense incurred for the most recently completed fiscal year of such
\nCompensation and Benefit Plan.<\/p>\n
(h) Section 3.11(h) of the Company Disclosure Schedule lists all
\noutstanding Stock Options as of the date hereof, identifying for each such
\noption: (i) the number of shares issuable, (ii) the number of vested shares,
\n(iii) the date of expiration and (iv) the exercise price.<\/p>\n
(i) All contributions required to be made under the terms of any
\nCompensation and Benefit Plan as of the date hereof have been timely made.<\/p>\n
(j) Except as provided by this Agreement or in Section 3.11(j) of the
\nCompany Disclosure Schedule, the execution of, and performance of the
\ntransactions contemplated by, this Agreement will not (either along with or upon
\nthe occurrence of any additional or subsequent events) constitute an event under
\nany Compensation and Benefit Plan or agreement that will or may reasonably be
\nexpected to result in any payment (whether severance pay or otherwise),
\nacceleration, vesting or increase in benefits with respect to any employee,
\nformer employee or director of the Company, or its subsidiaries, whether or not
\nany such payment would be an “excess parachute payment” (within the meaning of
\nSection 280G of the Code).<\/p>\n
(k) With respect to each Compensation and Benefit Plan required to be
\nmaintained or contributed to by the law or applicable custom or rule of the
\nrelevant jurisdiction outside of the United States (the “Foreign Plans”), are
\nlisted on Section 3.11(k) of the Company Disclosure Schedule. As regards each
\nsuch Foreign Plan:<\/p>\n
(i) Each of the Foreign Plans is in compliance in all material
\nrespects with the provisions of the laws of each jurisdiction in which each such
\nForeign Plan is maintained, to the extent those laws are applicable to the
\nForeign Plans;<\/p>\n
(ii) All contributions to, and payments from, the Foreign Plans which
\nmay have been required to be made in accordance with the terms of any such
\nForeign Plan, and, when applicable, the law of the jurisdiction in which such
\nForeign Plan is maintained, have been timely made or shall be made by the<\/p>\n
13
\n 20<\/p>\n
Effective Date. All such contributions to the Foreign Plans, and all payments
\nunder the Foreign Plans, for any period ending before the Closing Date that are
\nnot yet, but will be, required to be made, are reflected as an accrued liability
\non the balance sheet included in the most recently filed Company SEC Report;<\/p>\n
(iii) All material reports, returns and similar documents, if any,
\nwith respect to any Foreign Plan required to be filed with any governmental body
\nor distributed to any Foreign Plan participant have been duly and timely filed
\nor distributed or will be filed or distributed by the Closing Date, and all of
\nthe Foreign Plans have obtained from the governmental body having jurisdiction
\nwith respect to such plans any required determinations, if any, that such
\nForeign Plans are in compliance with the laws of the relevant jurisdiction if
\nsuch determinations are required in order to give effect to the Foreign Plan;<\/p>\n
(iv) Each of the Foreign Plans has been administered at all times,
\nand in all material respects, in accordance with its terms. To the knowledge of
\nCompany, there are no pending investigations by any governmental body involving
\nthe Foreign Plans, and no pending claims (except for claims for benefits payable
\nin the normal operation of the Foreign Plans), suits or proceedings against any
\nForeign Plan or asserting any rights or claims to benefits under any Foreign
\nPlan; and<\/p>\n
(v) The consummation of the transactions contemplated by this
\nAgreement will not by itself create or otherwise result in any material
\nliability with respect to any Foreign Plan other than the triggering of payment
\nto participants.<\/p>\n
(l) Each Compensation and Benefit Plan complies in all material respects
\nwith all applicable requirements of (i) the Age Discrimination in Employment Act
\nof 1967, as amended, and the regulations thereunder and (ii) Title VII of the
\nCivil Rights Act of 1964, as amended, and the regulations thereunder and all
\nother applicable laws. All amendments and actions required to bring each of the
\nCompensation and Benefit Plans into conformity with all of the applicable
\nprovisions of ERISA and other applicable laws have been made or taken except to
\nthe extent that such amendments or actions are not required by law to be made or
\ntaken until a date after the Effective Time and are disclosed Section 3.11(l) of
\nthe Company Disclosure Schedule or will be provided to Parent within fourteen
\n(14) days of the date hereof.<\/p>\n
(m) Each group medical plan sponsored by the Company or its subsidiaries
\nmaterially complies with the Medicare Secondary Payor Provisions of Section 1826
\n(b) of the Social Security Act, and the regulations promulgated thereunder.<\/p>\n
(n) Except as set forth on Section 3.11(n) of the Company Disclosure
\nSchedule, Parent, the Surviving Corporation, the Company and its subsidiaries
\nmay terminate or amend any Compensation and Benefit Plan maintained by the
\nCompany or its subsidiaries or may cease contributions to any such Compensation
\nand Benefit Plans without incurring any material liability other than a benefit
\nliability accrued in accordance with the terms of such Compensation and Benefit
\nPlan immediately prior to such amendment, termination or ceasing of
\ncontributions.<\/p>\n
(o) Neither the Company nor any of its subsidiaries maintained any
\nCompensation and Benefit Plan which is a “group health plan” (as such term is
\ndefined in Section 5000(b)(1) of the Code) that has not been administered and
\noperated in all respects in compliance with the applicable requirements of
\nSection 601 of ERISA and section 4980B(b) of the Code and the Company and its
\nsubsidiaries are not subject to any liability, including without limitation,
\nadditional contributions, fines, penalties or loss of tax deduction as a result
\nof such administration and operation.<\/p>\n
(p) Neither the Company nor any of its subsidiaries has incurred, nor
\ndoes the Company reasonably expect either it or any subsidiary to incur, any
\nliability for any tax imposed under Sections 4971 through 4980B of the Code or
\ncivil liability under Section 501(i) or (1) of ERISA;<\/p>\n
(q) Neither the Company nor any of its subsidiaries has incurred any
\nliability for any tax, excise tax, penalty or fee with respect to any
\nCompensation and Benefit Plan, including, but not limited to, taxes arising
\nunder Section 4971, 4977, 4978, 4878B, 4979, 4980 or 4980B of the Code, and no
\nevent has occurred and no circumstance has existed that could give rise to any
\nsuch liability.<\/p>\n
14
\n 21<\/p>\n
(r) Except as provided in Section 3.11(r) of the Company Disclosure
\nSchedule, no insurance policy nor any other contract or agreement affecting any
\nCompensation and Benefit Plan requires or permits a retroactive increase in
\npremiums or payments due thereunder.<\/p>\n
SECTION 3.12. Labor and Employment Matters. Except as set forth on Section
\n3.12(b) and (f) of the Company Disclosure Schedule:<\/p>\n
(a) No collective bargaining agreement exists that is binding on the
\nCompany or any of its subsidiaries, and the Company has not been officially
\napprised that any petition has been filed or proceeding instituted by an
\nemployee or group of employees of the Company, or any of its subsidiaries, with
\nthe National Labor Relations Board seeking recognition of a bargaining
\nrepresentative.<\/p>\n
(b) (i) To the Company’s knowledge, there is no labor strike, dispute,
\nslow down or stoppage pending or threatened against the Company or any of its
\nsubsidiaries; and<\/p>\n
(ii) Neither the Company nor any of its subsidiaries has received any
\ndemand letters, civil rights charges, suits or drafts of suits with respect to
\nclaims made by any of their respective employees.<\/p>\n
(c) All individuals who are performing consulting or other services for
\nthe Company or any of its subsidiaries are or were correctly classified by the
\nCompany as either “independent contractors” or “employees” as the case may be,
\nand, at the Closing Date, will qualify for such classification.<\/p>\n
(d) Section 3.12(d) of the Company Disclosure Schedule contains a list
\nof the name of each officer, employee and consultant of the Company or any of
\nthe Company’s subsidiaries, together with such person’s position or function,
\nannual base salary or wages and any incentives or bonus arrangement with respect
\nto such person. As of the date hereof, the Company has not received any
\ninformation that would lead it to believe that any such person will or may cease
\nto be engaged by the Company or such subsidiary for any reason, including
\nbecause of the consummation of the transactions contemplated by this Agreement.<\/p>\n
(e) The Company and each of its subsidiaries is in compliance in all
\nmaterial respects with all applicable foreign, federal, state and local laws,
\nrules and regulations respecting employment, employment practices, terms and
\nconditions of employment and wages and hours, in each case, with respect to
\nemployees.<\/p>\n
(f) The Company and each of its subsidiaries has in all material
\nrespects withheld and reported all amounts required by law or by agreement to be
\nwithheld and reported with respect to wages, salaries and other payments to
\nemployees.<\/p>\n
(g) To the Company’s knowledge, there are no pending or threatened
\nclaims or actions against the Company or any of its subsidiaries under any
\nworker’s compensation policy or long-term disability policy.<\/p>\n
SECTION 3.13. Environmental Laws and Regulations.<\/p>\n
(a) The term “Environmental Laws” means any applicable federal, state,
\nlocal or foreign law, statute, treaty, ordinance, rule, regulation, policy,
\npermit, consent, approval, license, judgment, order, decree or injunction
\nrelating to: (i) Releases (as defined in 42 U.S.C. sec. 9601(22)) or threatened
\nReleases of Hazardous Material (as hereinafter defined) into the environment,
\n(ii) the generation, treatment, storage, disposal, use, handling, manufacturing,
\ntransportation or shipment of Hazardous Material, (iii) the health or safety of
\nemployees in the workplace, (iv) protecting or restoring natural resources or
\n(e) the environment. The term “Hazardous Material” means (1) hazardous
\nsubstances (as defined in 42 U.S.C. sec. 9601(14)), including “hazardous waste”
\nas defined in 42 U.S.C. sec. 6903, (2) petroleum, including crude oil and any
\nfractions thereof, (3) natural gas, synthetic gas and any mixtures thereof, (4)
\nasbestos and\/or asbestos containing materials, (5) PCBs or materials containing
\nPCBs, (6) any material regulated as a medical waste, (7) lead containing paint,
\n(8) radioactive materials and (9) “Hazardous Substance” or “Hazardous Material”
\nas those terms are defined in any indemnification provision in any contract,
\nlease, or agreement to which the Company or any of its subsidiaries is a party.<\/p>\n
(b) During the period of ownership or operation by the Company and its
\nsubsidiaries of any of their current or previously owned or leased properties,
\nthere have been no Releases of Hazardous Material by the Company or any of its
\nsubsidiaries in, on, under or affecting such properties or any surrounding site,
\nand<\/p>\n
15
\n 22<\/p>\n
neither the Company nor any of its subsidiaries has disposed of any Hazardous
\nMaterial in a manner that has led, or could reasonably be anticipated to lead to
\na Release, except in each case for those which, individually or in the
\naggregate, would not have a Material Adverse Effect on the Company. There have
\nbeen no Releases of Hazardous Material by the Company or any of its subsidiaries
\nin, on, under or affecting their current or previously owned or leased
\nproperties or any surrounding site at times outside of such periods of
\nownership, operation or lease, except in each case for those which, individually
\non in the aggregate, would not have a Material Adverse Effect on the Company.
\nSince January 1, 1995, neither the Company nor any of its subsidiaries has
\nreceived any written notice of, or entered into any order, settlement or decree
\nrelating to: (i) any violation of any Environmental Laws or the institution or
\npendency of any suit, action, claim, proceeding or investigation by any
\nGovernmental Entity or any third party in connection with any alleged violation
\nof Environmental Laws or (ii) the response to or remediation of Hazardous
\nMaterial at or arising from any of the Company’s properties or any subsidiary’s
\nproperties. There have been no violations of any Environmental Laws by the
\nCompany or any subsidiary which violations, individually or in the aggregate,
\ncould reasonably be expected to have a Material Adverse Effect on the Company.<\/p>\n
(c) There are no past or present events, conditions, circumstances,
\nactivities, practices, incidents, actions, omissions or plans that constitute a
\nviolation by the Company or any of its subsidiaries of, or are reasonably likely
\nto prevent or interfere with the Company’s or any of its subsidiaries’ future
\ncompliance with, any Environmental Laws, other than any of the foregoing that,
\nindividually or in the aggregate, could not reasonably be expected to have a
\nMaterial Adverse Effect on the Company.<\/p>\n
SECTION 3.14. Taxes.<\/p>\n
(a) Definitions. For purposes of this Agreement:<\/p>\n
(i) the term “Code” means the Internal Revenue Code of 1986, as
\namended;<\/p>\n
(ii) the term “Tax” (including “Taxes”) means (1) all federal, state,
\nlocal, foreign and other net income, gross income, gross receipts, sales, use,
\nad valorem, transfer, franchise, profits, license, lease, service, service use,
\nwithholding, payroll, employment, excise, severance, stamp, occupation, premium,
\nproperty, windfall profits, customs, duties or other taxes, fees, assessments or
\ncharges of any kind whatsoever, whether disputed or not, together with any
\ninterest and any penalties, additions to tax or additional amounts with respect
\nthereto, (2) any liability for payment of amounts described in clause (1)
\nwhether as a result of transferee liability, of being a member of an affiliated,
\nconsolidated, combined or unitary group for any period, or otherwise through
\noperation of law, and (3) any liability for the payment of amounts described in
\nclauses (1) or (2) as a result of any tax sharing, tax indemnity or tax
\nallocation agreement or any other express or implied agreement to indemnify any
\nother person; and<\/p>\n
(iii) the term “Tax Return” means any return, declaration, report,
\nstatement, information statement and other document filed or required to be
\nfiled with respect to Taxes.<\/p>\n
(b) Except as set forth in Section 3.14(b) of the Company Disclosure
\nSchedule, the Company and its subsidiaries have duly and timely filed all Tax
\nReturns required to be filed; and such Tax Returns are complete and accurate and
\ncorrectly reflect the Tax liability required to be reported thereon. Such Tax
\nReturns do not contain a disclosure statement under Section 6662 of the Code (or
\nany predecessor provision or comparable provision of state, local or foreign
\nlaw).<\/p>\n
(c) The Company and its subsidiaries have paid or adequately provided in
\nthe financial statements included in the SEC Reports for all Taxes (whether or
\nnot shown on any Tax Return) accrued through the date of such Company SEC
\nReports; all Taxes the Company and its subsidiaries accrued following the end of
\nthe most recent period covered by the Company SEC Report have been accrued in
\nthe ordinary course of business of the Company and each such subsidiary and have
\nbeen paid when due in the ordinary course of business; and no material election
\nhas been made with respect to Taxes of the Company or its subsidiaries in any
\nTax Returns that have not been provided to Parent.<\/p>\n
(d) Except as set forth in Section 3.14(d) of the Company Disclosure
\nSchedule, no material claim for assessment or collection of Taxes is presently
\nbeing asserted against the Company or its subsidiaries and<\/p>\n
16
\n 23<\/p>\n
neither the Company nor any of its subsidiaries is a party to any pending
\naction, proceeding, or investigation by any governmental taxing authority nor
\ndoes the Company have knowledge of any such threatened action, proceeding or
\ninvestigation.<\/p>\n
(e) Except as set forth in Section 3.14(e) of the Company Disclosure
\nSchedule, neither the Company nor any of its subsidiaries is a party to any
\nagreement, contract, arrangement or plan that has resulted or would result,
\nindividually or in the aggregate, in connection with this Agreement or any
\nchange of control of the Company or any of its subsidiaries, in the payment of
\nany “excess parachute payments” within the meaning of Section 280G of the Code.<\/p>\n
(f) Except as set forth in Section 3.14(f) of the Company Disclosure
\nSchedule, neither the Company nor any of its subsidiaries is a party to or bound
\nby any obligation under any Tax sharing, Tax allocation, Tax indemnity or
\nsimilar agreement or arrangement.<\/p>\n
(g) Except as set forth in Section 3.14(g) of the Company Disclosure
\nSchedule, there is currently no limitation on the utilization of net operating
\nlosses, built-in losses, tax credits or other similar items of the Company or
\nits subsidiaries under Section 382, 383, 384 or 1502 of the Code and the
\nTreasury Regulations thereunder.<\/p>\n
(h) Except as set forth in Section 3.14(h) of the Company Disclosure
\nSchedule, neither the Company nor any of its subsidiaries has agreed to, or is
\nrequired to make, any adjustment under Section 481 of the Code by reason of a
\nchange in accounting method.<\/p>\n
(i) Neither the Company nor any of its subsidiaries are “consenting
\ncorporations” within the meaning of Section 341(f)(1) of the Code.<\/p>\n
SECTION 3.15. Intellectual Property.<\/p>\n
(a) Section 3.15(a) of the Company Disclosure Schedule sets forth, for
\nthe Intellectual Property owned, in whole or in part, including jointly with
\nothers, by the Company or any of its subsidiaries, a complete and accurate list
\nof all United States and foreign (i) patents and patent applications; (ii)
\nTrademark registrations and applications and material unregistered Trademarks;
\nand (iii) copyright registrations and applications, indicating for each, the
\napplicable jurisdiction, registration number (or application number) and date
\nissued (or date filed). For purposes of this Agreement, “Intellectual Property”
\nmeans: trademarks and service marks (whether registered or unregistered), trade
\nnames and designs, together with all goodwill related to the foregoing
\n(collectively, “Trademarks”); patents (including any continuations,
\ncontinuations in part, renewals and applications for any of the foregoing)
\n(collectively “Patents”); copyrights (including any registrations and
\napplications therefor and whether registered or unregistered) (collectively,
\n“Copyrights”); computer software; databases; works of authorship; mask works;
\ntechnology; trade secrets and other confidential information, know-how,
\nproprietary processes, formulae, algorithms, models, user interfaces, customer
\nlists, inventions, discoveries, concepts, ideas, techniques, methods, source
\ncodes, object codes, methodologies and, with respect to all of the foregoing,
\nrelated confidential data or information (collectively, “Trade Secrets”).<\/p>\n
(b) Trademarks.<\/p>\n
(i) All Trademark registrations are currently in compliance in all
\nmaterial respects with all legal requirements (including the timely
\npost-registration filing of affidavits of use and incontestability and renewal
\napplications) other than any requirement that, if not satisfied, would not
\nresult in a cancellation of any such registration or otherwise materially affect
\nthe priority and enforceability of the Trademark in question.<\/p>\n
(ii) No registered Trademark has been within the last three (3) years
\nor is now involved in any opposition or cancellation proceeding in the United
\nStates Patent and Trademark Office. To the Company’s knowledge, no such action
\nhas been threatened in writing within the one (1)-year period prior to the date
\nof this Agreement.<\/p>\n
17
\n 24<\/p>\n
(iii) To the Company’s knowledge, except as set forth in Section
\n3.15(b)(iii) of the Company Disclosure Schedule, there has been no prior use of
\nany material Trademark by any third party that confers upon said third party
\nsuperior rights in any such Trademark.<\/p>\n
(iv) The Company and its subsidiaries have adequately policed the
\nmaterial Trademarks against third party infringement, and the material
\nTrademarks registered in the United States have been continuously used by the
\nCompany or one of its subsidiaries since the date set forth in, the form
\nappearing in, and in connection with the goods and services listed in, their
\nrespective registration certificates or renewal certificates, as the case may
\nbe.<\/p>\n
(c) Patents.<\/p>\n
(i) All Patents are currently in compliance with legal requirements
\n(including payment of filing, examination, and maintenance fees and proofs of
\nworking or use) other than any requirement that, if not satisfied, would not
\nresult in a revocation or otherwise materially affect the enforceability of the
\nPatent in question.<\/p>\n
(ii) No Patent has been or is now involved in any interference,
\nreissue, reexamination or opposing proceeding in the United States Patent and
\nTrademark Office. To the Company’s knowledge, except as set forth in Section
\n3.15(c)(ii) of the Company Disclosure Schedule, no such action has been
\nthreatened within the one (1)-year period prior to the date of this Agreement.<\/p>\n
(iii) To the knowledge of the Company, there is no patent or patent
\napplication of any person that conflicts in any material respect with any Patent
\nor invalidates any claim the Company or any of its subsidiaries has in any
\nPatent.<\/p>\n
(d) Trade Secrets.<\/p>\n
(i) The Company and each of its subsidiaries have taken reasonable
\nsteps in accordance with normal industry practice to protect their respective
\nrights in confidential information and Trade Secrets.<\/p>\n
(ii) Without limiting the generality of Section 3.15(d)(i) and except
\nas would not be materially adverse to the Company and its subsidiaries, taken as
\na whole, or its business, the Company and each of its subsidiaries enforces a
\npolicy of requiring each relevant employee, consultant and contractor to execute
\nproprietary information, confidentiality and assignment agreements substantially
\nin the Company’s standard forms that assign to the Company or such subsidiary,
\nas the case may be, all rights to any Intellectual Property relating to the
\nCompany’s or such subsidiary’s business that is developed by the employee,
\nconsultant or contractor, as applicable, in the course of his or her activities
\nfor the Company or any of its subsidiaries or is developed during working hours
\nusing the resources of the Company or any such subsidiary, and, except under
\nconfidentiality obligations, to the knowledge of the Company, there has been no
\ndisclosure by the Company or any subsidiary of material confidential information
\nor Trade Secrets.<\/p>\n
(e) License Agreements.<\/p>\n
Section 3.15(e)(i) of the Company Disclosure Schedule sets forth a
\ncomplete and accurate list of all license agreements granting to the Company or
\nany of its subsidiaries any material right to use or practice any rights under
\nany Intellectual Property other than software commercially available on
\nreasonable terms to any person for a license fee of no more than One Hundred
\nThousand Dollars ($100,000) (collectively, the “Inbound License Agreements”),
\nindicating for each the title and the parties thereto and the amount of any
\nfuture royalty or license fee payable thereunder. Section 3.15(e)(ii) of the
\nCompany Disclosure Schedule sets forth a complete and accurate list of all
\nlicense agreements under which the Company or any of its subsidiaries licenses
\nsoftware or grants other rights in to use or practice any rights under any
\nIntellectual Property, excluding licenses with customers that in the
\ntwelve-month period prior to the date hereof have purchased or licensed products
\nfor which the total payments to the Company and its subsidiaries did not exceed
\nOne Hundred Thousand Dollars ($100,000) and otherwise are not material to the
\nCompany (collectively, the “Outbound License Agreements”), indicating for each
\nthe title and the parties thereto. Except as set forth in Section 3.15(e) of the
\nCompany Disclosure Schedule, there is no material outstanding<\/p>\n
18
\n 25<\/p>\n
or, to the Company’s knowledge, threatened dispute or disagreement with respect
\nto any Inbound License Agreement or any Outbound License Agreement.<\/p>\n
(f) Ownership; Sufficiency of IP Assets. The Company or one of its
\nsubsidiaries owns or possesses adequate licenses or other rights to use, free
\nand clear of Liens, orders and arbitration awards, all of its Intellectual
\nProperty used in its business. The Intellectual Property identified in Section
\n3.15(a) of the Company Disclosure Schedule, together with the Company’s and its
\nsubsidiaries’ unregistered copyrights and the Company’s and such subsidiaries’
\nrights under the licenses granted to the Company or any of its subsidiaries
\nunder the Inbound License Agreements, constitute all the material Intellectual
\nProperty rights used in the operation of the Company’s and its subsidiaries’
\nbusinesses as they are currently conducted and are all the Intellectual Property
\nrights necessary to operate such businesses after the Effective Time in
\nsubstantially the same manner as such businesses have been operated by the
\nCompany and its subsidiaries prior thereto.<\/p>\n
(g) Protection of IP. The Company has taken reasonable steps to protect
\nthe Intellectual Property of the Company and its subsidiaries.<\/p>\n
(h) No Infringement by the Company. To the knowledge of the Company,
\nexcept as set forth on Section 3.15(h) of the Company Disclosure Schedule, the
\nproducts used, manufactured, marketed, sold or licensed by the Company and its
\nsubsidiaries, and all Intellectual Property used in the conduct of the Company’s
\nand its subsidiaries’ businesses as currently conducted, do not infringe upon,
\nviolate or constitute the unauthorized use of any valid and enforceable rights
\nowned or controlled by any third party, including any Intellectual Property of
\nany third party. The Company’s products do not include, incorporate or otherwise
\nuse any proprietary information (including software) that may have been provided
\nby Professor B.S. Manjunath or any member of his research group as part of a
\ncollaborative agreement with Spectron Microsystems, Inc.<\/p>\n
(i) No Pending or Threatened Infringement Claims. Except and to the
\nextent publicly disclosed in the Company SEC Reports or in Section 3.15(i) of
\nthe Company Disclosure Schedule, no litigation is now or, within the three (3)
\nyears prior to the date of this Agreement, was pending and, to the Company’s
\nknowledge, no notice or other claim in writing has been received by the Company
\nwithin the one (1) year prior to the date of this Agreement, (i) alleging that
\nthe Company any of its subsidiaries has engaged in any activity or conduct that
\ninfringes upon, violates or constitutes the unauthorized use of the Intellectual
\nProperty rights of any third party or (ii) challenging the ownership, use,
\nvalidity or enforceability of any Intellectual Property owned or exclusively
\nlicensed by or to the Company. Except as specifically disclosed in one or more
\nsubsections of this Section 3.15 of the Company Disclosure Schedules, no
\nIntellectual Property (x) that is owned by the Company or any of its
\nsubsidiaries is subject to any outstanding order, judgment, decree, stipulation
\nor agreement restricting the use thereof by the Company or any such subsidiary,
\nexcept as may be specifically provided in any such Inbound License Agreement,
\n(y) that is the subject of an Outbound License Agreement is subject to any
\noutstanding order, judgment, decree, stipulation or agreement restricting the
\nsale, transfer, assignment or licensing thereof by the Company or any of its
\nsubsidiaries to any person or (z) that is the subject of an Inbound License
\nAgreement is, to the knowledge of the Company, subject to any outstanding
\njudgment, decree, stipulation or agreement restricting the use thereof by the
\nCompany or any of its subsidiaries.<\/p>\n
(j) No Infringement by Third Parties. Except as and to the extent
\npublicly disclosed in the Company SEC Reports or as set forth in Section 3.15(j)
\nof the Company Disclosure Schedule, to the knowledge of the Company, no third
\nparty is misappropriating, infringing, diluting or violating any Intellectual
\nProperty owned or exclusively licensed by the Company or any of its
\nsubsidiaries, and no such claims have been brought against any third party by
\nthe Company or any of its subsidiaries.<\/p>\n
(k) Assignment; Change of Control. Except as set forth in Section 3.15
\n(k) of the Company Disclosure Schedule, the execution, delivery and performance
\nby the Company of this Agreement, and the consummation of the transactions
\ncontemplated hereby, will not result in the loss or impairment of, or give rise
\nto any right of any third party to terminate or alter, any of the Company’s or
\nany of its subsidiaries’ rights to own any of its Intellectual Property or their
\nrespective rights under any Inbound License Agreement or<\/p>\n
19
\n 26<\/p>\n
Outbound License Agreement, nor require the consent of any Governmental
\nAuthority or third party in respect of any such Intellectual Property.<\/p>\n
(l) Software. The Software owned or purported to be owned by the Company
\nor any of its subsidiaries, was either (i) developed by employees of the Company
\nor any of its subsidiaries within the scope of their employment; (ii) developed
\nby independent contractors who have assigned their rights to the Company or any
\nof its subsidiaries pursuant to written agreements; or (iii) otherwise acquired
\nby the Company or a subsidiary from a third party. Except as set forth in
\nSection 3.15(l) of the Company Disclosure Schedule, the Software does not
\ncontain any programming code, documentation or other materials or development
\nenvironments that embody Intellectual Property rights of any person other than
\nthe Company or any of its subsidiaries, except for such materials or development
\nenvironments obtained by the Company or any of its subsidiaries from other
\npersons who make such materials or development environments generally available
\non non-discriminatory commercial terms. For purposes of this Section 3.15(l),
\n“Software” means any and all (i) computer programs, including any and all
\nsoftware implementations of algorithms, models and methodologies, whether in
\nsource code or object code, (ii) databases and compilations, including any and
\nall data and collections of data, whether machine readable or otherwise, (iii)
\ndescriptions, schematics, flow-charts and other work product used to design,
\nplan, organize and develop any of the foregoing, and (iv) all documentation,
\nincluding user manuals and training materials, relating to any of the foregoing.<\/p>\n
(m) Performance of Existing Software Products; No Real-Time Operating
\nSystems Software Products or Stand-Alone Products. The Company’s and its
\nsubsidiaries’ existing and currently manufactured and marketed Software products
\nlisted and described on Section 3.15(m) of the Company Disclosure Schedule
\nperform in all material respects, free of significant bugs, viruses or
\nprogramming errors, the functions described in any agreed specifications or end
\nuser documentation or other information provided to customers of the Company or
\nany of its subsidiaries on which such customers relied when licensing or
\notherwise acquiring such products. Neither the Company nor any of its
\nsubsidiaries currently, directly or indirectly, owns, manages, operates,
\ncontrols or participates in the ownership, management, operation or control of
\nany business, whether in corporate, proprietorship or partnership form or
\notherwise, engaged in the design, manufacturing or marketing of real time
\noperating systems software products as stand-alone products.<\/p>\n
(n) Documentation. The Company and its subsidiaries have taken all
\nactions customary in the software industry to document the Software and its
\noperation, such that the materials comprising the Software, including the source
\ncode and documentation, have been written in a clear and professional manner so
\nthat they may be understood, modified and maintained in an efficient manner by
\nreasonably competent programmers.<\/p>\n
(o) Year 2000 Capability.<\/p>\n
(i) Except as set forth in Section 3.15(o) of the Company Disclosure
\nSchedule, all of the Company’s and its subsidiaries’ material products
\n(including products currently under development) will record, store, process and
\ncalculate and present calendar dates falling on and after December 31, 1998, and
\nwill calculate any information dependent on or relating to such dates in the
\nsame manner and with the same functionality, data integrity and performance as
\nthe products record, store, process, calculate and present calendar dates on or
\nbefore December 31, 1998, or calculate any information dependent on or relating
\nto such dates (collectively, “Year 2000 Capable”). Except as set forth in
\nSection 3.15(o) of the Company Disclosure Schedule, (i) all of the Company’s and
\nits subsidiaries’ material products will lose no significant functionality with
\nrespect to the introduction of records containing dates falling on or after
\nDecember 31, 1998; and (ii) all of the Company’s and its subsidiaries’ internal
\ncomputer systems comprised of software, hardware, databases or embedded control
\nsystems (microprocessor controlled, robotic or other device) related to the
\nCompany’s and its subsidiaries’ businesses (collectively, a “Business System”),
\nthat constitutes any material part of, or is used in connection with the use,
\noperation or enjoyment of, any material tangible or intangible asset or real
\nproperty of the Company and its subsidiaries, including its accounting systems,
\nare Year 2000 Capable. Except as set forth on Section 3.15(o) of the Company
\nDisclosure Schedule, the current versions of the Company’s and its subsidiaries’
\nsoftware and all other Intellectual Property may be used prior to, during and
\nafter December 31, 1998, such that such Software and Intellectual Property will
\noperate prior to, during and after<\/p>\n
20
\n 27<\/p>\n
such time period without error caused by date data that represents or references
\ndifferent centuries or more than one century.<\/p>\n
(ii) Except as set forth on Section 3.15(o) of the Company Disclosure
\nSchedule, the Company’s material products and the conduct of the Company’s
\nbusiness with its material customers and suppliers will not be materially
\nadversely affected by the advent of the year 2000, the advent of the
\ntwenty-first century or the transition from the twentieth century through the
\nyear 2000 and into the twenty-first century. Except as set forth on Section
\n3.15(o) of the Company Disclosure Schedule, neither the Company nor any of its
\nsubsidiaries is reasonably likely to incur material expenses arising from or
\nrelating to the failure of any of its Business Systems or any products
\n(including all products sold on or prior to the date hereof) as a result of the
\nadvent of the year 2000, the advent of the twenty-first century or the
\ntransition from the twentieth century through the year 2000.<\/p>\n
(p) Foundry Relationships. Section 3.15(p) of the Company Disclosure
\nSchedule sets forth a complete and correct description of each and every (i)
\nfoundry relationship, wafer or digital signal processor manufacturing and
\nfabricating agreement, understanding or commitment, and (ii) integrated circuit
\ndie or device purchase, supply or service agreement, understanding or
\ncommitment, used by or in connection with the Company’s business, in whole or in
\npart, whether written or oral (the “Supply Contracts”). The Company has
\ndelivered to Parent a correct and complete copy of each written Supply Contract
\nand provided a written summary of each material oral Supply Contract. There are
\nno fees, penalties, price uplifts, shortfall payments, bill backs or other
\namounts outstanding under such Supply Contracts. The quantities available for
\npurchase under each written Supply Contract are as stated on the face of such
\nSupply Contract and are summarized in Section 3.15(p) of the Company Disclosure
\nSchedule. Each manufacturing or service site that requires qualification under
\nthe terms of a Supply Contract is qualified, and no unresolved differences with
\nrespect to product or process specifications remains outstanding. All
\nmanufacturing or service terms and conditions are as they appear to be on the
\nface of the written Supply Contracts. The Company has not received any written
\nor oral notice from the other party to any Supply Contract, or from any other
\nsupplier to the Company, to the effect that such party will not accept purchase
\norders from the Company on such terms, conditions and quantities consistent with
\npast practices. Prices required to be paid for products or services under such
\nSupply Contract are summarized on Section 3.15(p) of the Company Disclosure
\nSchedule. No condition exists that permit a termination or a material change of
\nsuch Supply Contracts by the other party under such Supply Contract.<\/p>\n
SECTION 3.16. Insurance. Except as set forth in Section 3.16 of the Company
\nDisclosure Schedule, each of the Company and its subsidiaries maintains
\ninsurance policies (the “Insurance Policies”) against all risks of a character
\nand in such amounts as are customarily insured against by similarly situated
\ncompanies in the same or similar businesses. Each Insurance Policy is in full
\nforce and effect and is valid, outstanding and enforceable, and all premiums due
\nthereon have been paid in full. None of the Insurance Policies will terminate or
\nlapse (or be affected in any other materially adverse manner) by reason of the
\ntransactions contemplated by this Agreement. Each of the Company and its
\nsubsidiaries has complied in all material respects with the provisions of each
\nInsurance Policy under which it is the insured party. No insurer under any
\nInsurance Policy has canceled or generally disclaimed liability under any such
\npolicy or, to the Company’s knowledge, indicated any intent to do so or not to
\nrenew any such policy. All material claims under the Insurance Policies have
\nbeen filed in a timely fashion.<\/p>\n
SECTION 3.17. Certain Business Practices. None of the Company, any of its
\nsubsidiaries or, to the Company’s knowledge, any directors, officers, agents or
\nemployees of the Company or any of its subsidiaries has (i) used any funds for
\nunlawful contributions, gifts, entertainment or other unlawful expenses related
\nto political activity, (ii) made any unlawful payment to foreign or domestic
\ngovernment officials or employees or to foreign or domestic political parties or
\ncampaigns or violated any provision of the Foreign Corrupt Practices Act of
\n1977, as amended, or (iii) made any other unlawful payment.<\/p>\n
SECTION 3.18. Product Warranties. Section 3.18 of the Company Disclosure
\nSchedule sets forth complete and accurate copies of the written warranties and
\nguaranties by the Company or any of its subsidiaries currently in effect with
\nrespect to its products. There have not been any material deviations from<\/p>\n
21
\n 28<\/p>\n
such warranties and guaranties, and neither the Company, any of its subsidiaries
\nnor any of their respective salesmen, employees, distributors and agents is
\nauthorized to undertake obligations to any customer or to other third parties
\nmaterially in excess of such warranties or guaranties. Neither the Company nor
\nany of its subsidiaries has made any material oral warranty or guaranty with
\nrespect to its products not described on such schedule.<\/p>\n
SECTION 3.19. Suppliers and Customers. Section 3.19 of the Company
\nDisclosure Schedule sets forth the names of the twenty (20) largest customers of
\nthe Company and its subsidiaries during the three (3) month period ended March
\n31, 1999. Since March 31, 1999 the Company has received no notices of
\ntermination or written threats of termination from any of such customers of the
\nCompany and its subsidiaries.<\/p>\n
SECTION 3.20. Vote Required. The affirmative vote of the holders of a
\nmajority of the votes cast by the holders of Shares at a duly constituted
\nmeeting with a quorum present is the only vote of the holders of any class or
\nseries of the Company’s capital stock necessary to approve and adopt this
\nAgreement and the Merger.<\/p>\n
SECTION 3.21. Opinion of Financial Adviser. The Fairness Opinion has not
\nbeen withdrawn, revoked or modified. A true and complete copy of such opinion
\nhas been delivered to Parent.<\/p>\n
SECTION 3.22. Brokers. No broker, finder or investment banker (other than
\nthe Financial Adviser, a true and correct copy of whose engagement agreement has
\nbeen provided to Parent) is entitled to any brokerage, finder’s or other fee or
\ncommission in connection with the transactions contemplated by this Agreement
\nbased upon arrangements made by or on behalf of the Company.<\/p>\n
SECTION 3.23. Takeover Statutes. No “fair price,” “moratorium,” “control
\nshare acquisition” or other similar anti-takeover statute or regulation under
\nthe laws of the State of New Jersey (each a “Takeover Statute”) is applicable to
\nthe Company, the Shares, the Offer, the Merger or any of the other transactions
\ncontemplated by this Agreement. The Company Board has approved the Offer, the
\nMerger and this Agreement, and such approval is sufficient to render
\ninapplicable to the Offer, the Merger, this Agreement, and the Stock Option
\nAgreement the transactions contemplated by this Agreement and the Stock Option
\nAgreement the provisions of Sections 14A:10A-4 and 14A:10A-5 of the NJBCA to the
\nextent, if any, such Sections are applicable to the Offer, the Merger, this
\nAgreement, the Stock Option Agreement or any of the transactions contemplated by
\nthis Agreement and the Stock Option Agreement.<\/p>\n
SECTION 3.24. Representations Complete. None of the representations or
\nwarranties made by the Company in this Agreement nor any statement made in any
\nSchedule or certificate furnished by the Company pursuant to this Agreement, or
\nfurnished in or in connection with documents mailed or delivered to the
\nstockholders of the Company in connection with soliciting their proxy or consent
\nto this Agreement and the Merger, contains or will contain at the Effective
\nTime, any untrue statement of a material fact, or omits or will omit at the
\nEffective Time to state any material fact necessary in order to make the
\nstatements contained herein or therein, in the light of the circumstances under
\nwhich made, not misleading.<\/p>\n
ARTICLE 4<\/p>\n
REPRESENTATIONS AND WARRANTIES OF
\n PARENT AND ACQUISITION<\/p>\n
Parent and Acquisition hereby represent and warrant to the Company as
\nfollows:<\/p>\n
SECTION 4.1. Organization.<\/p>\n
(a) Each of Parent and Acquisition is duly organized, validly existing
\nand in good standing under the laws of the State of Delaware and the State of
\nNew Jersey, respectively, and has all requisite power and authority to own,
\nlease and operate its properties and to carry on its business as now being
\nconducted. Parent has heretofore made available to the Company accurate and
\ncomplete copies of the Certificates of Incorporation and bylaws as currently in
\nfull force and effect, of Parent and Acquisition. Parent owns all of the issued
\nand outstanding capital stock of Acquisition.<\/p>\n
22
\n 29<\/p>\n
(b) Each of Parent and Acquisition is duly qualified or licensed and in
\ngood standing to do business in each jurisdiction in which the property owned,
\nleased or operated by it or the nature of the business conducted by it makes
\nsuch qualification or licensing necessary, except in such jurisdictions where
\nthe failure to be so duly qualified or licensed and in good standing would not
\nhave a Material Adverse Effect on Parent. When used in connection with Parent or
\nAcquisition the term “Material Adverse Effect on Parent” means any circumstance,
\nchange in, or effect on (or circumstance, change in, or effect involving a
\nprospective change on) Parent and its subsidiaries, taken as a whole, that
\nmaterially and adversely affects the ability of Parent and\/or Acquisition to
\nconsummate the Offer or the Merger.<\/p>\n
SECTION 4.2. Authority Relative to this Agreement. Each of Parent and
\nAcquisition has all necessary corporate power and authority to execute and
\ndeliver this Agreement, to perform its obligations under this Agreement and to
\nconsummate the transactions contemplated hereby. The execution and delivery of
\nthis Agreement and the consummation of the transactions contemplated hereby have
\nbeen duly and validly authorized by the boards of directors of Parent and
\nAcquisition and by Parent as the sole stockholder of Acquisition, and no other
\ncorporate proceedings on the part of Parent or Acquisition are necessary to
\nauthorize this Agreement or to consummate the transactions contemplated hereby.
\nThis Agreement has been duly and validly executed and delivered by each of
\nParent and Acquisition and constitutes, assuming the due authorization,
\nexecution and delivery hereof by the Company, a valid, legal and binding
\nagreement of each of Parent and Acquisition enforceable against each of Parent
\nand Acquisition in accordance with its terms, subject to any applicable
\nbankruptcy, insolvency, reorganization, moratorium or similar laws now or
\nhereafter in effect relating to creditors’ rights generally or to general
\nprinciples of equity.<\/p>\n
SECTION 4.3. Information Supplied. None of the information supplied or to
\nbe supplied by Parent or Acquisition for inclusion or incorporation by reference
\nin the Offer Documents and the Proxy Statement will at the date mailed to
\nstockholders and at the times of the meeting or meetings of stockholders of the
\nCompany to be held in connection with the Merger contain any untrue statement of
\na material fact or omit to state any material fact required to be stated therein
\nor necessary in order to make the statements therein in light of the
\ncircumstances under which they are made not misleading. Notwithstanding the
\nforegoing, neither Parent nor Acquisition makes any representation, warranty or
\ncovenant with respect to any information supplied or required to be supplied by
\nthe Company that is contained in or omitted from the Proxy Statement.<\/p>\n
SECTION 4.4. Consents and Approvals; No Violations. Except for filings,
\npermits, authorizations, consents and approvals as may be required under and
\nother applicable requirements of the Securities Act, the Exchange Act, state
\nsecurities or blue sky laws, the HSR Act, and any filings under similar merger
\nnotification laws or regulations of foreign Governmental Entities and the filing
\nand recordation of the Certificate of Merger as required by the NJBCA, no
\nmaterial filing with or notice to, and no material permit, authorization,
\nconsent or approval of any Governmental Entity is necessary for the execution
\nand delivery by Parent or Acquisition of this Agreement or the consummation by
\nParent or Acquisition of the transactions contemplated hereby. Neither the
\nexecution, delivery and performance of this Agreement by Parent or Acquisition
\nnor the consummation by Parent or Acquisition of the transactions contemplated
\nhereby will (a) conflict with or result in any breach of any provision of the
\nrespective Certificates of Incorporation or bylaws (or similar governing
\ndocuments) of Parent or Acquisition, (b) result in a violation or breach of or
\nconstitute (with or without due notice or lapse of time or both) a default (or
\ngive rise to any right of termination, amendment, cancellation or acceleration
\nor Lien) under any of the terms, conditions or provisions of any material note,
\nbond, mortgage, indenture, lease, license, contract, agreement or other
\ninstrument or obligation to which Parent or Acquisition or any of Parent’s other
\nsubsidiaries is a party or by which any of them or any of their respective
\nproperties and assets is bound or (c) violate any material order, writ,
\ninjunction, decree, law, statute, rule or regulation applicable to Parent or
\nAcquisition or any of Parent’s other subsidiaries or any of their respective
\nproperties or assets.<\/p>\n
SECTION 4.5. Litigation. There is no suit, claim, action, proceeding or
\ninvestigation pending or, to the knowledge of Parent threatened, against Parent
\nor any of its subsidiaries or any of their respective properties or assets
\nbefore any Governmental Entity that could reasonably be expected to prevent or
\ndelay the consummation of the transactions contemplated by this Agreement beyond
\nthe Final Date. Neither Parent nor any of its<\/p>\n
23
\n 30<\/p>\n
subsidiaries is subject to any outstanding order, writ, injunction or decree
\nthat could reasonably be expected to prevent or delay the consummation of the
\ntransactions contemplated hereby.<\/p>\n
SECTION 4.6. Brokers. No broker finder or investment banker is entitled to
\nany brokerage, finder’s or other fee or commission in connection with the
\ntransactions contemplated by this Agreement based upon arrangements made by or
\non behalf of Parent or Acquisition.<\/p>\n
SECTION 4.7. Financing. At the expiration of the Offer and at the Effective
\nTime, Parent and Acquisition will have available all the funds necessary for the
\nacquisition of all Shares and to perform their respective obligations under this
\nAgreement, including the payment in full for all Shares validly tendered or
\noutstanding as of the Effective Time.<\/p>\n
SECTION 4.8. Ownership of the Company. As of the date hereof, neither
\nParent nor Acquisition, nor any subsidiary of Parent, is the beneficial owner of
\nany shares of Company Common Stock.<\/p>\n
ARTICLE 5<\/p>\n
COVENANTS<\/p>\n
SECTION 5.1. Conduct of Business of the Company. Except as contemplated by
\nthis Agreement or as described in Section 5.1 of the Company Disclosure
\nSchedule, during the period from the date hereof to the Effective Time, the
\nCompany will and will cause each of its subsidiaries to (a) conduct its
\noperations in the ordinary course of business consistent with past practice and,
\nto the extent consistent therewith, with no less diligence and effort than would
\nbe applied in the absence of this Agreement, and (b) use all commercially
\nreasonable efforts to preserve intact its current business organizations, keep
\navailable the service of its current officers and employees and preserve its
\nrelationships with customers, suppliers, distributors, lessors, creditors,
\nemployees, contractors and others having business dealings with it with the
\nintention that its goodwill and ongoing businesses shall be unimpaired at the
\nEffective Time. Without limiting the generality of the foregoing, except as
\notherwise expressly provided in this Agreement or in Section 5.1 of the Company
\nDisclosure Schedule, prior to the Effective Time, neither the Company nor any of
\nits subsidiaries shall, without the prior written consent of Parent:<\/p>\n
(a) amend its Certificate of Incorporation or bylaws (or other similar
\ngoverning instrument);<\/p>\n
(b) authorize for issuance, issue, sell, deliver or agree or commit to
\nissue, sell or deliver (whether through the issuance or granting of options,
\nwarrants, commitments, subscriptions, rights to purchase or otherwise) any stock
\nof any class or any other debt or equity securities or equity equivalents
\n(including any stock options or stock appreciation rights) except for the
\nissuance and sale of Shares pursuant to the DSE\/DP, Company Stock Options
\noutstanding on the date hereof and grants of shares of Company Stock Options
\nconsistent with Section 5.13;<\/p>\n
(c) split, combine or reclassify any shares of its capital stock,
\ndeclare, set aside or pay any dividend or other distribution (whether in cash,
\nstock or property or any combination thereof) in respect of its capital stock,
\nmake any other actual, constructive or deemed distribution in respect of its
\ncapital stock or otherwise make any payments to stockholders in their capacity
\nas such, or redeem or otherwise acquire any of its securities or any securities
\nof any of its subsidiaries, except as may be required under the terms of any
\nCompany Stock Option;<\/p>\n
(d) adopt a plan of complete or partial liquidation, dissolution,
\nmerger, consolidation, restructuring, recapitalization or other reorganization
\nof the Company or any of its subsidiaries (other than the Merger);<\/p>\n
(e) alter through merger, liquidation, reorganization, restructuring or
\nany other fashion the corporate structure of any subsidiary;<\/p>\n
(f) (i) incur or assume any long-term or short-term debt or issue any
\ndebt securities except, in each case, for borrowings under existing lines of
\ncredit in the ordinary course of business consistent with past practice, or
\nmodify or agree to any material amendment of the terms of any of the foregoing;
\n(ii) assume, guarantee, endorse or otherwise become liable or responsible
\n(whether directly, contingently or otherwise) for<\/p>\n
24
\n 31<\/p>\n
the obligations of any other person except for obligations of subsidiaries of
\nthe Company incurred in the ordinary course of business consistent with past
\npractice, other than third-party guarantees and lease agreements not to exceed
\n$500,000 in the aggregate; (iii) make any loans, advances or capital
\ncontributions to or investments in any other person (other than in accordance
\nwith Section 5.1(m)(vii) and to subsidiaries of the Company or customary loans
\nor advances to employees in each case in the ordinary course of business
\nconsistent with past practice); (iv) pledge or otherwise subject to any Lien
\nshares of capital stock of the Company or any of its subsidiaries; or (v)
\nmortgage or pledge any of its material assets, tangible or intangible, or create
\nor suffer to exist any material Lien thereupon;<\/p>\n
(g) except as may be required by Applicable Law, enter into, adopt or
\namend or terminate any bonus, special remuneration, profit sharing,
\ncompensation, severance, termination, stock option, stock appreciation right,
\nrestricted stock, performance unit, stock equivalent, stock purchase agreement,
\npension, retirement, deferred compensation, employment, health, life, or
\ndisability insurance, dependent care, severance or other employee benefit plan,
\nagreement, trust, fund or other arrangement for the benefit or welfare of any
\ndirector, officer, employee or consultant in any manner or increase in any
\nmanner the compensation or fringe benefits of any director, officer or employee
\nor pay any benefit not required by any plan and arrangement as in effect as of
\nthe date hereof (including the granting of stock appreciation rights or
\nperformance units), except in accordance with Section 5.13;<\/p>\n
(h) grant any severance or termination pay to any director, officer,
\nemployee or consultant, except payments made pursuant to written agreements
\noutstanding on the date hereof or the current severance policies of the Company
\ndescribed on Section 3.11(a) of the Company Disclosure Schedule, the terms of
\nwhich are in all material respects completely and correctly disclosed in Section
\n5.1(h) of the Company Disclosure Schedule or as required by applicable federal,
\nstate or local law or regulations;<\/p>\n
(i) exercise its discretion or otherwise voluntarily accelerate the
\nvesting of any Company Stock Option as a result of the Merger, any other “change
\nin control” of the Company (as defined in the Company Plans) or otherwise.<\/p>\n
(j) except as set forth in Section 5.1(j) of the Company Disclosure
\nSchedule (i) sell, lease, license, transfer or otherwise dispose of any material
\nassets in any single transaction or series of related transactions (including in
\nany transaction or series of related transactions having a fair market value in
\nexcess of $300,000 in the aggregate), other than sales of its products and
\nlicenses of software in the ordinary course of business consistent with past
\npractices, (ii) enter into any exclusive license, distribution, marketing, sales
\nor other agreement or sell, transfer or otherwise dispose of any Intellectual
\nProperty, or (iii) license any source code to any third party;<\/p>\n
(k) except as may be required as a result of a change in law or in
\ngenerally accepted accounting principles, change any of the accounting
\nprinciples, practices or methods used by it;<\/p>\n
(l) revalue in any material respect any of its assets, including writing
\ndown the value of inventory or writing-off notes or accounts receivable, other
\nthan in the ordinary course of business consistent with past practice or as
\nrequired by generally accepted accounting principles;<\/p>\n
(m) (i) except as set forth in Section 5.1(m)(i) of the Company
\nDisclosure Schedule, acquire (by merger, consolidation or acquisition of stock
\nor assets) any corporation, partnership or other person or division thereof or
\nany equity interest therein; (ii) enter into any contract or agreement that
\nwould be material to the Company and its subsidiaries, taken as a whole; (iii)
\namend, modify or waive any material right under any material contract of the
\nCompany or any of its subsidiaries; (iv) modify its standard warranty terms for
\nits products or amend or modify any product warranties in effect as of the date
\nhereof in any material manner that is adverse to the Company or any of its
\nsubsidiaries; (v) authorize any new capital expenditure or expenditures that are
\nnot set forth in Section 5.1(m)(v) of the Company Disclosure Schedule and that
\nin the aggregate are in excess of $500,000 (vi) authorize any new or additional
\nmanufacturing capacity expenditure or expenditures for any manufacturing
\ncapacity contracts or arrangements; or (vii) acquire any other asset or related
\ngroup of assets, or make any investment, in a single transaction or series of
\nrelated transactions with a cost in<\/p>\n
25
\n 32<\/p>\n
excess of $300,000, provided that in no event shall the aggregate of all
\nacquisitions and investments exceed $1,000,000;<\/p>\n
(n) make any material tax election or settle or compromise any material
\nincome tax liability or permit any insurance policy naming it as a beneficiary
\nor loss-payee to expire, or to be canceled or terminated, unless a comparable
\ninsurance policy reasonably acceptable to Parent is obtained and in effect;<\/p>\n
(o) fail to file any Tax Returns when due (or, alternatively, fail to
\nfile for available extensions) or fail to cause such Tax Returns when filed to
\nbe complete and accurate in all material respects;<\/p>\n
(p) fail to pay any Taxes or other material debts when due;<\/p>\n
(q) settle or compromise any pending or threatened suit, action or claim
\nthat (i) relates to the transactions contemplated hereby or (ii) the settlement
\nor compromise of which would involves more than $300,000 or that would otherwise
\nbe material to the Company or that relates to any Intellectual Property matters;<\/p>\n
(r) take any action or fail to take any action that could reasonably be
\nexpected to (i) limit the utilization of any of the net operating losses,
\nbuilt-in losses, tax credits or other similar items of the Company or its
\nsubsidiaries under Section 382, 383, 384 or 1502 of the Code and the Treasury
\nRegulations thereunder, or (ii) cause any transaction in which the Company or
\nany of its subsidiaries was a party that was intended to be treated as a
\nreorganization under Section 368(a) of the Code to fail to qualify as a
\nreorganization under Section 368(a) of the Code; or<\/p>\n
(s) take or agree in writing or otherwise to take any of the actions
\ndescribed in Sections 5.1(a) through 5.1(r) (and it shall use all reasonable
\nefforts not to take any action that would make any of the representations or
\nwarranties of the Company contained in this Agreement untrue or incorrect in any
\nmaterial respect).<\/p>\n
SECTION 5.2. No Solicitation or Negotiation.<\/p>\n
(a) The Company, its subsidiaries and other affiliates (as reasonably
\ndetermined by the Company) and their respective officers and other employees
\nwith managerial responsibilities, directors, representatives (including the
\nFinancial Advisor or any other investment banker and any attorneys and
\naccountants) and agents shall immediately cease any discussions or negotiations
\nwith any other persons with respect to any Third Party Acquisition. The Company
\nalso agrees promptly to request each person that has heretofore executed a
\nconfidentiality agreement in connection with its consideration of acquiring
\n(whether by merger, acquisition of stock or assets or otherwise) the Company or
\nany of its subsidiaries, if any, to return all confidential information
\nheretofore furnished to such person by or on behalf of the Company or any of its
\nsubsidiaries. Neither the Company nor any of its subsidiaries and other
\naffiliates shall, nor shall the Company authorize or permit any of its or their
\nrespective officers, directors, employees, representatives or agents to,
\ndirectly or indirectly, encourage, solicit, participate in or initiate
\ndiscussions or negotiations with or provide any information to any person or
\ngroup (other than Parent and Acquisition or any designees of Parent and
\nAcquisition) concerning any Third Party Acquisition; provided, however,that if
\nthe Board of Directors of the Company determines in good faith, after
\nconsultation with legal counsel, that it is necessary to do so in order to
\ncomply with its fiduciary duties to the Company’s stockholders under the NJBCA,
\nthe Company may, in response to a proposal or offer for a Third Party
\nAcquisition that was not solicited and that the Board of Directors of the
\nCompany determines, based on consultation with the Company Financial Advisor, is
\nfrom a Third Party that is capable of consummating a Superior Proposal and only
\nfor so long as the Board of Directors so determines that its actions are likely
\nto lead to a Superior Proposal, (i) furnish information only of the type and
\nscope with respect to the Company that the Company provided to Parent prior to
\nthe date hereof to any such person pursuant to a customary confidentiality
\nagreement as was executed by Parent prior to the execution of this Agreement and
\n(ii) participate in the discussions and negotiations regarding such proposal or
\noffer; provided, further, nothing herein shall prevent the Company Board from
\ntaking and disclosing to the Company’s stockholders a position contemplated by
\nRules 14d-9 and 14e-2 promulgated under the Exchange Act with regard to any
\ntender or exchange offer. The Company shall promptly (and in any event within
\none business day after becoming aware thereof) (i) notify Parent in the event
\nthe Company<\/p>\n
26
\n 33<\/p>\n
or any of its subsidiaries and other affiliates or any of their respective
\nofficers, directors, employees and agents receives any proposal or inquiry
\nconcerning a Third Party Acquisition, including the terms and conditions thereof
\nand the identity of the party submitting such proposal, and any request for
\nconfidential information in connection with a potential Third Party Acquisition,
\n(ii) provide a copy of any written agreements, proposals or other materials the
\nCompany receives from any such person or group (or its representatives), and
\n(iii) advise Parent from time to time of the status, at any time upon Parent’s
\nrequest, and promptly following any developments concerning the same.<\/p>\n
(b) Except as set forth in this Section 5.2(b), the Company Board shall
\nnot withdraw or modify its recommendation of the transactions contemplated
\nhereby or approve or recommend, or cause or permit the Company to enter into any
\nagreement or obligation with respect to, any Third Party Acquisition.
\nNotwithstanding the foregoing, if the Company Board by a majority vote
\ndetermines in its good faith judgment, after consultation with and based upon
\nthe advice of legal counsel, that it is required to do so in order to comply
\nwith its fiduciary duties, the Company Board may withdraw its recommendation of
\nthe transactions contemplated hereby or approve or recommend a Superior
\nProposal, but in each case only (i) after providing written notice to Parent (a
\n“Notice of Superior Proposal”) advising Parent that the Company Board has
\nreceived a Superior Proposal, specifying the material terms and conditions of
\nsuch Superior Proposal and identifying the person or group making such Superior
\nProposal and (ii) if Parent does not, within five (5) business days after
\nParent’s receipt of the Notice of Superior Proposal, make an offer that the
\nCompany Board by a majority vote determines in its good faith judgment (based on
\nthe written advice of the Financial Advisor or another financial advisor of
\nnationally recognized reputation) to be at least as favorable to the Company’s
\nstockholders as such Superior Proposal; provided, however, that the Company
\nshall not be entitled to enter into any agreement with respect to a Superior
\nProposal unless and until this Agreement is terminated pursuant to Section 7.1
\nand the Company has paid all amounts due to Parent pursuant to Section 7.3. Any
\ndisclosure that the Company Board may be compelled to make with respect to the
\nreceipt of a proposal for a Third Party Acquisition or otherwise in order to
\ncomply with its fiduciary duties or Rule 14d-9 or 14e-2 will not constitute a
\nviolation of this Agreement; provided, however, that such disclosure states that
\nno action will be taken by the Company Board in violation of this Section
\n5.2(b).<\/p>\n
(c) For purposes of this Agreement, “Third Party Acquisition” means the
\noccurrence of any of the following events: (i) the acquisition of the Company by
\nmerger or otherwise by any person (which includes a “person” as such term is
\ndefined in Section 13(d)(3) of the Exchange Act) other than Parent, Acquisition
\nor any affiliate thereof (a “Third Party”); (ii) the acquisition by a Third
\nParty of any material portion (which shall include fifteen percent (15%) or
\nmore) of the assets of the Company and its subsidiaries, taken as a whole, other
\nthan the sale of its products in the ordinary course of business consistent with
\npast practices; (iii) the acquisition by a Third Party of fifteen percent (15%)
\nor more of the outstanding Shares; (iv) the adoption by the Company of a plan of
\nliquidation or the declaration or payment of an extraordinary dividend; (v) the
\nrepurchase by the Company or any of its subsidiaries of more than ten percent
\n(10%) of the outstanding Shares; or (vi) the acquisition (or any group of
\nacquisitions) by the Company or any of its subsidiaries by merger, purchase of
\nstock or assets, joint venture or otherwise of a direct or indirect ownership
\ninterest or investment in any business (or businesses) whose annual revenues,
\nnet income or assets is equal or greater than ten percent (10%) of the annual
\nrevenues, net income or assets of the Company, respectively. For purposes of
\nthis Agreement, a “Superior Proposal” means any bona fide proposal (1) to
\nacquire, directly or indirectly, for consideration consisting solely of cash
\nand\/or securities, all of the Shares then outstanding, or all or substantially
\nall the assets, of the Company, (2) that is fully-financed or financeable and
\ncontains terms that the Company Board by a majority vote determines in its good
\nfaith judgment (based, as to the financial terms, on the written advice of the
\nFinancial Advisor or another financial advisor of nationally recognized
\nreputation) to be more favorable to the Company’s stockholders than the Merger,
\n(3) that the Company Board by a majority vote determines in its good faith
\njudgment (following and based on consultation with the Financial Adviser or
\nanother financial advisor of nationally recognized reputation and its legal and
\nother advisors) to be reasonably capable of being completed (taking into account
\nall legal, financial, regulatory and other aspects of the proposal and the
\nperson making the proposal), (4) that does not contain a “right of first
\nrefusal” or “right of first offer” with respect to any counter-proposal that
\nParent might make and (5) that does not contain any “due diligence” condition.<\/p>\n
27
\n 34<\/p>\n
SECTION 5.3. Meeting of Stockholders.<\/p>\n
(a) The Company shall, following the acceptance for payment of Shares by
\nAcquisition pursuant to the Offer, take all actions necessary in accordance with
\nthe NJBCA and its Certificate of Incorporation and bylaws to duly call, give
\nnotice of, convene and hold a meeting of its stockholders as promptly as
\npracticable to consider and vote upon the adoption and approval of this
\nAgreement and the transactions contemplated hereby (the “Meeting”). The
\nstockholder vote required for the adoption and approval of the transactions
\ncontemplated by this Agreement shall be the vote required by the NJBCA and the
\nCompany’s Certificate of Incorporation and bylaws. The Company will, through the
\nCompany Board, recommend to its stockholders approval of such matters subject to
\nthe provisions of Section 5.2(b). The Company shall, promptly after payment for
\nthe tendered shares by Acquisition pursuant to the Offer, prepare and file with
\nthe SEC the Proxy Statement for the solicitation of a vote of the holders of
\nShares approving the Merger, which, subject to the provisions of Section 5.2(b),
\nshall include the recommendation of the Company Board that stockholders of the
\nCompany vote in favor of the approval and adoption of this Agreement and the
\nwritten opinion of the Financial Advisor that the consideration to be received
\nby the stockholders of the Company pursuant to this Agreement is fair to such
\nstockholders from a financial point of view. The Company shall use all
\nreasonable efforts to have the Proxy Statement cleared by the SEC as promptly as
\npracticable after such filing, and promptly thereafter mail the Proxy Statement
\nto the stockholders of the Company. Whenever any event occurs which is required
\nto be set forth in an amendment or supplement to the Proxy Statement, the
\nCompany will promptly inform Parent of such occurrence and cooperate in filing
\nwith the SEC or its staff or any other government officials, and\/or mailing to
\nstockholders of the Company, such amendment or supplement. Notwithstanding
\nanything to the contrary contained in this Agreement, the Company may adjourn or
\npostpone (i) the Meeting to the extent necessary to ensure that any necessary
\nsupplement or amendment to the Proxy Statement is provided to the Company’s
\nstockholders in advance of a vote on the Merger and this Agreement or (ii) the
\ntime for which the Meeting is originally scheduled (as set forth in the Proxy
\nStatement), if there are insufficient Shares represented, either in person or by
\nproxy, to constitute a quorum necessary to conduct the business of the Meeting.
\nNotwithstanding the foregoing, if Parent, Acquisition and\/or any other
\nsubsidiary of Parent shall acquire at least 90% of the outstanding Shares, the
\nparties shall take all necessary and appropriate action to cause the Merger to
\nbecome effective as soon as practicable after the expiration of the Offer
\nwithout a Meeting in accordance with Section 14A:10-5.1 of the NJBCA.<\/p>\n
(b) Each of Parent and Acquisition agrees to (and Parent shall cause
\nAcquisition to) vote in favor of the Merger all Shares purchased pursuant to the
\nOffer and all other Shares owned by Parent or any other subsidiary of Parent.<\/p>\n
SECTION 5.4. Access to Information.<\/p>\n
(a) Between the date hereof and the Effective Time, upon reasonable
\nnotice and except as set forth on Section 5.4 of the Company Disclosure Schedule
\nand subject in each instance to the requirements of Applicable Law, the Company
\nwill give Parent and its authorized representatives reasonable access to all
\nemployees, plants, offices, warehouses and other facilities and to all books and
\nrecords and personnel files of current employees of the Company and its
\nsubsidiaries as Parent may reasonably require, and will cause its officers and
\nthose of its subsidiaries to furnish Parent with such financial and operating
\ndata and other information with respect to the business and properties of the
\nCompany and its subsidiaries as Parent may from time to time reasonably request.
\nBetween the date hereof and the Effective Time, Parent shall make available to
\nthe Company, as reasonably requested by the Company, a designated officer of
\nParent to answer questions and make available such information regarding Parent
\nand its subsidiaries as is reasonably requested by the Company taking into
\naccount the nature of the transactions contemplated by this Agreement.<\/p>\n
(b) Between the date hereof and the Effective Time, the Company shall
\nfurnish to Parent (i) within two (2) business days following preparation thereof
\n(and in any event within twenty (20) business days after the end of each
\ncalendar month, commencing with June 1999), an unaudited balance sheet as of the
\nend of such month and the related statements of earnings, stockholders’ equity
\nand cash flows, without notes to such financial statements, (ii) within two (2)
\nbusiness days following preparation thereof (and in any event within twenty (20)
\nbusiness days after the end of each fiscal quarter) an unaudited balance sheet
\nas of the end<\/p>\n
28
\n 35<\/p>\n
of such quarter and the related statements of earnings, stockholders’ equity and
\ncash flows for the quarter then ended, with condensed notes to such financial
\nstatements, and (iii) within two (2) business days following preparation thereof
\n(and in any event within ninety (90) calendar days after the end of each fiscal
\nyear) an audited balance sheet as of the end of such year and the related
\nstatements of earnings, stockholders’ equity (deficit) and cash flows, all of
\nsuch financial statements referred to in clauses (i), (ii) and (iii) to be
\nprepared in accordance with generally accepted accounting principles in
\nconformity with the practices consistently applied by the Company with respect
\nto such financial statements. All the foregoing shall be in accordance with the
\nbooks and records of the Company and shall fairly present its financial position
\n(taking into account the differences between the monthly, quarterly and annual
\nfinancial statements prepared by the Company in conformity with its past
\npractices) as of the last day of the period then ended.<\/p>\n
(c) Each of the parties hereto will hold, and will cause its consultants
\nand advisers to hold, in confidence all documents and information furnished to
\nit by or on behalf of another party to this Agreement in connection with the
\ntransactions contemplated by this Agreement pursuant to the terms of that
\ncertain Corporate Nondisclosure Agreement No. 2387365 entered into between the
\nCompany and Parent and Addendum No. 1 thereto dated May 21, 1999.<\/p>\n
SECTION 5.5. Certain Filings; Reasonable Efforts.<\/p>\n
(a) Subject to the terms and conditions herein provided, including
\nSection 5.2(b), each of the parties hereto agrees to use all reasonable efforts
\nto take or cause to be taken all action and to do or cause to be done all things
\nreasonably necessary, proper or advisable under Applicable Law to consummate and
\nmake effective the transactions contemplated by this Agreement, including using
\nall reasonable efforts to do the following, (i) cooperate in the preparation and
\nfiling of the Proxy Statement and any amendments thereto, any filings that may
\nbe required under the HSR Act and any filings under similar merger notification
\nlaws or regulations of foreign Governmental Entities; (ii) obtain consents of
\nall third parties and Governmental Entities necessary, proper, advisable or
\nreasonably requested by Parent or the Company, for the consummation of the
\ntransactions contemplated by this Agreement; (iii) contest any legal proceeding
\nrelating to the Merger; and (iv) execute any additional instruments necessary to
\nconsummate the transactions contemplated hereby. Subject to the terms and
\nconditions of this Agreement, Parent and Acquisition agree to use all reasonable
\nefforts to cause the Effective Time to occur as soon as practicable after the
\nCompany stockholder vote with respect to the Merger or the purchase by
\nAcquisition of 90% or more of the outstanding Shares pursuant to the Offer. The
\nCompany agrees to use all reasonable efforts to encourage its employees to
\naccept any offers of employment extended by Parent. If at any time after the
\nEffective Time any further action is necessary to carry out the purposes of this
\nAgreement the proper officers and directors of each party hereto shall take all
\nsuch necessary action.<\/p>\n
(b) Parent and the Company will consult and cooperate with one another,
\nand consider in good faith the views of one another, in connection with any
\nanalyses, appearances, presentations, letters, white papers, memoranda, briefs,
\narguments, opinions or proposals made or submitted by or on behalf of any party
\nhereto in connection with proceedings under or relating to the HSR Act or any
\nother foreign, federal, or state antitrust, competition, or fair trade law. In
\nthis regard but without limitation, each party hereto shall promptly inform the
\nother of any material communication between such party and the Federal Trade
\nCommission, the Antitrust Division of the United States Department of Justice,
\nor any other federal, foreign or state antitrust or competition Governmental
\nEntity regarding the transactions contemplated herein.<\/p>\n
SECTION 5.6. Public Announcements. Neither Parent, Acquisition nor the
\nCompany shall issue any press release or otherwise make any public statements
\nwith respect to the transactions contemplated by this Agreement, including the
\nMerger, or any Third Party Acquisition, without the prior consent of Parent and
\nAcquisition (in the case of the Company) or the Company (in the case of Parent
\nor Acquisition), except (i) as may be required by Applicable Law, or by the
\nrules and regulations of, or pursuant to any agreement with, the Nasdaq National
\nMarket, (ii) following a change, if any, of the Company Board’s recommendation
\nof the Merger (in accordance with Section 5.2(b)) or (iii) only in the case of a
\nrelease or statement relating to a Third Party Acquisition, if the Company Board
\nhas been advised by outside legal counsel that a press release or other public
\nstatement is required by Applicable Law. The first public announcement of this<\/p>\n
29
\n 36<\/p>\n
Agreement, the Offer and the Merger shall be a joint press release agreed upon
\nby Parent, Acquisition and the Company.<\/p>\n
SECTION 5.7. Indemnification and Directors’ and Officers’ Insurance.<\/p>\n
(a) From and after the Effective Time, Parent shall cause the Surviving
\nCorporation to indemnify, defend and hold harmless (and shall also cause the
\nSurviving Corporation to advance expenses as incurred to the fullest extent
\npermitted under Applicable Law to), to the extent not covered by insurance, each
\nperson who is now or has been prior to the date hereof or who becomes prior to
\nthe Effective Time an officer or director of the Company or any of the Company’s
\nsubsidiaries (the “Indemnified Persons”) against (i) all losses, claims,
\ndamages, costs, expenses (including counsel fees and expenses), settlement,
\npayments or liabilities arising out of or in connection with any claim, demand,
\naction, suit, proceeding or investigation based in whole or in part on or
\narising in whole or in part out of the fact that such person is or was an
\nofficer or director of the Company or any of its subsidiaries, whether or not
\npertaining to any matter existing or occurring at or prior to the Effective Time
\nand whether or not asserted or claimed prior to or at or after the Effective
\nTime (“Indemnified Liabilities”); and (ii) all Indemnified Liabilities based in
\nwhole or in part on or arising in whole or in part out of or pertaining to this
\nAgreement, the Stock Option Agreement or the transactions contemplated hereby or
\nthereby, in each case to the fullest extent required or permitted under
\nApplicable Law. Nothing contained herein shall make Parent, Acquisition, the
\nCompany or the Surviving Corporation, an insurer, a co-insurer or an excess
\ninsurer in respect of any insurance policies which may provide coverage for
\nIndemnified Liabilities, nor shall this Section 5.7 relieve the obligations of
\nany insurer in respect thereto. The parties hereto intend, to the extent not
\nprohibited by Applicable Law, that the indemnification provided for in this
\nSection 5.7 shall apply without limitation to negligent acts or omissions by an
\nIndemnified Person. Each Indemnified Person is intended to be a third party
\nbeneficiary of this Section 5.7 and may specifically enforce its terms. This
\nSection 5.7 shall not limit or otherwise adversely affect any rights any
\nIndemnified Person may have under any agreement with the Company or under the
\nCompany’s Certificate of Incorporation or bylaws as presently in effect.<\/p>\n
(b) From and after the Effective Time, Parent shall cause the Surviving
\nCorporation to fulfill and honor in all respects the obligations of the Company
\npursuant to any indemnification agreements between the Company and its directors
\nand officers as of or prior to the date hereof (or indemnification agreements in
\nthe Company’s customary form for directors joining the Company Board prior to
\nthe Effective Time) and any indemnification provisions under the Company’s
\ncertificate of incorporation or bylaws as in effect immediately prior to the
\nEffective Time. The Surviving Corporation’s aggregate obligation to indemnify
\nand hold harmless all Indemnified Persons for all matters to which such
\nIndemnified Persons may be entitled to be indemnified or held harmless under
\nsubsections (a) and (b) of this Section 5.7 shall in no event exceed the
\nCompany’s net worth as of March 31, 1999.<\/p>\n
(c) For a period of six years after the Effective Time, Parent will
\nmaintain or cause the Surviving Corporation to maintain in effect, if available,
\ndirectors’ and officers’ liability insurance covering those persons who, as of
\nimmediately prior to the Effective Time, are covered by the Company’s directors’
\nand officers’ liability insurance policy (the “Insured Parties”) on terms no
\nless favorable to the Insured Parties than those of the Company’s present
\ndirectors’ and officers’ liability insurance policy; provided, however, that in
\nno event shall Parent or the Company be required to expend on an annual basis in
\nexcess of 200% of the annual premium currently paid by the Company for such
\ncoverage (or such coverage as is available for 200% of such annual premium);
\nprovided further, that, in lieu of maintaining such existing insurance as
\nprovided above, Parent, at its election, may cause coverage to be provided under
\nany policy maintained for the benefit of Parent or any of its subsidiaries, so
\nlong as the terms are not materially less advantageous to the intended
\nbeneficiaries thereof than such existing insurance.<\/p>\n
(d) Neither Parent nor any of its affiliates shall be obligated to
\nguarantee the payment or performance of the Company’s obligations under
\nsubsection (a) or (b) of this Section 5.7, so long as the Surviving Corporation
\nhonors such obligations to the extent of the Company’s net worth at March 31,
\n1999. In no event, however, shall Parent or any such affiliate have any
\nliability or obligation to any Indemnified Person arising from the Company’s
\nbreach of, or inability to perform its obligations under, subsection (a) or (b)
\nof<\/p>\n
30
\n 37<\/p>\n
this Section 5.7 in excess of the difference between the net worth of the
\nCompany at March 31, 1999 and the aggregate of all amounts paid by the Company
\nin satisfaction of such obligation. The provisions of this Section 5.7 are
\nintended to be for the benefit of, and will be enforceable by, each person
\nentitled to indemnification hereunder and the heirs and representatives of such
\nperson. Parent will not permit the Company to merge or consolidate with any
\nother Person unless the Company will ensure that the surviving or resulting
\nentity assumes the obligations imposed by this Section 5.7.<\/p>\n
SECTION 5.8. Notification of Certain Matters. The Company shall give prompt
\nnotice to Parent, and Parent shall give prompt notice to the Company, of (i) the
\noccurrence or nonoccurrence of any event the occurrence or nonoccurrence of
\nwhich has caused or would be likely to cause any representation or warranty
\ncontained in this Agreement by such first party to be untrue or inaccurate in
\nany material respect at or prior to the Effective Time and (ii) any material
\nfailure by such first party to comply with or satisfy in any material respect
\nany covenant, condition or agreement to be complied with or satisfied by it
\nhereunder; provided, however, that the delivery of any notice pursuant to this
\nSection 5.8 shall not cure such breach or non-compliance or limit or otherwise
\naffect the remedies available hereunder to the party receiving such notice.<\/p>\n
SECTION 5.9. Additions to and Modification of Company Disclosure
\nSchedule. Concurrently with the execution and delivery of this Agreement, the
\nCompany has delivered a Company Disclosure Schedule that includes all of the
\ninformation required by the relevant provisions of this Agreement. In addition,
\nthe Company shall deliver to Parent and Acquisition such additions to or
\nmodifications of any Sections of the Company Disclosure Schedule necessary to
\nmake the information set forth therein true, accurate and complete in all
\nmaterial respects as soon as practicable after such information is available to
\nthe Company after the date of execution and delivery of this Agreement;
\nprovided, however, that such disclosure shall not be deemed to constitute an
\nexception to its representations and warranties under Article 3, nor limit the
\nrights and remedies of Parent and Acquisition under this Agreement for any
\nbreach by the Company of such representation and warranties.<\/p>\n
SECTION 5.10. Access to Company Employees. The Company agrees to provide
\nParent with, and to cause each of its subsidiaries to provide Parent with,
\nreasonable access to its employees during normal working hours following the
\ndate of this Agreement, to among other things, deliver offers of continued
\nemployment and to provide information to such employees about Parent.<\/p>\n
SECTION 5.11. Company Compensation and Benefit Plans. The Company agrees to
\ntake all actions necessary to amend, merge, freeze or terminate all compensation
\nand benefit plans, effective at the Closing Date, as requested in writing by
\nParent.<\/p>\n
SECTION 5.12. Takeover Statutes. If any Takeover Statute or any similar
\nstatute, law, rule or regulation in any State of the United States (including
\nunder the NJBCA or any other law of the State of New Jersey) is or may become
\napplicable to the Offer, the Merger or any of the other transactions
\ncontemplated by this Agreement or the Stock Option Agreement, the Company and
\nthe Company Board shall promptly grant such approvals and use all reasonable
\nefforts to take such lawful actions as are necessary so that such transactions
\nmay be consummated as promptly as practicable on the terms contemplated by this
\nAgreement or the Stock Option Agreement, as the case may be, or by the Offer or
\nthe Merger, as the case may be, and use all reasonable efforts to otherwise take
\nsuch lawful actions to eliminate or minimize the effects of such statute, law,
\nrule or regulation, on such transactions.<\/p>\n
SECTION 5.13. Company Stock Options.<\/p>\n
(a) The Company agrees that, from and after the date hereof, it will not
\ntake any action or refrain from taking any action, that (i) will prevent or is
\ninconsistent with Parent assuming any of the Assumed Options or any of the
\nAssumed Option Plans, (ii) results in the acceleration of the vesting or
\nexercisability of any Assumed Option or (iii) causes the transactions
\ncontemplated by this Agreement to result in or cause the acceleration of the
\nvesting or exercisability of any Assumed Option.<\/p>\n
(b) From and after the date hereof, the Company agrees that with respect
\nto each restricted stock grant and each grant of a Company Option in connection
\nwith an offer of employment for a new employee, such grant will not include or
\nbe subject to any change of control provisions (including the change in control<\/p>\n
31
\n 38<\/p>\n
provisions of the 1997 Plan or 1988 Plan) and will not be in an amount in excess
\nof such grants made to new employees of a similar grade, consistent with past
\npractice, and will be within the ranges set forth in the “At-Hire Grant
\nGuidelines” approved by Parent and set forth in Section 5.13 of the Company
\nDisclosure Schedule.<\/p>\n
(c) From and after the date hereof, the Company agrees that, with
\nrespect to each restricted stock grant and each grant of a Company Option
\ngranted to a continuing employee after May 25, 1999, such grant will not include
\nor be subject to any change in control provisions (including the change in
\ncontrol provisions of the 1997 Plan or 1988 Plan), will not be in an amount in
\nexcess of such grants made to continuing employees of a similar grade,
\nconsistent with past practice, and will otherwise be within the ranges set forth
\nin the “Add-On Grant Guidelines” approved by Parent and set forth in Section
\n5.13 of the Company Disclosure Schedule, and the aggregate number of shares
\ncovered by such grants shall not exceed Six Hundred Sixty Thousand (660,000).<\/p>\n
(d) The Company agrees to cause the Company Board to adopt all
\nresolutions reasonably necessary or appropriate to further the purposes of
\nsubsections (a), (b) and (c) of this Section 5.13 and provide that all options
\noutstanding under each Assumed Option Plan can be assumed by Parent.<\/p>\n
(e) The Company will provide the notice described in clause II of
\nSection 12 of the Company’s 1993 Non-Employee Director Stock Option Plan and
\nwill take all actions necessary to effect the procedures described therein.<\/p>\n
(f) In the event that a “DSE\/DP Participant” ceases to be a member of
\nthe Company Board as a result of the Merger, Parent shall assure that such
\nDSE\/DP Participant receives the same benefits that he would have received had
\nhis service on the Company Board been terminated immediately prior to the
\nEffective Time and had he then received shares of Company Common Stock pursuant
\nto the Company’s 1997 Director Stock Election\/Deferral Plan (the “DSE\/DP”) prior
\nto the Effective Time. The term “DSE\/DP Participant” shall mean a participant in
\nthe DSE\/DP, but only to the extent that such participant has elected to receive
\ndeferred fees in the form of Company Common Stock.<\/p>\n
(g) The Company’s actual new hires prior to Closing shall be consistent
\nwith and within the ranges set forth in the 1999 hiring plan set forth in
\nSchedule 5.13.<\/p>\n
SECTION 5.14. ISRA. The Company agrees that it shall, at its sole cost and
\nexpense, either: (a) obtain from the New Jersey Department of Environmental
\nProtection (the “NJDEP”) a “Letter of Non-Applicability” that the transactions
\ncontemplated by this Agreement are exempt from the requirements of ISRA; or (b)
\nattain compliance with the requirements of ISRA by obtaining from the NJDEP (i)
\napproval of a proposed “Negative Declaration”, as such term is defined at
\nN.J.S.A. 13:1K-8, (ii) a “no further action letter”, as such term is defined at
\nN.J.S.A. 13:1K-8, or (iii) an equivalent final written approval of the
\nimplementation of a “Remedial action workplan”, as that term is defined at
\nN.J.S.A. 58:10B-1, which is acceptable to the NJDEP and Parent, such acceptance
\nby Parent not to be unreasonably withheld. The Company further agrees that, as
\nrequired by the NJDEP, it shall obtain and maintain a “Remediation funding
\nsource,” as such term is defined at N.J.S.A. 58:10B-1 in an amount and form
\nacceptable to the NJDEP. The Company shall provide Parent a reasonable
\nopportunity to review and comment on all proposed filings and correspondence by
\nthe Company under this Section 5.14 prior to filing with the NJDEP, and shall
\nprovide a copy of all filings and correspondence by the Company under this
\nSection 5.14 no later than two (2) business days after being filed or delivered
\nto the NJDEP. The Company shall provide to Parent copies of all written
\ncorrespondence received from the NJDEP promptly following receipt and shall
\npromptly advise Parent of any oral, electronic or other communications from the
\nNJDEP.<\/p>\n
SECTION 5.15. Certain Rights of Warrant Holder. The holder of the Warrant
\n(as defined herein) shall have the right, on and after the Effective Time, to
\npurchase and receive upon the basis and upon the terms and conditions specified
\nin the Warrant, upon exercise of the Warrant in accordance with its terms, and
\nin lieu of the “Warrant Shares” (as such term is defined in the Warrant)
\nimmediately theretofore purchasable and receivable upon the exercise of the
\nrights represented thereby, such amount of cash as may be payable pursuant to
\nthe terms of this Agreement with respect to or in exchange for the number of
\nshares of Company<\/p>\n
32
\n 39<\/p>\n
Common Stock immediately theretofore purchasable upon the exercise of the rights
\nrepresented by the Warrant as if such shares were outstanding immediately prior
\nto the Effective Time. For purposes of this Section 5.15, the term “Warrant”
\nshall mean the Dialogic Common Stock Purchase Warrant delivered to Microsoft
\nCorporation pursuant to Dialogic’s Common Stock and Warrant Purchase Agreement
\nwith Microsoft Corporation dated as of March 1, 1999.<\/p>\n
ARTICLE 6<\/p>\n
CONDITIONS TO CONSUMMATION OF THE MERGER<\/p>\n
SECTION 6.1. Conditions to Each Party’s Obligations to Effect the
\nMerger. The respective obligations of each party hereto to effect the Merger are
\nsubject to the satisfaction at or prior to the Effective Time of the following
\nconditions:<\/p>\n
(a) this Agreement shall have been approved and adopted by the requisite
\nvote of the stockholders of the Company, if required by Applicable Law;<\/p>\n
(b) no statute, rule, regulation, executive order, decree, ruling or
\ninjunction shall have been enacted, entered, promulgated or enforced by any
\nUnited States federal or state court or United States federal or state
\nGovernmental Entity that prohibits, restrains, enjoins or restricts the
\nconsummation of the Merger;<\/p>\n
(c) any governmental or regulatory notices, approvals or other
\nrequirements necessary to consummate the transactions contemplated hereby and to
\noperate the Business after the Effective Time in all material respects as it was
\noperated prior thereto (other than under the HSR Act) shall have been given,
\nobtained or complied with, as applicable; and<\/p>\n
(d) the Proxy Statement, if required to be prepared and disseminated to
\nthe Company’s stockholders, shall have been cleared by the SEC and shall not be
\nthe subject of any stop order.<\/p>\n
SECTION 6.2. Conditions to the Obligations of the Company. The obligation
\nof the Company to effect the Merger is subject to the satisfaction at or prior
\nto the Effective Time of the following conditions:<\/p>\n
(a) the representations and warranties of Parent and Acquisition
\ncontained in this Agreement shall be true and correct (except to the extent that
\nthe aggregate of all breaches thereof do not constitute a Material Adverse
\nEffect on Parent) at and as of the Effective Time with the same effect as if
\nmade at and as of the Effective Time (except to the extent such representations
\nspecifically relate to an earlier date, in which case such representations shall
\nbe true and correct as of such earlier date, and in any event, subject to the
\nforegoing Material Adverse Effect qualification) and, at the Closing, Parent and
\nAcquisition shall have delivered to the Company a certificate to that effect,
\nexecuted by two (2) executive officers of Parent and Acquisition; and<\/p>\n
(b) each of the covenants and obligations of Parent and Acquisition to
\nbe performed at or before the Effective Time pursuant to the terms of this
\nAgreement shall have been duly performed in all material respects at or before
\nthe Effective Time and, at the Closing, Parent and Acquisition shall have
\ndelivered to the Company a certificate to that effect, executed by two (2)
\nexecutive officers of Parent and Acquisition.<\/p>\n
SECTION 6.3. Conditions to the Obligations of Parent and Acquisition. The
\nrespective obligations of Parent and Acquisition to effect the Merger are
\nsubject to the satisfaction at or prior to the Effective Time of the following
\nconditions:<\/p>\n
(a) the representations and warranties of the Company contained in this
\nAgreement shall be true and correct (except to the extent that the aggregate of
\nall breaches thereof do not constitute a Material Adverse Effect on the Company)
\nat and as of the Effective Time with the same effect as if made at and as of the
\nEffective Time (except to the extent such representations specifically relate to
\nan earlier date, in which case such representations shall be true and correct as
\nof such earlier date, and in any event, subject to the foregoing Material
\nAdverse Effect qualification) and, at the Closing, the Company shall have
\ndelivered to Parent and Acquisition a certificate to that effect, executed by
\ntwo (2) executive officers of the Company;<\/p>\n
33
\n 40<\/p>\n
(b) each of the covenants and obligations of the Company to be performed
\nat or before the Effective Time pursuant to the terms of this Agreement shall
\nhave been duly performed in all material respects at or before the Effective
\nTime and, at the Closing, the Company shall have delivered to Parent and
\nAcquisition a certificate to that effect, executed by two (2) executive officers
\nof the Company;<\/p>\n
(c) since March 31, 1999, there shall have been no events, changes or
\neffects, individually or in the aggregate, with respect to the Company or its
\nsubsidiaries that constitutes a Material Adverse Effect on the Company; or<\/p>\n
(d) in connection with the compliance by Parent or Acquisition with any
\nApplicable Law (including the HSR Act) or obtaining the consent or approval of
\nany Governmental Entity whose consent or approval may be required to consummate
\nthe transactions contemplated by this Agreement, Parent shall not be (i)
\nrequired, or be construed to be required, to sell or divest any assets or
\nbusiness or to restrict any business operations in order to obtain the consent
\nor successful termination of any review of any such Governmental Entity
\nregarding the transactions contemplated hereby or (ii) prohibited from owning,
\nand no material limitation shall be imposed on Parent’s ownership of, any
\nmaterial portion of the Company’s business or assets.<\/p>\n
ARTICLE 7<\/p>\n
TERMINATION; AMENDMENT; WAIVER<\/p>\n
SECTION 7.1. Termination. This Agreement may be terminated and the Merger
\nmay be abandoned at any time prior to the Effective Time whether before or after
\napproval and adoption of this Agreement by the Company’s stockholders:<\/p>\n
(a) by mutual written consent of Parent, Acquisition and the Company;<\/p>\n
(b) by Parent and Acquisition or the Company if (i) any court of
\ncompetent jurisdiction in the United States or other United States federal or
\nstate Governmental Entity shall have issued a final order, decree or ruling, or
\ntaken any other final action, restraining, enjoining or otherwise prohibiting
\nthe Merger and such order, decree, ruling or other action is or shall have
\nbecome nonappealable or (ii) the Merger has not been consummated by December 15,
\n1999 (the “Final Date”); provided, however, that no party may terminate this
\nAgreement pursuant to this clause (ii) if such party’s failure to fulfill any of
\nits obligations under this Agreement shall have been a principal reason that the
\nEffective Time shall not have occurred on or before said date;<\/p>\n
(c) by the Company if (i) there shall have been a breach of any
\nrepresentations or warranties on the part of Parent or Acquisition set forth in
\nthis Agreement or if any representations or warranties of Parent or Acquisition
\nshall have become untrue such that, in either such instance, the conditions set
\nforth in Section 6.2(a) would be incapable of being satisfied by the Final Date,
\nprovided that the Company has not breached any of its obligations hereunder in
\nany material respect; (ii) there shall have been a breach by Parent or
\nAcquisition of any of their respective covenants or agreements hereunder having
\na Material Adverse Effect on Parent or materially adversely affecting (or
\nmaterially delaying) the ability of the Company to consummate the Merger, and
\nParent or Acquisition, as the case may be, has not cured such breach within five
\n(5) business days after notice by the Company thereof, provided that the Company
\nhas not breached any of its obligations hereunder in any material respect; (iii)
\nthe Company shall have convened the Meeting and shall have failed to obtain the
\nrequisite vote of its stockholders thereat (including any adjournments thereof);
\nor (iv) the Company Board has received a Superior Proposal, has complied with
\nthe provisions of Section 5.3(b), and has made the payment called for by Section
\n7.3(a);<\/p>\n
(d) by Parent and Acquisition if (i) there shall have been a breach of
\nany representations or warranties on the part of the Company set forth in this
\nAgreement or if any representations or warranties of the Company shall have
\nbecome untrue such that, in either such instance, the conditions set forth in
\nSection 6.3(a) would be incapable of being satisfied by the Final Date, provided
\nthat neither Parent nor Acquisition has breached any of their respective
\nobligations hereunder in any material respect; (ii) there shall have been a
\nbreach by the Company of one or more of its covenants or agreements hereunder
\nhaving a<\/p>\n
34
\n 41<\/p>\n
Material Adverse Effect on the Company (or, in the case of Section 5.2, any
\nmaterial breach thereof) or materially adversely affecting (or materially
\ndelaying) the ability of Acquisition to consummate the Offer or of Parent,
\nAcquisition or the Company to consummate the Merger, and the Company has not
\ncured such breach within five (5) business days after notice by Parent or
\nAcquisition thereof, provided that neither Parent nor Acquisition has breached
\nany of their respective obligations hereunder in any material respect; (iii) the
\nCompany Board shall have recommended to the Company’s stockholders a Superior
\nProposal; (iv) the Company Board shall have withdrawn or adversely modified its
\napproval or recommendation of this Agreement, the Offer or the Merger; (v) at
\nany time after the date on which Acquisition has accepted Shares for payment
\npursuant to the Offer, the Company Board (with the concurrence of, or because of
\nthe vote of, one or more of the Continuing Directors) shall have ceased using
\nall reasonable efforts to call, give notice of, or convene or hold the Meeting
\nas promptly as practicable or shall have adopted a resolution not to effect any
\nof the foregoing; or (vi) the Company shall have convened the Meeting,
\nAcquisition shall have voted all of the Shares accepted by Acquisition for
\npayment pursuant to the Offer in favor of the Merger, and the Company shall have
\nfailed to obtain the requisite vote of its stockholders thereat (including any
\nadjournments thereof);<\/p>\n
(e) by the Company, if by the Final Date, Acquisition shall have failed
\nto pay for Shares pursuant to the Offer; provided, however, that the right to
\nterminate this Agreement pursuant to this subsection (e) shall not be available
\nto the Company if it has breached in any material respect its obligations under
\nthis Agreement that in any manner shall have proximately contributed in any
\nmaterial respect to the failure referenced in this subsection (e); or<\/p>\n
(f) by Parent and Acquisition, if Acquisition shall have terminated the
\nOffer in accordance with the provisions of Annex A; provided, however, that the
\nright to terminate this Agreement pursuant to this subsection (f) shall not be
\navailable to Parent and Acquisition if either of them has breached in any
\nmaterial respect its obligations under this Agreement in any manner that shall
\nhave proximately contributed in any material respect to the termination of the
\nOffer.<\/p>\n
SECTION 7.2. Effect of Termination. In the event of the termination and
\nabandonment of this Agreement pursuant to Section 7.1, this Agreement shall
\nforthwith become void and have no effect without any liability on the part of
\nany party hereto or its affiliates, directors, officers or stockholders other
\nthan the provisions of this Section 7.2 and Sections 5.4(c) and 7.3. Nothing
\ncontained in this Section 7.2 shall relieve any party from liability for any
\nbreach of any covenant in this Agreement prior to such termination. The
\nrepresentation and warranties made herein shall not survive beyond the Effective
\nTime or a termination of this Agreement, and, except for payments that may be
\nrequired under Section 7.3, no party shall have any liability for breach of any
\nrepresentation or warranty. Nothing set forth herein shall limit any rights any
\nparty may have arising out of the intentional fraudulent conduct of any other
\nparty hereto.<\/p>\n
SECTION 7.3. Fees and Expenses.<\/p>\n
(a) In the event that this Agreement shall be terminated pursuant to:<\/p>\n
(i) Section 7.1(c)(iv) or 7.1(d)(iii), (iv) or (v);<\/p>\n
(ii) Section 7.1(d)(i) or (ii) and, at the time of such termination,
\n(x) there is outstanding an offer by a Third Party to consummate, or a Third
\nParty shall have publicly announced (and not withdrawn) a plan or proposal with
\nrespect to, a Third Party Acquisition and such Third Party Acquisition occurs,
\nor (y) there is no such Third Party offer outstanding or plan or proposal
\nannounced but within twelve (12) months after the date on which this Agreement
\nhas been terminated the Company enters into an agreement with respect to a Third
\nParty Acquisition or a Third Party Acquisition occurs involving any person other
\nthan Parent or one of its subsidiaries;<\/p>\n
(iii) Section 7.1(f) and, at the time of such termination, there is
\noutstanding an offer by a Third Party to consummate, or a Third Party shall have
\npublicly announced (and not withdrawn) a plan or proposal with respect to a
\nThird Party Acquisition and the Company has entered into an agreement with
\nrespect to such Third Party Acquisition or such Third Party Acquisition
\notherwise occurs within twelve (12) months after the date on which this
\nAgreement has been terminated; or<\/p>\n
35
\n 42<\/p>\n
(iv) Section 7.1(c)(iii) or 7.1(d)(vi) and at the time of the Meeting
\nat which the Company failed to obtain the requisite vote there shall be
\noutstanding at that time an offer by a Third Party to consummate, or a Third
\nParty shall have publicly announced (and not withdrawn) a plan or proposal with
\nrespect to, a Third Party Acquisition;<\/p>\n
Parent and Acquisition would suffer direct and substantial damages, which
\ndamages cannot be determined with reasonable certainty. To compensate Parent and
\nAcquisition for such damages, the Company shall pay to Parent the amount of
\nTwenty Five Million Dollars ($25,000,000) in liquidated damages immediately upon
\nthe occurrence of the event described in this Section 7.3(a) giving rise to such
\ndamages. It is specifically agreed that the amount to be paid pursuant to this
\nSection 7.3(a) represents liquidated damages and not a penalty. The Company
\nhereby waives any right to set-off or counterclaim against such amount.<\/p>\n
(b) Upon termination of this Agreement pursuant to Section 7.1(c)(iii)
\nor (iv), or Section 7.1(d)(i), (ii), (iii), (iv), (v) or (vi), in addition to
\nany other remedies that Parent, Acquisition or their affiliates may have as a
\nresult of such termination (including pursuant to Section 7.3(a) or otherwise),
\nthe Company shall pay to Parent the amount of Three Million Dollars ($3,000,000)
\nas reimbursement for the out-of-pocket costs, fees and expenses incurred by any
\nof them or on their behalf in connection with this Agreement, the Stock Option
\nAgreement, the Offer, the Merger and the consummation of all transactions
\ncontemplated by this Agreement and the Stock Option Agreement (including fees
\npayable to investment bankers, counsel to any of the foregoing and accountants);
\nprovided, however, that if Parent requests reimbursement for such costs, fees
\nand expenses in excess of $1,000,000, Parent shall accompany such request with
\ninvoices or other reasonable evidence of its or Acquisitions payment of such
\ncosts, fees and expenses. If such request for reimbursement of such costs, fees
\nand expenses is in excess of $1,000,000, the Company shall promptly pay to
\nParent $1,000,000 after Parent has requested reimbursement pursuant to this
\nsubsection (b), and shall pay any balance promptly following receipt of such
\ninvoices or other evidence. Notwithstanding any of the foregoing, Parent shall
\nnot be entitled to receive more than $3,000,000 pursuant to this subsection (b).
\nNothing contained in this Section 7.3(b) shall relieve any party of any
\nliability for breach of this Agreement.<\/p>\n
(c) Upon termination of this Agreement pursuant to Section 7.1(c)(i) or
\n(ii), in addition to any other remedies that the Company or its affiliates may
\nhave as a result of such termination, Parent shall pay to the Company the amount
\nof Three Million Dollars ($3,000,000) as reimbursement for the out-of-pocket
\ncosts, fees and expenses incurred by any of them or on their behalf in
\nconnection with this Agreement, the Stock Option Agreement, the Offer, the
\nMerger and the consummation of all transactions contemplated by this Agreement
\nand the Stock Option Agreement (including fees payable to investment bankers,
\ncounsel to any of the foregoing and accountants); provided, however, that if the
\nCompany requests reimbursement for such costs, fees and expenses in excess of
\n$1,000,000, the Company shall accompany such request with invoices or other
\nreasonable evidence of the payment thereof. If the Company makes such request
\nfor reimbursement of such costs, fees and expenses in excess of $1,000,000,
\nParent shall promptly pay to the Company $1,000,000 after the Company has
\nrequested reimbursement pursuant to this subsection (c), and shall pay any
\nbalance promptly following receipt of such invoices or other evidence.
\nNotwithstanding any of the foregoing, the Company shall not be entitled to
\nreceive more than $3,000,000 pursuant to this subsection (c). Nothing contained
\nin this Section 7.3(c) shall relieve any party of any liability for breach of
\nthis Agreement.<\/p>\n
(d) Except as specifically provided in this Section 7.3, each party
\nshall bear its own expenses in connection with this Agreement and the
\ntransactions contemplated hereby. The parties acknowledge that Parent shall pay
\nthe fees imposed in connection with its filing under the HSR Act.<\/p>\n
(e) The parties acknowledge that the agreements contained in this
\nArticle 7 (including this Section 7.3) are an integral part of the transactions
\ncontemplated by this Agreement and that, without these agreements, the parties
\nwould not enter into this Agreement. Accordingly, if any party fails promptly to
\npay the amounts required pursuant to Section 7.3 when due (including
\ncircumstances where, in order to obtain such payment a party commences a suit
\nthat results in a final nonappealable judgment against another party for such
\namounts), the defaulting party shall pay to the other party (i) their costs and
\nexpenses (including attorneys’ fees) in connection with such suit and (ii)
\ninterest on the amount that was determined to be due<\/p>\n
36
\n 43<\/p>\n
and payable hereunder at the rate announced by Chase Manhattan Bank as its
\n“reference rate” in effect on the date such payment was required to be made.<\/p>\n
SECTION 7.4. Amendment. This Agreement may be amended by action taken by
\nthe Company, Parent and Acquisition at any time before or after approval of the
\nMerger by the stockholders of the Company but after any such approval no
\namendment shall be made that requires the approval of such stockholders under
\nApplicable Law without such approval. This Agreement (including, subject to
\nSection 5.9, the Company Disclosure Schedule) may be amended only by an
\ninstrument in writing signed on behalf of the parties hereto.<\/p>\n
Section 7.5. Extension; Waiver. At any time prior to the Effective Time,
\neach party hereto may (i) extend the time for the performance of any of the
\nobligations or other acts of the other party, (ii) waive any inaccuracies in the
\nrepresentations and warranties of the other party contained herein or in any
\ndocument, certificate or writing delivered pursuant hereto or (iii) waive
\ncompliance by the other party with any of the agreements or conditions contained
\nherein. Any agreement on the part of any party hereto to any such extension or
\nwaiver shall be valid only if set forth in an instrument, in writing, signed on
\nbehalf of such party. The failure of any party hereto to assert any of its
\nrights hereunder shall not constitute a waiver of such rights.<\/p>\n
37
\n 44<\/p>\n
ARTICLE 8<\/p>\n
MISCELLANEOUS<\/p>\n
SECTION 8.1. Nonsurvival of Representations and Warranties. The
\nrepresentations and warranties made herein shall not survive beyond the
\nEffective Time or a termination of this Agreement. This Section 8.1 shall not
\nlimit any covenant or agreement of the parties hereto that by its terms requires
\nperformance after the Effective Time.<\/p>\n
SECTION 8.2. Entire Agreement; Assignment. This Agreement (including the
\nCompany Disclosure Schedule and the Exhibits and Annex A, all of which are
\nincorporated by reference into this Agreement) and the Stock Option Agreement
\n(a) constitute the entire agreement between the parties hereto with respect to
\nthe subject matter hereof and supersede all other prior and contemporaneous
\nagreements and understandings both written and oral between the parties with
\nrespect to the subject matter hereof and (b) shall not be assigned by operation
\nof law or otherwise; provided, however, that Acquisition may assign any or all
\nof its rights and obligations under this Agreement to any wholly owned
\nsubsidiary of Parent, but no such assignment shall relieve Acquisition of its
\nobligations hereunder if such assignee does not perform such obligations.<\/p>\n
SECTION 8.3. Validity. If any provision of this Agreement or the
\napplication thereof to any person or circumstance is held invalid or
\nunenforceable, the remainder of this Agreement and the application of such
\nprovision to other persons or circumstances shall not be affected thereby and to
\nsuch end the provisions of this Agreement are agreed to be severable.<\/p>\n
SECTION 8.4. Notices. All notices and other communications pursuant to this
\nAgreement shall be in writing and shall be deemed given if delivered personally,
\ntelecopied, sent by nationally-recognized overnight courier or mailed by
\nregistered or certified mail (return receipt requested), postage prepaid, to the
\nparties at the addresses set forth below or to such other address as the party
\nto whom notice is to be given may have furnished to the other parties hereto in
\nwriting in accordance herewith. Any such notice or communication shall be deemed
\nto have been delivered and received (i) in the case of personal delivery, on the
\ndate of such delivery, (ii) in the case of telecopier, on the date sent if
\nconfirmation of receipt is received and such notice is also promptly mailed by
\nregistered or certified mail (return receipt requested), (iii) in the case of a
\nnationally-recognized overnight courier in circumstances under which such
\ncourier guarantees next business day delivery, on the next business day after
\nthe date when sent and (iv) in the case of mailing, on the third business day
\nfollowing that on which the piece of mail containing such communication is
\nposted:<\/p>\n
\n
\n if to Parent or Acquisition: Intel Corporation
\n 2200 Mission College Boulevard
\n Santa Clara, California 95052
\n Telecopier: (408) 765-1859
\n Attention: General Counsel
\n and
\n Intel Corporation
\n 2200 Mission College Boulevard
\n Santa Clara, California 95052
\n Telecopier: (408) 765-6038
\n Attention: Treasurer
\n with a copy to: Gibson, Dunn & Crutcher LLP
\n One Montgomery Street
\n Telesis Tower
\n San Francisco, California 94104
\n Telecopier: (415) 986-5309
\n Attention: Kenneth R. Lamb
\n and
\n Gregory J. Conklin
\n<\/c><\/s><\/table>\n 38
\n 45<\/p>\n
\n
\n if to the Company to: Dialogic Corporation
\n 1515 Route 10
\n Parsippany, New Jersey 07054
\n Telecopier: (973) 993-3060
\n Attention: General Counsel
\n with a copy to: Lowenstein Sandler PC
\n 65 Livingston Avenue
\n Roseland, New Jersey 07068
\n Telecopier: (973) 597-2351
\n Attention: Peter H. Ehrenberg
\n and: Winthrop, Stimson, Putnam & Roberts
\n One Battery Park
\n New York, New York 10004
\n Telecopier: (212) 858-1442
\n Attention: Stephen R. Rusmisel
\n<\/c><\/s><\/table>\nor to such other address as the person to whom notice is given may have
\npreviously furnished to the others in writing in the manner set forth above.<\/p>\n
SECTION 8.5. Governing Law and Venue; Waiver of Jury Trial.<\/p>\n
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS
\nSHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW
\nOF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
\nTHEREOF. The parties hereby irrevocably submit to the jurisdiction of the courts
\nof the State of Delaware and the Federal courts of the United States of America
\nlocated in the State of Delaware solely in respect of the interpretation and
\nenforcement of the provisions of this Agreement and of the documents referred to
\nin this Agreement, and in respect of the transactions contemplated hereby, and
\nhereby waive, and agree not to assert, as a defense in any action, suit or
\nproceeding for the interpretation or enforcement hereof or of any such document,
\nthat it is not subject thereto or that such action, suit or proceeding may not
\nbe brought or is not maintainable in said courts or that the venue thereof may
\nnot be appropriate or that this Agreement or any such document may not be
\nenforced in or by such courts, and the parties hereto irrevocably agree that all
\nclaims with respect to such action or proceeding shall be heard and determined
\nin such a Delaware State or Federal court. The parties hereby consent to and
\ngrant any such court jurisdiction over the person of such parties and over the
\nsubject matter of such dispute and agree that mailing of process or other papers
\nin connection with any such action or proceeding in the manner provided in
\nSection 8.4 or in such other manner as may be permitted by Applicable Law, shall
\nbe valid and sufficient service thereof.<\/p>\n
(b) The parties agree that irreparable damage would occur and that the
\nparties would not have any adequate remedy at law in the event that any of the
\nprovisions of this Agreement were not performed in accordance with their
\nspecific terms or were otherwise breached. It is accordingly agreed that the
\nparties shall be entitled to an injunction or injunctions to prevent breaches of
\nthis Agreement and to enforce specifically the terms and provisions of this
\nAgreement in any Federal court located in the State of Delaware or in Delaware
\nstate court, this being in addition to any other remedy to which they are
\nentitled at law or in equity.<\/p>\n
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
\nARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
\nISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
\nWAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
\nLITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
\nOR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
\nACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
\nHAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
\nEVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
\nUNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH
\nPARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED
\nTO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND
\nCERTIFICATIONS IN THIS SECTION 8.5.<\/p>\n
39
\n 46<\/p>\n
SECTION 8.6. Descriptive Headings; Article and Section References. The
\ndescriptive headings herein are inserted for convenience of reference only and
\nare not intended to be part of or to affect the meaning or interpretation of
\nthis Agreement. All Article, Section, Subsection, Schedule, Exhibit and Annex
\nreferences in this Agreement are to Articles, Sections, subsections, Schedules,
\nExhibits and Annexes, respectively, of or to this Agreement unless specified
\notherwise.<\/p>\n
SECTION 8.7. Parties in Interest. This Agreement shall be binding upon and
\ninure solely to the benefit of each party hereto and its successors and
\npermitted assigns and, except as expressly provided herein, including in
\nSections 5.7 and 8.2, nothing in this Agreement is intended to or shall confer
\nupon any other person any rights, benefits or remedies of any nature whatsoever
\nunder or by reason of this Agreement.<\/p>\n
SECTION 8.8. Certain Definitions. For the purposes of this Agreement the
\nterm:<\/p>\n
(a) “affiliate” means a person that, directly or indirectly, through one
\nor more intermediaries controls, is controlled by or is under common control
\nwith the first-mentioned person.<\/p>\n
(b) “Applicable Law” means, with respect to any person, any domestic or
\nforeign, federal, state or local statute, law, ordinance, rule, regulation,
\norder, writ, injunction, judgment, decree or other requirement of any
\nGovernmental Entity existing as of the date hereof or as of the Effective Time
\napplicable to such Person or any of its respective properties, assets, officers,
\ndirectors, employees, consultants or agents.<\/p>\n
(c) “business day” means any day other than a day on which the Nasdaq
\nNational Market is closed.<\/p>\n
(d) “capital stock” means common stock, preferred stock, partnership
\ninterests, limited liability company interests or other ownership interests
\nentitling the holder thereof to vote with respect to matters involving the
\nissuer thereof.<\/p>\n
(e) “Company Plans” means the Assumed Option Plans, together with the
\nCompany’s 1993 Non-Employee Director Stock Option Plan, as amended and restated
\nthrough March 29, 1997, Profit Sharing Plan and 401(k) Plan and the Dialogic
\nCorporation 1997 Director Stock Election\/Deferral Plan.<\/p>\n
(f) “knowledge” or “known” means, with respect to any matter in
\nquestion, the actual knowledge of such matter of any member of the Board of
\nDirectors or any officer or employee of the Company or any of its subsidiaries,
\nor Parent or any of its subsidiaries, as the case may be, and each of such
\npersons shall be deemed to have actual knowledge of all books and records in the
\npossession or control of the Company or any of its subsidiaries, or Parent or
\nany of its subsidiaries, as the case may be, and all books and records to which
\nhe or she has reasonable access.<\/p>\n
(g) “include” or “including” means “include, without limitation” or
\n“including, without limitation,” as the case may be, and the language following
\n“include” or “including” shall not be deemed to set forth an exhaustive list.<\/p>\n
(h) “person” means an individual, corporation, partnership, limited
\nliability company, association, trust, unincorporated organization or other
\nlegal entity including any Governmental Entity.<\/p>\n
(i) “Stock Option Agreement” means that certain Stock Option Agreement
\nof even date herewith between the Company and Parent.<\/p>\n
(j) “subsidiary” or “subsidiaries” of the Company, Parent, the Surviving
\nCorporation or any other person means any corporation, partnership, limited
\nliability company, association, trust, unincorporated association or other legal
\nentity of which the Company, Parent, the Surviving Corporation or any such other
\nperson, as the case may be (either alone or through or together with any other
\nsubsidiary), owns, directly or indirectly, 50% or more of the capital stock the
\nholders of which are generally entitled to vote for the election of the board of
\ndirectors or other governing body of such corporation or other legal entity.<\/p>\n
SECTION 8.9. Personal Liability. This Agreement shall not create or be
\ndeemed to create or permit any personal liability or obligation on the part of
\nany direct or indirect stockholder of the Company or Parent or Acquisition or
\nany officer, director, employee, agent, representative or investor of any party
\nhereto.<\/p>\n
40
\n 47<\/p>\n
SECTION 8.10. Specific Performance. The parties hereby acknowledge and
\nagree that the failure of any party to perform its agreements and covenants
\nhereunder, including its failure to take all actions as are necessary on its
\npart to the consummation of the Offer or the Merger, will cause irreparable
\ninjury to the other parties, for which damages, even if available, will not be
\nan adequate remedy. Accordingly, each party hereby consents to the issuance of
\ninjunctive relief by any court of competent jurisdiction to compel performance
\nof such party’s obligations and to the granting by any court of the remedy of
\nspecific performance of its obligations hereunder; provided, however, that if a
\nparty hereto is entitled to receive any payment or reimbursement of expenses
\npursuant to Section 7.3(a), (b) or (c), it shall not be entitled to specific
\nperformance to compel the consummation of the Offer or the Merger.<\/p>\n
SECTION 8.11. Counterparts. This Agreement may be executed in one or more
\ncounterparts, each of which shall be deemed to be an original but all of which
\nshall constitute one and the same agreement.<\/p>\n
41
\n 48<\/p>\n
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
\nduly executed on its behalf as of the day and year first above written.<\/p>\n
DIALOGIC CORPORATION, a New Jersey
\n corporation
\n By: \/s\/ HOWARD BUBB<\/p>\n
————————————–
\n Name: Howard Bubb
\n Title: President
\n Date: May 31, 1999<\/p>\n
INTEL CORPORATION, a Delaware
\n corporation
\n By: \/s\/ ARVIND SODHANI<\/p>\n
————————————–
\n Name: Arvind Sodhani
\n Title: Treasurer
\n Date: May 31, 1999<\/p>\n
INTEL LMH ACQUISITION CORPORATION, a
\n New Jersey corporation
\n By: \/s\/ ARVIND SODHANI<\/p>\n
————————————–
\n Name: Arvind Sodhani
\n Title: Treasurer
\n Date: May 31, 1999<\/p>\n
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER BY AND AMONG DIALOGIC
\n CORPORATION, INTEL CORPORATION AND INTEL LMH ACQUISITION CORPORATION]<\/p>\n
42
\n 49<\/p>\n
ANNEX A<\/p>\n
CONDITIONS OF THE OFFER<\/p>\n
Notwithstanding any other provision of the Offer or this Agreement, and
\nsubject to any applicable rules and regulations of the SEC, including Rule
\n14e-1(c) relating to Acquisition’s obligation to pay for or return tendered
\nshares after termination of the Offer, Acquisition shall not be required to
\naccept for payment or pay for any Shares tendered pursuant to the Offer, may
\ndelay the acceptance for payment of any Shares pursuant to Section 1.1(b) of
\nthis Agreement, may extend the Offer by one or more times, and may terminate the
\nOffer at any time after September 15, 1999 if (i) less than a majority of the
\noutstanding Shares on a fully-diluted basis (including for purposes of such
\ncalculation all Shares issuable upon exercise of all vested Company Stock
\nOptions and unvested Company Stock Options that vest prior to the Final Date,
\nbut excluding any Shares held by the Company or any of its subsidiaries) has
\nbeen tendered pursuant to the Offer by the expiration of the Offer and not
\nwithdrawn; (ii) any applicable waiting period under the HSR Act has not expired
\nor terminated; (iii) all necessary consents and approvals from all Governmental
\nEntities shall not have been obtained on terms and conditions reasonably
\nsatisfactory to Parent; or (iv) at any time after the date of this Agreement,
\nand before acceptance for payment of any Shares, any of the following events
\nshall occur and be continuing:<\/p>\n
(a) (1) there shall have been any action taken, or any statute, rule,
\nregulation, judgment, order or injunction promulgated, entered, enforced,
\nenacted, issued or deemed applicable to the Offer or the Merger by any domestic
\nor foreign court or other Governmental Entity which directly or indirectly (i)
\nprohibits, or makes illegal, the acceptance for payment, payment for or purchase
\nof Shares or the consummation of the Offer, the Merger or the other transactions
\ncontemplated by this Agreement, (ii) renders Acquisition unable to accept for
\npayment, pay for or purchase some or all of the Shares, (iii) imposes material
\nlimitations on the ability of Parent effectively to exercise full rights of
\nownership of the Shares, including the right to vote the Shares purchased by it
\non all matters properly presented to the Company’s stockholders, or (iv)
\notherwise has a Material Adverse Effect on the Company; or (2) in connection
\nwith the compliance by Parent or Acquisition with any Applicable Law (including
\nthe HSR Act) or obtaining the consent or approval of any Governmental Entity
\nwhose consent or approval may be required to consummate the transactions
\ncontemplated by this Agreement, Parent shall be (i) required, or be construed to
\nbe required, to sell or divest any assets or business or to restrict any
\nbusiness operations in order to obtain the consent or successful termination of
\nany review of any such Governmental Entity regarding the transactions
\ncontemplated hereby or (ii) prohibited from owning, or any material limitation
\nshall be imposed on Parent’s ownership of, any material portion of the Company’s
\nbusiness or assets.<\/p>\n
(b) (i) the representations and warranties of the Company contained in
\nthis Agreement shall not be true and correct (except to the extent that the
\naggregate of all breaches thereof would not have a Material Adverse Effect on
\nthe Company) at the date hereof and as of the consummation of the Offer with the
\nsame effect as if made at and as of the consummation of the Offer (except to the
\nextent such representations specifically relate to an earlier date, in which
\ncase such representations shall be true and correct as of such earlier date, and
\nin any event, subject to the foregoing Material Adverse Effect qualification),
\n(ii) the Company shall have failed to perform in all material respects its
\ncovenants and obligations contained in this Agreement , or (iii) there shall
\nhave occurred since March 31, 1999 any events or changes which constitute a
\nMaterial Adverse Effect on the Company;<\/p>\n
(c) it shall have been publicly disclosed or Parent shall have otherwise
\nlearned that (i) any person or “group” (as defined in Section l3(d)(3) of the
\nExchange Act) shall have acquired or entered into a definitive agreement or
\nagreement in principle to acquire beneficial ownership of more than 20% of the
\nShares or any other class of capital stock of the Company, through the
\nacquisition of stock, the formation of a group or otherwise, or shall have been
\ngranted any option, right or warrant, conditional or otherwise, to acquire
\nbeneficial ownership of more than 20% of the Shares and (ii) such person or
\ngroup shall not have tendered such Shares pursuant to the Offer;<\/p>\n
(d) the Company Board shall have withdrawn, or modified or changed in a
\nmanner adverse to Parent and Acquisition (including by amendment of the Schedule
\n14D-9), its recommendation of the Offer,
\n 50<\/p>\n
this Agreement or the Merger, or recommended another proposal or offer, or the
\nCompany Board, shall have resolved to do any of the foregoing;<\/p>\n
(e) this Agreement shall have terminated in accordance with its terms;
\nor<\/p>\n
(f) there shall have occurred (i) any general suspension of trading in,
\nor limitation on prices for, securities on the New York Stock Exchange or the
\nNasdaq National Market, for a period in excess of twenty-four (24) hours, (ii)
\nthe commencement of a war, armed hostilities or other national or international
\ncalamity directly or indirectly involving the United States that constitutes a
\nMaterial Adverse Effect on the Company or materially adversely affects or delays
\nthe consummation of the Offer, (iii) the average of the closing prices of the
\nStandard & Poor’s 500 Index for any twenty (20) consecutive trading days shall
\nbe twenty-five percent (25%) or more below the closing price of such index on
\nany trading day on or after the date hereof that precedes the commencement of
\nsuch 20-trading day period, or (iv) in the case of any of the foregoing existing
\nat the time of the commencement of the Offer, a material acceleration or
\nworsening thereof;<\/p>\n
which in the good faith judgment of Parent, in any such case, and regardless of
\nthe circumstances (including any action or inaction by Parent) giving rise to
\nsuch condition makes it inadvisable to proceed with the Offer or the acceptance
\nfor payment of or payment for the Shares.<\/p>\n
The foregoing conditions (other than the Minimum Condition) are for the sole
\nbenefit of Parent and Acquisition and may be waived by Parent and Acquisition,
\nin whole or in part at any time and from time to time, in the sole discretion of
\nParent and Acquisition. The failure by Parent and Acquisition at any time to
\nexercise any of the foregoing rights shall not be deemed a waiver of any such
\nright and each such right shall be deemed an ongoing right which may be asserted
\nat any time and from time to time.<\/p>\n
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