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EXHIBIT 1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
CISCO SYSTEMS, INC.,
OSPREY ACQUISITION CORPORATION
AND
AIRONET WIRELESS COMMUNICATIONS, INC.
NOVEMBER 8, 1999
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TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER.........................................................................2
1.1 The Merger....................................................................2
1.2 Closing; Effective Time.......................................................2
1.3 Effect of the Merger..........................................................2
1.4 Certificate of Incorporation; Bylaws..........................................2
1.5 Directors and Officers........................................................2
1.6 Effect on Capital Stock.......................................................3
1.7 Surrender of Certificates.....................................................4
1.8 No Further Ownership Rights in Company Common Stock...........................5
1.9 Lost, Stolen or Destroyed Certificates........................................5
1.10 Tax Consequences..............................................................6
1.11 Withholding Rights............................................................6
1.12 Taking of Necessary Action; Further Action....................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY.........................................6
2.1 Organization, Standing and Power..............................................7
2.2 Capital Structure.............................................................7
2.3 Authority.....................................................................8
2.4 SEC Documents; Financial Statements...........................................9
2.5 Absence of Certain Changes...................................................10
2.6 Absence of Undisclosed Liabilities...........................................11
2.7 Litigation...................................................................11
2.8 Restrictions on Business Activities..........................................11
2.9 Governmental Authorization...................................................11
2.10 Title to Property............................................................11
2.11 Intellectual Property........................................................12
2.12 Environmental Matters........................................................13
2.13 Taxes........................................................................14
2.14 Employee Benefit Plans.......................................................15
2.15 Certain Agreements Affected by the Merger....................................18
2.16 Employee Matters.............................................................18
2.17 Interested Party Transactions................................................19
2.18 Insurance....................................................................19
2.19 Compliance With Laws.........................................................19
2.20 Minute Books.................................................................19
2.21 Complete Copies of Materials.................................................19
2.22 Brokers' and Finders' Fees...................................................19
2.23 Registration Statement; Proxy Statement/Prospectus...........................20
2.24 Opinion of Financial Advisor.................................................20
2.25 Vote Required................................................................20
2.26 Board Approval...............................................................20
2.27 Stockholder Agreement; Irrevocable Proxies...................................20
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2.28 Section 203 of the DGCL Not Applicable.......................................21
2.29 Inventory....................................................................21
2.30 Accounts Receivable..........................................................21
2.31 Customers and Suppliers......................................................21
2.32 Rights Plan..................................................................21
2.33 Export Control Laws..........................................................22
2.34 Year 2000....................................................................22
2.35 Representations Complete.....................................................22
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.........................23
3.1 Organization, Standing and Power.............................................23
3.2 Capital Structure............................................................23
3.3 Authority....................................................................23
3.4 SEC Documents; Financial Statements..........................................24
3.5 Absence of Undisclosed Liabilities...........................................25
3.6 Litigation...................................................................25
3.7 Broker's and Finders' Fees...................................................25
3.8 Registration Statement; Proxy Statement/Prospectus...........................25
3.9 Board Approval...............................................................26
3.10 Representations Complete.....................................................26
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME..............................................26
4.1 Conduct of Business of Company...............................................26
4.2 Restrictions on Conduct of Business of Company...............................26
4.3 No Solicitation..............................................................29
ARTICLE V ADDITIONAL AGREEMENTS.............................................................30
5.1 Proxy Statement/Prospectus; Registration Statement...........................31
5.2 Meeting of Stockholders......................................................31
5.3 Access to Information........................................................31
5.4 Confidentiality..............................................................32
5.5 Public Disclosure............................................................32
5.6 Consents; Cooperation........................................................32
5.7 Legal Requirements...........................................................33
5.8 Blue Sky Laws................................................................34
5.9 Employee Benefit Plans.......................................................34
5.10 Forms S-3 and S-8............................................................35
5.11 Option Agreement.............................................................35
5.12 Listing of Additional Shares.................................................36
5.13 Nasdaq Quotation.............................................................36
5.14 Employees....................................................................36
5.15 Amendment of Stock Option Plan...............................................36
5.16 Company Rights Agreement.....................................................36
5.17 Indemnification..............................................................36
5.18 Tax Treatment................................................................37
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5.19 Stockholder Litigation.......................................................37
5.20 Best Efforts and Further Assurances..........................................38
ARTICLE VI CONDITIONS TO THE MERGER.........................................................38
6.1 Conditions to Obligations of Each Party to Effect the Merger.................38
6.2 Additional Conditions to Obligations of Company..............................39
6.3 Additional Conditions to the Obligations of Parent and Merger Sub............39
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER...............................................41
7.1 Termination..................................................................41
7.2 Effect of Termination........................................................42
7.3 Expenses and Termination Fees................................................42
7.4 Amendment....................................................................44
7.5 Extension; Waiver............................................................44
ARTICLE VIII GENERAL PROVISIONS.............................................................45
8.1 Non-Survival at Effective Time...............................................45
8.2 Notices......................................................................45
8.3 Interpretation...............................................................46
8.4 Counterparts.................................................................46
8.5 Entire Agreement; Nonassignability; Parties in Interest......................46
8.6 Severability.................................................................47
8.7 Remedies Cumulative..........................................................47
8.8 Governing Law................................................................47
8.9 Rules of Construction........................................................47
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SCHEDULES
Company Disclosure Schedule
Schedule 2.0 - Revenue Levels
Schedule 2.10 - Company Real Property
Schedule 2.11 - Company Intellectual Property
Schedule 2.13 - Tax Sharing and Allocation Agreements and Other Tax Matters
Schedule 2.14 - Company Employee Plans
Schedule 2.27 - Signatories to Stockholder Agreement
Schedule 5.9(a) - Outstanding Options
Schedule 5.9(d) - Disqualified Persons
Schedule 5.10(a) - S-8 Eligible Optionees
Schedule 5.10(b) - S-3 Eligible Optionees
Schedule 5.14 - List of Employees
Parent Disclosure Schedule
EXHIBITS
Exhibit A - Option Agreement
Exhibit B - Stockholder Agreement
Exhibit C - Certificate of Merger
Exhibit D - Employment and Non-Competition Agreement
Exhibit E - FIRPTA Notice
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the
"Agreement") is made and entered into as of November 8, 1999, by and among Cisco
Systems, Inc., a California corporation ("Parent"), Osprey Acquisition
Corporation, a Delaware corporation ("Merger Sub") and wholly owned subsidiary
of Parent, and Aironet Wireless Communications, Inc., a Delaware corporation
("Company").
RECITALS:
A. The Boards of Directors of Company, Parent and Merger Sub
believe it is in the best interests of their respective companies and the
stockholders of their respective companies that Company and Merger Sub combine
into a single company through the statutory merger of Merger Sub with and into
Company (the "Merger") and, in furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, the outstanding
shares of Company Common Stock, $0.01 par value ("Company Common Stock"), shall
be converted into shares of Parent Common Stock, $0.001 par value ("Parent
Common Stock"), at the rate set forth herein.
C. Company, Parent and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
D. The parties intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"), and to cause the Merger to qualify as a
reorganization under the provisions of Sections 368(a)(1)(A) and 368(a)(2)(E) of
the Code.
E. Concurrently with the execution of this Agreement and as an
inducement to Parent and Merger Sub to enter into this Agreement, (a) Company
and Parent have entered into a stock option agreement dated the date hereof in
the form attached hereto as Exhibit A (the "Option Agreement") providing for the
purchase by Parent of newly-issued shares of Company's Common Stock, and (b)
certain stockholders of Company have on the date hereof entered into a
stockholder agreement in the form attached hereto as Exhibit B (the "Stockholder
Agreement") to, among other things, vote the shares of Company's Common Stock
owned by such persons to approve the Merger and against any competing proposals.
AGREEMENT:
NOW, THEREFORE, in consideration of the covenants and
representations set forth herein, and for other good and valuable consideration,
the parties agree as follows:
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ARTICLE I
THE MERGER
1.1. The Merger. At the Effective Time (as defined in Section
1.2) and subject to and upon the terms and conditions of this Agreement, the
Certificate of Merger attached hereto as Exhibit C (the "Certificate of Merger")
and the applicable provisions of the Delaware General Corporation Law ("Delaware
Law"), Merger Sub shall be merged with and into Company, the separate corporate
existence of Merger Sub shall cease and Company shall continue as the surviving
corporation. Company as the surviving corporation after the Merger is
hereinafter sometimes referred to as the "Surviving Corporation."
1.2. Closing; Effective Time. The closing of the transactions
contemplated hereby (the "Closing") shall take place as soon as practicable
after the satisfaction or waiver of each of the conditions set forth in Article
VI hereof or at such other time as the parties hereto agree (the "Closing
Date"). The Closing shall take place at the offices of Xxxxxxx, Xxxxxxx &
Xxxxxxxx LLP, Two Embarcadero Place, 0000 Xxxx Xxxx, Xxxx Xxxx, XX 00000, or at
such other location as the parties hereto agree. In connection with the Closing,
the parties hereto shall cause the Merger to be consummated by filing the
Certificate of Merger with the Secretary of State of the State of Delaware, in
accordance with the relevant provisions of Delaware Law (the time of such filing
being the "Effective Time").
1.3. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger and
the applicable provisions of Delaware Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the property,
rights, privileges, powers and franchises of Company and Merger Sub shall vest
in the Surviving Corporation, and all debts, liabilities and duties of Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of
Incorporation of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by Delaware Law and such Certificate of
Incorporation; provided, however, that immediately after the Effective Time the
Certificate of Incorporation of the Surviving Corporation shall be amended so as
to read in its entirety like the Certificate of Incorporation of Merger Sub with
Article I of the Certificate of Incorporation amended to read as follows: "The
name of the corporation is Aironet Wireless Communications, Inc."
(b) The Bylaws of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving Corporation
until thereafter amended; provided, however, that immediately after the
Effective Time the Bylaws of the Surviving Corporation shall be amended so as to
read in their entirety like the Bylaws of Merger Sub.
1.5 Directors and Officers. At the Effective Time, the directors
of the Surviving Corporation shall be those persons who were the directors of
Merger Sub. The officers of the
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Surviving Corporation shall be the initial officers of Merger Sub, until their
respective successors are duly elected or appointed and qualified.
1.6. Effect on Capital Stock. By virtue of the Merger and
without any action on the part of Merger Sub, Company or the holders of any of
the following securities:
(a) Conversion of Company Common Stock. At the Effective
Time, each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time together with the corresponding Right (as defined in
the Rights Agreement dated as of June 25, 1999 (the "Company Rights Agreement")
between Company and Xxxxxx Savings Bank (other than any shares of Company Common
Stock to be canceled pursuant to Section 1.6(b)) will be canceled and
extinguished and be converted automatically into the right to receive 0.63734
shares of Parent Common Stock (the "Exchange Ratio"). All references in this
Agreement to Parent Common Stock to be issued pursuant to the Merger shall be
deemed to include the corresponding rights ("Parent Rights") to purchase shares
of Parent Series A Junior Participating Preferred Stock, no par value, pursuant
to the Parent Rights Agreement dated as of June 10, 1998 between Parent and Bank
Boston, N.A., except where the context otherwise requires.
(b) Cancellation of Company Common Stock Owned by Parent
or Company. At the Effective Time, all shares of Company Common Stock that are
owned by Company as treasury stock and each share of Company Common Stock owned
by Parent or any direct or indirect wholly owned subsidiary of Parent or of
Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
(c) Company Stock Option Plans. At the Effective Time,
the Company's 1999 Stock Option Plan for Non-Employee Directors, Amended and
Restated 1996 Stock Option Plan, as amended (including all prior versions
thereof), and 1999 Omnibus Stock Incentive Plan (collectively, the "Company
Stock Option Plans") and all options to purchase Company Common Stock then
outstanding under the Company Stock Option Plans shall be assumed by Parent in
accordance with Section 5.9.
(d) Capital Stock of Merger Sub. At the Effective Time,
each share of common stock, $0.001 par value, of Merger Sub ("Merger Sub Common
Stock") issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation, and the
Surviving Corporation shall be a wholly-owned subsidiary of Parent. Each stock
certificate of Merger Sub evidencing ownership of any such shares shall continue
to evidence ownership of such shares of capital stock of the Surviving
Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio
shall be adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities convertible
into Parent Common Stock or Company Common Stock), reorganization,
recapitalization or other like change with respect to Parent Common Stock or
Company Common Stock occurring after the date hereof and prior to the Effective
Time and of any increase in the number of shares of Company Common Stock
outstanding after the date hereof (treating as outstanding as of the date
hereof, up to 461,904
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shares of Common Stock issuable upon exercise of outstanding warrants, up to
1,972,533 shares of Common Stock issuable upon exercise of outstanding options
and up to 75,000 shares of Common Stock issuable upon exercise of options issued
between the date hereof and the Effective Date) relative to such number as
derived from Section 2.2 hereof, so as to provide holders of Company Common
Stock and Parent the same economic effect as contemplated by this Agreement
prior to such stock split, reverse split, stock dividend, reorganization,
recapitalization, like change or increase.
(f) Fractional Shares. No fraction of a share of Parent
Common Stock will be issued, but in lieu thereof each holder of shares of
Company Common Stock who would otherwise be entitled to a fraction of a share of
Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock to be received by such holder) shall receive from Parent an amount of cash
(rounded to the nearest whole cent) equal to the product of (i) such fraction,
multiplied by (ii) the average closing price of a share of Parent Common Stock
as quoted on the NASDAQ National Market for the ten (10) trading days ending on
the last full trading day prior to the Effective Time.
1.7 Surrender of Certificates.
(a) Exchange Agent. Parent's transfer agent shall act as
exchange agent (the "Exchange Agent") in the Merger.
(b) Parent to Provide Common Stock and Cash. Promptly
after the Effective Time, Parent shall make available to the Exchange Agent for
exchange in accordance with this Article I, through such reasonable procedures
as Parent may adopt, (i) the shares of Parent Common Stock issuable pursuant to
Section 1.6(a) in exchange for shares of Company Common Stock outstanding
immediately prior to the Effective Time (provided that delivery of any shares
that are subject to vesting or other restrictions shall be in book entry form
until such vesting or other restrictions lapse) and (ii) cash in an amount
sufficient to permit payment of cash in lieu of fractional shares pursuant to
Section 1.6(f).
(c) Exchange Procedures. Promptly after the Effective
Time, the Surviving Corporation shall cause to be mailed to each holder of
record of a certificate or certificates (the "Certificates") which immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock, whose shares were converted into the right to receive shares of Parent
Common Stock (and cash in lieu of fractional shares) pursuant to Section 1.6,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
receipt of the Certificates by the Exchange Agent, and shall be in such form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates (or book entries in the case of shares that are subject to
vesting or other restrictions) representing shares of Parent Common Stock (and
cash in lieu of fractional shares). Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, the holder of
such Certificate shall be entitled to receive in exchange therefor a certificate
(or book entry in the case of shares that are subject to vesting or other
restrictions) representing the number of whole shares of
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Parent Common Stock and payment in lieu of fractional shares which such holder
has the right to receive pursuant to Section 1.6, and the Certificate so
surrendered shall forthwith be canceled. Until so surrendered, each outstanding
Certificate that, prior to the Effective Time, represented shares of Company
Common Stock will be deemed from and after the Effective Time, for all corporate
purposes, other than the payment of dividends, to evidence the ownership of the
number of full shares of Parent Common Stock into which such shares of Company
Common Stock shall have been so converted and the right to receive an amount in
cash in lieu of the issuance of any fractional shares in accordance with Section
1.6.
(d) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time will be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby until the holder of record of such Certificate shall
surrender such Certificate. Subject to applicable law, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, at the time of such surrender, the amount of any
such dividends or other distributions with a record date after the Effective
Time theretofore payable (but for the provisions of this Section 1.7(d)) with
respect to such shares of Parent Common Stock.
(e) Transfers of Ownership. If any certificate for
shares of Parent Common Stock is to be issued in a name other than that in which
the Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of a certificate
for shares of Parent Common Stock in any name other than that of the registered
holder of the Certificate surrendered, or established to the satisfaction of
Parent or any agent designated by it that such tax has been paid or is not
payable.
(f) No Liability. Notwithstanding anything to the
contrary in this Section 1.7, none of the Exchange Agent, the Surviving
Corporation, Parent or any party hereto shall be liable to any person for any
amount properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
1.8. No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of shares
of Company Common Stock in accordance with the terms hereof (including any cash
paid in lieu of fractional shares) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Common Stock,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article I.
1.9 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or
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destroyed Certificates, upon the making of an affidavit of that fact by the
holder thereof, such shares of Parent Common Stock (and cash in lieu of
fractional shares) as may be required pursuant to Section 1.6; provided,
however, that Parent may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Parent, the Surviving
Corporation or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
1.10. Tax Consequences. It is intended by the parties hereto
that the Merger shall constitute a reorganization within the meaning of Section
368 of the Code.
1.11. Withholding Rights. Parent and the Surviving Corporation
shall be entitled to deduct and withhold from the number of shares of Parent
Common Stock otherwise deliverable under this Agreement, and from any other
payments made pursuant to this Agreement, such amounts as Parent and the
Surviving Corporation are required to deduct and withhold with respect to such
delivery and payment under the Code or any provision of state, local, provincial
or foreign tax law. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes of this Agreement as having been
delivered and paid to the holder of shares of Company Common Stock in respect of
which such deduction and withholding was made by Parent and the Surviving
Corporation.
1.12. Taking of Necessary Action; Further Action. If, at any
time after the Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving Corporation
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of Company and Merger Sub, the officers and
directors of Company and Merger Sub are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all such lawful and
necessary action, so long as such action is not inconsistent with this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
In this Agreement, any reference to any event, change, condition
or effect being "material" with respect to any person means any material event,
change, condition or effect related to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of such person and its subsidiaries, taken
as a whole. In this Agreement, any reference to a "Material Adverse Effect" with
respect to any person means any event, change or effect that is materially
adverse to the condition (financial or otherwise), properties, assets,
liabilities, business, operations or results of operations of such person and
its subsidiaries, taken as a whole, provided, however, that a "Material Adverse
Effect" with respect to Company shall not include the following (collectively,
"Non-Controllable Events"): (i) general changes in the telecommunications
industry or economic conditions that affect Company and its subsidiaries, taken
as a whole, substantially proportionately relative to the Parent and its
subsidiaries, taken as a whole or (ii) a decline in the revenues or earnings of
Company following the date of this Agreement which is attributable to a delay
of, reduction in or cancellation or change in the purchase orders by customers
of Company arising as a result of the
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execution or announcement of this Agreement (provided that revenues do not
decline below the levels set forth in Schedule 2.0). A decline of revenues below
such levels shall be deemed to be a Material Adverse Effect on Company.
In this Agreement, any reference to a party's "knowledge" means
such party's actual knowledge after reasonable inquiry of officers, directors
and other employees of such party charged with senior administrative or
operational responsibility for such matters.
Except as disclosed in that section of the document of even date
herewith delivered by Company to Parent prior to the execution and delivery of
this Agreement (the "Company Disclosure Schedule") corresponding to the Section
of this Agreement to which any of the following representations and warranties
specifically relate or as disclosed in another section of the Company Disclosure
Schedule if it is reasonably apparent on the face of the disclosure that it is
applicable to another Section of this Agreement, Company represents and warrants
to Parent and Merger Sub as follows:
2.1. Organization, Standing and Power. Each of Company and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. Each of Company and
its subsidiaries has the corporate power to own its properties and to carry on
its business as now being conducted and as presently proposed to be conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified and in good standing would
have a Material Adverse Effect on Company. Company has delivered to Parent a
true and correct copy of the Amended and Restated Certificate of Incorporation,
as amended (the "Certificate of Incorporation"), and Second Amended and Restated
Bylaws, as amended, or other charter documents, as applicable, of Company and
each of its subsidiaries, each as amended to date. Neither Company nor any of
its subsidiaries is in violation of any of the provisions of its respective
charters or bylaws. Company is the owner of all outstanding shares of capital
stock of each of its subsidiaries and all such shares are duly authorized,
validly issued, fully paid and nonassessable. All of the outstanding shares of
capital stock of each such subsidiary are owned by Company free and clear of all
liens, charges, claims or encumbrances or rights of others. There are no
outstanding subscriptions, options, warrants, puts, calls, rights, exchangeable
or convertible securities or other commitments or agreements of any character
relating to the issued or unissued capital stock or other securities of any such
subsidiary, or otherwise obligating Company or any such subsidiary to issue,
transfer, sell, purchase, redeem or otherwise acquire any such securities.
Except as disclosed in the Company SEC Documents (as defined in Section 2.4),
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.
2.2 Capital Structure. The authorized capital stock of Company
consists of 60,000,000 shares of Common Stock, $0.01 par value, and 500,000
shares of Preferred Stock, $0.01 par value, of which there were issued and
outstanding as of the close of business on November 3, 1999, 14,202,910 shares
of Common Stock and no shares of Preferred Stock. There are no other outstanding
shares of capital stock or voting securities and no outstanding commitments to
issue any shares of capital stock or voting securities after November 3, 1999
other than pursuant to the Option Agreement, the exercise of options outstanding
as of such date
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under the Company Stock Option Plans or pursuant to the Company Employee Stock
Purchase Plan (the "Company ESPP"). All outstanding shares of Company Common
Stock are duly authorized, validly issued, fully paid and non-assessable and are
free of any liens or encumbrances other than any liens or encumbrances created
by or imposed upon the holders thereof, and are not subject to preemptive rights
or rights of first refusal created by statute, the Certificate of Incorporation
or Bylaws of Company or any agreement to which Company is a party or by which it
is bound. As of the close of business on November 3, 1999, Company has reserved
(i) 4,238,817 shares of Common Stock for issuance to employees, consultants and
directors pursuant to the Company Stock Option Plans, of which 349,301 shares
have been issued pursuant to option exercises or direct stock purchases,
1,972,533 shares are subject to outstanding, unexercised options, no shares are
subject to outstanding stock purchase rights, and 1,346,983 shares are available
for issuance thereunder and (ii) 500,000 shares of Common Stock for issuance to
employees pursuant to the Company ESPP, of which no shares have been issued.
Since November 3, 1999, Company has not (i) issued or granted additional options
under the Company Stock Option Plans, or (ii) accepted enrollments in the
Company ESPP. Except for (i) the rights created pursuant to this Agreement, the
Option Agreement, the Company Stock Option Plans, the Company Rights Agreement
and the Company ESPP and (ii) the Company's rights to repurchase any unvested
shares under the Company Stock Option Plans, there are no other options,
warrants, calls, rights, commitments or agreements of any character to which
Company is a party or by which it is bound obligating Company to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased
or redeemed, any shares of capital stock of Company or obligating Company to
grant, extend, accelerate the vesting of, change the price of, or otherwise
amend or enter into any such option, warrant, call, right, commitment or
agreement. There are no contracts, commitments or agreements relating to voting,
purchase or sale of Company's capital stock (i) between or among Company and any
of its stockholders and (ii) to the best of Company's knowledge, between or
among any of Company's stockholders. The terms of the Company Stock Option Plans
permit the assumption or substitution of options to purchase Parent Common Stock
as provided in this Agreement, without the consent or approval of the holders of
such securities, stockholders, or otherwise. The current "Purchase Period" (as
defined in the Company ESPP) commenced under the Company ESPP on November 12,
1999, and will end on the earlier of the day immediately prior to the Effective
Time and December 31, 1999, and except for the purchase rights granted on such
commencement date to participants in the current Purchase Period, there are no
other purchase rights or options outstanding under the Company ESPP. True and
complete copies of all agreements and instruments relating to or issued under
the Company Stock Option Plans or Company ESPP have been made available to
Parent and such agreements and instruments have not been amended, modified or
supplemented, and there are no agreements to amend, modify or supplement such
agreements or instruments in any case from the form made available to Parent.
The shares of Company Common Stock issued under the Amended and Restated 1996
Stock Option Plan, as amended and under all prior versions thereof, have not
been registered under the Securities Act and were issued in transactions which
qualified for exemptions under, either Section 4(2) of, or Rule 701 under, the
Securities Act for stock issuances under compensatory benefit plans.
2.3 Authority. Company has all requisite corporate power and
authority to enter into this Agreement and the Option Agreement and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Option Agreement
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and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of Company,
subject only to the approval of the Merger by Company's stockholders as
contemplated by Section 6.1(a). Each of this Agreement and the Option Agreement
has been duly executed and delivered by Company and constitutes the valid and
binding obligation of Company enforceable against Company in accordance with its
terms, except as enforceability may be limited by bankruptcy and other laws
affecting the rights and remedies of creditors generally and general principles
of equity. The execution and delivery of this Agreement and the Option Agreement
by Company does not, and the consummation of the transactions contemplated
hereby will not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (i) any provision of the Certificate of Incorporation or Bylaws of
Company or any of its subsidiaries, as amended, or (ii) any material mortgage,
indenture, lease, contract or other agreement or instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Company or any of its subsidiaries or any of their
properties or assets. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to Company or any of its subsidiaries in
connection with the execution and delivery of this Agreement, the Option
Agreement, or the consummation of the transactions contemplated hereby and
thereby, except for (i) the filing of the Certificate of Merger as provided in
Section 1.2; (ii) the filing with the Securities and Exchange Commission (the
"SEC") and the National Association of Securities Dealers, Inc. (the "NASD") of
the Proxy Statement (as defined in Section 2.23) relating to the Company
Stockholders Meeting (as defined in Section 2.23); (iii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws and the securities laws
of any foreign country; (iv) such filings as may be required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended ("HSR"); (v)
the filing of a Form S-4 Registration Statement with the SEC in accordance with
the Securities Act of 1933, as amended; (vi) the filing of a Current Report on
Form 8-K with the SEC; and (vii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have a
Material Adverse Effect on Company and would not prevent, or materially alter or
delay any of the transactions contemplated by this Agreement or the Option
Agreement.
2.4 SEC Documents; Financial Statements. Company has made
available to Parent a true and complete copy of each statement, report,
registration statement (with the prospectus in the form filed pursuant to Rule
424(b) of the Securities Act of 1933, as amended (the "Securities Act")),
definitive proxy statement and other filings made with the SEC by Company since
May 1, 1999, and, prior to the Effective Time, Company will have furnished
Parent with true and complete copies of any additional documents filed with the
SEC by Company prior to the Effective Time (collectively, the "Company SEC
Documents"). In addition, Company has made available to Parent all exhibits to
the Company SEC Documents filed prior to the date hereof, and will promptly make
available to Parent all exhibits to any additional Company SEC Documents filed
prior to the Effective Time. All documents required to be filed as exhibits to
the Company SEC Documents have been so filed, and all material contracts so
filed as exhibits are in full force and effect, except those which have expired
in accordance with their terms, and neither Company nor any of its subsidiaries
is in material
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default thereunder. As of their respective filing dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
Securities Act, and none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a subsequently filed Company SEC Document. The financial statements
of Company, including the notes thereto, included in the Company SEC Documents
(the "Company Financial Statements") were complete and correct in all material
respects as of their respective dates, complied as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto as of their respective dates,
and have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a basis consistent throughout the
periods indicated and consistent with each other (except as may be indicated in
the notes thereto or, in the case of unaudited statements included in Quarterly
Reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The Company
Financial Statements fairly present the consolidated financial condition and
operating results of Company and its subsidiaries at the dates and during the
periods indicated therein (subject, in the case of unaudited statements, to
normal, recurring year-end adjustments). There has been no change in Company
accounting policies since June 30, 1999, except as described in the notes to the
Company Financial Statements.
2.5. Absence of Certain Changes. Since June 30, 1999 (the
"Company Balance Sheet Date"), Company has conducted its business in the
ordinary course consistent with past practice and there has not occurred: (i)
any change, event or condition (whether or not covered by insurance) that has
resulted in, or might reasonably be expected to result in, a Material Adverse
Effect to Company; (ii) any acquisition, sale or transfer of any material asset
of Company or any of its subsidiaries other than in the ordinary course of
business and consistent with past practice; (iii) any change in accounting
methods or practices (including any change in depreciation or amortization
policies or rates) by Company or any revaluation by Company of any of its or any
of its subsidiaries' assets; (iv) any declaration, setting aside, or payment of
a dividend or other distribution with respect to the shares of Company, or any
direct or indirect redemption, purchase or other acquisition by Company of any
of its shares of capital stock; (v) any material contract entered into by
Company or any of its subsidiaries, other than in the ordinary course of
business and as provided to Parent, or any material amendment or termination of,
or default under, any material contract to which Company or any of its
subsidiaries is a party or by which it is bound; (vi) any amendment or change to
the Certificate of Incorporation or Bylaws or, except as contemplated by Section
2.32 hereof, Rights Agreement of Company; or (vii) any increase in or
modification of the compensation or benefits payable, or to become payable, by
Company to any of its directors or employees, other than pursuant to scheduled
annual performance reviews, provided that any resulting modifications are in the
ordinary course of business and consistent with Company's past practices.
Company has not agreed since June 30, 1999 to do any of the things described in
the preceding clauses (i) through (vii) and is not currently involved in any
negotiations to do any of the things described in the preceding clauses (i)
through (vii) (other than negotiations with Parent and its representatives
regarding the transactions contemplated by this Agreement).
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2.6. Absence of Undisclosed Liabilities. Company has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet included in Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1999 (the "Company Balance Sheet"), (ii) those incurred in the
ordinary course of business and not required to be set forth in the Company's
Balance Sheet under GAAP, (iii) those incurred in the ordinary course of
business since the Company Balance Sheet Date and not reasonably likely to have
a Material Adverse Effect on Company; and (iv) those incurred in connection with
the execution of this Agreement.
2.7. Litigation. There is no private or governmental action,
suit, proceeding, claim, arbitration or investigation pending before any agency,
court or tribunal, foreign or domestic, or, to the knowledge of Company or any
of its subsidiaries, threatened against Company or any of its subsidiaries or
any of their respective properties or any of their respective officers or
directors (in their capacities as such) that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on Company. There
is no judgment, decree or order against Company or any of its subsidiaries, or,
to the knowledge of Company and its subsidiaries, any of their respective
directors or officers (in their capacities as such), that would prevent, enjoin,
alter or materially delay any of the transactions contemplated by this
Agreement, or that would reasonably be expected to have a Material Adverse
Effect on Company.
2.8. Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon Company or any of its
subsidiaries which has or reasonably would be expected to have the effect of
prohibiting or materially impairing any business practice of Company or any of
its subsidiaries, any acquisition of property by Company or any of its
subsidiaries or the conduct of business by Company or any of its subsidiaries.
2.9. Governmental Authorization. Company and each of its
subsidiaries have obtained each federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization of a
Governmental Entity (i) pursuant to which Company or any of its subsidiaries
currently operates or holds any interest in any of its properties or (ii) that
is required for the operation of Company's or any of its subsidiaries' business
or the holding of any such interest ((i) and (ii) herein collectively called
"Company Authorizations"), and all of such Company Authorizations are in full
force and effect, except where the failure to obtain or have any of such Company
Authorizations would not reasonably be expected to have a Material Adverse
Effect on Company.
2.10 Title to Property. Company and its subsidiaries have good
and valid title to all of their respective properties, interests in properties
and assets, real and personal, reflected in the Company Balance Sheet or
acquired after the Company Balance Sheet Date (except properties, interests in
properties and assets sold or otherwise disposed of since the Company Balance
Sheet Date in the ordinary course of business), or in the case of leased
properties and assets, valid leasehold interests in, free and clear of all
mortgages, liens, pledges, charges or encumbrances of any kind or character,
except (i) the lien of current taxes not yet due and payable, (ii) such
imperfections of title, liens and easements as do not and will not materially
detract from or interfere with the use of the properties subject thereto or
affected thereby, or otherwise materially impair business operations involving
such properties, (iii) liens securing
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debt which is reflected on the Company Balance Sheet, and (iv) liens that in the
aggregate would not have a Material Adverse Effect on Company. The plants,
property and equipment of Company and its subsidiaries that are used in the
operations of their businesses are in good operating condition and repair,
except when the failure to do so would not have a Material Adverse Effect. All
properties used in the operations of Company and its subsidiaries are reflected
in the Company Balance Sheet to the extent generally accepted accounting
principles require the same to be reflected. Schedule 2.10 identifies each
parcel of real property owned or leased by Company or any of its subsidiaries.
No lease relating to a foreign parcel contains any extraordinary payment
obligation.
2.11 Intellectual Property.
(a) Company and its subsidiaries own, or are licensed or
otherwise possess legally enforceable and unencumbered rights to use all
patents, trademarks, trade names, service marks, domain names, database rights,
copyrights, and any applications therefor, maskworks, net lists, schematics,
technology, know-how, trade secrets, inventory, ideas, algorithms, processes,
computer software programs or applications (in both source code, except in
circumstances where Company only possesses a license to the object code form,
and object code form), and tangible or intangible proprietary information or
material ("Intellectual Property") that are used in the business of Company and
its subsidiaries. Company owns and possesses source code for all software owned
by Company and owns or has valid licenses and possesses source code for all
products owned, distributed and presently supported by Company. Company has not
(i) licensed any of its Intellectual Property in source code form to any party
or (ii) entered into any exclusive agreements relating to its Intellectual
Property. No royalties or other continuing payment obligations are due in
respect of Third Party Intellectual Property Rights.
(b) Schedule 2.11 lists (i) all patents and patent
applications and all registered trademarks, trade names and service marks,
registered copyrights, and maskworks included in the Intellectual Property,
including the jurisdictions in which each such Intellectual Property right has
been issued or registered or in which any application for such issuance and
registration has been filed, (ii) all licenses, sublicenses and other agreements
as to which Company is a party and pursuant to which any person is authorized to
use any Intellectual Property (except for non-material licenses entered into by
Company in the ordinary course of business), and (iii) all licenses, sublicenses
and other agreements as to which Company is a party and pursuant to which
Company is authorized to use any third party patents, trademarks or copyrights,
including software ("Third Party Intellectual Property Rights") which are
incorporated in, are, or form a part of any Company product, other than
commercially available, off-the-shelf software.
(c) There is no unauthorized use, disclosure,
infringement or misappropriation of any Intellectual Property rights of Company
or any of its subsidiaries, or any Intellectual Property right of any third
party to the extent licensed by or through Company or any of its subsidiaries,
by any third party, including any employee or former employee of Company or any
of its subsidiaries. Neither Company nor any of its subsidiaries has entered
into any agreement to indemnify any other person against any charge of
infringement of any Intellectual
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Property, other than indemnification provisions contained in purchase orders,
license agreements and distribution and other customer agreements arising in the
ordinary course of business.
(d) Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any license, sublicense or other agreement
relating to the Intellectual Property or Third Party Intellectual Property
Rights.
(e) All patents, trademarks, service marks and
copyrights held by Company are valid and subsisting. Company (i) has not been
sued in any suit, action or proceeding (or received any notice or, to Company's
knowledge, threat) which involves a claim of infringement of any patents,
trademarks, service marks, copyrights or violation of any trade secret or other
proprietary right of any third party and (ii) has not brought any action, suit
or proceeding for infringement of Intellectual Property or breach of any license
or agreement involving Intellectual Property against any third party. The
manufacture, marketing, licensing or sale of Company's products does not
infringe any patent, trademark, service xxxx, copyright, trade secret or other
proprietary right of any third party.
(f) Company has secured valid written assignments from
all consultants and employees who contributed to the creation or development of
Intellectual Property of the rights to such contributions that Company does not
already own by operation of law.
(g) Company has taken all reasonably necessary steps to
protect and preserve the confidentiality of all Intellectual Property not
otherwise protected by patents or patent applications or copyright
("Confidential Information"). All use, disclosure or appropriation of
Confidential Information owned by Company by or to a third party has been
pursuant to the terms of a written agreement between Company and such third
party. All use, disclosure or appropriation of Confidential Information not
owned by Company has been pursuant to the terms of a written agreement between
Company and the owner of such Confidential Information, or is otherwise lawful.
(h) There are no actions that must be taken by Company
or any subsidiary within sixty (60) days of the Closing Date that, if not taken,
will result in the loss of any Intellectual Property, including the payment of
any registration, maintenance or renewal fees or the filing of any responses to
the U.S. Patent and Trademark Office actions, documents, applications or
certificates for the purposes of obtaining, maintaining, perfecting or
preserving or renewing any Intellectual Property.
(i) Company has not received any opinion of counsel that
any third party patents apply to the Company's products.
2.12 Environmental Matters.
(a) The following terms shall be defined as follows:
(i) "Environmental and Safety Laws" shall mean
any federal, state or local laws, ordinances, codes, regulations, rules,
policies and orders that are intended to assure the protection of the
environment, or that classify, regulate, call for the remediation of,
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require reporting with respect to, or list or define air, water, groundwater,
solid waste, hazardous or toxic substances, materials, wastes, pollutants or
contaminants, or which are intended to assure the safety of employees, workers
or other persons, including the public.
(ii) "Hazardous Materials" shall mean any toxic
or hazardous substance, material or waste or any pollutant or contaminant, or
infectious or radioactive substance or material, including without limitation,
those substances, materials and wastes defined in or regulated under any
Environmental and Safety Laws.
(iii) "Property" shall mean all real property
leased or owned by Company or its subsidiaries either currently or in the past.
(iv) "Facilities" shall mean all buildings and
improvements on the Property of Company or its subsidiaries.
(b) Company represents and warrants that, except in all
cases as, in the aggregate, would not have a Material Adverse Effect on Company,
as follows: (i) no methylene chloride or asbestos is contained in or has been
used at or released from the Facilities; (ii) all Hazardous Materials and wastes
have been disposed of in accordance with all Environmental and Safety Laws;
(iii) Company and its subsidiaries have received no notice (verbal or written)
of any noncompliance of the Facilities or its past or present operations with
Environmental and Safety Laws; (iv) no notices, administrative actions or suits
are pending or, to Company's knowledge, threatened relating to a violation of
any Environmental and Safety Laws; (v) to Company's knowledge, neither Company
nor its subsidiaries are a potentially responsible party under the federal
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA),
or state analog statute, arising out of events occurring prior to the Closing
Date; (vi) there have not been in the past, and are not now, any Hazardous
Materials on, under or migrating to or from the Facilities or Property; (vii)
there have not been in the past, and are not now, any underground tanks or
underground improvements at, on or under the Property including without
limitation, treatment or storage tanks, sumps, or water, gas or oil xxxxx;
(viii) there are no polychlorinated biphenyls (PCBs) deposited, stored, disposed
of or located on the Property or Facilities or any equipment on the Property
containing PCBs at levels in excess of 50 parts per million; (ix) there is no
formaldehyde on the Property or in the Facilities, nor any insulating material
containing urea formaldehyde in the Facilities; (x) the Facilities and Company's
and its subsidiaries uses and activities therein have at all times complied with
all Environmental and Safety Laws; and (xi) Company and its subsidiaries have
all the permits and licenses required to be issued and are in full compliance
with the terms and conditions of those permits.
2.13 Taxes. Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax (as defined below)
purposes of which Company or any of its subsidiaries is or has been a member,
have properly completed and timely filed all Tax Returns required to be filed by
them and have paid all Taxes shown thereon to be due. Company has provided
adequate accruals in accordance with GAAP in the Company Balance Sheet for any
Taxes of the Company and its subsidiaries that have not been paid with respect
to periods through June 30, 1999. The Company has no material liability for
unpaid Taxes accruing after June 30, 1999 other than Taxes arising in the
ordinary course of its business subsequent to June 30, 1999. There is (i) no
material claim for Taxes that is a lien against the property of
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Company or any of its subsidiaries or is being asserted against Company or any
of its subsidiaries other than liens for Taxes not yet due and payable; (ii) no
audit of any Tax Return of Company or any of its subsidiaries that is being
conducted by a Tax authority; (iii) no extension of the statute of limitations
on the assessment of any Taxes that has been granted by Company or any of its
subsidiaries and that is currently in effect; and (iv) no agreement, contract or
arrangement to which Company or any of its subsidiaries is a party that may
result in the payment of any amount that would not be deductible by reason of
Sections 280G, 162 or 404 of the Code. Neither Company nor any of its
subsidiaries has been or will be required to include any material adjustment in
Taxable income for any Tax period (or portion thereof) pursuant to Section 481
or 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions, events or accounting methods employed prior to the
Merger. Neither Company nor any of its subsidiaries has filed or will file any
consent to have the provisions of paragraph 341(f)(2) of the Code (or comparable
provisions of any state Tax laws) apply to Company or any of its subsidiaries.
All Tax sharing or Tax allocation agreements to which Company or any of its
subsidiaries is a party are listed on Schedule 2.13 together with any liability
of Company or its subsidiaries to another party under any such agreement which
is either currently owing or which would result from assertions currently being
made by Tax Authorities from audits or proceedings in progress. Neither Company
nor any of its subsidiaries has filed any disclosures under Section 6662 or
comparable provisions of state, local or foreign law to prevent the imposition
of penalties with respect to any Tax reporting position taken on any Tax Return.
Except as set forth on Schedule 2.13, neither Company nor any of its
subsidiaries has ever been a member of a consolidated, combined or unitary group
of which Company was not the ultimate parent corporation. Company and each of
its subsidiaries have in their possession receipts for any Taxes paid to foreign
Tax authorities. For purposes of this Agreement, the following terms have the
following meanings: "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means (i) any net income, alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Governmental Entity (a "Tax authority") responsible for the
imposition of any such tax (domestic or foreign); (ii) any liability for the
payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group for any Taxable
period; and (iii) any liability for the payment of any amounts of the type
described in (i) or (ii) as a result of being a transferee of or successor to
any person or as a result of any express or implied obligation to indemnify any
other person, including pursuant to any Tax sharing or Tax allocation agreement.
As used herein, "Tax Return" shall mean any return, statement, report or form
(including, without limitation estimated Tax returns and reports, withholding
Tax returns and reports and information reports and returns) required to be
filed with respect to Taxes. Neither Company nor any of its subsidiaries has
ever been a United States real property holding corporation within the meaning
of Section 897 of the Code.
2.14 Employee Benefit Plans.
(a) Schedule 2.14 lists, with respect to Company, any
subsidiary of Company and any trade or business (whether or not incorporated)
which is treated as a single
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employer with Company (an "ERISA Affiliate") within the meaning of Section
414(b), (c), (m) or (o) of the Code, (i) all material employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")); (ii) each loan to a non-officer employee in excess of
$50,000, loans to officers and directors and any stock option, stock purchase,
phantom stock, stock appreciation right, supplemental retirement, severance,
sabbatical, medical, dental, vision care, disability, employee relocation,
cafeteria benefit (Code section 125) or dependent care (Code Section 129), life
insurance or accident insurance plans, programs or arrangements; (iii) all
bonus, pension, profit sharing, savings, deferred compensation or incentive
plans, programs or arrangements; (iv) other fringe or employee benefit plans,
programs or arrangements that apply to senior management of Company and that do
not generally apply to all employees; and (v) any current or former employment
or executive compensation or severance agreements, written or otherwise, as to
which unsatisfied obligations of Company of greater than $50,000 remain for the
benefit of, or relating to, any present or former employee, consultant or
director of Company (together, the "Company Employee Plans").
(b) Company has furnished to Parent a copy of each of
the Company Employee Plans and related plan documents (including trust
documents, insurance policies or contracts, employee booklets, summary plan
descriptions and other authorizing documents, and any material employee
communications relating thereto) and has, with respect to each Company Employee
Plan which is subject to ERISA reporting requirements, provided copies of the
Form 5500 reports filed for the last three plan years. Any Company Employee Plan
intended to be qualified under Section 401(a) of the Code has either obtained
from the Internal Revenue Service a favorable determination letter as to its
qualified status under the Code, including all amendments to the Code effected
by the Tax Reform Act of 1986 and subsequent legislation other than the Uruguay
Round Agreements Act of 1994, the Uniformed Services Employment and Reemployment
Rights Act of 1994, the Small Business Job Protection Act of 1996, and the
Taxpayer Relief Act of 1997, or has applied to the Internal Revenue Service for
such a determination letter prior to the expiration of the requisite period
under applicable Treasury Regulations or Internal Revenue Service pronouncements
in which to apply for such determination letter and to make any amendments
necessary to obtain a favorable determination. Company has also furnished Parent
with the most recent Internal Revenue Service determination letter issued with
respect to each such Company Employee Plan, and nothing has occurred since the
issuance of each such letter which would reasonably be expected to cause the
loss of the tax-qualified status of any Company Employee Plan subject to Code
Section 401(a). Company has also furnished Parent with all registration
statements and prospectuses prepared in connection with each Company Employee
Plan.
(c) (i) None of the Company Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person, except
as required by applicable law; (ii) there has been no "prohibited transaction,"
as such term is defined in Section 406 of ERISA and Section 4975 of the Code,
with respect to any Company Employee Plan, which would reasonably be expected to
have, in the aggregate, a Material Adverse Effect on Company; (iii) each Company
Employee Plan has been administered in accordance with its terms and in
compliance with the requirements prescribed by any and all statutes, rules and
regulations (including ERISA and the Code), except as would not have, in the
aggregate, a Material Adverse Effect on Company, and Company and each subsidiary
or ERISA Affiliate have performed in all material
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respects all obligations required to be performed by them under, are not in
default in any material respect under or violation of, and have no knowledge of
any material default or violation by any other party to, any of the Company
Employee Plans; (iv) neither Company nor any subsidiary or ERISA Affiliate is
subject to any material liability or material penalty under Sections 4976
through 4980 of the Code or Title I of ERISA with respect to any of the Company
Employee Plans; (v) all material contributions required to be made by Company or
any subsidiary or ERISA Affiliate to any Company Employee Plan have been made on
or before their due dates and a reasonable amount has been accrued for
contributions to each Company Employee Plan for the current plan years; (vi)
with respect to each Company Employee Plan, no "reportable event" within the
meaning of Section 4043 of ERISA (excluding any such event for which the thirty
(30) day notice requirement has been waived under the regulations to Section
4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 or ERISA
has occurred; (vii) no Company Employee Plan is covered by, and neither Company
nor any subsidiary or ERISA Affiliate has incurred or expects to incur any
liability under Title IV of ERISA or Section 412 of the Code; and (viii) each
Company Employee Plan can be amended, terminated or otherwise discontinued after
the Effective Time in accordance with its terms, without liability to Parent
(other than for benefits accrued through the date of termination and ordinary
administrative expenses typically incurred in a termination event). With respect
to each Company Employee Plan subject to ERISA as either an employee pension
plan within the meaning of Section 3(2) of ERISA or an employee welfare benefit
plan within the meaning of Section 3(1) of ERISA, Company has prepared in good
faith and timely filed all requisite governmental reports (which were true and
correct as of the date filed) and has properly and timely filed and distributed
or posted all notices and reports to employees required to be filed, distributed
or posted with respect to each such Company Employee Plan, except where the
failure to do so would not have a Material Adverse Effect. No suit,
administrative proceeding, action or other litigation has been brought, or to
the knowledge of Company is threatened, against or with respect to any such
Company Employee Plan, including any audit or inquiry by the IRS or United
States Department of Labor. No payment or benefit which will or may be made by
Company to any employee will be characterized as an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code.
(d) With respect to each Company Employee Plan, Company
and each of its United States subsidiaries have complied except to the extent
that such failure to comply would not, individually or in the aggregate, have a
Material Adverse Effect on Company, with (i) the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and the regulations (including proposed
regulations) thereunder, (ii) the applicable requirements of the Family Medical
and Leave Act of 1993 and the regulations thereunder, and (iii) the applicable
requirements of the Health Insurance Portability and Accountability Act of 1996
and the regulations (including proposed regulations) thereunder.
(e) The consummation of the transactions contemplated by
this Agreement will not (i) entitle any current or former employee or other
service provider of Company, any Company subsidiary or any other ERISA Affiliate
to severance benefits or any other payment, except as expressly provided in this
Agreement, or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or service provider.
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(f) There has been no amendment to, written
interpretation or announcement (whether or not written) by Company, any Company
subsidiary or other ERISA Affiliate relating to, or change in participation or
coverage under, any Company Employee Plan which would materially increase the
expense of maintaining such Plan above the level of expense incurred with
respect to that Plan for the most recent fiscal year included in Company's
financial statements.
(g) Company does not currently maintain, sponsor,
participate in or contribute to, nor has it ever maintained, established,
sponsored, participated in, or contributed to, any pension plan (within the
meaning of Section 3(2) of ERISA) which is subject to Part 3 of Subtitle B of
Title I of ERISA, Title IV of ERISA or Section 412 of the Code.
(h) Neither Company nor any Company subsidiary or other
ERISA Affiliate is a party to, or has made any contribution to or otherwise
incurred any obligation under, any "multiemployer plan" as defined in Section
3(37) of ERISA.
2.15 Certain Agreements Affected by the Merger. Neither the
execution and delivery of this Agreement nor the consummation of the transaction
contemplated hereby will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any director or employee of Company or any of its
subsidiaries, (ii) materially increase any benefits otherwise payable by Company
or (iii) result in the acceleration of the time of payment or vesting of any
such benefits.
2.16 Employee Matters. Company and each of its subsidiaries are
in compliance in all respects with all currently applicable laws and regulations
respecting employment, discrimination in employment, terms and conditions of
employment, wages, hours and occupational safety and health and employment
practices, and is not engaged in any unfair labor practice, except where the
failure to be in compliance or the engagement in such unfair labor practices
would not have a Material Adverse Effect on Company. Company has in all material
respects withheld all amounts required by law or by agreement to be withheld
from the wages, salaries, and other payments to employees; and is not liable for
any material arrears of wages or any material taxes or any material penalty for
failure to comply with any of the foregoing. Company is not liable for any
material payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for employees (other than
routine payments to be made in the normal course of business and consistent with
past practice). There are no pending claims against Company or any of its
subsidiaries for any material amounts under any workers compensation plan or
policy or for long term disability. Neither Company nor any of its subsidiaries
has any obligations under COBRA with respect to any former employees or
qualifying beneficiaries thereunder, except for obligations that are not
material in amount. There are no controversies pending or, to the knowledge of
Company or any of its subsidiaries, threatened, between Company or any of its
subsidiaries and any of their respective employees, which controversies have or
would reasonably be expected to result in an action, suit, proceeding, claim,
arbitration or investigation before any agency, court or tribunal, foreign or
domestic. Neither Company nor any of its subsidiaries is a party to any
collective bargaining agreement or other labor union contract nor does Company
nor any of its subsidiaries know of any activities or proceedings of any labor
union to organize any such employees. To Company's
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knowledge, no employees of Company or any of its subsidiaries are in violation
of any term of any employment contract, patent disclosure agreement,
noncompetition agreement, or any restrictive covenant to a former employer
relating to the right of any such employee to be employed by Company because of
the nature of the business conducted or presently proposed to be conducted by
Company or any of its subsidiaries or to the use of trade secrets or proprietary
information of others. No employees of Company or any of its subsidiaries have
given notice to Company, nor is Company otherwise aware, that any such employee
intends to terminate his or her employment with Company or any subsidiary.
2.17 Interested Party Transactions. Except as disclosed in the
Company SEC Documents, neither Company nor any of its subsidiaries is indebted
to any director or officer of Company or any of its subsidiaries (except for
amounts due as normal salaries and bonuses and in reimbursement of ordinary
expenses), and no such person is indebted to Company or any of its subsidiaries,
and there are no other transactions of the type required to be disclosed
pursuant to Items 402 and 404 of Regulation S-K under the Securities Act and the
Exchange Act.
2.18 Insurance. Company and each of its subsidiaries have
policies of insurance and bonds of the type and in amounts customarily carried
by persons conducting businesses or owning assets similar to those of Company
and its subsidiaries. There is no material claim pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds. All premiums due and payable
under all such policies and bonds have been paid and Company and its
subsidiaries are otherwise in compliance in all material respects with the terms
of such policies and bonds. Company has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies.
2.19 Compliance With Laws. Each of Company and its subsidiaries
has complied with, are not in violation of, and have not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for such violations or failures to comply as
would not be reasonably expected to have a Material Adverse Effect on Company.
2.20 Minute Books. The minute books of Company and its
subsidiaries made available to Parent contain a complete and accurate summary of
all meetings of directors and stockholders or actions by written consent since
the time of incorporation of Company and the respective subsidiaries through the
date of this Agreement, and reflect all transactions referred to in such minutes
accurately in all material respects.
2.21 Complete Copies of Materials. Company has delivered or
made available true and complete copies of each document that has been requested
by Parent or its counsel in connection with their legal and accounting review of
Company and its subsidiaries.
2.22 Brokers' and Finders' Fees. Except for payment obligations
to Xxxx Xxxxxxxx Xxxxxxx set forth in an engagement letter, a copy of which has
been provided to Parent, Company has not incurred, nor will it incur, directly
or indirectly, any liability for brokerage or finders' fees or agents'
commissions or investment bankers' fees or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
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2.23 Registration Statement; Proxy Statement/Prospectus. The
information supplied by Company for inclusion in the registration statement on
Form S-4 (or such other or successor form as shall be appropriate) pursuant to
which the shares of Parent Common Stock to be issued in the Merger will be
registered with the SEC (the "Registration Statement") shall not at the time the
Registration Statement (including any amendments or supplements thereto) is
declared effective by the SEC contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The information supplied by Company for
inclusion in the proxy statement/prospectus to be sent to the stockholders of
Company in connection with the meeting of Company's stockholders to consider the
Merger (the "Company Stockholders Meeting") (such proxy statement/prospectus as
amended or supplemented is referred to herein as the "Proxy Statement") shall
not, on the date the Proxy Statement is first mailed to Company's stockholders,
at the time of the Company Stockholders Meeting and at the Effective Time,
contain any statement which, at such time, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made therein, in light of the circumstances under which they
are made, not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Stockholders Meeting which has become
false or misleading. If at any time prior to the Effective Time any event or
information should be discovered by Company which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy Statement,
Company shall promptly inform Parent and Merger Sub. Notwithstanding the
foregoing, Company makes no representation, warranty or covenant with respect to
any information supplied by Parent or Merger Sub or any other third party which
is contained in any of the foregoing documents.
2.24 Opinion of Financial Advisor. Company has been advised in
writing by its financial advisor, Xxxx Xxxxxxxx Xxxxxxx, that in such advisor's
opinion, as of the date hereof, the consideration to be received by the
stockholders of Company is fair, from a financial point of view, to the
stockholders of Company.
2.25 Vote Required. The affirmative vote of the holders of at
least seventy-five percent (75%) of the shares of Company Common Stock
outstanding on the record date set for the Company Stockholders Meeting is the
only vote of the holders of any of Company's capital stock necessary to approve
this Agreement and the transactions contemplated hereby.
2.26 Board Approval. The Board of Directors of Company has (i)
approved this Agreement and the Merger, (ii) determined that the Merger is
advisable and in the best interests of the stockholders of Company and is on
terms that are fair to such stockholders and (iii) recommended that the
stockholders of Company approve this Agreement and consummation of the Merger.
2.27 Stockholder Agreement; Irrevocable Proxies. All of the
persons listed on Schedule 2.27 have agreed in writing to vote for approval of
the Merger pursuant to a Stockholder Agreement, and pursuant to an Irrevocable
Proxy attached thereto as Exhibit A.
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2.28 Section 203 of the DGCL Not Applicable. The Board of
Directors of Company has taken all actions so that the restrictions contained in
Section 203 of the Delaware Law applicable to a "business combination" (as
defined in Section 203) will not apply to the execution, delivery or performance
of this Agreement or the Option Agreement or the consummation of the Merger or
the other transactions contemplated by this Agreement or by the Option
Agreement. No other state takeover statute is applicable to the Merger, the
Merger Agreement, the Option Agreement or the transactions contemplated hereby
and thereby.
2.29 Inventory. The inventories of Company disclosed in the
Company SEC Documents as of June 30, 1999 and in any subsequently filed Company
SEC Documents are stated consistently with the audited financial statements of
Company and consist of items of a quantity usable or salable in the ordinary
course of business. Since June 30, 1999, Company has continued to replenish
inventories in a normal and customary manner consistent with past practices.
Company has not received written or oral notice that it will experience in the
foreseeable future any difficulty in obtaining, in the desired quantity and
quality and at a reasonable price and upon reasonable terms and conditions, the
raw materials, supplies or component products required for the manufacture,
assembly or production of its products. The values at which inventories are
carried reflect the inventory valuation policy of Company, which is consistent
with its past practice and in accordance with GAAP applied on a consistent
basis. Since June 30, 1999 due provision was made on the books of Company in the
ordinary course of business consistent with past practices to provide for all
slow-moving, obsolete, or unusable inventories to their estimated useful or
scrap values and such inventory reserves are adequate to provide for such
slow-moving, obsolete or unusable inventory and inventory shrinkage. As of June
30, 1999, Company had inventory of approximately $500,000 in the distribution
channel and had commitments to purchase inventory (other than purchases of
supplies in the ordinary course) in an amount of approximately $1,600,000.
2.30 Accounts Receivable. The accounts receivable disclosed in
the Company SEC Documents as of June 30, 1999, and, with respect to accounts
receivable created since such date, disclosed in any subsequently filed Company
SEC Documents, or as accrued on the books of Company in the ordinary course of
business consistent with past practices in accordance with GAAP since the last
filed Company SEC Documents, represent and will represent bona fide claims
against debtors for sales and other charges, are not subject to discount except
for normal cash and immaterial trade discount. The amount carried for doubtful
accounts and allowances disclosed in each of such Company SEC Document or
accrued on such books is sufficient to provide for any losses that may be
sustained on realization of the receivables.
2.31 Customers and Suppliers. None of Company's customers which
individually accounted for more than 5% of Company's gross revenues during the
12-month period preceding the date hereof has terminated any agreement with
Company. As of the date hereof, no material supplier of Company has indicated
that it will stop, or decrease the rate of, supplying materials, products or
services to Company. Company has not knowingly breached, so as to provide a
benefit to Company that was not intended by the parties, any agreement with, or
engaged in any fraudulent conduct with respect to, any customer or supplier of
Company.
2.32 Rights Plan. Company has amended the Company Rights
Agreement on terms satisfactory to Parent to make the Rights inapplicable to the
Merger Agreement, the Option
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Agreement and all of the transactions contemplated hereby or thereby; provided
that the Rights shall remain applicable to all acquisitions of capital stock of
Company other than pursuant to this Agreement or the Option Agreement or any of
the transactions contemplated hereby or thereby. After such amendment, Company
will not thereafter amend the Rights Agreement so as to make the Rights
applicable to the Merger or so as to make the Rights inapplicable to any
acquisition of capital stock of Company other than pursuant to this Agreement or
the Option Agreement or any of the transactions contemplated hereby or thereby.
2.33 Export Control Laws. Company has conducted its export
transactions in accordance with applicable provisions of United States export
control laws and regulations, including but not limited to the Export
Administration Act and implementing Export Administration Regulations, except
for such violations which would not have a Material Adverse Effect on Company.
Without limiting the foregoing, Company represents and warrants that:
(a) Company has obtained all export licenses and other
approvals required for its exports of products, software and technologies from
the United States;
(b) Company is in compliance with the terms of all
applicable export licenses or other approvals;
(c) There are no pending or threatened claims against
Company with respect to such export licenses or other approvals;
(d) There are no actions, conditions or circumstances
pertaining to Company's export transactions that may give rise to any future
claims; and
(e) No consents or approvals for the transfer of export
licenses to Parent are required, or such consents and approvals can be obtained
expeditiously without material cost.
2.34 Year 2000. Company's current products and services are
"Year 2000 Compliant," where "Year 2000 Compliant" means that such products and
services have been designed and tested so that, when used in accordance with
their associated documentation, they are capable of accurately processing,
providing and/or receiving (i) date-related data from, into and between the
Twentieth (20th) and Twenty-First (21st) centuries, or (ii) date-related data in
connection with any valid date in the Twentieth (20th) and Twenty-First (21st)
centuries; provided that all other products and services used in combination in
any way with Company's current products and services properly exchange
date-related data with them. The information technology systems and
non-information technology systems used by Company in its internal operations
will function properly beyond 1999. Neither Company nor any of its subsidiaries
has made any representations or warranties relating to the ability of any
product or service of Company or its subsidiaries to be Year 2000 Compliant.
Company has made inquiries to its key third-party vendors and providers as to
the status of their Year 2000 efforts, and has not uncovered any problems that
would aversely affect the operation of the products or that could disrupt or
harm the day-to-day functioning of the business or operations of Company.
2.35 Representations Complete. None of the representations or
warranties made by Company herein or in any Schedule hereto, including the
Company Disclosure Schedule, or certificate furnished by Company pursuant to
this Agreement, or the Company SEC
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Documents, when all such documents are read together in their entirety, contains
or will contain at the Effective Time any untrue statement of a material fact,
or omits or will omit at the Effective Time to state any material fact necessary
in order to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in that section of the document of even date
herewith delivered by Parent to Company prior to the execution and delivery of
this Agreement (the "Parent Disclosure Schedule") corresponding to the Section
of this Agreement to which any of the following representations and warranties
specifically relate or as disclosed in another section of the Parent Disclosure
Schedule if it is reasonably apparent on the face of the disclosure that it is
applicable to another Section of this Agreement, Parent represents and warrants
to Company as follows:
3.1. Organization, Standing and Power. Each of Parent and Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization. Each of Parent and Merger Sub has
the corporate power to own its properties and to carry on its business as now
being conducted and as proposed to be conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified and in good standing would have a Material Adverse Effect on
Parent. Neither Parent nor Merger Sub is in violation of any of the provisions
of its Articles of Incorporation or Bylaws or equivalent organizational
documents.
3.2. Capital Structure. The authorized capital stock of Parent
consists of 5,400,000,000 shares of Common Stock, $0.001 par value, and
5,000,000 shares of Preferred Stock, no par value, of which there were issued
and outstanding as of the close of business on October 21, 1999, 3,294,811,181
shares of Common Stock and no shares of Preferred Stock. The Board of Directors
of Parent has authorized, subject to shareholder approval, an increase in the
authorized shares of Common Stock to 10,000,000,000. The authorized capital
stock of Merger Sub consists of 1,000 shares of Common Stock, $0.001 par value,
all of which are issued and outstanding and are held by Parent. The shares of
Parent Common Stock to be issued pursuant to the Merger will be duly authorized,
validly issued, fully paid, and non-assessable, free of any liens or
encumbrances imposed by Parent or Merger Sub.
3.3 Authority. Parent and Merger Sub have all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub. This Agreement has been duly executed and delivered by Parent and Merger
Sub and constitutes the valid and binding obligations of Parent and Merger Sub.
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or
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acceleration of any obligation or loss of a benefit under (i) any provision of
the Articles of Incorporation or Bylaws of Parent or any of its subsidiaries, as
amended, or (ii) any material mortgage, indenture, lease, contract or other
agreement or instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to Parent
or any of its subsidiaries or their properties or assets, except where such
conflict, violation, default, termination, cancellation or acceleration with
respect to the foregoing provisions of (ii) would not have had and would not
reasonably be expected to have a Material Adverse Effect on Parent. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity, is required by or with respect to Parent or any
of its subsidiaries in connection with the execution and delivery of this
Agreement by Parent and Merger Sub or the consummation by Parent and Merger Sub
of the transactions contemplated hereby, except for (i) the filing of the
Certificate of Merger as provided in Section 1.2; (ii) the filing with the SEC
and NASD of the Registration Statement; (iii) the filing of a Form 8-K with the
SEC and NASD within 15 days after the Closing Date; (iv) any filings as may be
required under applicable state securities laws and the securities laws of any
foreign country; (v) such filings as may be required under HSR; (vi) the filing
with the Nasdaq National Market of a Notification Form for Listing of Additional
Shares with respect to the shares of Parent Common Stock issuable upon
conversion of the Company Common Stock in the Merger and upon exercise of the
options under the Company Stock Option Plans assumed by Parent; (vii) the filing
of a registration statement on Form S-8 with the SEC, or other applicable form
covering the shares of Parent Common Stock issuable pursuant to outstanding
options under the Company Stock Option Plans assumed by Parent; and (viii) such
other consents, authorizations, filings, approvals and registrations which, if
not obtained or made, would not have a Material Adverse Effect on Parent and
would not prevent or materially alter or delay any of the transactions
contemplated by this Agreement.
3.4 SEC Documents; Financial Statements. Parent has made
available to Company each statement, report, registration statement (with the
prospectus in the form filed pursuant to Rule 424(b) of the Securities Act),
definitive proxy statement, and other filings filed with the SEC by Parent since
July 31, 1999, and, prior to the Effective Time, Parent will have furnished or
made available to Company true and complete copies of any additional documents
filed with the SEC by Parent prior to the Effective Time (collectively, the
"Parent SEC Documents"). In addition, Parent has made available to Company all
exhibits to the Parent SEC Documents filed prior to the date hereof, and will
promptly make available to Company all exhibits to any additional Parent SEC
Documents filed prior to the Effective Time. All documents required to be filed
as exhibits to the Company SEC Documents have been so filed, and all material
contracts so filed as exhibits are in full force and effect, except those which
have expired in accordance with their terms, and neither Parent nor any of its
subsidiaries is in default thereunder. As of their respective filing dates, the
Parent SEC Documents complied in all material respects with the requirements of
the Exchange Act and the Securities Act, and none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not misleading,
except to the extent corrected by a subsequently filed Parent SEC Document. The
financial statements of Parent, including the notes thereto, included in the
Parent SEC Documents (the "Parent Financial Statements") were complete and
correct in all material respects as of their respective dates, complied as to
form in all material respects with applicable accounting requirements and with
the
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published rules and regulations of the SEC with respect thereto as of their
respective dates, and have been prepared in accordance with GAAP applied on a
basis consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements included in Quarterly Reports on Form 10-Q, as permitted by Form 10-Q
of the SEC). The Parent Financial Statements fairly present the consolidated
financial condition and operating results of Parent and its subsidiaries at the
dates and during the periods indicated therein (subject, in the case of
unaudited statements, to normal, recurring year-end adjustments).
3.5. Absence of Undisclosed Liabilities. Parent has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet or in the related Notes to Consolidated Financial Statements
included in Parent's Annual Report on Form 10-K for the year ended July 31, 1999
(the "Parent Balance Sheet"), (ii) those disclosed in Parent SEC documents filed
subsequent to such Annual Report on Form 10-K for the year ended July 31, 1999,
(iii) those incurred in the ordinary course of business and not required to be
set forth in the Parent Balance Sheet under GAAP, and (iv) those incurred in the
ordinary course of business since the Parent Balance Sheet Date and consistent
with past practice.
3.6. Litigation. There is no litigation pending against Parent
or any of its subsidiaries or, to the knowledge of Parent, threatened against
Parent or any of its subsidiaries that would prevent, enjoin, alter or
materially delay any of the transactions contemplated by this Agreement, or that
would have a Material Adverse Effect on the ability of Parent to consummate the
transactions contemplated by this Agreement. There is no judgment, decree or
order against Parent or any of its subsidiaries, or, to the knowledge of Parent,
any of their respective directors or officers (in their capacities as such),
that would prevent, enjoin, alter or materially delay any of the transactions
contemplated by this Agreement, or that would have a Material Adverse Effect on
the ability of Parent to consummate the transactions contemplated by this
Agreement.
3.7. Broker's and Finders' Fees. Parent has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or investment bankers' fees or any similar charges
in connection with this Agreement or any transaction contemplated hereby.
3.8 Registration Statement; Proxy Statement/Prospectus. The
information supplied by Parent and Merger Sub for inclusion in the Registration
Statement shall not, at the time the Registration Statement (including any
amendments or supplements thereto) is declared effective by the SEC, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The information supplied by Parent for
inclusion in the Proxy Statement shall not, on the date the Proxy Statement is
first mailed to Company's stockholders, at the time of the Company Stockholders
Meeting and at the Effective Time, contain any statement which, at such time, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which it is made, not false or misleading; or omit to state
any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company
Stockholders Meeting which has become false or misleading. If at
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any time prior to the Effective Time any event or information should be
discovered by Parent or Merger Sub which should be set forth in an amendment to
the Registration Statement or a supplement to the Proxy Statement, Parent or
Merger Sub will promptly inform Company. Notwithstanding the foregoing, Parent
and Merger Sub make no representation, warranty or covenant with respect to any
information supplied by Company or any third party which is contained in any of
the foregoing documents.
3.9. Board Approval. The Boards of Directors of Parent and
Merger Sub have (i) approved this Agreement and the Merger, (ii) determined that
the Merger is advisable and in the best interests of their respective
stockholders and is on terms that are fair to such stockholders and (iii)
recommended that the stockholder of Merger Sub approve this Agreement and the
consummation of the Merger.
3.10. Representations Complete. None of the representations or
warranties made by Parent or Merger Sub herein or in any Schedule hereto,
including the Parent Disclosure Schedule, or certificate furnished by Parent or
Merger Sub pursuant to this Agreement, or the Parent SEC Documents, when all
such documents are read together in their entirety, contains or will contain at
the Effective Time any untrue statement of a material fact, or omits or will
omit at the Effective Time to state any material fact necessary in order to make
the statements contained herein or therein, in the light of the circumstances
under which made, not misleading.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1. Conduct of Business of Company. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, Company agrees (except to the extent
expressly contemplated by this Agreement or as consented to in writing by
Parent), to carry on its and its subsidiaries' business in the ordinary course
in substantially the same manner as heretofore conducted, to pay and to cause
its subsidiaries to pay debts and Taxes when due subject to good faith disputes
over such debts or taxes, to pay or perform other obligations when due, and to
use all reasonable efforts consistent with past practice and policies to
preserve intact its and its subsidiaries' present business organizations, use
its reasonable best efforts consistent with past practice to keep available the
services of its and its subsidiaries' present officers and key employees and use
its reasonable best efforts consistent with past practice to preserve its and
its subsidiaries' relationships with customers, suppliers, distributors,
licensors, licensees, and others having business dealings with it or its
subsidiaries, to the end that its and its subsidiaries' goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Company agrees to promptly
notify Parent of any material event or occurrence not in the ordinary course of
its or its subsidiaries' business, and of any event which would have a Material
Adverse Effect on Company.
4.2 Restrictions on Conduct of Business of Company. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, except as expressly
contemplated by this Agreement, Company shall not do,
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cause or permit any of the following, or allow, cause or permit any of its
subsidiaries to do, cause or permit any of the following, without the prior
written consent of Parent:
(a) Charter Documents. Cause or permit any amendments to
its Certificate of Incorporation, Bylaws or the Company Rights Agreement;
(b) Dividends; Changes in Capital Stock. Declare or pay
any dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares
in connection with any termination of service to it or its subsidiaries;
(c) Stock Option Plans, Etc. Take any action to
accelerate, amend or change the period of exercisability or vesting of options
or other rights granted under its stock plans (except for the action required
pursuant to Section 5.15) or authorize cash payments in exchange for any options
or other rights granted under any of such plans.
(d) Material Contracts. Except as set forth on Schedule
4.2, enter into any contract or commitment, or violate, amend or otherwise
modify or waive any of the terms of any of its contracts, other than (i) in the
ordinary course of business consistent with past practice and in no event shall
such contract, commitment, amendment, modification or waiver (other than those
relating to sales of products or purchases of supplies in the ordinary course)
involve the payment by Company or its subsidiaries in excess of $300,000 and
(ii) amendments to warrants to acquire Company Common Stock outstanding on the
date hereof, which amendments are acceptable to Parent, in order to permit
cashless exercise;
(e) Issuance of Securities. Issue, deliver or sell or
authorize or propose the issuance, delivery or sale of, or purchase or propose
the purchase of, any shares of its capital stock or securities convertible into,
or subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such shares or other
convertible securities, other than the issuance of shares of its Common Stock
pursuant to the exercise of stock options, warrants or other rights therefor
outstanding as of the date of this Agreement; provided, however, that Company
may, in the ordinary course of business consistent with past practice, grant
options for the purchase of Company Common Stock under the Company Stock Option
Plans (not to exceed an aggregate of 75,000 options to purchase shares of
Company Common Stock and provided that all of such options are assumable by
Parent and that none of such options provide for acceleration of vesting upon
the Merger); provided, however, that Company may file on Form S-8 a registration
statement covering its Amended and Restated 1996 Stock Option Plan, as amended;
(f) Intellectual Property. Transfer or license to any
person or entity any rights to its Intellectual Property other than the license
of non-exclusive rights to its Intellectual Property in the ordinary course of
business consistent with past practice;
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(g) Exclusive Rights. Except as set forth on Schedule
4.2, enter into or amend any agreements pursuant to which any other party is
granted exclusive marketing or other exclusive rights of any type or scope with
respect to any of its products or technology;
(h) Dispositions. Sell, lease, license or otherwise
dispose of or encumber any of its properties or assets which are material,
individually or in the aggregate, to its and its subsidiaries' business, taken
as a whole, except in the ordinary course of business consistent with past
practice;
(i) Indebtedness. Incur any indebtedness for borrowed
money or guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(j) Leases. Enter into any operating lease in excess of
$100,000;
(k) Payment of Obligations. Pay, discharge or satisfy in
an amount in excess of $100,000 in any one case, any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise)
arising other than in the ordinary course of business, other than the payment,
discharge or satisfaction of liabilities reflected or reserved against in the
Company Financial Statements;
(l) Capital Expenditures. Make any capital expenditures,
capital additions or capital improvements except in the ordinary course of
business and consistent with past practice that do not exceed $100,000
individually or $500,000 in the aggregate;
(m) Insurance. Materially reduce the amount of any
material insurance coverage provided by existing insurance policies;
(n) Termination or Waiver. Terminate or waive any right
of substantial value;
(o) Employee Benefit Plans; New Hires; Pay Increases.
Adopt or amend any employee benefit or stock purchase or option plan or hire any
new director level or officer level employee, pay any special bonus or special
remuneration to any employee or director, or increase the salaries or wage rates
of its employees other than pursuant to scheduled annual performance reviews,
provided that any resulting modifications are in the ordinary course of business
and consistent with Company's past practices and provided that the Company may
enter into employment agreements with two employees as described in Schedule 2.1
of the Company Disclosure Schedules in the form provided in writing to Parent,
provided that the options granted pursuant to such agreements are granted at the
fair market value of Company Common Stock at the time of grant.
(p) Severance Arrangements. Grant any severance or
termination pay (i) to any director or officer, except the payment of a bonus to
Company's Chief Executive Officer as described in Schedule 2.5 of the Company
Disclosure Schedule, or (ii) to any other employee except payments made pursuant
to standard written agreements outstanding on the date hereof;
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(q) Lawsuits. Commence a lawsuit other than (i) for the
routine collection of bills, (ii) in such cases where it in good faith
determines that failure to commence suit would result in the material impairment
of a valuable aspect of its business, provided that it consults with Parent
prior to the filing of such a suit, or (iii) for a breach of this Agreement;
(r) Acquisitions. Acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial portion of the assets of,
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to its and its subsidiaries' business, taken as a whole, or
acquire or agree to acquire any equity securities of any corporation,
partnership, association or business organization;
(s) Taxes. Other than in the ordinary course of
business, make or change any material election in respect of Taxes, adopt or
change any accounting method in respect of Taxes, file any material Tax Return
or any amendment to a material Tax Return, enter into any closing agreement,
settle any claim or assessment in respect of Taxes, or consent to any extension
or waiver of the limitation period applicable to any claim or assessment in
respect of Taxes, excluding any actions (other than amendments or
modifications), including any payment required to be made, pursuant to that
certain Tax Indemnification Agreement dated March 31, 1998 between Company and
Telxon Corporation;
(t) Notices. Company shall give all notices and other
information required by applicable law to be given to the employees of Company,
any collective bargaining unit representing any group of employees of Company,
and any applicable government authority under the WARN Act, the National Labor
Relations Act, the Internal Revenue Code, the Consolidated Omnibus Budget
Reconciliation Act, and other applicable law in connection with the transactions
provided for in this Agreement;
(u) Revaluation. Revalue any of its assets, including
without limitation writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business;
(v) Accounting Policies and Procedures. Make any change
to its accounting methods, principles, policies, procedures or practices, except
as may be required by GAAP, Regulation S-X promulgated by the SEC or applicable
statutory accounting principles;
(w) Year 2000 Compliance. Fail to carry forward in all
material respects Company's Year 2000 assessment and compliance programs, as
made available to Parent by Company; or
(x) Other. Take or agree in writing or otherwise to
take, any of the actions described in Sections 4.2(a) through (w) above, or any
action which would make any of its representations or warranties contained in
this Agreement untrue or incorrect or prevent it from performing or cause it not
to perform its covenants hereunder.
4.3 No Solicitation. Company and its subsidiaries and the
officers, directors, employees or other agents of Company and its subsidiaries
(collectively, "Company Representatives") will not, directly or indirectly, (i)
take any action to solicit, initiate or
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encourage or agree to any Takeover Proposal (as defined in Section 7.3(f)) or
(ii) subject to the terms of the immediately following sentence, engage in
negotiations with, or disclose any nonpublic information relating to Company or
any of it subsidiaries to, or afford access to the properties, books or records
of Company or any of its subsidiaries to, any person that has advised Company
that it may be considering making, or that has made, a Takeover Proposal;
provided, nothing herein shall prohibit Company's Board of Directors from
complying with Rules 14d-9 and 14e-2 promulgated under the Exchange Act.
Notwithstanding the immediately preceding sentence, if an unsolicited written
Takeover Proposal shall be received by the Board of Directors of Company, then,
to the extent the Board of Directors of Company believes in good faith (after
written advice from its financial advisor) that such Takeover Proposal would, if
consummated, result in a transaction more favorable to Company's stockholders
from a financial point of view than the transaction contemplated by this
Agreement (any such more favorable Takeover Proposal being referred to in this
Agreement as a "Superior Proposal") and the Board of Directors of Company
determines in good faith after advice from outside legal counsel that it is
necessary for the Board of Directors of Company to comply with its fiduciary
duties to stockholders under applicable law, Company Representatives may furnish
in connection therewith information to the party making such Superior Proposal
and, subject to the provisions hereof, engage in negotiations with such party,
and such actions shall not be considered a breach of this Section 4.3 or any
other provisions of this Agreement; provided that in each such event Company
notifies Parent of such determination by the Company Board of Directors and
provides Parent with a true and complete copy of the Superior Proposal received
from such third party, and provides (or has provided) Parent with all documents
containing or referring to non-public information of Company that are supplied
to such third party; provided, however, that Company provides such non-public
information pursuant to a non-disclosure agreement at least as restrictive on
such third party as the Confidentiality Agreement is on Parent (as defined in
Section 5.4); and provided further that Company shall not, and shall not permit
any of its officers, directors, employees or other representatives to agree to
or endorse any Takeover Proposal or withdraw its recommendation of the Merger
unless Company has provided Parent at least five (5) days prior notice thereof.
Company will promptly (and in any event within 24 hours) notify Parent after
receipt of any Takeover Proposal or any notice that any person is considering
making a Takeover Proposal or any request for non-public information relating to
Company or any of its subsidiaries or for access to the properties, books or
records of Company or any of its subsidiaries by any person that has advised
Company that it may be considering making, or that has made, a Takeover
Proposal, or whose efforts to formulate a Takeover Proposal would be assisted
thereby (such notice to include the identity of such person or persons), and
will keep Parent fully informed of the status and details of any such Takeover
Proposal notice, request or correspondence or communications related thereto,
and shall provide Parent with a true and complete copy of such Takeover Proposal
notice or any amendment thereto, if it is in writing, or a complete written
summary thereof, if it is not in writing. Company shall immediately cease and
cause to be terminated all existing discussions or negotiations with any persons
conducted heretofore with respect to a Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
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5.1. Proxy Statement/Prospectus; Registration Statement. As
promptly as practicable after the execution of this Agreement, Company and
Parent shall prepare, and Company shall file with the SEC, preliminary proxy
materials relating to the approval of the Merger and the transactions
contemplated hereby by the stockholders of Company. As promptly as practicable
following receipt of SEC comments thereon, Company shall file with the SEC
definitive proxy materials and Parent shall file with the SEC a Registration
Statement on Form S-4 (or such other or successor form as shall be appropriate),
in each case which complies in form with applicable SEC requirements and shall
use all reasonable efforts to cause the Registration Statement to become
effective as soon thereafter as practicable. Company and Parent will notify each
other promptly of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff or any other government officials for
amendments or supplements to the Proxy Statement or any other filing or for
additional information and will supply each other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the Proxy Statement or other filing. Whenever any event
occurs that is required to be set forth in an amendment or supplement to the
Proxy Statement or any other filing, Company shall promptly inform Parent of
such occurrence and cooperate in filing with the SEC or its staff or any other
government officials, and/or mailing to shareholders of Company, such amendment
or supplement. The Proxy Statement shall include the recommendation of the Board
of Directors of Company in favor of the Merger Agreement and the Merger.
5.2. Meeting of Stockholders. Company shall promptly after the
date hereof take all action necessary in accordance with Delaware Law and its
Certificate of Incorporation and Bylaws to convene the Company Stockholders
Meeting within 45 days of the Registration Statement being declared effective by
the SEC. Company shall consult with Parent regarding the date of the Company
Stockholders Meeting and use all reasonable efforts and shall not postpone or
adjourn (other than for the absence of a quorum) the Company Stockholders
Meeting, subject to Section 5.1, without the consent of Parent. Company shall
use its reasonable best efforts to solicit from stockholders of Company proxies
in favor of the Merger and shall take all other action necessary or advisable to
secure the vote or consent of stockholders required to effect the Merger.
5.3 Access to Information.
(a) Company shall afford Parent and its accountants,
counsel and other representatives, reasonable access during normal business
hours during the period prior to the Effective Time to (i) all of Company's and
its subsidiaries' properties, books, contracts, commitments and records, and
(ii) all other information concerning the business, properties and personnel of
Company and its subsidiaries as Parent may reasonably request. Company agrees to
provide to Parent and its accountants, counsel and other representatives copies
of internal financial statements promptly upon request.
(b) Subject to compliance with applicable law, from the
date hereof until the Effective Time, each of Parent and Company shall confer on
a regular and frequent basis with one or more representatives of the other party
to report operational matters of materiality and the general status of ongoing
operations.
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(c) No information or knowledge obtained in any
investigation pursuant to this Section 5.3 shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
(d) Company shall provide Parent and its accountants,
counsel and other representatives reasonable access, during normal business
hours during the period prior to the Effective Time, to all of Company's and
subsidiaries Tax Returns and other records and workpapers relating to Taxes, and
shall also provide the following information upon the request of Parent or its
subsidiaries: (i) a schedule of the types of Tax Returns being filed by Company
and each of its subsidiaries in each taxing jurisdiction, (ii) a schedule of the
year of the commencement of the filing of each such type of Tax Return, (iii) a
schedule of all closed years with respect to each such type of Tax Return filed
in each jurisdiction, (iv) a schedule of all material Tax elections filed in
each jurisdiction by Company and each of its subsidiaries, (v) a schedule of any
deferred intercompany gain with respect to transactions to which Company or any
of its subsidiaries has been a party, and (vi) receipts for any Taxes paid to
foreign Tax authorities.
5.4. Confidentiality. The parties acknowledge that each of
Parent and Company have previously executed a non-disclosure agreement, which
agreement shall continue in full force and effect in accordance with its terms.
5.5. Public Disclosure. Unless otherwise permitted by this
Agreement, Parent and Company shall consult with each other before issuing any
press release or otherwise making any public statement or making any other
public (or non-confidential) disclosure (whether or not in response to an
inquiry) regarding the terms of this Agreement and the transactions contemplated
hereby, and neither shall issue any such press release or make any such
statement or disclosure without the prior approval of the other (which approval
shall not be unreasonably withheld), except as may be required by law or by
obligations pursuant to any listing agreement with any national securities
exchange or with the NASD, in which case the party proposing to issue such press
release or make such public statement or disclosure shall use commercially
reasonable efforts to consult with the other party before issuing such press
release or making such public statement or disclosure.
5.6 Consents; Cooperation.
(a) Each of Parent and Company shall promptly apply for
or otherwise seek, and use its reasonable best efforts to obtain, all consents
and approvals required to be obtained by it for the consummation of the Merger,
including those required under HSR. Company shall use its reasonable best
efforts to obtain all necessary consents, waivers and approvals under any of its
material contracts in connection with the Merger for the assignment thereof or
otherwise. The parties hereto will consult and cooperate with one another, and
consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to HSR or any other federal or state
antitrust or fair trade law.
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(b) Each of Parent and Company shall use its reasonable
best efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the transactions contemplated by this
Agreement under HSR, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended,
the Federal Trade Commission Act, as amended, and any other Federal, state or
foreign statutes, rules, regulations, orders or decrees that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, each of Parent
and Company shall cooperate and use its reasonable best efforts vigorously to
contest and resist any such action or proceeding and to have vacated, lifted,
reversed, or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent (each, an "Order"), that is in effect and
that prohibits, prevents, or restricts consummation of the Merger or any such
other transactions, unless by mutual agreement Parent and Company decide that
litigation is not in their respective best interests. Notwithstanding the
provisions of the immediately preceding sentence, it is expressly understood and
agreed that neither Parent nor Company shall have any obligation to litigate or
contest any administrative or judicial action or proceeding or any Order beyond
the Final Date (as defined in Section 7.1(b)). Each of Parent and Company shall
use its reasonable best efforts to take such action as may be required to cause
the expiration of the notice periods under the HSR or other Antitrust Laws with
respect to such transactions as promptly as possible after the execution of this
Agreement. Parent and Company also agree to take any and all of the following
actions to the extent necessary to obtain the approval of any Governmental
Entity with jurisdiction over the enforcement of any applicable laws regarding
the transactions contemplated hereby: entering into negotiations; providing
information required by law or governmental regulation; and substantially
complying with any second request for information pursuant to the Antitrust
Laws. Notwithstanding anything to the contrary in this Section 5.6, neither
Parent nor Company nor any of their respective subsidiaries shall be required to
take any action that would reasonably be expected to substantially impair the
overall benefits expected, as of the date hereof, to be realized from the
consummation of the transactions contemplated hereby.
(c) Notwithstanding anything to the contrary in Section
5.6(a) or (b), (i) neither Parent nor any of it subsidiaries shall be required
to divest any of their respective businesses, product lines or assets, or to
take or agree to take any other action or agree to any limitation that would
reasonably be expected to have a Material Adverse Effect on Parent or of Parent
combined with the Surviving Corporation after the Effective Time or (ii) neither
Company nor its subsidiaries shall be required to divest any of their respective
businesses, product lines or assets, or to take or agree to take any other
action or agree to any limitation that would reasonably be expected to have a
Material Adverse Effect on Company.
5.7 Legal Requirements. Each of Parent, Merger Sub and Company
will, and will cause their respective subsidiaries to, take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on them with respect to the consummation of the transactions
contemplated by this Agreement and will promptly cooperate with and furnish
information to any party hereto necessary in connection with any such
requirements imposed upon such other party in connection with the consummation
of the transactions contemplated by this Agreement and will take all reasonable
actions necessary to obtain (and will cooperate with
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the other parties hereto in obtaining) any consent, approval, order or
authorization of, or any registration, declaration or filing with, any
Governmental Entity or other person, required to be obtained or made in
connection with the taking of any action contemplated by this Agreement.
5.8. Blue Sky Laws. Parent shall take such steps as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of the Parent Common Stock in connection
with the Merger. Company shall use its reasonable best efforts to assist Parent
as may be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable in connection with the issuance of Parent
Common Stock in connection with the Merger.
5.9 Employee Benefit Plans.
(a) At the Effective Time, the Company Stock Option
Plans and each outstanding option to purchase shares of Company Common Stock
under the Company Stock Option Plans, whether vested or unvested, will be
assumed by Parent. Company represents and warrants to Parent that Schedule
5.9(a) hereto sets forth a true and complete list as of the date hereof of all
holders of outstanding options under the Company Stock Option Plans, including
the number of shares of Company capital stock subject to each such option, the
exercise or vesting schedule, the exercise price per share and the term of each
such option. On the Closing Date, Company shall deliver to Parent an updated
Schedule 5.9(a) hereto current as of such date. Each such option so assumed by
Parent under this Agreement shall continue to have, and be subject to, the same
terms and conditions set forth in the Company Stock Option Plans and the
applicable stock option agreements, immediately prior to the Effective Time,
except that (i) such option will be exercisable for that number of whole shares
of Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were issuable upon exercise of such option immediately prior
to the Effective Time multiplied by the Exchange Ratio and rounded down to the
nearest whole number of shares of Parent Common Stock, and (ii) the per share
exercise price for the shares of Parent Common Stock issuable upon exercise of
such assumed option will be equal to the quotient determined by dividing the
exercise price per share of Company Common Stock at which such option was
exercisable immediately prior to the Effective Time by the Exchange Ratio,
rounded up to the nearest whole cent. At or prior to the Closing, Company shall
take all actions required to prevent the cancellation, termination or the
accelerated vesting of such options upon the closing of the Merger or the
transactions contemplated hereby, and to allow such options at the Effective
Time to be converted into options to purchase Parent Common Stock as described
above, without requiring the consent of the optionees; provided, however that
vesting of outstanding options to purchase 100,000 shares granted to
non-employee directors may accelerate at the Effective Time. Company has not
granted any options under the Company Stock Option Plans intended to qualify as
"incentive stock options" as defined in Section 422 of the Code. Within 30
business days after the Effective Time, Parent will issue to each person who,
immediately prior to the Effective Time was a holder of an outstanding option
under the Company Stock Option Plans a document in form and substance reasonably
satisfactory to Company evidencing the foregoing assumption of such option by
Parent.
(b) All outstanding rights of Company which it may hold
immediately prior to the Effective Time to repurchase unvested shares of Company
Common Stock (the
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"Repurchase Options") shall continue in effect following the Merger and shall
thereafter continue to be exercisable by Parent upon the same terms and
conditions in effect immediately prior to the Effective Time, except that the
shares purchasable pursuant to the Repurchase Options and the purchase price per
shall be adjusted to reflect the Exchange Ratio.
(c) Outstanding purchase rights under the Company ESPP
shall be exercised upon the earlier of (i) the next scheduled purchase date
under the Company ESPP or (ii) immediately prior to the Effective Time, and each
participant in the Company ESPP shall accordingly be issued shares of Company
Common Stock at that time which shall be converted into shares of Parent Common
Stock in the Merger. Company shall cause the Company ESPP to terminate with such
exercise date, and no purchase rights shall be subsequently granted or exercised
under the Company ESPP. Company employees who meet the eligibility requirements
for participation in the Parent Employee Stock Purchase Plan shall be eligible
to begin payroll deductions under that plan as of the start date of the first
offering period thereunder beginning after the Effective Time.
(d) Within five (5) business days following the date of
this Agreement, Company shall set forth on Schedule 5.9(d) a list of all persons
who Company reasonably believes are, with respect to Company and as of the date
of this Agreement, "disqualified individuals" (within the meaning of Section
280G of the Code and the regulations promulgated thereunder). For this purpose,
Company shall assume that the fair market value of Company Common Stock is
$41.00 per share. Within a reasonable period of time after the last business day
of each month after the date of this Agreement (other than November, 1999) and
on or about the date five business days prior to the expected Closing Date,
Company shall revise Schedule 5.9(d) to reflect the most recently available
closing price of Company Common Stock as of the last business day of such month
and to reflect any additional information which Company reasonably believes
would impact the determination of persons who are, with respect to Company and
as of the each such date, "disqualified individuals" (within the meaning of
Section 280G of the Code and the regulations promulgated thereunder).
5.10. Forms S-3 and S-8. Parent agrees to file, no later than 30
business days after the Closing (provided that Parent has received within 10
business days after the Closing all option documentation it requires relating to
the outstanding options), (i) a registration statement on Form S-8 under the
Securities Act covering the shares of Parent Common Stock issuable pursuant to
outstanding options granted to individuals for which a Form S-8 registration
statement is available and listed on Schedule 5.10(a) hereto and (ii) a
registration statement on Form S-3 under the Securities Act covering the shares
of Parent Common Stock issuable pursuant to outstanding options granted to
entities or to individuals for which a Form S-8 registration statement is not
available, which Form S-3 shall remain current for one year from the Effective
Time, under the Company Stock Option Plans assumed by Parent or otherwise issued
in compensatory transactions to entities or to individuals not currently
providing services to Company as employees or consultants and listed on Schedule
5.10(b). Company shall cooperate with and assist Parent in the preparation of
such registration statements.
5.11. Option Agreement. Company agrees to fully perform its
obligations under the Option Agreement.
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5.12. Listing of Additional Shares. Prior to the Effective Time,
Parent shall file with the Nasdaq National Market a Notification Form for
Listing of Additional Shares with respect to the shares referred to in Section
6.1(f).
5.13. Nasdaq Quotation. Company and Parent agree to continue the
quotation of Company Common Stock and Parent Common Stock, respectively, on the
Nasdaq National Market during the term of the Agreement so that appraisal rights
will not be available to stockholders of Company under Section 262 of the
Delaware Law.
5.14. Employees. Company shall use its reasonable best efforts
to cause each of the individuals set forth on Schedule 5.14 to deliver to Parent
an executed Employment Agreement in the form of Exhibit D.
5.15. Action Under Stock Option Plan. The Board of Directors of
Company shall take all action necessary to prevent the cancellation, termination
or accelerated vesting of options under the Company Stock Option Plans (other
than the 100,000 shares granted to non-employee directors) upon the closing of
the Merger and to allow such options to be assumed by Parent as described in
Section 5.9.
5.16. Company Rights Agreement. Company hereby agrees that it
has taken and will continue to take all necessary action to ensure that none of
the transactions contemplated by this Agreement, the Option Agreement or the
Stockholder Agreement will cause (i) Parent or any of its affiliates or
associates to become an Acquiring Person (as defined in the Company Rights
Agreement) for purposes of the Company Rights Agreement, or (ii) otherwise
affect in any way the Rights under the Company Rights Agreement, including by
causing such Rights to separate from the underlying shares or by giving such
holders the right to acquire securities of any party hereto.
5.17 Indemnification.
(a) After the Effective Time, Parent will cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
Company pursuant to the indemnification provisions of Company's Certificate of
Incorporation and Bylaws or any indemnification agreement with Company officers
and directors to which Company is a party, in each case in effect on the date
hereof; provided that such indemnification shall be subject to any limitation
imposed from time to time under applicable law. Without limitation of the
foregoing, in the event any person so indemnified (an "Indemnified Party") is or
becomes involved in any capacity in any action, proceeding or investigation in
connection with any matter relating to this Agreement or the transactions
contemplated hereby occurring on or prior to the Effective Time, Parent shall,
or shall cause the Surviving Corporation to, pay as incurred such Indemnified
Party's reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith to the fullest
extent permitted by the Delaware Law upon receipt of any undertaking
contemplated by Section 145(e) of the Delaware Law. Any Indemnified Party
wishing to claim indemnification under this Section 5.17, upon learning of any
such claim, action, suit, proceeding or investigation, shall promptly notify
Parent and the Surviving Corporation, and shall deliver to Parent and the
Surviving Corporation the undertaking contemplated by Section 145(e) of the
Delaware Law.
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(b) For four years after the Effective Time, Parent will
either (i) at all times maintain at least $50,000,000 in cash, marketable
securities or unrestricted lines of credit (or any combination thereof) to be
available to indemnify the Indemnified Parties in accordance with Section
5.17(a) above or (ii) cause the Surviving Corporation to provide officers' and
directors' liability insurance in respect of acts or omissions occurring on or
prior to the Effective Time covering each such person currently covered by
Company's officers' and directors' liability insurance policy on terms
substantially similar to those of such policy in effect on the date hereof,
provided that in satisfying its obligation under this Section, Parent shall not
be obligated to cause the Surviving Corporation to pay premiums in excess of
150% of the amount per annum Company paid in its last full fiscal year, which
amount has been disclosed to Parent, and if the Surviving Corporation is unable
to obtain the insurance required by this Section 5.17, it shall obtain as much
comparable insurance as possible for an annual premium equal to such maximum
amount.
(c) To the extent there is any claim, action, suit,
proceeding or investigation (whether arising before or after the Effective Time)
against an Indemnified Party that arises out of or pertains to any action or
omission in his or her capacity as director, officer, employee, fiduciary or
agent of Company occurring prior to the Effective Time, or arises out of or
pertains to the transactions contemplated by this Agreement for a period of four
years after the Effective Time (whether arising before or after the Effective
Time), in each case for which such Indemnified Party is indemnified under this
Section 5.17, such Indemnified Party shall be entitled to be represented by
counsel, which counsel shall be counsel of Parent (provided that if use of
counsel of Parent would be expected under applicable standards of professional
conduct to give rise to a conflict between the position of the Indemnified
Person and of Parent, the Indemnified Party shall be entitled instead to be
represented by counsel selected by the Indemnified Party and reasonably
acceptable to Parent) and following the Effective Time the Surviving Corporation
and Parent shall pay the reasonable fees and expenses of such counsel, promptly
after statements therefor are received and the Surviving Corporation and Parent
will cooperate in the defense of any such matter; provided, however, that
neither the Surviving Corporation nor Parent shall be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld); and provided, further, that, in the event that any claim or claims
for indemnification are asserted or made within such four year period, all
rights to indemnification in respect to any such claim or claims shall continue
until the disposition of any and all such claims. The Indemnified Parties as a
group may retain only one law firm (in addition to local counsel) to represent
them with respect to any single action unless there is, under applicable
standards of professional conduct, a conflict on any significant issue between
the position of any two or more Indemnified Parties.
(d) The provisions of this Section 5.17 are intended to
be for the benefit of, and shall be enforceable by, each Indemnified Party, his
or her heirs and representatives.
5.18 Tax Treatment. The parties each intend that the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the Code and
shall use best efforts to cause the Merger to so qualify.
5.19 Stockholder Litigation. Unless and until Company has
withdrawn its recommendation of the Merger, Company shall give Parent the
opportunity to participate at its
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own expense in the defense of any stockholder litigation against Company and/or
its directors relating to the transactions contemplated by this Agreement and
the Option Agreement.
5.20. Best Efforts and Further Assurances. Each of the parties
to this Agreement shall use its best efforts to effectuate the transactions
contemplated hereby and to fulfill and cause to be fulfilled the conditions to
closing under this Agreement. Each party hereto, at the reasonable request of
another party hereto, shall execute and deliver such other instruments and do
and perform such other acts and things as may be necessary or desirable for
effecting completely the consummation of this Agreement and the transactions
contemplated hereby.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1. Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each party to this Agreement to consummate
and effect this Agreement and the transactions contemplated hereby shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any of which may be waived, in writing, by agreement of
all the parties hereto:
(a) Stockholder Approval. This Agreement and the Merger
shall have been approved and adopted by the requisite vote of the stockholders
of Company under Delaware Law.
(b) Registration Statement Effective. The SEC shall have
declared the Registration Statement effective. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose, and no similar proceeding in respect
of the Proxy Statement, shall have been initiated or threatened by the SEC; and
all requests for additional information on the part of the SEC shall have been
complied with to the reasonable satisfaction of the parties hereto.
(c) No Injunctions or Restraints; Illegality. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint or prohibition preventing the consummation of the Merger shall be in
effect, nor shall any proceeding brought by an administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger, which makes the consummation of the Merger
illegal. In the event an injunction or other order shall have been issued, each
party agrees to use its reasonable best efforts to have such injunction or other
order lifted.
(d) Governmental Approvals. Parent, Company and Merger
Sub and their respective subsidiaries shall have timely obtained from each
Governmental Entity all approvals, waivers and consents, if any, necessary for
consummation of or in connection with the Merger
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and the several transactions contemplated hereby, including such approvals,
waivers and consents as may be required under the Securities Act, under state
Blue Sky laws, and under HSR.
(e) Tax Opinion. Parent and Company shall have received
substantially similar written opinions of Xxxxxxx, Xxxxxxx and Xxxxxxxx LLP and
Day, Xxxxx & Xxxxxx LLP, respectively, in form and substance reasonably
satisfactory to them, dated on or about the date of Closing to the effect that
the Merger will constitute a reorganization within the meaning of Section 368(a)
of the Code, and such opinions shall not have been withdrawn. In rendering such
opinions, counsel shall be entitled to rely upon, among other things, reasonable
assumptions as well as representations of Parent, Merger Sub and Company. In
addition, Parent and Company shall have received from such respective firms such
tax opinions as may be required by the SEC in connection with the filing of the
Registration Statement.
(f) Listing of Additional Shares. The filing with the
Nasdaq National Market of a Notification Form for Listing of Additional Shares
with respect to the shares of Parent Common Stock issuable upon conversion of
the Company Common Stock in the Merger and upon exercise of the options under
the Company Stock Option Plans assumed by Parent shall have been made.
6.2. Additional Conditions to Obligations of Company. The
obligations of Company to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by Company:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of Parent and Merger Sub in this Agreement shall
be true and correct in all material respects (except for such representations
and warranties that are qualified by their terms by a reference to materiality
which representations and warranties as so qualified shall be true in all
respects) both when made and on and as of the Effective Time as though such
representations and warranties were made on and as of such time and (ii) Parent
and Merger Sub shall have performed and complied in all material respects with
all covenants, obligations and conditions of this Agreement required to be
performed and complied with by them as of the Effective Time.
(b) Certificate of Parent. Company shall have been
provided with a certificate executed on behalf of Parent by an authorized
officer certifying that the condition set forth in Section 6.2(a) shall have
been fulfilled.
6.3. Additional Conditions to the Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to consummate and effect
this Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by Parent:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of Company in this Agreement shall be true and
correct in all material respects (except for such representations and warranties
that are qualified by their terms by a reference to materiality, which
representations and warranties as so qualified shall be true in all respects)
both when made and on and as of the Effective Time as though such
representations and warranties
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were made on and as of such time and (ii) Company shall have performed and
complied in all material respects with all covenants, obligations and conditions
of this Agreement required to be performed and complied with by it as of the
Effective Time.
(b) Certificate of Company. Parent shall have been
provided with a certificate executed on behalf of Company by its President and
Chief Financial Officer certifying that the condition set forth in Section
6.3(a) shall have been fulfilled.
(c) Third Party Consents. Parent shall have been
furnished with evidence satisfactory to it of the consent or approval of those
persons whose consent or approval shall be required in connection with the
Merger under any material contract of Company or any of its subsidiaries or
otherwise, except where failure to obtain such consent would not have a Material
Adverse Effect on Company.
(d) Injunctions or Restraints on Conduct of Business. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint provision limiting or restricting Parent's conduct or operation of the
business of Company and its subsidiaries, following the Merger shall be in
effect, nor shall any proceeding brought by an administrative agency or
commission or other Governmental Entity, domestic or foreign, seeking the
foregoing be pending.
(e) No Material Adverse Changes. There shall not have
occurred any Material Adverse Effect on Company, or any change that has a
Material Adverse Effect on Company (other than Non-Controllable Events).
(f) FIRPTA Certificate. Company shall, prior to the
Closing Date, provide Parent with a properly executed FIRPTA Notification
Letter, substantially in the form of Exhibit E attached hereto, which states
that shares of capital stock of Company do not constitute "United States real
property interests" under Section 897(c) of the Code, for purposes of satisfying
Parent's obligations under Treasury Regulation Section 1.1445-2(c)(3). In
addition, simultaneously with delivery of such Notification Letter, Company
shall have provided to Parent, as agent for Company, a form of notice to the
Internal Revenue Service in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2) and substantially in the form of Exhibit E
attached hereto along with written authorization for Parent to deliver such
notice form to the Internal Revenue Service on behalf of Company upon the
Closing of the Merger.
(g) Employment and Non-Competition Agreements. The
employees of Company set forth on Schedule 5.14 shall have accepted employment
with Parent and shall have entered into an Employment and Non-Competition
Agreement in the form attached hereto as Exhibit D.
(h) Action Under Stock Option Plans. The Board of
Directors of Company shall have taken all action necessary to prevent the
cancellation, termination or accelerated vesting of options under the Company
Stock Option Plans (other than the 100,000 options granted to non-employee
directors) upon the closing of the Merger and to allow such options to be
assumed by Parent as described in Section 5.9.
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(i) Warrants. All outstanding warrants to acquire
Company capital stock shall have been exercised in accordance with their terms.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1. Termination. At any time prior to the Effective Time,
whether before or after approval of the matters presented in connection with the
Merger by the stockholders of Company, this Agreement may be terminated:
(a) by mutual consent of Parent and Company;
(b) by either Parent or Company, if, without fault of
the terminating party, the Closing shall not have occurred on or before February
29, 2000 or such later date as may be agreed upon in writing by the parties
hereto (the "Final Date"); provided, however, that the Final Date shall be
extended to March 31, 2000 in the event that if the only reason the Closing
shall not have occurred by February 29, 2000 is the failure of the conditions
set forth in Section 6.1(b) and/or Section 6.1(d) (although such extension shall
not occur if the failure of such conditions has been caused or resulted from one
party's action or failure to act constituting a breach of this Agreement and the
other party does not consent to such extension); and provided further that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been the cause of or
resulted in the failure of the Merger to occur on or before such date and such
action or failure to act constitutes a breach of this Agreement;
(c) by Parent, if (i) Company shall breach any of its
representations, warranties or obligations hereunder to an extent that would
cause the condition set forth in Section 6.3(a) not to be satisfied and such
breach shall not have been cured within ten (10) business days of receipt by
Company of written notice of such breach (and Parent shall not have willfully
breached any of its covenants hereunder, which breach is not cured), (ii) the
Board of Directors of Company shall have withdrawn or modified its
recommendation of this Agreement or the Merger in a manner adverse to Parent or
shall have resolved to do any of the foregoing, (iii) Company shall have failed
to comply with Section 4.3, (iv) the Board of Directors of Company shall have
recommended, endorsed, accepted or agreed to a Takeover Proposal or shall have
resolved to do so, or (v) for any reason Company fails to call and hold the
Company Stockholders Meeting by February 15, 2000 or in the event the condition
set forth in Section 6.1(b) shall not have been satisfied by February 15, 2000
under circumstances in which it can be reasonably expected that the Final Date
will be extended pursuant to the proviso set forth in Section 7.1(b), March 15,
2000;
(d) by Company, if Parent shall breach any of its
representations, warranties or obligations hereunder to an extent that would
cause the condition set forth in Section 6.2(a) not to be satisfied and such
breach shall not have been cured within ten (10) business days following receipt
by Parent of written notice of such breach (and Company shall not have willfully
breached any of its covenants hereunder, which breach is not cured);
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(e) by Parent if a Trigger Event (as defined in Section
7.3(e)) or Takeover Proposal shall have occurred and the Board of Directors of
Company in connection therewith, does not within ten (10) business days of such
occurrence (i) reconfirm its approval and recommendation of this Agreement and
the transactions contemplated hereby, and (ii) reject such Takeover Proposal or
Trigger Event (in the case of a Trigger Event involving a tender or exchange
offer); or
(f) by either Parent or Company if (i) any permanent
injunction or other order of a court or other competent authority preventing the
consummation of the Merger shall have become final and nonappealable or (ii) any
required approval of the stockholders of Company shall not have been obtained by
reason of the failure to obtain the required vote upon a vote held at a duly
held meeting of stockholders or at any adjournment thereof (provided that the
right to terminate this Agreement under this subsection (ii) shall not be
available to Company where the failure to obtain such stockholder approval shall
have been caused by the action or failure to act of Company and such action or
failure constitutes a breach by Company of this Agreement).
7.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent, Merger Sub
or Company or their respective officers, directors, stockholders or affiliates,
except to the extent that such termination results from the breach by a party
hereto of any of its representations, warranties or covenants set forth in this
Agreement; provided that, the provisions of Section 5.4 (Confidentiality),
Section 7.3 (Expenses and Termination Fees), this Section 7.2 and Article VIII
shall remain in full force and effect and survive any termination of this
Agreement.
7.3 Expenses and Termination Fees.
(a) Subject to subsections (b), (c), (d) and (e) of this
Section 7.3, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby (including, without limitation, the fees and expenses of its advisers,
accountants and legal counsel) shall be paid by the party incurring such
expense, except that expenses incurred in connection with printing the Proxy
Materials and the Registration Statement, registration and filing fees incurred
in connection with the Registration Statement, the Proxy Materials and the
listing of additional shares pursuant to Section 6.1(f) and fees, costs and
expenses associated with compliance with applicable state securities laws in
connection with the Merger shall be shared equally by Company and Parent.
(b) In the event that (i) Parent shall terminate this
Agreement pursuant to Section 7.1(e); (ii) Parent shall terminate this Agreement
pursuant to Section 7.1(c)(iii) as a result of the failure by Company, its
stockholders who are parties to the Stockholder Agreements, and each of their
respective directors, officers, employees, affiliates and controlling persons,
or any person authorized by such persons, to comply with the requirements of
Section 4.3; (iii) Parent shall terminate this Agreement pursuant to Section
7.1(c)(iv); (iv) Parent (or in the case of Section 7.1(f)(ii), Company) shall
terminate this Agreement pursuant to Section 7.1(c)(ii) or 7.1(f)(ii) and, prior
to such withdrawal, modification or stockholder rejection, there shall have been
(A) a Trigger Event with respect to Company or (B) a Takeover Proposal with
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respect to Company which at the time of such withdrawal, modification or
stockholder rejection shall not have been rejected by Company; or (v) Parent (or
in the case of Section 7.1(b), Company) shall terminate this Agreement pursuant
to Section 7.1(b), 7.1(c)(i) or 7.1(c)(v) due in whole or in part to any failure
by Company to use its reasonable best efforts to perform and comply with all
agreements and conditions required by this Agreement to be performed or complied
with by Company prior to or on the Closing Date or any failure by Company's
affiliates to take any actions required to be taken hereby, and prior thereto
there shall have been (A) a Trigger Event with respect to Company or (B) a
Takeover Proposal with respect to Company which shall not have been rejected by
Company, then Company shall promptly reimburse Parent for all of the
out-of-pocket costs and expenses incurred by Parent in connection with this
Agreement and the transactions contemplated hereby (including, without
limitation, the fees and expenses of its advisors, accountants and legal
counsel), and, in addition to any other remedies Parent may have, Company shall
promptly pay to Parent the sum of $25,000,000.
(c) In the event that (i) Parent shall terminate this
Agreement pursuant to Section 7.1(c)(i) or 7.1(c)(v) under circumstances not
described in Section 7.3(b)(v); or (ii) Parent shall terminate this Agreement
pursuant to Section 7.1(c)(ii) or 7.1(f)(ii) (under circumstances not described
in Section 7.3(b)(iv)), Company shall promptly reimburse Parent for all of the
out-of-pocket costs and expenses incurred by Parent in connection with this
Agreement and the transactions contemplated hereby (including, without
limitation, the fees and expenses of its advisors, accountants and legal
counsel); and, in the event (A) any Takeover Proposal or Trigger Event is,
within twelve months of the later of (x) such termination of this Agreement and
(y) the payment of the above described expenses, consummated (as defined in
Section 7.3(g)) by or with any person (or any affiliate of any person) that made
a Takeover Proposal prior to termination of this Agreement or that caused a
Trigger Event prior to such termination, or (B) any other Takeover Proposal or
Trigger Event not described in clause (A) is consummated (as defined in Section
7.3(g)) within six months of the later of (x) such termination of this Agreement
and (y) the payment of the above-described expenses, Company shall promptly pay
to Parent the additional sum of $25,000,000 (less any amounts paid by Company to
Parent under Section 7.3(b)).
(d) In the event that Company shall terminate this
Agreement pursuant to Section 7.1(d) Parent shall promptly reimburse Company for
all of the out-of-pocket costs and expenses incurred by Company in connection
with this Agreement and the transactions contemplated hereby (including, without
limitation, the fees and expenses of its advisors, accountants and legal
counsel).
(e) As used herein, a "Trigger Event" shall occur if any
Person (as that term is defined in Section 13(d) of the Exchange Act and the
regulations promulgated thereunder) acquires securities representing 15% or
more, or commences a tender or exchange offer, open market purchase program or
other publicly announced initiative following the successful consummation of
which the offeror and its affiliate would beneficially own securities
representing 15% or more, of the voting power of Company; provided, however, a
Trigger Event shall not be deemed to include the acquisition by any Person of
securities representing 15% or more of Company if such Person has acquired such
securities not with the purpose nor with the effect of changing or influencing
the control of Company, nor in connection with or as a participant in any
transaction having such purpose or effect, including without limitation not in
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connection with such Person (i) making any public announcement with respect to
the voting of such shares at any meeting to consider any merger, consolidation,
sale of substantial assets or other business combination or extraordinary
transaction involving Company; (ii) making, or in any way participating in, any
"solicitation" of "proxies" (as such terms are defined or used in Regulation 14A
under the Exchange Act) to vote any voting securities of Company (including,
without limitation, any such solicitation subject to Rule 14a-11 under the
Exchange Act) or seeking to advise or influence any Person with respect to the
voting of any voting securities of Company, directly or indirectly, relating to
a merger or other business combination involving Company or the sale or transfer
of a significant portion of assets (excluding the sale or disposition of assets
in the ordinary course of business) of Company; (iii) forming, joining or in any
way participating in any "group" within the meaning of Section 13(d)(3) of the
Exchange Act with respect to any voting securities of Company, directly or
indirectly, relating to a merger or other business combination involving Company
or the sale or transfer of a significant portion of assets (excluding the sale
or disposition of assets in the ordinary course of business) of Company; or (iv)
otherwise acting, alone or in concert with others, to seek control of Company or
to seek to control or influence the management or policies of Company.
(f) For purposes of this Agreement, "Takeover Proposal"
means any offer or proposal for, or any indication of interest in, a merger or
other business combination involving Company or any of its subsidiaries or the
acquisition of 15% or more of the outstanding shares of capital stock of
Company, or a significant portion of the assets of, Company or any of its
subsidiaries, other than the transactions contemplated by this Agreement.
(g) For purposes of Section 7.3(c) above, (A)
"consummation" of a Takeover Proposal shall occur on the date a written
agreement is entered into with respect to a merger or other business combination
involving Company or the acquisition of 15% or more of the outstanding shares of
capital stock of Company, or sale or transfer of any material assets (excluding
the sale or disposition of assets in the ordinary course of business) of Company
or any of its subsidiaries and (B) "consummation" of a Trigger Event shall occur
on the date any Person (other than any shareholder which currently owns 15% or
more of the outstanding shares of capital stock of Company provided such
shareholder does not increase its ownership) or any of its affiliates or
associates would beneficially own securities representing 15% or more of the
voting power of Company, following a tender or exchange offer.
7.4. Amendment. The boards of directors of the parties hereto
may cause this Agreement to be amended at any time by execution of an instrument
in writing signed on behalf of each of the parties hereto; provided that an
amendment made subsequent to adoption of the Agreement by the stockholders of
Company or Merger Sub shall not (i) alter or change the amount or kind of
consideration to be received on conversion of the Company Common Stock, (ii)
alter or change any term of the Certificate of Incorporation of the Surviving
Corporation to be effected by the Merger, or (iii) alter or change any of the
terms and conditions of the Agreement if such alteration or change would
materially adversely affect the holders of Company Common Stock or Merger Sub
Common Stock.
7.5 Extension; Waiver. At any time prior to the Effective Time
any party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the
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representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Non-Survival at Effective Time. The representations,
warranties and agreements set forth in this Agreement shall terminate at the
Effective Time, except that the agreements set forth in Article I, Section 5.4
(Confidentiality), 5.10 (Forms S-3 and S-8), 5.17 (Indemnification), 5.20 (Best
Efforts and Further Assurances), 7.3 (Expenses and Termination Fees), 7.4
(Amendment), and this Article VIII shall survive the Effective Time.
8.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial delivery service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with confirmation of receipt) to the
parties at the following address (or at such other address for a party as shall
be specified by like notice):
(a) if to Parent or Merger Sub, to:
Cisco Systems, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Senior Vice President, Legal and
Government Affairs
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxx Xxxx
Xxx Xxxxxxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
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(b) if to Company, to:
Aironet Wireless Communications, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxx, XX 00000
Attention: President
Facsimile No: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Day, Xxxxx & Xxxxxx LLP
City Place I
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
and to
Xxxxxxx Xxxxx Xxxxxx LLP
000 Xxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Esq. and Xxx X.
Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
8.3. Interpretation. When a reference is made in this Agreement
to Exhibits or Schedules, such reference shall be to an Exhibit or Schedule to
this Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement", "the date hereof", and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to November 8, 1999.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
8.4. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Nonassignability; Parties in Interest.
This Agreement and the documents and instruments and other agreements
specifically referred to herein or delivered pursuant hereto, including the
Exhibits, the Schedules, including the Company Disclosure Schedule and the
Parent Disclosure Schedule (a) constitute the entire agreement among the
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parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, except for the Confidentiality Agreement,
which shall continue in full force and effect, and shall survive any termination
of this Agreement or the Closing, in accordance with its terms; (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as set forth in Sections 1.6(a)-(c) and (f), 1.7-1.9, 5.9, 5.10, 5.12 and
5.17; and (c) shall not be assigned by operation of law or otherwise except as
otherwise specifically provided.
8.6. Severability. In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.7. Remedies Cumulative. Except as otherwise provided herein,
any and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy.
8.8. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws that might otherwise govern under
applicable principles of conflicts of law. Each of the parties hereto
irrevocably consents to the exclusive jurisdiction of any court located within
the State of Delaware in connection with any matter based upon or arising out of
this Agreement or the matters contemplated herein, agrees that process may be
served upon them in any manner authorized by the laws of the State of Delaware
for such persons and waives and covenants not to assert or plead any objection
which they might otherwise have to such jurisdiction and such process.
8.9. Rules of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing that ambiguities in an
agreement or other document will be construed against the party drafting such
agreement or document.
[Signature page follows.]
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IN WITNESS WHEREOF, Company, Parent and Merger Sub have caused
this Agreement and Plan of Merger and Reorganization to be executed and
delivered by their respective officers thereunto duly authorized, all as of the
date first written above.
AIRONET WIRELESS COMMUNICATIONS,
INC.
By:_________________________________
Name:_______________________________
Title:______________________________
CISCO SYSTEMS, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
OSPREY ACQUISITION CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
[SIGNATURE PAGE TO AGREEMENT AND
PLAN OF MERGER AND REORGANIZATION]
