ANNEX A1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into this
1st day of July 1998, by and among MOTOROLA, INC., a Delaware corporation
("Motorola"), SS ACQUISITION CORPORATION, a California corporation and a
wholly-owned subsidiary of Motorola ("Sub"), and STARFISH SOFTWARE, INC., a
California corporation ("Starfish"). Certain other capitalized terms used in
this Agreement are defined in Exhibit A attached hereto.
RECITALS
WHEREAS, Starfish, Motorola and Sub believe it is in the best interests of
each company, the shareholders of Motorola and the shareholders of Starfish
that Motorola acquire Starfish through the statutory merger of Starfish with
and into Sub pursuant to which Sub shall continue as the surviving corporation
and as a wholly-owned subsidiary of Motorola (the "Merger");
WHEREAS, pursuant to the Merger, among other things, each issued and
outstanding share of capital stock of Starfish (assuming conversion or
exercise of the outstanding warrants to purchase shares of Starfish common
stock) ("Starfish Capital Stock"), other than shares owned directly by
Motorola and Dissenting Shares (as defined in Section 2.1 below), will be
converted into the right to receive the Merger Consideration (as defined in
Section 2.1(d));
WHEREAS, Starfish shareholders holding approximately 49% of the Starfish
Common Stock and approximately one percent (1%) of the Series B Preferred
Stock have entered into Voting Agreements substantially in the form attached
hereto as Exhibit B (the "Voting Agreements") pursuant to which such
shareholders, among other things, have agreed to vote their shares of Starfish
Capital Stock in favor of the Merger;
WHEREAS, for federal income tax purposes, it is intended that (i) the Merger
shall qualify as a reorganization, and (ii) this Agreement (and the other
agreements entered into in connection herewith) shall qualify as a plan of
reorganization within the meaning of the regulations issued pursuant to
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the Merger.
NOW, THEREFORE, in reliance on the foregoing recitals and in and for the
consideration and mutual covenants set forth herein, and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2 below) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of the California Corporations Code (the "California
Code"), Starfish shall be merged with and into Sub, the separate corporate
existence of Starfish shall cease and Sub shall continue as the surviving
corporation and as a wholly-owned subsidiary of Motorola. Sub, as the
surviving corporation after the Merger, is hereinafter sometimes referred to
as the "Surviving Corporation."
1.2 Closing; Effective Time. Unless this Agreement is earlier terminated
pursuant to Section 10.1 below, the closing of the Merger ("Closing") will
take place as promptly as practicable, but no later than five (5) business
days following satisfaction or waiver of the conditions set forth in Article
VIII and Article IX, at the offices of Xxxxxxx Xxxxx Xxxx & Black, LLP, 00
Xxxxx Xxxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx, unless another place or time is
agreed to in writing by Motorola and Starfish. The date upon which the Closing
actually occurs is herein referred to as the "Closing Date." On the Closing
Date, the parties hereto shall cause the Merger to be consummated by filing an
agreement of merger in the form required by the California Code with the
Secretary of State of
A1-1
California (the "Merger Articles"), in accordance with the relevant provisions
of applicable law (the later to occur of the time of acceptance by the
Secretary of State of California of such filing being referred to herein as
the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the California Code.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
Starfish and Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Starfish and Sub shall become the debts, liabilities
and duties of the Surviving Corporation.
1.4 Articles of Incorporation; Bylaws.
(a) At the Effective Time, the Articles of Incorporation of Sub shall be the
Articles of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Articles of Incorporation.
(b) At the Effective Time, the Bylaws of Sub shall be the Bylaws of the
Surviving Corporation until thereafter amended.
1.5 Directors and Officers. At the Effective Time, each member of the Board
of Directors of Sub immediately prior to the Effective Time shall become a
member of the Board of Directors of the Surviving Corporation (the "Surviving
Corporation Board"). Immediately following the Effective Time, each officer of
Sub immediately prior to the Effective Time shall become an officer of the
Surviving Corporation, each to hold office in accordance with the Bylaws of
the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 Conversion of Capital Stock.
(a) As of the Effective Time, each share of Starfish Common Stock and each
share of Starfish Series A Preferred Stock (collectively, the "Starfish
Shares") that is issued and outstanding immediately prior to the Effective
Time of the Merger (except for those Starfish Shares held of record by
Motorola and Dissenting Shares) shall, by virtue of the Merger and without any
action on the part of Motorola, Sub, Starfish, or the shareholders of
Starfish, be canceled and extinguished and each Starfish Share then
outstanding shall be converted into the right to receive:
(i) an amount in cash equal to Two Dollars and Ninety-Five Cents ($2.95)
per share (together with the amount payable pursuant to Section 2.1(b)(i),
the "Initial Cash Merger Consideration");
(ii) a number of shares of Common Stock, $3.00 par value per share, of
Motorola and any rights attaching to such stock pursuant to that certain
Rights Agreement dated as of November 9, 1988 (as amended through the date
hereof), by and between Motorola and Xxxxxx Trust and Savings Bank
("Motorola Common Stock"), equal to the quotient (calculated to the nearest
0.0001) of (A) Two Dollars and Ninety-Five Cents ($2.95) (together with the
shares issuable pursuant to Section 2.1(b)(ii), the "Initial Non-Cash
Merger Consideration") divided by (B) the Valuation Period Stock Price;
(iii) a conditional amount of cash equal to Fifty-Five Cents ($0.55)
(together with the amount payable pursuant to Section 2.1(b)(iii), the
"Holdback Amount"); and
(iv) a conditional number of shares of Motorola Common Stock equal to the
quotient (calculated to the nearest 0.0001) of (A) Fifty-Five Cents ($0.55)
(together with the shares issuable pursuant to Section 2.1(b)(iv), the
"Escrowed Non-Cash Merger Consideration") divided by (B) the Valuation
Period Stock Price.
(b) As of the Effective Time, each share of Starfish Series B Preferred
Stock ("Starfish Series B Shares") that is issued and outstanding immediately
prior to the Effective Time of the Merger (except for those Starfish Series B
Shares of held of record by Motorola and Dissenting Shares) shall, by virtue
of the Merger and without
A1-2
any action on the part of Motorola, Sub, Starfish, or the shareholders of
Starfish, be canceled and extinguished and each Starfish Series B Share then
outstanding shall be converted into the right to receive:
(i) an amount in cash equal to Twenty-Nine Dollars and Fifty Cents
($29.50) per share;
(ii) a number of shares of Motorola Common Stock, equal to the quotient
(calculated to the nearest 0.0001) of (A) Twenty-Nine Dollars and Fifty
Cents ($29.50) divided by (B) the Valuation Period Stock Price;
(iii) a conditional amount of cash equal to Five Dollars and Fifty Cents
($5.50); and
(iv) a conditional number of shares of Motorola Common Stock equal to the
quotient (calculated to the nearest 0.0001) of (A) Five Dollars and Fifty
Cents ($5.50) divided by (B) the Valuation Period Stock Price.
(c) If between the date of this Agreement and the Effective Time the
outstanding shares of Motorola Common Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination
or exchange of shares, the exchange ratios set forth in Sections 2.1(a)(ii)
and (iv) and 2.1(b)(ii) and (iv) above shall be correspondingly adjusted to
reflect such stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares. The "Valuation Period Stock Price"
means $52.97.
(d) The Initial Merger Consideration, the Initial Non-Cash Merger
Consideration, the Holdback Amount and the Escrowed Non-Cash Merger
Consideration (as adjusted pursuant to this Agreement) shall constitute the
"Merger Consideration" which shall be payable per share in accordance with the
provisions of Section 2.2 below. All such Starfish Shares, when so converted,
and all the Starfish Shares held of record by Motorola, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate presenting any such shares shall cease
to have any rights with respect thereto, except the right to receive the
Merger Consideration represented by such certificate upon the surrender of
such certificate in accordance with Section 2.2, without interest. No
fractional shares of Motorola Common Stock shall be issued and, in lieu
thereof, a cash payment shall be made pursuant to Section 2.2(e). "Dissenting
Share" means any Starfish Share in respect of which any Starfish Shareholder
has exercised his or its dissenters rights under the California Code.
2.2 Exchange of Certificates.
(a) Exchange Agent. Motorola shall deposit with such bank or trust company
as may be designated by Motorola (the "Exchange Agent") appointed pursuant to
the terms of the Exchange Agreement substantially in the form attached hereto
as Exhibit C (the "Exchange Agreement"), for the benefit of the holders of
shares of Starfish Capital Stock, for exchange in accordance with this Article
II, through the Exchange Agent, (i) as of the Effective Time certificates
representing the Initial Non-Cash Merger Consideration and the Escrowed Non-
Cash Merger Consideration and (ii) as of the Effective Time cash in the amount
sufficient to pay the Initial Cash Merger Consideration, and (iii) on each of
six (6) months following the Closing Date and the first (1st), second (2nd)
and third (3rd) anniversaries of the Closing Date and such time as all claims
by Motorola with respect to the Holdback Amount have been determined without
possibility of appeal, cash in the amount specified in Section 2.2(b) in
respect of the Holdback Amount (such shares and cash consideration, together
with any dividends or distributions with respect thereto with a record date on
or after the day on which the Effective Time occurs and any cash payable in
lieu of any fractional shares of Motorola Common Stock being hereinafter
referred to as the "Exchange Fund").
(b) Exchange Procedures. No later than three business days after the
Effective Time, the Exchange Agent shall, in accordance with the terms of the
Exchange Agreement, mail to each holder of record of a Certificate or
Certificates immediately prior to the Effective Time, whose shares were
converted into the right to receive the Merger Consideration pursuant to
Section 2.1, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as Motorola may reasonably specify)
A1-3
and (ii) instructions for use in effecting the surrender of the Certificates
in exchange for the Merger Consideration (collectively, the "Letter of
Transmittal"). Upon the later of the Effective Time or the surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Motorola, together with such Letter of
Transmittal, duly executed, and such other documents as may be reasonably
required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) a certificate representing the
number of whole shares of Motorola Common Stock constituting the Initial Non-
Cash Merger Consideration payable to such holder and (y) a certified or bank
cashier's check in the amount equal to the cash that such holder has the right
to receive pursuant to the provisions of this Article II in respect of the
Initial Cash Merger Consideration payable to such holder and fractional shares
(in each case, less the amount of any withholding taxes required under
applicable law), and the Certificate so surrendered shall forthwith be
canceled. Six (6) months following the Closing Date, Motorola shall deposit
Five Million Dollars ($5,000,000); on the first (1st) anniversary of the
Closing Date, Motorola shall deposit Five Million Dollars ($5,000,000); on the
second (2nd) anniversary of the Closing Date, Motorola shall deposit Two
Million Five Hundred Thousand Dollars ($2,500,000); and on the third (3rd)
anniversary of the Closing Date Motorola shall deposit the balance of the
Holdback Amount in each case as such amount may be adjusted in accordance with
Section 2.6 below, plus interest thereon as determined in the manner set forth
below, in the Exchange Fund, for distribution by the Exchange Agent in
accordance with the terms of the Exchange Agreement. The interest to be added
to the amount of the Holdback Amount paid on each anniversary of the Closing
Date (as provided for by the previous sentence) shall be calculated as
follows: (i) at the end of the sixth (6th) month following the Closing Date,
interest shall be paid for the six (6) month period from the Closing Date
until paid on Five Million Dollars ($5,000,000) as adjusted by any adjustments
to the Holdback Amount made since the Closing Date in accordance with Section
2.6, at the Prime Rate as quoted by the Wall Street Journal on the Closing
Date, (ii) on the first (1st) anniversary of the Closing Date, interest shall
be paid for the period from the Closing Date until paid on Five Million
Dollars ($5,000,000) as adjusted by any adjustments to the Holdback Amount
made since the Closing Date in accordance with Section 2.6, at the Prime Rate
as quoted by the Wall Street Journal on the Closing Date, (iii) on the second
(2nd) anniversary of the Closing Date, interest shall be paid for the period
from the Closing Date until paid on Two Million Five Hundred Thousand Dollars
($2,500,000) as adjusted by any adjustments to the Holdback Amount made since
the Closing Date in accordance with Section 2.6, at the Prime Rate as quoted
by the Wall Street Journal on the date of the preceding anniversary of the
Closing Date; and (iv) on the third (3rd) anniversary, interest shall be paid
for the period from the Closing Date until paid on the balance of the Holdback
Amount as adjusted by any adjustments to the Holdback Amount made since the
Closing Date in accordance with Section 2.6 and less any Holdback Amount
deposited with the Exchange Agent on or prior to the preceding anniversary, at
the Prime Rate as quoted by the Wall Street Journal on the date of the
preceding anniversary of the Closing Date. In the event of a transfer of
ownership of Starfish Capital Stock which is not registered in the transfer
records of Starfish, a certificate representing the proper number of shares of
Motorola Common Stock may be issued to a person other than the person in whose
name the Certificate so surrendered is registered, if such Certificate shall
be properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other taxes required
by reason of the issuance of shares of Motorola Common Stock to a person other
than the registered holder of such Certificate or establish to the
satisfaction of Motorola that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2(b), each Certificate
(other than those representing Dissenting Shares) shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration and any cash in lieu of a fractional share
of Motorola Common Stock which the holder thereof has the right to receive in
respect of such Certificate pursuant to this Article II. Except as set forth
with respect to the Holdback Amount, no interest will be paid or will accrue
on any cash payable to holders of Certificates pursuant to this Article II.
(c) Distributions with Respect to Unexchanged Shares. Notwithstanding any
other provisions of this Agreement, no dividends or other distributions with
respect to shares of Motorola Common Stock with a record date on or after the
day on which the Effective Time occurs shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Motorola Common Stock
represented thereby, and no cash in lieu of a fractional share of Motorola
Common Stock shall be paid to any such holder pursuant to this Article II, and
all
A1-4
such dividends, other distributions and cash in lieu of any fractional share
of Motorola Common Stock shall be paid by Motorola to the Exchange Agent (less
the amount of any required withholding taxes) and shall be included in the
Exchange Fund, in each case until the surrender of such Certificate in
accordance with this Article II. Following surrender of any such Certificate,
there shall be issued or paid, as applicable, to the holder thereof (i) at the
time of such surrender, (x) a certificate representing whole shares of the
Initial Non-Cash Merger Consideration issued in exchange therefor, (y) the
portion of the Initial Cash Merger Consideration and any cash payable in lieu
of a fractional share of Motorola Common Stock to which such holder is
entitled pursuant to this Article II and (z) the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Motorola Common Stock (in each case,
without interest and less the amount of any required withholding taxes); and
(ii) at the appropriate payment date, (x) the amount of any dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and with a payment date subsequent to such surrender payable with
respect to such whole shares of Motorola Common Stock and (y) the portion of
the Holdback Amount and the Escrowed Non-Cash Merger Consideration to which
such holder is entitled pursuant to this Article II and the Exchange
Agreement.
(d) No Further Ownership Rights in Starfish Capital Stock. All shares of
Motorola Common Stock issued and cash paid upon the surrender for exchange of
Certificates in accordance with this Article II shall be deemed to have been
issued (and paid) in full satisfaction of all rights pertaining to the shares
of Starfish Capital Stock theretofore represented by such Certificates,
subject, however, to the Surviving Corporation's obligation to pay (i) any
dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by Starfish on such shares
of Starfish Capital Stock in accordance with the terms of this Agreement or
prior to the date of this Agreement and which remain unpaid at the Effective
Time and (ii) the Holdback Amount, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
shares of Starfish Capital Stock which were outstanding immediately prior to
the Effective Time. Subject to applicable law, Certificates presented after
the Effective Time to the Surviving Corporation or the Exchange Agent for any
reason shall be canceled and exchanged as provided in this Article II.
(e) No Fractional Shares.
(i) No certificates or scrip representing fractional shares of Motorola
Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution of Motorola shall relate to such
fractional share interests and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of
Motorola.
(ii) Notwithstanding any other provision of this Agreement, each holder
of record of shares of Starfish Capital Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a
share of Motorola Common Stock (after taking into account all shares and
Certificates delivered by such holder of record) shall receive, in lieu
thereof, cash (without interest) in an amount equal to such fractional part
of a share of Motorola Common Stock multiplied by the Valuation Period
Stock Price.
(f) Termination of Exchange Fund. The Exchange Fund shall terminate in
accordance with the terms of the Exchange Agreement.
(g) No Liability. None of Motorola, Sub, Starfish and the Exchange Agent
shall be liable to any person in respect of any shares of Motorola Common
Stock (or any dividends or distributions with respect thereto or with respect
to any shares of Starfish Capital Stock theretofore represented by any
Certificate) or any cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate shall not have been surrendered prior to the date on which any
Merger Consideration or any cash in lieu of a fractional share of Motorola
Common Stock or other dividends or distributions payable to the holder of such
Certificate pursuant to this Article II would otherwise escheat to or become
the property of any Governmental Body (as defined in Exhibit A), any such
Merger Consideration or cash or other dividends or distributions shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interests of any person
previously entitled thereto.
A1-5
(h) Lost, Stolen and Destroyed Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or destroyed and,
if required by Motorola, the posting by such person of a bond in such
reasonable amount as Motorola may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate, the
Merger Consideration, cash in lieu of a fractional share of Motorola Common
Stock and unpaid dividends and distribution on shares of Motorola Common Stock
as provided in this Article II, deliverable in respect thereof pursuant to
this Agreement.
2.3 Stock Options.
(a) At the Effective Time and subject to Section 6.6 each option granted by
Starfish to purchase shares of Starfish Common Stock (each, a "Starfish
Option") which is outstanding immediately prior thereto shall cease to
represent a right to acquire shares of Starfish Common Stock and shall be
assumed automatically by Motorola and converted automatically into an option
(the "Exchanged Option") to purchase shares of Motorola Common Stock
exercisable until the current termination of the Starfish Option in an amount
and at an exercise price determined as provided below (and subject to the
terms of the 1995 Stock Option Plan and the 1997 Stock Option Plan of Starfish
(the "Starfish Stock Plans") and the agreements evidencing such grants:
(i) The number of shares of Motorola Common Stock to be subject to each
Exchanged Option shall be equal to the product of the number of shares of
Starfish Common stock subject immediately prior to the Effective Time to
the Starfish Option to be converted into such Exchanged Option and the
Option Exchange Ratio, provided that any fractional share of Motorola
Common Stock resulting from such multiplication shall be rounded down to
the nearest share; and
(ii) The exercise price per share of Motorola Common Stock under the
Exchanged Option shall be equal to the exercise price per share of Starfish
Common Stock under the Starfish Option to be converted into such Exchanged
Option divided by the Option Exchange Ratio, provided that such exercise
price shall be rounded up to the nearest one-tenth of a cent; and
(iii) provided further, however, that with respect to each Starfish
Option which, immediately prior to the Effective Time, is intended to
qualify as an "incentive stock option" within the meaning of Section 422(b)
of the Code, the number of shares of Motorola Common Stock subject to the
Exchanged Option into which such Starfish Option is converted and the
exercise price, terms and conditions of such Exchanged Option shall be
determined in compliance with the requirements of Section 424(a) of the
Code.
For purposes of this Agreement, the "Option Exchange Ratio" shall be
calculated as Seven Dollars ($7.00) divided by the Valuation Period Stock
Price.
(b) Motorola shall (i) reserve for issuance the number of shares of Motorola
Common Stock that will become issuable upon the exercise of the Exchanged
Options and (ii) promptly after the Effective Time, issue to each holder of an
Exchanged Option a document evidencing Motorola's assumption of Starfish's
obligations under the Starfish Options. The Exchanged Options shall have the
same terms and conditions as the Starfish Options.
2.4 Dissenting Shares. Any Dissenting Shares shall not be converted into a
right to receive Motorola Common Stock but shall be converted into the right
to receive such consideration as may be determined to be due with respect to
such Dissenting Shares pursuant to the California Code; provided, however,
that if the status of any such shares as Dissenting Shares shall not be
perfected, or if any such shares shall lose their status as Dissenting Shares,
then, as of the later of the Effective Date or the time of the failure to
perfect such status, such shares shall automatically be converted into and
shall represent only the right to receive (upon the surrender of the
Certificate or Certificates representing such shares) Motorola Common Stock in
accordance with Section 2.1 (and cash in lieu of fractional shares in
accordance with Section 2.2(e)). Starfish shall give Motorola prompt notice of
any demand received by Starfish for appraisal of Starfish Capital Stock, and
Motorola shall have the right to participate in all negotiations and
proceedings with respect to such demand. Starfish agrees that, except with the
prior written consent of Motorola or as required under Chapter 13 of the
California Code, it will not
A1-6
voluntarily make any payment with respect to, or settle or offer to settle,
any such demand for appraisal. Each holder of Dissenting Shares ("Dissenting
Shareholder") who, pursuant to the provisions of the California Code, becomes
entitled to payment of the value of shares of Starfish Capital Stock shall
receive payment therefor from the Surviving Corporation (but only after the
value therefor shall have been agreed upon or finally determined pursuant to
such provisions).
2.5 Tax Free Reorganization. The parties intend to adopt and hereby do adopt
this Agreement as a plan of reorganization within the meaning of the
regulations issued pursuant to Section 368 of the Code and intend to
consummate the Merger in accordance with the provisions of Sections
368(a)(1)(A) and (a)(2)(D) of the Code. Each party agrees that it will not
take or assert any position on any tax return, report, or otherwise which is
inconsistent with the qualification of the Merger as a reorganization within
the meaning of Section 368(a) of the Code and will take no action, either
prior or subsequent to the Merger, which would cause the Merger to fail to
qualify as a reorganization. The provisions and representations contained or
referred to in this Section 2.5 shall survive until the expiration of the
applicable statute of limitations.
2.6 Post-Closing Adjustment to Holdback Amount. The Holdback Amount may be
reduced from time to time in accordance with the provisions of Article XI of
this Agreement. Any reduction to the Holdback Amount pursuant to Article XI
shall be made (i) by first reducing the amount payable by Motorola pursuant to
Section 2.2 above at the end of the sixth (6th) month period, provided that if
the amount then payable is less than the amount of such reduction, or if such
six (6) month period has passed and the portion of the Holdback Amount then
payable has been paid, by then reducing the amount payable by Motorola by the
amount of such difference on the first (1st) anniversary of the Closing Date;
(ii) to the extent that the amount then payable is less than the amount of
such reduction, or if such first (1st) anniversary has passed and the portion
of the Holdback Amount then payable has been paid, by then reducing the amount
payable by Motorola by the amount of such difference on the second (2nd)
anniversary of the Closing Date; (iii) to the extent that the amount then
payable is less than the amount of such reduction, or if such second (2nd)
anniversary has passed and the portion of the Holdback Amount then payable has
been paid, by then reducing the amount payable by Motorola by the amount of
such difference on the third (3rd) anniversary of the Closing Date and (iv) to
the extent that the amount then payable is less than the amount of the
Holdback Amount then remaining, then by reducing the Escrowed Non-Cash Merger
Consideration by the amount of such shortfall in accordance with the terms of
the Exchange Agreement.
2.7 Discussion of Adjustment of Merger Consideration. If the value of the
total Initial Non-Cash Merger Consideration as of the Effective Time
(determined by the closing price of Motorola Common Stock on the Closing Date)
is not equal to or in excess of two-thirds of the total Initial Cash Merger
Consideration then Motorola and Starfish will discuss in good faith whether an
increase in the number of shares of Motorola Common Stock (and a corresponding
decrease in the cash component of the Merger Consideration) is in the best
interests of the parties. In the event that the parties are unable to agree on
such adjustment (within five (5) business days), then the conditions set forth
in Sections 8.8 and 9.16 of this Agreement shall be deemed waived by Starfish
and Motorola and Sub, respectively.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STARFISH
Except as otherwise set forth in the "Starfish Disclosure Schedule" provided
to Motorola on the date hereof, Starfish represents and warrants to Motorola
as set forth below. No fact or circumstance disclosed to Motorola shall
constitute an exception to these representations and warranties unless such
fact or circumstance is set forth in the Starfish Disclosure Schedule.
3.1 Organization. Starfish is a corporation duly organized, validly existing
and in good standing under the laws of the State of California and has
corporate power and authority to carry on its business as it is now being
conducted and as it is proposed to be conducted. Starfish is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or properties makes such qualification or
A1-7
licensing necessary, except where the failure to qualify would not have a
Material Adverse Effect on Starfish's business. The Starfish Disclosure
Schedule contains a true and complete listing of the locations of all sales
offices, manufacturing facilities, and any other offices or facilities of
Starfish and a true and complete list of all states and countries in which
Starfish maintains any employees. The Starfish Disclosure Schedule contains a
true and complete list of all states in which Starfish is duly qualified to
transact business as a foreign corporation. True and complete copies of
Starfish's articles of incorporation and bylaws, as in effect on the date
hereof and as to be in effect immediately prior to the Closing, have been
provided to Motorola or its representatives. Starfish owns and on the Closing
Date will own no equity securities of any other corporation, limited
partnership or similar entity. Starfish does not have any ownership interest
in any joint venture, partnership or similar arrangement.
3.2 Capitalization. The authorized capital stock of Starfish, as of the date
of this Agreement, consists of: sixty million (60,000,000) shares of Common
Stock, 26,500,298 shares of which are issued and outstanding, 6,051,332 shares
of which are reserved for future issuance to employees upon the exercise of
Starfish Options, 4,746,832 of which are currently outstanding, and 375,796
shares of which are reserved for issuance upon exercise of the Warrant to
purchase 375,796 shares of Starfish Common Stock; and five million (5,000,000)
shares of Preferred Stock, of which 356,506 shares have been designated Series
A Preferred Stock, all of which are issued and outstanding, and of which
500,000 shares have been designated Series B Preferred Stock, 473,725 of which
are issued and outstanding. All issued and outstanding shares of Starfish
Common Stock and Starfish Preferred Stock (i) have been duly authorized and
validly issued, (ii) are fully paid and nonassessable, and (iii) were issued
in compliance with all applicable state and federal laws concerning the
issuance of securities. Except for Starfish Options and the Warrant, there are
no outstanding options, warrants, rights (including conversion or preemptive
rights and rights of first refusal), proxy or shareholder agreements, or
agreements of any kind for the purchase or acquisition from Starfish of any of
its securities. Except as set forth in Part 3.2 of the Starfish Disclosure
Schedule, there are no voting or other agreements which restrict voting or
dividend rights on the Starfish Capital Stock. None of the outstanding shares
of Starfish Capital Stock was issued in consideration in whole or in part for
any contribution, transfer or assignment of the Starfish Products or
Proprietary Assets or any proprietary rights incorporated therein or otherwise
related thereto.
3.3 Power, Authority and Validity
(a) Starfish has the corporate power and authority to enter into this
Agreement and the other Transaction Documents to which it is a party and to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Transaction Documents to which it is a party and the
consummation of the transactions contemplated herein and therein have been
duly authorized by the board of directors of Starfish, and no other corporate
proceedings, other than shareholder approval of the Merger, are necessary to
authorize this Agreement and the other Transaction Documents. Starfish is not
subject to or obligated under any charter, bylaw or contract provision or any
license, franchise or permit, or subject to any order or decree, which would
be breached or violated in a manner by or in conflict with its executing and
carrying out this Agreement and the transactions contemplated herein and under
the Transaction Documents. Except for (i) the filing of the Merger Articles
and any required officers' certificates with the Secretary of State of the
State of California and appropriate documents with the relevant authorities of
other states in which Starfish is qualified to do business, (ii) filings under
applicable securities laws, (iii) the termination of the waiting period under
the HSR Act and (iv) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the laws of
any foreign country in which Starfish conducts any business or owns any
property or assets, no consent of any person who is a party to a contract
which is material to Starfish's business, nor consent of any governmental
body, is required to be obtained on the part of Starfish to permit the
transactions contemplated herein and continue the business activities of
Starfish as previously conducted by Starfish. This Agreement constitutes, and
the other Transaction Documents to which Starfish is a party when executed and
delivered by Starfish shall constitute, valid and binding obligations of
Starfish enforceable in accordance with their respective terms, subject to (i)
laws of general application relating to public policy, bankruptcy, insolvency,
and the relief of debtors and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
A1-8
(b) Except as set forth in Part 3.3(b) of the Starfish Disclosure Schedule,
all Starfish Options outstanding as of the Effective Date have been issued in
accordance with the terms of the Starfish Stock Plans and pursuant to the
forms of option agreement previously provided to legal counsel for Motorola.
Except for the changes resulting from the application of Section 2.3(a)
hereof, no Starfish Options will by its terms require an adjustment in
connection with the Merger. Neither the transactions contemplated in this
Agreement nor any action taken by Starfish will result in (i) any additional
benefits for any optionee under Starfish Options or (ii) the inability of
Motorola after the Effective Date to exercise any right or benefit held by
Starfish prior to the Effective Date with respect to a Starfish Option assumed
by Motorola, including, without limitation, the right to repurchase an
optionee's unvested shares on termination of such optionee's employment. The
assumption by Motorola of Starfish Options in accordance with Section 2.3
hereunder will not constitute a breach of the Starfish Stock Plans or any
material agreement entered into pursuant to the Starfish Stock Plans.
(c) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein will conflict with, or
result in a material breach or violation of, any provision of Starfish's
articles of incorporation, and bylaws as currently in effect, any instrument
or contract to which Starfish is a party or by which Starfish is bound, or any
federal, state or local judgment, writ, decree, order, statute, rule or
regulation applicable to Starfish. Neither the execution and delivery of this
Agreement, nor any Agreement attached hereto as an Exhibit, nor the
consummation of the transactions contemplated herein or therein will have a
Material Adverse Effect on the operations, assets, or financial condition of
Starfish.
3.4 Financial Statements.
(a) Starfish has delivered to Motorola copies of Starfish's audited balance
sheet as of December 31, 1997 and statements of operations, shareholders'
equity and cash flow for the twelve-month period then ended (the "Starfish
Audited Financial Statements") and the unaudited balance sheet as of April 30,
1998 and statements of operations, shareholder's equity and cash flow for the
four-month period then ended (collectively, the "Starfish Financial
Statements").
(b) The Starfish Financial Statements are complete and in accordance with
the books and records of Starfish and present fairly in all material respects
the financial position of Starfish as of the dates thereof. The Starfish
Financial Statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") (except, as to the Starfish unaudited financial
statements, for the absence of footnotes) applied on a basis consistent with
prior periods. Except and to the extent reflected or reserved against in such
balance sheets (including the notes thereto), Starfish does not have, as of
the dates of such balance sheets, any liabilities or obligations (absolute or
contingent) of a nature required to be or customarily reflected in a balance
sheet (or the notes thereto) prepared in accordance with GAAP. The reserves,
if any, reflected on the Starfish Financial Statements are adequate in light
of the contingencies with respect to which they are made. The statements of
operations, shareholders' equity and cash flow are complete and in accordance
with the books and records of Starfish and present fairly the results of
operations, equity transactions and changes of Starfish for the periods
indicated, subject, in the case of the Starfish unaudited Financial
Statements, to normal year end adjustments.
(c) Starfish has no debt, liability, or obligation of any nature, whether
known, unknown, accrued, absolute, contingent, or otherwise, and whether due
or to become due and which is required to be reflected in a financial
statement in accordance with GAAP except for those (i) that are reflected or
reserved against in the face of (as opposed to the notes to) the Starfish
Financial Statements and (ii) that may have been incurred after the date of
the Starfish Financial Statements in the ordinary course of business, all of
which are usual and normal in amount, both individually and in the aggregate.
3.5 Tax Matters.
(a) Starfish has fully and timely, properly and accurately filed all tax
returns and reports required to be filed by it, including all federal,
foreign, state and local tax returns and estimates for all years and periods
(and portions thereof) for which any such returns, reports or estimates were
due. All such returns, reports and
A1-9
estimates were prepared in the manner required by applicable law in all
material respects. All income, sales, use, occupation, property or other taxes
or assessments due from Starfish prior to the Closing Date have been paid or
will be paid on or before the Closing Date. There are no pending assessments,
asserted deficiencies or claims for additional taxes that have not been paid.
The reserves for taxes, if any, reflected on the Starfish Financial Statements
are adequate, and there are no tax liens on any property or assets of Starfish
(other than liens for taxes not yet due and payable). There have been no
audits or examinations of any tax returns or reports by any applicable
governmental agency. No state of facts exists or has existed which would
constitute grounds for the assessment of any penalty or any further tax
liability in a material amount, either individually or in the aggregate,
beyond that shown on the respective tax reports, returns or estimates or
accrued for or reserved on the Starfish Financial Statements. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any federal, foreign state or local tax return or report for any
period.
(b) All taxes that Starfish has been required to collect or withhold have
been duly withheld or collected and, to the extent required, have been paid to
the proper taxing authority.
(c) Starfish is not a party to any tax-sharing agreement or similar
arrangement with any other party.
(d) At no time has Starfish been included in the federal consolidated income
tax return of any affiliated group of corporations.
(e) No payment which Starfish is obliged to pay to any director, officer,
employee or independent contractor pursuant to the terms of an employment
agreement, severance agreement or otherwise will constitute an excess
parachute payment as defined in Section 280G of the Code.
(f) Starfish will not be required to include any adjustment in taxable
income for any tax period (or portion thereof) ending after the Closing Date
pursuant to Section 481(c) of the Code or any provision of the tax laws of any
jurisdiction requiring tax adjustments as a result of a change in method of
accounting implemented by Starfish prior to the Closing Date for any tax
period (or portion thereof) ending on or before the Closing Date or pursuant
to the provisions of any agreement entered into by Starfish prior to the
Closing Date with any taxing authority with regard to the tax liability of
Starfish for any tax period (or portion thereof) ending on or before the
Closing Date.
(g) Starfish is not currently under any contractual obligation to pay to any
Governmental Body any tax obligations of, or with respect to any transaction
relating to, any other person or to indemnify any other person with respect to
any tax, other than pursuant to this Agreement.
3.6 Absence of Certain Changes or Events. Except as set forth in Part 3.6 of
the Starfish Disclosure Statement, from April 30, 1998, to the date of this
Agreement, Starfish has not:
(a) suffered any Material Adverse Change in its financial condition or in
the operations of its business, nor any Material Adverse Change in its balance
sheet, and including but not limited to cash distributions or material
decreases in the net assets of Starfish;
(b) suffered any damage, destruction or loss, whether covered by insurance
in an amount in excess of Fifty Thousand Dollars ($50,000);
(c) granted or agreed to make any increase in the compensation payable or to
become payable by Starfish to its officers or employees, except those
occurring in the ordinary course of business;
(d) declared, set aside or paid any dividend or made any other distribution
on or in respect of the shares of Starfish Capital Stock or declared any
direct or indirect redemption, retirement, purchase or other acquisition by
Starfish of such shares other than repurchases of Starfish Capital Stock at
original issue prices from former employees or consultants pursuant to written
agreements providing for their repurchase in the event of termination of
employment or consultancy;
A1-10
(e) issued any shares of capital stock of Starfish or any warrants, rights
or options or entered into any commitment relating to the shares of Starfish
except for the issuance of shares of Starfish Capital Stock pursuant to the
exercise of outstanding Starfish Options or upon conversion of outstanding
shares of Starfish Preferred Stock;
(f) made any change in the accounting methods or practices it follows,
whether for general financial or tax purposes, or any change in depreciation
or amortization policies or rates adopted therein other than changes required
by changes in GAAP;
(g) sold, leased, abandoned or otherwise disposed of any real property or
any machinery, equipment or other operating property other than in the
ordinary course of business;
(h) sold, assigned, transferred, licensed or otherwise disposed of any
patent, trademark, trade name, brand name, copyright (or pending application
for any patent, trademark or copyright), invention, work of authorship,
process, know-how, formula or trade secret or interest thereunder or other
intangible asset except in the ordinary course of its business;
(i) suffered any dispute involving any employee that to Starfish's knowledge
may reasonably result in a material liability to Starfish;
(j) engaged in any activity or entered into any material commitment or
transaction (including without limitation any borrowing or capital
expenditure), in either case, other than in the ordinary course of business;
(k) incurred any liabilities, contingent or otherwise, either matured or
unmatured (whether or not required to be reflected in financial statements in
accordance with GAAP, and whether due or to become due), except for (i)
liabilities identified as such in the "liabilities" column of the Starfish
Financial Statements, and (ii) accounts payable or accrued salaries that have
been incurred by Starfish since April 30, 1998 in the ordinary course of
business and consistent with Starfish's past practices;
(l) permitted or allowed any of its material property or assets to be
subjected to any mortgage, deed of trust, pledge, lien, security interest or
other encumbrance of any kind, except those permitted under Section 3.7
hereof, other than any purchase money security interests incurred in the
ordinary course of business;
(m) made any capital expenditure or commitment for additions to property,
plant or equipment individually in excess of Fifty Thousand Dollars ($50,000),
or in the aggregate, in excess of Two Hundred Thousand Dollars ($200,000);
(n) paid, loaned or advanced any amount to, or sold, transferred or leased
any properties or assets to, or entered into any agreement or arrangement with
any of its Affiliates, officers, directors or shareholders or, to Starfish's
knowledge, any Affiliate or associate of any of the foregoing;
(o) made any amendment to or terminated any agreement which, if not so
amended or terminated, would be required to be disclosed on the Starfish
Disclosure Schedule; or
(p) agreed to take any action described in this Section 3.6 or outside of
its ordinary course of business or which would constitute a breach of any of
the representations contained in this Agreement.
3.7 Title and Related Matters. Starfish has good and marketable title to all
the properties, interests in properties and assets, real and personal,
reflected in the Starfish Financial Statements or acquired after the date of
the Starfish Financial Statements (except properties, interests in properties
and assets sold or otherwise disposed of since the date of the Starfish
Financial Statements in the ordinary course of business), free and clear of
all mortgages, liens, pledges, charges or encumbrances of any kind or
character, except the lien of current taxes not yet due and payable and except
for liens which in the aggregate do not secure more than Fifty Thousand
Dollars ($50,000) in liabilities. The equipment of Starfish used in the
operation of its business is in good
A1-11
operating condition and repair, normal wear and tear excepted. All real or
personal property leases to which Starfish is a party are valid, binding,
enforceable and effective in accordance with their respective terms, subject
to (i) laws of general application relating to bankruptcy, insolvency, and the
relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies. There is not under any of such
leases any existing default by Starfish (or to the knowledge of Starfish, by
any other party thereto) or event of default or event which, with notice or
lapse of time or both, would constitute a material default. The Starfish
Disclosure Schedule contains a description of all real property and personal
property with a value in excess of $50,000 leased or owned by Starfish,
describing its interest in said property and with respect to owned real
property, a description of each parcel and a summary description of the
buildings, structures and improvements thereon. True and correct copies of the
leases of Starfish have been provided to Motorola or its representatives.
3.8 Intellectual Property
(a) For the purposes of this Agreement, the following terms have the
following definitions:
"Intellectual Property" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States and
foreign patents and applications therefor and all reissues, divisions,
renewals, extensions, provisional, continuations and continuations in part
thereof; (ii) all inventions (whether patentable or not), invention
disclosures, improvements, trade secrets, proprietary information, know how,
technology, technical data and customer lists, and all documentation relating
to any of the foregoing, (iii) all copyrights, copyrights registrations and
applications therefor, and all other rights corresponding thereto throughout
the world; (iv) all mask works, mask work registrations and applications
therefor, and all other rights corresponding thereto throughout the world; (v)
all industrial designs and any registrations and applications therefor
throughout the world; (vi) all trade names, logos, common law trademarks and
service marks; trademark and service xxxx registrations and applications
therefor throughout the world; (vii) all databases and data collections and
all rights therein throughout the world; and (viii) all computer software
including all source code, object code, firmware, development tools, files,
records and data, all media on which any of the foregoing is recorded, and all
documentation related to any of the foregoing throughout the world.
"Software" shall mean all computer code and data in source code, object code
or other form incorporated in the Starfish Products or used by Starfish in the
preparation or support of the Starfish Products.
"Software Authors" shall mean all authors of the Software, or any other
Person or entity who participated in the development of the Software or any
portion thereof or performed any work related to the Software; provided,
however, that Software Authors shall not include any Persons who are not
involved in the development or modification of Software source code.
"Starfish Intellectual Property" shall mean any Intellectual Property that:
(i) is owned by or exclusively licensed to Starfish.
(b) Part 3.8(b) of the Starfish Disclosure Statement lists all of Starfish's
United States and foreign: (i) patents, patent applications (including
provisional applications); (ii) registered trademarks, applications to
register trademarks, intent to use applications or other registrations related
to trademarks; (iii) registered copyrights and applications for copyright
registration; (iv) mask work registrations and applications to register mask
works; and (v) any other Intellectual Property of Starfish that is the subject
of an application, certificate or registration filed with, issued by, or
recorded by, any state, government or other public legal authority (all of the
foregoing, the "Registered Intellectual Property") and Part 3.8(b) of the
Starfish Disclosure Statement identifies the principal Starfish Intellectual
Property comprised in such Registered Intellectual Property.
(c) Each patent, registered trademark, registered copyright and mask work
registration which is an item of Registered Intellectual Property
(collectively "Issued Registered Intellectual Property") is valid and
subsisting, and all necessary registration, maintenance and renewal fees in
connection with such Issued Registered Intellectual Property have been made
and all necessary documents and certificates in connection with such Issued
Registered Intellectual Property have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such Issued
Registered Intellectual Property.
A1-12
(d) The contracts, licenses and agreements listed on Part 3.8(d) of the
Starfish Disclosure Statement include all contracts, licenses and agreements
currently in effect relating to any Intellectual Property, to which Starfish
is a party, other than: (i) "shrink wrap" software; (ii) rights to use
Intellectual Property granted by Starfish in the ordinary course of Starfish's
business in connection with sales of products or services; (iii) third party
software generally available to the public at a cost of less than Ten Thousand
Dollars ($10,000); and (iv) contracts, licenses or agreements which Starfish
has no continuing obligations or for which liability is contractually limited
to less than $50,000 (collectively, such exceptions being referred to as
"Excluded Licenses").
(e) Except as disclosed in Part 3.8(e) of the Starfish Disclosure Statement,
the contracts, licenses and agreements listed on Part 3.8(d) of the Starfish
Disclosure Statement are in full force and effect. The consummation of the
transactions contemplated by this Agreement will neither violate nor result in
the breach, modification, cancellation, termination, or suspension of the
contracts, licenses and agreements listed on Part 3.8(d) of the Starfish
Disclosure Statement. Except as disclosed in Part 3.8(e) of the Starfish
Disclosure Statement, Starfish is in compliance in all material respects with
and has not breached any material term of, the contracts, licenses and
agreements listed on Part 3.8(d) of the Starfish Disclosure Statement and, to
the knowledge of Starfish, all other parties to the contracts, licenses and
agreements listed on Part 3.8(d) of the Starfish Disclosure Statement are in
compliance with, and have not breached any term of the contracts, licenses and
agreements. Except as disclosed in Part 3.8(e) of the Starfish Disclosure
Statement, following the Closing Date, Starfish will be permitted to exercise
all of its rights under the contracts, licenses and agreements listed in Part
3.8(d) of the Starfish Disclosure Statement without the payment of any
additional amounts or consideration other than ongoing fees, royalties or
payments which Starfish would otherwise be required to pay.
(f) Except as set forth in Part 3.8(f) of the Starfish Disclosure Statement
and other than Excluded Licenses or other agreements which are not currently
in effect: (i) no Person other than Starfish has any rights to use any
Starfish Intellectual Property other than immaterial rights granted from time
to time in the ordinary course of business which do not individually or in
aggregate materially affect the value of the Starfish Intellectual Property in
question; and (ii) Starfish has not granted to any Person, nor authorized any
Person to retain, any rights or interests of any nature in or with respect to
Starfish Intellectual Property.
(g) Except as set forth in Part 3.8(g) of the Starfish Disclosure Statement:
(i) Starfish owns and has good and exclusive title to each item of Starfish
Intellectual Property listed on Part 3.8(b) of the Starfish Disclosure
Statement, free and clear of any encumbrance; and (ii) Starfish owns, or has
the right, pursuant to a valid contract to use or operate under, all other
Starfish Intellectual Property.
(h) Except as set forth on Part 3.8(h) of the Starfish Disclosure Statement,
the operation of the business of Starfish, to Starfish's knowledge, including
the design, development, manufacture and sale of its products (including with
respect to products currently under development) and provision of services,
does not infringe or misappropriate the Intellectual Property of any other
Person, violate the rights of any Person (including rights to privacy or
publicity), or constitute unfair competition. Notwithstanding the foregoing,
it is expressly understood that the foregoing does not limit the
indemnification provided by the Starfish Shareholders pursuant to Section
11.2(a)(iii) of this Agreement.
(i) In the last five years, except as set forth on Part 3.8(i) of the
Starfish Disclosure Statement, Starfish has not received notice from any
Person that the operation of the business of Starfish or the Business,
including its design, development, manufacture and sale of its products
(including with respect to products currently under development) and provision
of its services, infringes or misappropriates the Intellectual Property of any
Person, violates the rights of any Person (including rights to privacy or
publicity), or constitutes unfair competition.
(j) Except as disclosed in Part 3.8(j) of the Starfish Disclosure Statement,
Starfish owns or has the right to all Intellectual Property necessary to the
conduct of the business of Starfish as it currently is conducted, including
its design, development, manufacture and sale of its products (including with
respect to products currently under development and provision of services).
A1-13
(k) Part 3.8(k) of the Starfish Disclosure Statement lists all contracts,
licenses and agreements between Starfish and any other Person wherein or
whereby Starfish has agreed to, or assumed, any obligation or duty to
indemnify, hold harmless or otherwise assume or incur any obligation or
liability with respect to the infringement by Starfish or such other Person of
the Intellectual Property rights of any other Person; provided that the
foregoing only applies to agreements for which Starfish's obligations are
continuing as of the date of this Agreement and does not apply to contracts,
licenses or agreements for which liability of Starfish is contractually
limited to less than $50,000.
(l) Except as listed on Part 3.8(l) of the Starfish Disclosure Statement,
there are no contracts, licenses and agreements between Starfish and any other
Person with respect to Starfish Intellectual Property with respect to which
Starfish has received notice of any dispute which could be reasonably
considered to be a material dispute regarding the scope of such agreement, or
performance under such agreement including with respect to any payments to be
made or received by Starfish thereunder.
(m) Except as listed on Part 3.8(m) of the Starfish Disclosure Statement, to
the knowledge of Starfish, no Person is infringing or misappropriating any
Starfish Intellectual Property.
(n) Except as listed on Part 3.8(n) of the Starfish Disclosure Statement,
there are no claims asserted against Starfish, or to Starfish's knowledge,
against any customer of Starfish, related to any product or service of
Starfish.
(o) No Starfish Intellectual Property or product or service of Starfish, is
subject to any outstanding decree, order, judgment, or stipulation restricting
in any manner the use or licensing thereof by Starfish.
(p) Except as disclosed in Part 3.8(p) of the Starfish Disclosure Statement,
Starfish has, and enforces, a policy requiring each employee and contractor to
execute proprietary information and confidentiality agreements substantially
identical to the form of the Employee Agreement previously delivered to
Motorola, and all current and former employees and contractors of Starfish
have executed such an agreement.
(q) To Starfish's knowledge, no (i) product, service or publication of
Starfish, (ii) material published or distributed by Starfish or (iii) conduct
or statement of Starfish, constitutes obscene material, a defamatory statement
or material, or violates any rights, including rights of publicity or privacy,
of any Person.
(r) Part 3.8(r) of the Starfish Disclosure Statement lists all the Software
Authors who were not employees of Starfish. Each Software Author made his
contribution to the Software within the scope of employment with Starfish as
an employee or independent contractor, as a "work made for hire," and was
directed by Starfish to work on the Software.
(s) Except for technology supplied by third party vendors disclosed in Part
3.8(s) of the Starfish Disclosure Statement, the Software and every portion
thereof are an original creation of the Software Authors and do not contain
any source code or portions of source code (including any "canned program")
created by any parties other than the Software Authors. To Starfish's
knowledge, Starfish has not, by any of its acts or omissions, or by acts or
omissions of its directors, officers, employees, agents, or representatives
caused any of its proprietary rights in the Software, including copyrights,
trademarks, and trade secrets to be diminished, or adversely affected to any
material extent.
(t) Except as set forth in Part 3.8(t) of the Starfish Disclosure Statement:
(i) to the best of Starfish's knowledge, there are no defects in the
Software, and there are no errors in any accompanying design documentation,
which defects or errors would in any material respect affect Motorola's or
its licensee's use of the Software or the functioning of the Software in
accordance with the specifications for the Software published by Starfish;
the Software has all the material features described in the user manuals
made available to Starfish's customers;
A1-14
(ii) the Software does not contain any "back door," "time bomb," "Trojan
horse," "worm," "drop dead device," "virus" (as these terms are commonly
used in the computer software industry), or other software routines or
hardware components designed to permit unauthorized access, to disable or
erase software, hardware, or data, or to perform any other similar type of
functions;
(iii) the Software (A) shall not fail to perform any function specified
in the product specifications therefor or otherwise be adversely affected
in any material respect as a result of the date change from December 31,
1999 to January 1, 2000; and (B) to ensure Year 2000 compatibility
includes, without limitation, date data century recognition, calculations
which accommodate same century and multi-century formulas and date values,
and date data interface values which reflect the correct century.
(iv) no government funding or university or college facilities were used
in the development of the Software, and the Software was not developed
pursuant to a contract with any Person or entity, and no situation, matter,
or agreement exists that would preclude Motorola from making any change to
the Software or combining it with other software in any lawful manner; and
(v) all copies of the Software contain appropriate copyright legends; no
third party has any interest in, or right to compensation from Starfish by
reason of, the use, exploitation, or sale of the Software; there are no
restrictions on the ability of Starfish (or any successor or assignee of
Starfish) to use or otherwise exploit the Software, and such use or
exploitation does not and will not obligate Starfish (or any successor or
assign of Starfish) to pay any royalty, fee, or other compensation to any
Person or entity; and Starfish has not received any notice and do not have
any knowledge of any complaint, assertion, threat, or allegation
inconsistent with the preceding statements in this paragraph.
(u) Starfish has made available to Motorola complete and accurate records of
Starfish with respect to Software fixes (including fixes currently in
progress), problem lists and maintenance of the Software, and customer
complaints. All warranty claims (including any pending claims) of any material
nature related to the Software are described in the Starfish Disclosure
Statement. Except as set forth in Part 3.8(u) of the Starfish Disclosure
Statement, Starfish has made no written representations and warranties with
respect to the Software as to which Starfish has surviving obligations or
liabilities.
3.9 Employee Benefit Plans. (a) Starfish does not maintain, nor is it
obligated to contribute to, any defined benefit pension plan or any employee
benefit plan that is subject to either Title IV of the Employee Retirement
Income Security Act of 1974 ("ERISA") or the minimum funding standards of
ERISA or the Internal Revenue Code. Each bonus, deferred compensation,
pension, profit-sharing, retirement, stock purchase, stock option, and other
employee benefit or fringe benefit plans, whether formal or informal,
maintained by Starfish conforms in all material respects, to the applicable
requirements, if any, of ERISA. The Starfish Disclosure Schedule lists any
formal or informal (i) stock purchase or stock option, nonqualified deferred
compensation or retirement plans, programs or arrangements which may be
"employee pension benefit plans" as defined in Section 3(2) of ERISA, (ii)
qualified defined contribution plans or arrangements, and defined benefit
plans or arrangements which are "employee pension benefit plans" as defined in
Section 3(2) of ERISA, (iii) employee welfare benefit plans, as defined in
Section 3(1) of ERISA or material fringe benefit plans or programs (the
"Welfare Plans"), including any bonus, incentive, or vacation arrangement,
program or policy maintained by or to which Starfish contributes on behalf of
current or former employees of Starfish. If no plan or other written document
for the plans, policies, programs or arrangements listed on the Starfish
Disclosure Schedule has been provided to Motorola, the Starfish Disclosure
Schedule shall briefly summarize the principal features of such plans,
policies, programs or arrangements.
(b) Starfish maintains an Employee Pension Benefit Plan (as defined in
Section 3(2)(A) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) which is a defined contribution plan (as defined in Section
3(34) of ERISA) named the Starfish Software, Inc. 401(k) Savings Plan (the
"Plan").
(c) The Plan is the only Employee Pension Benefit Plan, whether a defined
contribution plan or a defined benefit plan (as defined in Section 3(35) of
ERISA), ever maintained or participated in by Starfish.
A1-15
(d) The Plan (and its related trust) has received a favorable determination
letter on its qualified status under Section 401(a) and 501(b) of the Internal
Revenue Code of 1986, as amended (the "Code") from the Internal Revenue
Service dated February 10, 1997, and has been operated and administered in all
material respects in compliance with the applicable requirements of ERISA, the
Code and all other applicable laws, rules and regulations, and, to the
knowledge of Starfish or any of the employees with responsibility for employee
benefits matters, no event has occurred which will or could cause the Plan to
fail to comply with such requirements. Neither Starfish nor any of the
employees with responsibility for employee benefits matters has any knowledge,
of any fact, situation, circumstance, condition or occurrence that would or
could adversely affect the qualified status of the Plan.
(e) All contributions (including all employer and employee contributions)
which are due have been paid to the Plan and all contributions for any period
ending on or before the Closing Date which are not yet due have been paid to
the Plan or properly accrued and reflected on the financial statements of
Starfish.
(f) The fair market value of the assets of the Plan equals or exceeds the
present value of all vested and nonvested liabilities thereunder.
(g) Starfish has delivered to Motorola correct and complete copies of the
Plan documents and Summary Plan Description, the most recent determination
letter received from the Internal Revenue Service, the most recent Form 5500
Annual Report and all related trust agreements, insurance contracts and other
funding agreements which implement the Plan.
(h) All required reports and descriptions (including Form 5500 Annual
Reports, Summary Annual Reports and Summary Plan Descriptions) have been
timely filed and/or distributed appropriately with respect to the Plan.
(i) The Plan has not been partially or completely terminated.
(j) There have been no prohibited transactions (as defined in Section 406 of
ERISA and Section 4975 of the Code) with respect to the Plan, and, to the
knowledge of Starfish or any of the employees with responsibility for employee
benefits matters, no fiduciary (as defined in Section 3(21) of ERISA) has any
liability for breach of fiduciary duty or any other failure to act or comply
in connection with the administration, or investment of the assets, of the
Plan.
(k) No claim, action, suit, proceeding, hearing or investigation with
respect to the Plan, the administration of the Plan or the investment of the
assets of the Plan (other than routine claims for benefits) is pending or, to
the knowledge of Starfish or any of the employees with responsibility for
employees benefits matters, is threatened, and neither Starfish nor any of the
employees with responsibility for employees benefits matter has any knowledge
of any basis for any such claim, action, suit, proceeding, hearing or
investigation.
(l) Starfish has not incurred, and neither Starfish nor any of the employees
with responsibility for employee benefits matters has any reason to expect
that Starfish will incur, any liability, fine, penalties, taxes or charges
under ERISA, the Code or other applicable laws or regulations with respect to
the Plan.
(m) The Plan is not a Multi-employer Plan (as defined in Section 3(37) of
ERISA, and neither Starfish nor any member of the controlled group of
corporations (as defined in Section 1563 of the Code) that includes Starfish
contributes to, ever has contributed to, or ever has been required to
contribute to, any Multi-employer Plan or has any liability (including
withdrawal liability) under any Multi-employer Plan.
(n) Except as set forth on Schedule 3.9(n) of the Starfish Disclosure
Statement, the Welfare Plans (and any related trusts, insurance contracts, any
funding agreements that implement the Welfare Plans, any provider agreements
and any other agreements relating to the Welfare Plans) meet the requirements
of ERISA and the Code, if applicable, and neither Starfish nor any of the
employees with responsibility for employee benefits matters has no knowledge,
of any fact, situation, circumstance, condition or occurrence that the Welfare
Plans do not meet the requirements of ERISA or the Code.
A1-16
(o) All contributions or premiums (including all employer and employee
contributions or premiums) which are due have been paid to the Welfare Plans
and all contributions or premiums for any period ending on or before the
Closing Date which are not yet due have been paid to the Welfare Plans or
properly accrued and reflected on the financial statements of Starfish.
(p) Starfish has delivered to Motorola correct and complete copies of the
plan documents, summary plan descriptions, summary of material modifications,
a copy of the most recent Form 5500 Annual Report relating to the Welfare
Plans, and all related trust agreements, insurance contracts, provider
agreements, any funding agreements which implement the Welfare Plans and any
other agreements relating to the Welfare Plans.
(q) All required reports and descriptions (including Form 5500 Annual
Reports, summary Annual Reports, and Summary Plan Descriptions) have been
timely filed and/or distributed appropriately as required under ERISA and the
Code with respect to the Welfare Plans.
(r) Except as set forth on Schedule 3.9(r) of the Starfish Disclosure
Statement, with respect to the Welfare Plans, Starfish has complied with the
requirements of Section 4980B of the Code and Sections 601 through 609 of
ERISA, Sections 701 though 734 of ERISA and the applicable regulations and all
other applicable federal and state laws.
(s) There have been no prohibited transactions (as defined in Section 406 of
ERISA and Section 4975 of the Code) with respect to the Welfare Plans, and, to
the knowledge of Starfish and the employees with responsibility for employee
benefits matters, no fiduciary (as defined in Section 3(21) of ERISA) has any
liability for breach of fiduciary duty or any other failure to act or comply
in connection with the administration or investment of the assets of the
Welfare Plans.
(t) No claim, action, suit, proceeding, hearing or investigation with
respect to the Welfare Plans, the administration of the Welfare Plans or the
investment of the assets of the Welfare Plans (other than routine claims for
benefits) is pending, and neither Starfish nor any of the employees with
responsibility for employee benefits matters has knowledge of any basis for
any such claim, action suit, proceeding, hearing or investigation.
(u) Starfish has not incurred, and neither Starfish nor any of the employees
with responsibility for employee benefits matters has any reason to expect
that Starfish will incur, any liability, fines, penalties, taxes or charges
under ERISA, the Code or other applicable laws or regulations with respect to
the Welfare Plans.
(v) Starfish does not maintain or have an obligation to contribute to a
Welfare Plan that provides health, accident or life insurance benefits to
former employees, their spouses or dependents, other than in accordance with
Sections 601-609 of ERISA and Section 4980B of the Code.
(w) Starfish does not maintain or have an obligation to contribute to a
plan, program, policy or arrangement that provides severance benefits and the
transaction contemplated by this Agreement shall not result in any liability
to provide severance pay or severance benefits.
3.10 Bank Accounts and Receivables. Part 3.10 of the Starfish Disclosure
Schedule sets forth the names and locations of all banks, trusts, companies,
savings and loan associations, and other financial institutions at which
Starfish maintains accounts of any nature and the names of all persons
authorized to draw thereon or make withdrawals therefrom. The Starfish
Disclosure Schedule sets forth an accurate and complete breakdown and aging of
all accounts receivable, notes receivable, and other receivables of Starfish
as of March 31, 1998. Except as set forth on the Starfish Disclosure Schedule
all existing accounts receivable of Starfish (including those accounts
receivable reflected on the Starfish unaudited financial statements that have
not yet been collected and those accounts receivable that have arisen since
March 31, 1998 and have not yet been collected) represent valid obligations of
customers of Starfish arising from bona fide transactions entered into in the
ordinary course of business.
A1-17
3.11 Contracts.
(a) Part 3.11(a) of the Starfish Disclosure Schedule identifies each
material agreement (including without limitation each employment agreement and
each material license agreement, development agreement, manufacturing
agreement, distribution agreement, and OEM agreement) to which Starfish is a
party ("Material Contract").
(b) Except as set forth in Part 3.11(b) of the Starfish Disclosure Schedule,
(i) Starfish has no agreements, contracts or commitments that call for
prospective fixed and/or contingent payments or expenditures by or to
Starfish of more than Twenty-five Thousand Dollars ($25,000) other than
those entered into in the ordinary course of business concerning the sale
of products of Starfish;
(ii) Starfish has no purchase agreement, contract or commitment that
calls for fixed and/or contingent payments by Starfish that are in excess
of the normal, ordinary and usual requirements of the business of Starfish;
(iii) There is no outstanding sales contract, commitment or proposal
(including, without limitation, development projects) of Starfish that
Starfish currently expects to result either individually or in the
aggregate in any material loss to Starfish on a consolidated basis upon
completion or performance thereof;
(iv) Starfish has no outstanding agreements, contracts or commitments
with officers, employees, agents, consultants, advisors, salesmen, sales
representatives, distributors or dealers that are not cancelable by it on
notice of not longer than ninety (90) days and without liability, penalty
or premium exceeding Five Thousand Dollars ($5,000) in any single instance
or Twenty Five Thousand Dollars ($25,000) in the aggregate;
(v) Starfish has no currently effective collective bargaining or union
agreements, contracts or commitments;
(vi) Starfish is not restricted by agreement from competing with any
person or from carrying on its business anywhere in the world;
(vii) Starfish is under no liability or obligation, and no such
outstanding claim has been made, with respect to the return to Starfish of
inventory or merchandise in the possession of wholesalers, distributors,
retailers, or other customers, except such liabilities, obligations and
claims as, in the aggregate, do not exceed the reserves therefor set forth
in the Starfish Financial Statements;
(viii) Starfish has not guaranteed any obligations of other persons or
made any agreements to acquire or guarantee any obligations of other
Persons;
(ix) Starfish has no outstanding loan or advance to any Person; nor is it
party to any line of credit, standby financing, revolving credit or other
similar financing arrangement of any sort which would permit the borrowing
by Starfish of any sum not reflected in the Starfish Financial Statements;
and
(x) All material contracts, agreements and instruments to which Starfish
is a party are valid, binding, in full force and effect, and enforceable by
Starfish in accordance with their respective terms, subject to (i) laws of
general application relating to public policy, bankruptcy, insolvency and
the relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies. No such contract, agreement
or instrument contains any liquidated damages, penalty or similar
provision. To Starfish's knowledge, no party to any such contract,
agreement or instrument intends to cancel, withdraw, modify or amend such
contract, agreement or instrument.
(c) Part 3.11(c) of the Starfish Disclosure Schedule describes all
agreements pursuant to which Starfish has agreed to manufacture for or supply
to any third party any Starfish Products or components thereto requiring, or
expected to require, payments of Fifty Thousand Dollars ($50,000) or more over
the life of any such agreement. Part 3.11(c) of the Starfish Disclosure
Schedule also lists each vendor which is the sole source for any product or
component included in the Starfish Products which Starfish believes is not
readily available from other sources.
A1-18
(d) Starfish has delivered to Motorola accurate and complete copies of all
Material Contracts, including all amendments thereto. Starfish has not entered
into any material oral contracts. Each Material Contract is valid and in full
force and effect, and, to the best of the knowledge of Starfish, is
enforceable by Starfish in accordance with its terms, subject to (i) laws of
general application relating to public policy, bankruptcy, insolvency and the
relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
(e) Except as set forth in Part 3.11(e) of the Disclosure Schedule:
(i) Starfish has not violated or breached, or committed any default
under, any Material Contract, and, to Starfish's knowledge, no other Person
has violated or breached, or committed any default under, any Material
Contract except as in any such case where such default would not have a
Material Adverse Effect; and
(ii) to Starfish's knowledge, no event has occurred, and no circumstance
or condition exists, that (with or without notice or lapse of time) will,
or could reasonably be expected to, (A) result in a violation or breach of
any of the provisions of any Material Contract, (B) give any Person the
right to declare default or exercise any remedy under any Material
Contract, (C) give any Person the right to accelerate the maturity or
performance of any Material Contract or (D) give any Person the right to
cancel, terminate or modify any Material Contract except to the extent that
any of the foregoing would not have a Material Adverse Effect.
(f) Except as set forth in Part 3.11(f) of the Starfish Disclosure
Statement, none of the Material Contracts contains any provision which would
require the consent of third parties to the Merger or which would be altered
in any material respect as a result of the Merger.
3.12 Orders, Commitments and Returns. All accepted and unfilled orders
entered into by Starfish for the sale, license, or lease or other disposition
by Starfish of the Starfish Products, and all agreements, contracts, or
commitments for the purchase of supplies by Starfish, were made in the
ordinary course of business. To Starfish's knowledge, no outstanding material
purchase or outstanding lease commitment of Starfish is in excess of the
normal, ordinary and usual requirements of its business or was made at a price
(on both a per unit and aggregate basis) in excess of the current market price
at the time made, or contains terms and conditions materially more onerous to
Starfish than those usual and customary in the industry.
3.13 Compliance with Law. Starfish is in compliance with all applicable laws
and regulations in all material respects. Neither Starfish, nor to Starfish's
knowledge, any of its employees has directly or indirectly paid or delivered
any fee, commission or other sum of money or item of property, however
characterized, to any finder, agent, government official or other party in the
United States or any other country, that was or is in violation of any
federal, state, or local statute or law or of any statute or law of any other
country having jurisdiction. Starfish has not participated directly or
indirectly in any boycotts or other similar practices affecting any of its
customers. Starfish has complied in all material respects at all times with
any and all applicable federal, state and foreign laws, rules, regulations,
proclamations and orders relating to the importation or exportation of its
products. All licenses, franchises, permits and other governmental
authorizations held by Starfish which are material to its business are valid
and sufficient in all respects for the business presently carried on by
Starfish.
3.14 Labor Difficulties; No Discrimination.
(a) Starfish is not engaged in any unfair labor practice and is not in
violation of any applicable laws relating to employment and employment
practices, terms and conditions of employment, and wages and hours.
(b) There is no unfair labor practice complaint against Starfish actually
pending or, to Starfish's knowledge, threatened before the National Labor
Relations Board or any comparable foreign governmental or quasi-governmental
authority.
(c) There is no strike, labor dispute, slowdown, or stoppage actually
pending or, to Starfish's knowledge, threatened against Starfish.
A1-19
(d) No union representation question exists with respect to the employees of
Starfish and, to Starfish's knowledge, no union organizing activities are
taking place.
(e) No grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is pending and, to Starfish's knowledge, no
claims therefor exist.
(f) No collective bargaining agreement that is binding on Starfish restricts
it from relocating or closing any of its operations.
(g) Starfish has not experienced any work stoppage or other labor
difficulty.
(h) There is not presently, and there has not been within the previous three
(3) years, any claim against Starfish based on actual or alleged wrongful
termination or on actual or alleged race, age, sex, disability or other
harassment or discrimination, or similar tortious conduct, nor to Starfish's
knowledge, is there any reasonable basis for any such claim.
(i) Starfish is not aware of any key Starfish employee who intends to
terminate his or her employment with Starfish.
3.15 Trade Regulation. Starfish has not terminated its relationship with or
refused to ship Starfish Products to any dealer, distributor, OEM, third party
marketing entity or customer which had theretofore paid or been obligated to
pay Starfish in excess of Fifty Thousand Dollars ($50,000) over any
consecutive twelve (12) month period. The prices charged by Starfish in
connection with the marketing or sale of any products or services have been in
compliance in all material respects with all applicable laws and regulations.
No claims against Starfish have been communicated or threatened in writing to
Starfish with respect to wrongful termination of any dealer, distributor or
any other marketing entity, discriminatory pricing, price fixing, unfair
competition, false advertising, or any other violation of any laws or
regulations relating to anti-competitive practices or unfair trade practices
of any kind and, to Starfish's knowledge, no specific situation, set of facts,
or occurrence provides a reasonable basis for any such claim.
3.16 Insider Transactions. No Affiliate of Starfish has any interest in (i)
any equipment or other material property, real or personal, tangible or
intangible, including, without limitation, any proprietary asset, used in
connection with or pertaining to the business of Starfish or (ii) to
Starfish's knowledge, any creditor, supplier, customer, manufacturer, agent,
representative, or distributor of products of Starfish; provided, however,
that no such Affiliate or other person shall be deemed to have such an
interest solely by virtue of (a) the ownership of less than one percent (1%)
of the outstanding stock or debt securities of any publicly-held company whose
stock or debt securities are traded on a recognized stock exchange or quoted
on Nasdaq, or (b) such person's status as a general or limited partner of a
venture capital or similar fund, which fund is also a holder of the securities
of such creditor, supplier, customer, manufacturer, agent, representative or
distributor.
3.17 Employees, Independent Contractors and Consultants. The Starfish
Disclosure Schedule lists all currently effective written or, to Starfish's
knowledge, oral consulting, independent contractor and/or employment
agreements and other material agreements concluded with individual employees,
independent contractors or consultants to which Starfish is a party other than
those terminable at will or within thirty (30) days. If oral, Part 3.17 of the
Starfish Disclosure Schedule also contains a brief summary of such agreements.
True and correct copies of all such written agreements have been provided to
Motorola or its representatives. All salaries and wages paid by Starfish are
in material compliance, both individually and in the aggregate, with
applicable foreign, federal, state and local laws. Part 3.17 of the Starfish
Disclosure Schedule lists (i) the names of all persons currently employed by
Starfish and the salaries and other compensation arrangements (bonus, deferred
compensation, etc.) for each such person. Starfish's aggregate consolidated
accrued vacation and severance pay as of March 31, 1998 was approximately Two
Hundred and Fifty Thousand Dollars ($250,000).
A1-20
3.18 Insurance. Part 3.18 of the Starfish Disclosure Schedule contains a
list of the principal policies of fire, liability and other forms of insurance
held by Starfish. Each such policy is in full force and effect. Starfish is
not in default with respect to its obligations under any insurance policy
maintained by it, and Starfish has not been denied insurance coverage. To
Starfish's knowledge, the insurance coverage of Starfish is customary for
corporations of similar size engaged in similar lines of business. Except as
set forth on Part 3.18 of the Starfish Disclosure Schedule, Starfish does not
have any self-insurance or co-insurance programs, and the reserves set forth
on the balance sheet included in the Starfish unaudited financial statements
are adequate to cover all anticipated liabilities with respect to any such
self-insurance or co-insurance programs.
3.19 Litigation. There are no actions, suits, proceedings, orders,
investigations or claims pending or, to the best of the Starfish's knowledge,
threatened against Starfish (or to the best of Starfish's knowledge, pending
or threatened against or affecting any of the officers, directors or employees
of Starfish with respect to Starfish businesses or proposed business
activities), or pending or threatened by Starfish against any third party, at
law or in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality (including, without limitation, any
actions, suit, proceedings or investigations with respect to the transactions
contemplated by this Agreement); nor has there been any such actions, suits,
proceedings, orders, investigations or claims pending against or affecting
Starfish during the past three years; Starfish is not subject to any
arbitration proceedings under collective bargaining agreements or otherwise
or, to the best of Starfish's knowledge, any governmental investigations or
inquiries; and, to the best of Starfish's knowledge, there is no basis for any
of the foregoing. Starfish is not subject to any judgment, order or decree of
any court or other governmental agency, and Starfish has not received any
opinion or memorandum or legal advice from legal counsel to the effect that it
is exposed, from a legal standpoint, to any liability or disadvantage which
may have a material adverse effect on the financial condition or operations of
Starfish taken as a whole.
3.20 Section 341(f)(2). Starfish has not, with regard to any property or
assets held, acquired or to be acquired by it, at any time, filed a consent to
the application of Section 341(f)(2) of the Code nor will any such consent be
filed before the Closing.
3.21 Compliance with Environmental Requirements. For purposes of this
Agreement, the term "Environmental, Safety and Health Requirements" shall mean
all federal, state, local and foreign statutes, regulations, ordinances and
other provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and all
common law, in each case concerning public health and safety, worker health
and safety and pollution or protection of the environment (including, without
limitation, all those relating to the presence, use, production, generation,
handling, transport, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, Release, threatened Release, control or
cleanup of any hazardous or otherwise regulated materials, substances or
wastes, chemical substances or mixtures, pesticides, pollutants, contaminants,
toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation); "Release" shall have the meaning set forth in
CERCLA (as defined below); and "Environmental Lien" shall mean any Lien,
whether recorded or unrecorded, in favor of any governmental entity, relating
to any liability of Starfish or any Subsidiary arising under any Environmental
and Safety Requirements.
(a) Except as set forth in Part 3.21 of the Starfish Disclosure Schedule:
(i) Starfish has complied with and is currently in compliance with all
Environmental and Safety Requirements, and Starfish has not received any
oral or written notice, report or information regarding any liabilities or
threatened liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise) or any corrective, investigatory or remedial obligations
arising under Environmental and Safety Requirements which relate to
Starfish or any of its properties or facilities.
(ii) Without limiting the generality of the foregoing, Starfish has
obtained and complied with, and is currently in compliance with, all
permits, licenses and other authorizations or notice or warning
requirements, including but not limited to the requirements under
Proposition 65 that apply to its California Operations that may be required
pursuant to any Environmental and Safety Requirements for the occupancy of
its properties or facilities or the operation of its businesses,
A1-21
(b) Neither this Agreement nor the consummation of the transactions
contemplated by this Agreement shall impose any obligations on Starfish or
otherwise for site investigation or cleanup, or notification to or consent of
any government agencies or third parties under any Environmental and Safety
Requirements (including, without limitation, any so called "transaction-
triggered" or "responsible property transfer" laws and regulations).
(c) None of the following exists at any property or facility owned, occupied
or operated by Starfish:
(i) underground storage tanks or surface impoundments;
(ii) asbestos-containing materials in any form or condition; or
(iii) materials or equipment containing polychlorinated biphenyls.
(d) Starfish has not treated, stored, disposed of, arranged for or permitted
the disposal of, transported, handled or Released any substance (including,
without limitation, any hazardous chemical or substance) or owned, occupied or
operated any facility or property, so as to give rise to liabilities of
Starfish or its Subsidiaries for response costs, natural resource damages or
attorneys fees pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), as amended, or any other
Environmental and Safety Requirements.
(e) Without limiting the generality of the foregoing, no facts, events or
conditions relating to the past or present properties, facilities, leased
space or operations of Starfish shall prevent, hinder or limit continued
compliance with Environmental and Safety Requirements, give rise to any
corrective, investigatory or remedial obligations pursuant to Environmental
and Safety Requirements or give rise to any other liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise) pursuant to
Environmental and Safety Requirements (including, without limitation, those
liabilities, including but not limited to third party liabilities, relating to
onsite or offsite Releases or threatened Releases of hazardous materials,
substances or wastes, personal injury, property damage or natural resources
damage .
(f) Starfish has not, either expressly or by operation of law, assumed or
undertaken any liability or corrective, investigatory or remedial obligation
of any other Person relating to any Environmental and Safety Requirements.
(g) No Environmental Lien has attached to any property owned, leased or
operated by Starfish.
3.22 Corporate Documents. Starfish has furnished to Motorola for its
examination: (i) copies of its articles of incorporation and bylaws, (ii) its
minute book containing all records required to be set forth of all
proceedings, consents, actions, and meetings of the shareholders, the board of
directors and any committees thereof, (iii) all material permits, orders, and
consents issued by any regulatory agency with respect to Starfish, or any
securities of Starfish, and all applications for such permits, orders, and
consents, and (iv) the stock transfer books of Starfish setting forth all
transfers of any capital stock. The corporate minute books, stock certificate
books, stock registers and other corporate records of Starfish are complete
and accurate in all respects, and the signatures appearing on all documents
contained therein are the true signatures of the persons purporting to have
signed the same. All actions reflected in such books and records were duly and
validly taken in compliance in all material respects with the laws of the
applicable jurisdiction.
3.23 No Brokers. Neither Starfish nor, to Starfish's knowledge, any Starfish
shareholder is obligated for the payment of fees or expenses of any broker or
finder in connection with the origin, negotiation or execution of this
Agreement or in connection with any transaction contemplated hereby.
3.24 Disclosure. The statements by Starfish contained in this Agreement, the
exhibits and schedules thereto, and the certificates or documents required to
be delivered by Starfish to Motorola or Sub under this Agreement, taken as a
whole, do not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were
made.
A1-22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MOTOROLA AND SUB.
Motorola and Sub jointly and severally represent and warrant to Starfish
that:
4.1 Organization and Good Standing. Motorola and Sub are corporations duly
organized, validly existing and in good standing under the laws of their
respective states of incorporation, and have full power and authority to carry
on their businesses as now conducted.
4.2 Capital Structure. As of the date hereof the authorized capital stock of
Motorola consists of one billion, four hundred million (1,400,000,000) shares
of Motorola Common Stock, Three Dollars ($3.00) par value per share, and five
hundred thousand (500,000) shares of Motorola Preferred Stock, One Hundred
Dollars ($100) par value per share. At the close of business on January 31,
1998, 597,503,874 shares of Motorola Common Stock were outstanding and no
shares of Motorola Preferred Stock were outstanding. The shares of Motorola
Common Stock issuable in connection with the Merger are duly authorized and
reserved for issuance and, when issued in accordance with the terms of this
Agreement and Agreement of Merger, will be validly issued, fully paid,
nonassessable and free of preemptive rights. As of the date hereof, the
authorized capital stock of Sub consists of one thousand (1,000) shares of
Common Stock, no par value, all of which are validly issued, fully paid and
nonassessable and owned by Motorola.
4.3 Power, Authorization and Validity. Motorola and Sub have the right,
power, legal capacity and authority to enter into and perform their respective
obligations under this Agreement and the other Transaction Documents to which
they are a party. The execution and delivery of this Agreement and the other
Transaction Documents have been duly and validly approved and authorized by
the respective boards of directors of Motorola and Sub and by Motorola as the
sole shareholder of Sub. No authorization or approval, governmental or
otherwise, is necessary in order to enable Motorola and Sub to enter into and
to perform the terms of this Agreement or the other Transaction Documents on
their parts to be performed, except for (i) the filing of the Merger Agreement
and all required officers' certificates with the Secretary of State of the
State of California and appropriate documents with the relevant authorities of
other states in which Motorola is qualified to do business, (ii) filings under
applicable securities laws, (iii) the termination of the waiting period under
the HSR Act and (iv) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the laws of
any foreign country in which Motorola or any of Motorola's subsidiaries
conducts any business or owns any property or assets. This Agreement is, and
the other Transaction Documents when executed and delivered by Motorola and/or
Sub shall be, the valid and binding obligations of Motorola and Sub
enforceable in accordance with their respective terms, subject to (i) laws of
general application relating to bankruptcy, insolvency, and the relief of
debtors and (ii) rules of law governing specific performance, injunctive
relief and other equitable remedies.
4.4 No Violation of Existing Agreements. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated herein
will conflict with, or result in a material breach or violation of, any
provision of Motorola's and or Sub's respective articles of incorporation, and
bylaws as currently in effect, any instrument or contract to which Motorola or
Sub is a party or by which any such party is bound, or any federal, state or
local judgment, writ, decree, order, statute, rule or regulation applicable to
any such party. Neither the execution and delivery of this Agreement, nor any
Agreement attached hereto as an Exhibit, nor the consummation of the
transactions contemplated herein or therein will have a Material Adverse
Effect on the operations, assets, or financial condition of Motorola.
4.5 SEC Documents. Motorola has made available to Starfish true, accurate
and complete copies of Motorola's most recent Proxy Statement and reports on
Forms 10-K, 10-Q and any report on Form 8-K filed since the most recent 10-Q
(collectively, the "SEC Documents"). As of their respective filing dates, the
SEC Documents complied in all material respects with the requirements of the
Exchange Act or the Securities Act, and taken together, the SEC Documents
contain no untrue statement of a material fact and did not omit to state a
A1-23
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 or superseded by a
subsequently filed SEC Document. The financial statements of Motorola included
in the Motorola SEC Documents (the "Motorola Financial Statements") comply as
to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with GAAP (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC) and fairly present the consolidated financial position of Motorola
and its consolidated subsidiaries at the dates thereof and the consolidated
results of their operations and changes in financial position for the periods
then ended (subject, in the case of unaudited statements, to normal, recurring
audit adjustments, provided that the notes and accounts receivable are
collectible in the amounts shown thereon and inventories are not subject to
write-down, except in either case in an amount not material or for which
Motorola has provided adequate reserves). There has been no change in
Motorola's accounting policies or estimates except as described in the notes
to the Motorola Financial Statements.
4.6 Compliance with Other Instruments and Laws. Motorola is not in violation
of any provisions of its certificate of incorporation or bylaws as currently
in effect or any federal, state or local judgment, writ, decree, or order
applicable to Motorola.
4.7 Litigation. There is no suit, action, proceeding, claim or investigation
pending or, to Motorola's knowledge, threatened against Motorola and Sub
before any court or administrative agency or which questions or challenges the
validity of this Agreement and which is not set forth in the SEC Documents (as
defined below) which could have a Material Adverse Effect on the operations,
assets or financial condition of Motorola or Sub.
4.8 Disclosure. The statements by Motorola and Sub contained in this
Agreement, the exhibits thereto, and the certificates and documents required
to be delivered by Motorola or Sub to Starfish under this Agreement, taken as
a whole, do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements contained
herein and therein not misleading in light of the circumstances under which
such statements were made.
ARTICLE V
PRECLOSING COVENANTS OF STARFISH
5.1 Material Consents. Starfish shall, to the extent requested by Motorola,
use reasonable commercial efforts to obtain any and all consents necessary for
the assumption by the Surviving Corporation of the Material Contracts.
5.2 Advice of Changes. Starfish shall promptly advise Motorola in writing
(i) of any event occurring subsequent to the date of this Agreement which
would render any representation or warranty of Starfish contained in this
Agreement, if made on or as of the date of such event, untrue or inaccurate in
any material and adverse respect and (ii) of any Material Adverse Change in
Starfish's business or financial condition, taken as a whole.
5.3 Conduct Of Business. Until the Closing, Starfish will continue to
conduct its business and maintain its business relationships in the ordinary
and usual course and will not, except as set forth in the Starfish Disclosure
Schedule or with the prior written consent of Motorola, which consent will not
be unreasonably withheld,
(a) borrow any additional money which borrowings exceed in the aggregate
One Hundred Thousand Dollars ($100,000);
(b) incur any liability other than in the ordinary and usual course of
business or in connection with the performance or consummation of this
Agreement;
(c) incur or commit to incur any capital expenditures in excess of Two
Hundred Thousand Dollars ($200,000) in the aggregate or as to any
individual matter in excess of Fifty Thousand Dollars ($50,000) other than
capital expenditures and commitments made in the usual and ordinary course
of its business, consistent in amount with past practice;
A1-24
(d) lease, license, sell, transfer, encumber or permit to be encumbered
any asset, intellectual property right or other property associated with
the business of Starfish (including sales or transfers to Affiliates of
Starfish), except for licenses granted and products sold in the usual and
ordinary course of business and except for cash applied in payment of
Starfish's liabilities in the usual and ordinary course of its business;
(e) dispose of any of its assets, except inventory in the regular and
ordinary course of business;
(f) enter into any lease or contract for the purchase or sale of any
property, real or personal, except in the ordinary course of business;
(g) fail to maintain its equipment and other assets in good working
condition and repair according to the standards it has maintained up to the
date of this Agreement, subject only to ordinary wear and tear;
(h) pay any bonus or special remuneration (excluding sales commissions
and bonuses paid pursuant to existing arrangements in the ordinary course
of business) to any officer or employee, including any amounts for accrued
but unpaid bonuses, or increase the salary of any officer or employee;
(i) change its accounting methods;
(j) declare, set aside or pay any cash or stock dividend or other
distribution in respect of capital, or redeem or otherwise acquire any of
its capital stock other than repurchases of Starfish Capital Stock at
original prices from former employees or consultants pursuant to written
agreements providing for their repurchase in the event of termination of
employment or consultancy;
(k) amend or terminate any Material Contract, agreement or license to
which it is a party except in the ordinary course of business;
(l) enter into any material contract except in the ordinary course of
business and consistent with past practice;
(m) loan any amount to any person or entity, or guaranty or act as a
surety for any obligation;
(n) waive or release any right or claim, except in the ordinary course of
business;
(o) issue or sell any shares of its capital stock of any class or any
other of its securities, or issue or create any warrants, obligations,
subscriptions, options (other than options granted to new employees hired
in the ordinary course of business not to exceed options to purchase an
aggregate of 200,000 shares of Starfish Common Stock), convertible
securities, or other commitments to issue shares of capital stock, except
in connection with the exercise of rights existing prior to the date
hereof;
(p) split or combine the outstanding shares of its capital stock of any
class or enter into any recapitalization affecting the number of
outstanding shares of its capital stock of any class or affecting any other
of its securities;
(q) merge, consolidate or reorganize with any entity;
(r) amend its articles of incorporation or bylaws;
(s) make or change any election, change any annual accounting period,
adopt or change any accounting method, file any amended tax return, enter
into any closing agreement, settle any tax claim or assessment relating to
Starfish, surrender any right to claim refund of taxes, consent to any
extension or waiver of the limitation period applicable to any tax claim or
assessment relating to Starfish, or take any other action or omit to take
any action, if any such election, adoption, change, amendment, agreement,
settlement, surrender, consent or other action or omission would have the
effect of increasing the tax liability of Starfish or Motorola;
(t) Adopt, amend, modify, or terminate any plan, program, policy or
arrangement subject to Section 3.9, including the Plan or any Welfare Plan,
other than as required under Section 12.3 of this Agreement.
A1-25
(u) do anything that is not contemplated in this Agreement or would cause
there to be a Material Adverse Change in the Starfish Financial Statements
(with such Starfish Financial Statements analyzed as if they had been
prepared according to GAAP, and including but not limited to cash
distributions or material decreases in the net assets of Starfish), except
as would occur in the ordinary course of Starfish's business, between the
date of the Starfish Financial Statements and the Closing Date; or
(v) agree to do any of the things described in the preceding clauses
Section 5.3(a) through (u).
5.4 Risk Of Loss. Except as otherwise provided in this Agreement or to the
extent caused by Motorola or Sub, until the Closing, all risk of loss, damage
or destruction to Starfish's assets shall be borne by Starfish.
5.5 Access To Information. Until the Closing, Starfish shall allow Motorola
and its agents free access upon reasonable notice and during normal working
hours to its files, books, records, and offices, including, without
limitation, any and all information relating to taxes, commitments, contracts,
leases, licenses, and personal property and financial condition. Until the
Closing, Starfish shall cause its accountants to cooperate with Motorola and
its agents in making available all financial information requested, including
without limitation the right to examine all working papers pertaining to all
financial statements prepared or audited by such accountants.
5.6 Satisfaction of Conditions Precedent. Starfish will use its Best Efforts
to satisfy or cause to be satisfied all the conditions precedent which are set
forth in Section 9, and Starfish will use its Best Efforts to cause the
transactions contemplated in this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings (including the HSR
application) with, and give all notices to, third parties which may be
necessary or reasonably required on its part in order to effect the
transactions contemplated herein.
5.7 Other Negotiations. Between the date hereof and the date this Agreement
is terminated pursuant to Section 10 hereof (the "Expiration Date"), Starfish
will not (and it will use its Best Efforts to assure that its officers,
directors, employees, agents and affiliates do not on its behalf) take any
action to solicit, initiate, seek, encourage or support any inquiry, proposal
or offer from, furnish any information to, or participate in any negotiations
with, any corporation, partnership, person or other entity or group (other
than discussions with Motorola) regarding any acquisition of Starfish, any
merger or consolidation with or involving Starfish, or any acquisition of any
material portion of the stock or assets of Starfish. Starfish agrees that any
such negotiations in progress as of the date hereof will be terminated or
suspended during such period. In no event will Starfish accept or enter into
an agreement concerning any such third party transaction. Starfish represents
and warrants that it has the legal right to terminate or suspend any such
pending negotiations and agrees to indemnify Motorola, its representatives and
agents from and against any claims by any party to such negotiations based
upon or arising out of the discussion or any consummation of the Acquisition
as contemplated in this Agreement.
5.8 Registration Statement; Proxy Statement; Prospectus. The information
supplied by Starfish for inclusion in the registration statement on Form S-4
pursuant to which the shares of Motorola Common Stock issued in the Merger
will be registered with the SEC (the "Registration Statement") shall not at
the time the Registration Statement 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 in the Registration Statement or necessary in order to
make the statements in the Registration Statement, in light of the
circumstances in which such statements were made, not misleading. The
information supplied by Starfish for inclusion in the proxy
statement/prospectus (the "Proxy Statement") to be sent to the Starfish
shareholders in connection with the meeting of Starfish's shareholders to
consider approval of this Agreement and the Merger (the "Starfish
Shareholders' Meeting") shall not, on the date the Proxy Statement is first
mailed to shareholders of Starfish, at the time of the Starfish Shareholder's
Meeting and on the Effective Date, contain any statement which, at such time
and in light of the circumstances under which it was made, 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 in the Proxy Statement 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 Starfish Shareholders' Meeting which has become false or
misleading. If, at any time prior to the Effective Date, Starfish should
discover any event or fact relating to Starfish or any of its Affiliates,
officers or directors which would be required to be set forth in an amendment
to the Registration Statement or a supplement to the Proxy Statement, Starfish
shall promptly inform Motorola of such event or fact.
A1-26
ARTICLE VI
PRECLOSING AND OTHER COVENANTS OF MOTOROLA AND SUB
6.1 Material Consents. Motorola shall provide reasonable assistance and
cooperation to Starfish in obtaining the Material Consents.
6.2 Advice of Changes. Motorola and Sub will promptly advise Starfish in
writing of (i) any event occurring subsequent to the date of this Agreement
which would render any representation or warranty of Motorola or Sub contained
in this Agreement, if made on or as of the date of such event or the Closing
Date, untrue or inaccurate in any material respect and (ii) any Material
Adverse Change in Motorola's or Sub's business or financial condition, taken
as a whole.
6.3 Reservation of Motorola Common Stock. Motorola shall reserve for
issuance, out of its authorized but unissued capital stock, that number of
shares of Motorola Common Stock (as adjusted for any reclassification, split-
up, stock dividend or stock combination occurring between the date of this
Agreement and the Effective Date) as are issuable upon or after consummation
of the Merger.
6.4 Satisfaction of Conditions Precedent. Motorola and Sub will use their
respective Best Efforts to satisfy or cause to be satisfied all the conditions
precedent which are set forth in Section 8, and Motorola and Sub will use
their respective Best Efforts to cause the transactions contemplated herein to
be consummated, and, without limiting the generality of the foregoing, to
obtain all consents and authorizations of third parties and to make all
filings (including the HSR Act application) with, and give all notices to,
third parties which may be necessary or reasonably required on its part in
order to effect the transactions contemplated hereby.
6.5 Registration Statement; Proxy Statement; Prospectus. The information
supplied by Motorola for inclusion in the Registration Statement shall not at
the time the Registration Statement 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 in the Registration Statement or necessary in order to
make the statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading. The information
supplied by Motorola for inclusion in the Proxy Statement shall not, at the
time of the Starfish Shareholders Meeting and on the Effective Date, contain
any statement which, at such time and in light of the circumstances under
which it was made, 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 in the Proxy Statement 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 Starfish Shareholders'
Meeting which has become false or misleading. If at any time prior to the
Effective Date Motorola should discover any event or fact relating to Motorola
or any of its Affiliates, officers or directors which would be required to be
set forth in an amendment to the Registration Statement or a supplement to the
Proxy Statement, Motorola shall promptly inform Starfish of such event or
fact.
6.6 S-8 Registration. Motorola shall use its Best Efforts to cause the
shares of Motorola Common Stock issuable upon the exercise of the Starfish
Options to be subject to Motorola's existing Form S-8 (or if not, file a new
Form S-8 within thirty days of the Effective Time), and Motorola shall use its
Best Efforts to maintain the effectiveness of such registration statement (and
maintain the current status of the prospectus contained therein) for so long
as such Exchanged Options remain outstanding.
6.7 NYSE Listing. Motorola shall use its Best Efforts to cause the Motorola
Common Stock to be issued in the Merger to be approved for listing on the New
York Stock Exchange, subject to official notice of issuance, prior to the
Closing Date.
A1-27
ARTICLE VII
MUTUAL COVENANTS
7.1 Confidentiality. Each party acknowledges that in the course of the
performance of this Agreement, it may obtain the Confidential Information of
the other party. The party receiving such Confidential Information (the
"Receiving Party") from the party disclosing such confidential information
(the "Disclosing Party") shall, at all times, both during the term of this
Agreement and thereafter, keep in confidence and trust all of the Disclosing
Party's Confidential Information received by it. The Receiving Party shall not
use the Confidential Information of the Disclosing Party other than as
expressly permitted under the terms of this Agreement or by a separate written
agreement. The Receiving Party shall take all reasonable steps to prevent
unauthorized disclosure or use of the Disclosing Party's Confidential
Information and to prevent it from falling into the public domain or into the
possession of unauthorized persons. The Receiving Party shall not disclose
Confidential Information of the Disclosing Party to any person or entity other
than its officers or employees (or outside legal, financial or accounting
advisors) who need access to such Confidential Information in order to effect
the intent of this Agreement and who have entered into confidentiality
agreements with such person's employer or who are subject to ethical
restrictions on disclosure which protects the Confidential Information of the
Disclosing Party. The Receiving Party shall immediately give notice to the
Disclosing Party of any unauthorized use or disclosure of Disclosing Party's
Confidential Information. The Receiving Party agrees to assist the Disclosing
Party to remedy such unauthorized use or disclosure of its Confidential
Information. These obligations shall not apply to the extent that Confidential
Information includes information which:
(a) is already known to the Receiving Party at the time of disclosure,
which knowledge the Receiving Party shall have the burden of proving by
reference to written or electronic records in existence at the time of
disclosure;
(b) is, or through no act or failure to act of the Receiving Party
becomes, publicly known;
(c) is received by the Receiving Party from a third party without
restriction on disclosure (although this exception shall not apply if such
third party is itself violating a confidentiality obligation by making such
disclosure);
(d) is independently developed by the Receiving Party without reference
to the Confidential Information of the Disclosing Party, which independent
development the Receiving Party will have the burden of proving;
(e) is approved for release by written authorization of the Disclosing
Party; or
(f) is required to be disclosed by a Government Body to further the
objectives of this Agreement or by a proper order of a court of competent
jurisdiction; provided, however, that the Receiving Party will use its best
efforts to minimize such disclosure and will consult with and assist the
Disclosing Party in obtaining a protective order prior to such disclosure.
7.2 No Public Announcement. The parties shall make no public announcement
concerning this Agreement, their discussions or any other memos, letters or
agreements between the parties relating to the Merger until such time as they
agree in writing to the contents of a mutually satisfactory press release.
Either of the parties, but only after reasonable consultation with the other,
may make disclosure if required under applicable law.
7.3 Regulatory Filings; Consents; Best Efforts. Subject to the terms and
conditions of this Agreement, Starfish and Motorola shall use their respective
Best Efforts to (i) make all necessary filings with respect to the Merger and
this Agreement under the Securities Act, the Exchange Act and applicable blue
sky or similar securities laws and obtain required approvals and clearances
with respect thereto and supply all additional information requested in
connection therewith (ii) make other appropriate filings with federal, state
or local governmental bodies or applicable foreign governmental agencies and
obtain required approvals and clearances with respect thereto and supply all
additional information requested in connection therewith (iii) obtain all
consents, waivers, approvals, authorizations and orders required in connection
with the authorization, execution
A1-28
and delivery of this Agreement and the consummation of the Merger and (iv)
take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement as promptly as
practicable, with the objective of completing the Closing no later than August
30, 1998.
7.4 HSR Act Application. As soon as practicable after the public
announcement of this Agreement, each of Motorola and Starfish shall make or
cause to be made any and all required filings pursuant to the HSR Act, with
respect to the transactions contemplated herein and in the Transaction
Documents. Each of Motorola and Starfish shall use its respective best efforts
to respond as promptly as practicable to all inquiries received from the
applicable governmental agencies or committees for additional information or
documentation. Each of Motorola and Starfish shall notify the other of all
correspondence, filings, request or communications between such party or its
representatives on the one hand, and the applicable Governmental Body on the
other hand, with respect to the transactions contemplated herein and in the
Transaction Documents. Each of Motorola and Starfish shall furnish the other
with such necessary information and reasonable assistance as such other
parties may request in connection with its preparation of all required filings
under the HSR Act.
7.5 Proxy Statement; Prospectus; Registration Statement
(a) As promptly as practicable after the execution of this Agreement,
Motorola and Starfish shall prepare and file with the SEC the Proxy Statement,
and Motorola shall prepare and file with the SEC the Registration Statement,
in which the Proxy Statement will be included. Each of Motorola and Starfish
shall use its respective Best Efforts to cause the Registration Statement to
become effective as soon after such filing as practicable.
(b) Motorola and Starfish shall make all necessary filings with respect to
the Merger under the Securities Act and the Exchange Act and applicable state
blue sky laws and the rules and regulations thereunder.
7.6 Tax Matters. All parties intend the Merger to be a tax-free
reorganization within the meaning of Section 368(a) of the Code, and agree to
use their respective Best Efforts to take all action required or appropriate
to facilitate such tax treatment.
7.7 Further Assurances. Prior to and following the Closing, each party
agrees to cooperate fully with the other parties and to execute such further
instruments, documents and agreements, and to give such further written
assurances, as may be reasonably requested by any other party to evidence and
reflect better the transactions described and contemplated herein and to carry
into effect the intents and purposes of this Agreement.
ARTICLE VIII
CONDITIONS OF STARFISH'S OBLIGATIONS
The obligations of Starfish to close the transactions contemplated in this
Agreement are subject to the fulfillment or satisfaction on and as of the
Closing of each of the following conditions (any one or more of which may be
waived by Starfish, but only in a writing signed by Starfish):
8.1 Accuracy of Representations and Warranties. The representations and
warranties of Motorola and Sub set forth in Section 4 and in any certificate
delivered at the Closing by Motorola or Sub in connection with this Agreement
shall be true and correct in all material respects when made and on and as of
the Closing with the same force and effect as if such representations and
warranties had been made at the Closing, and Starfish shall receive a
certificate to such effect signed by an officer of Motorola and Sub,
respectively.
8.2 Covenants. Motorola and Sub shall have performed and complied in all
material respects with all of their covenants contained in Article VI and
Article VII on or before the Closing, and Starfish shall receive a certificate
from Motorola and Sub to such effect signed by an officer of Motorola and Sub,
respectively.
A1-29
8.3 Authorizations. Starfish shall have received from Motorola and Sub
written evidence that the execution, delivery and performance of Motorola and
Sub's obligations under this Agreement have been duly and validly approved and
authorized by the Board of Directors of Motorola and Sub, respectively, and
the shareholder of Sub.
8.4 Opinion of Motorola's Counsel. Starfish shall receive from Motorola in-
house counsel an opinion in form and substance reasonably satisfactory to
counsel to Starfish ("Opinion of Counsel to Motorola").
8.5 Government Consents. There shall have been obtained at or prior to the
date of Closing such permits or authorizations, and there shall have been
taken such other action, as may be required by any regulatory authority having
jurisdiction over the parties and the subject matter and the actions herein
proposed to be taken.
8.6 Termination of HSR Waiting Period. The waiting period under the HSR Act
shall have terminated.
8.7 Listing of Motorola Common. The shares of Motorola Common Stock to be
issued in the Merger pursuant to this Agreement shall have been approved for
listing (subject to notice of issuance) on the New York Stock Exchange.
8.8 Tax Opinion. Except as contemplated by Section 2.7 of this Agreement,
Starfish shall have received a written opinion of Starfish's legal counsel in
form and substance reasonably satisfactory to it, to the effect that the
Merger will constitute a reorganization within the meaning of Section 368(a)
of the Code, and such opinion shall not have been withdrawn. In rendering such
opinion, counsel shall be entitled to rely upon, among other things,
reasonable assumptions as well as representations of Motorola, Sub and
Starfish and certain shareholders of Starfish and each of Motorola, Sub and
Starfish shall provide counsel such reasonable representations.
8.9 Registration Statement. The Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order.
8.10 Blue Sky Laws. Motorola shall have received all permits and other
authorizations required under applicable state blue sky laws for the issuance
of Motorola Common Stock pursuant to the Merger.
ARTICLE IX
CONDITIONS TO MOTOROLA'S AND SUB'S OBLIGATIONS
The obligations of Motorola and Sub are subject to the fulfillment or
satisfaction on and as of the Closing of each of the following conditions (any
one or more of which may be waived by Motorola, but only in a writing signed
by Motorola):
9.1 Accuracy of Representations and Warranties. The representations and
warranties made by Starfish contained in Article III and in any certificate
delivered by Starfish in connection with this Agreement shall be true and
correct when made except where (i) the failure of such representation or
warranty to be true and correct would not have a Material Adverse Effect; (ii)
the failure of such representation or warranty to be true and correct has been
remedied prior to the Closing Date; or (iii) the failure of such
representation or warranty is the result of the announcement of the
acquisition of Starfish by Motorola; and Motorola shall receive a certificate
to such effect signed by the President or Chief Financial Officer of Starfish.
9.2 Covenants. Starfish shall have performed and complied in all material
respects with all of its covenants and obligations contained in this Agreement
on or before the Closing except to the extent any non-performance does not
have a Material Adverse Effect.
9.3 No Litigation. On and as of the Closing, no litigation or proceeding
shall be threatened or pending against Motorola or Starfish with the probable
effect (in the reasonable opinion of Motorola's counsel) of enjoining or
preventing the consummation of the Merger or the enforcement of any of the
Noncompetition Agreements, or requiring Motorola to divest or hold separate
any business in connection with the Merger, and
no judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator shall be
outstanding against Starfish that would otherwise have a Material Adverse
Effect on Motorola (exclusive of the business of Starfish).
A1-30
9.4 Authorizations. Motorola shall have received from Starfish written
evidence that (i) the execution, delivery and performance of this Agreement
have been duly and validly approved and authorized by Starfish's board of
directors and by the shareholders of Starfish, and (ii) shareholders of
Starfish holding no more than ten percent (10%) of the outstanding shares of
Starfish capital stock have, or might be able to perfect, dissenters' rights
in connection with the Merger.
9.5 Voting Agreements and Non-Competition and Non Solicitation Agreements.
Each of the Voting Agreements and the Non-Competition and Non-Solicitation
Agreements referred to in Section 12.1 shall be in full force and effect and
shall not been amended without Motorola's consent.
9.6 Intentionally omitted.
9.7 Opinion of Starfish's Counsel. Motorola shall have received from counsel
to Starfish, an opinion in substantially the form attached hereto as Exhibit D
("Opinion of Counsel to Starfish").
9.8 Termination of HSR Waiting Period. The waiting period under the HSR Act
shall have been terminated.
9.9 Listing of Motorola Stock. The shares of Motorola Stock to be issued in
the Merger pursuant to this Agreement shall have been approved for listing
(subject to notice of issuance) on the New York Stock Exchange.
9.10 Receipt Of Certificate. Motorola shall have received at Closing a
certificate signed by the President and Chief Financial Officer of Starfish
certifying the accuracy of the matters set forth in Section 9.1, 9.2, 9.3, and
9.4.
9.11 Registration Statement. The Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order.
9.12 Blue Sky Laws. Motorola shall have received all permits and other
authorizations required under applicable state blue sky laws for the issuance
of shares of Motorola Common Stock pursuant to the Merger.
9.13 Employees. None of the Key Employees (as defined in Section 12.1), and
no more than twenty percent (20%), of Starfish's other employees shall have:
(a) voluntarily terminated their employment with Starfish on or prior to the
Closing Date or (b) refused to accept employment with, or given notice that
they do not intend to continue employment with, the Surviving Corporation.
9.14. Exercise of Warrants. The Warrant(s) shall have been exercised in
full.
9.15 Exchange Agent Agreement. Starfish, the Exchange Agent and the
Shareholder Representative shall have entered into the Exchange Agent
Agreement in form and substance satisfactory to Motorola.
9.16 Tax Opinion. Except as contemplated by Section 2.7 of this Agreement,
Motorola shall have received a written opinion of Motorola's outside legal
counsel in form and substance reasonably satisfactory to it, to the effect
that the Merger will constitute a reorganization within the meaning of Section
368(a) of the Code, and such opinion shall not have been withdrawn. In
rendering such opinion, counsel shall be entitled to rely upon, among other
things, reasonable assumptions as well as representations of Motorola, Sub and
Starfish and certain shareholders of Starfish and each of Motorola, Sub and
Starfish shall provide counsel such reasonable representations.
ARTICLE X
TERMINATION OF AGREEMENT
10.1 Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) By mutual consent, or
(b) By either Motorola or Starfish for any reason if the Closing has not
occurred by October 31, 1998, unless otherwise mutually agreed in writing
by the parties, or such later date as the parties may agree in writing,
provided that a party cannot terminate under this provision if the failure
to occur of the Closing is
A1-31
the result of the failure on the part of such party to perform any of its
obligations hereunder (except the failure on the part of such party to
satisfy a closing condition over which such party has no control). Any
termination of this Agreement under this Section 10.1 shall be effective by
the delivery of written notice of the terminating party to the other
parties hereto, or
(c) By either Motorola or Starfish if any Governmental Entity shall have
issued an order, injunction, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Merger and
such order, injunction, decree, ruling or other action shall have become
final and nonappealable.
10.2 Effect of Termination. Any termination of this Agreement pursuant to
this Article X shall be without further obligation or liability upon any party
in favor of any other party hereto; provided, however, that if such
termination by one party shall result from the willful failure of the other
party to carry out its obligations under this Agreement, then such party shall
be liable for Damages incurred by the other party, and such termination shall
not be deemed or construed as limiting or denying any legal or equitable right
or remedy of said party, and said party shall be entitled to recover its costs
and expenses which are incurred in pursuing its rights and remedies (including
reasonable attorneys' fees).
10.3 Certain Effects Of Termination. In the event of the termination of this
Agreement by either Starfish or Motorola as provided in Section 10.1 hereof:
(a) each party, if so requested by the other party, will (i) return
promptly every document (other than documents publicly available and other
than one copy thereof to be retained by outside counsel for such party)
furnished to it by the other party (or any subsidiary, division, associate
or affiliate of such other party) in connection with the transactions
contemplated hereby, whether so obtained before or after the execution of
this Agreement, and any copies thereof which may have been made, and will
cause its representatives and any representatives of financial institutions
and investors and others to whom such documents were furnished promptly to
return such documents and any copies thereof any of them may have made, or
(ii) destroy such documents and cause its representatives and such other
representatives to destroy such documents, and such party shall deliver a
certificate executed by its president or vice president stating to such
effect; and
(b) Starfish and Motorola shall continue to abide by the provisions of
the Mutual Non-Disclosure and Non-Solicitation Agreement dated as of
January 16, 1998 between Motorola and Starfish (the "Nondisclosure
Agreement"). This Section 10.3 shall survive any termination of this
Agreement.
ARTICLE XI
INDEMNIFICATION AND ESCROW
11.1 Survival of Representations.
(a) The representations and warranties made by Starfish (including the
representations and warranties set forth in Article III hereof and the
representations and warranties set forth in any certificate delivered by
Starfish in connection with this Agreement) shall survive the Closing and
shall remain in full force and effect and shall survive until the end of the
Indemnification Period and shall survive thereafter only with respect to any
claims made prior to the end of the Indemnification Period; provided, however,
that the termination hereunder of the representations and warranties made by
Starfish shall not terminate or limit in any manner whatsoever any rights
Motorola has or may have for knowing and intentional misrepresentation. The
representations and warranties made by Motorola and Sub shall survive the
Closing, shall remain in full force and effect and shall survive until the end
of the Indemnification Period, and the holders of Starfish Securities shall be
expressly permitted to rely on such representations and warranties as third
party beneficiaries; provided, however, that the termination hereunder of the
representations and warranties made by Motorola and Sub shall not terminate or
limit in any manner whatsoever any rights which Starfish or the Starfish
Shareholders or holders of Starfish Options have or may have for knowing and
intentional misrepresentation.
A1-32
(b) As used in this Agreement, Indemnification Period shall mean a period of
two (2) years from the Closing Date; provided, however, that the
Indemnification Period with respect to claims arising under Section 11.2(iii)
shall be three (3) years; provided, further, that the expiration of any
Indemnification Period shall not limit the rights any Indemnitees with respect
to indemnification under this Article XI in respect of any claim commenced
with the applicable Indemnification Period.
(c) The representations, warranties, covenants and obligations of Starfish,
and the rights and remedies that may be exercised by the Indemnitees, shall
not be limited or otherwise affected by or as a result of any information
furnished to, or any investigation made by or knowledge of, any of the
Indemnitees or any of their Representatives.
11.2 Indemnification by Shareholders.
(a) From and after the Closing Date (but subject to Section 11.1(a)), the
Shareholders of Starfish shall hold harmless and indemnify each of the
Indemnitees from and against, and shall compensate and reimburse each of the
Indemnitees for, any Damages which are suffered or incurred by any of the
Indemnitees or to which any of the Indemnitees may otherwise become subject
(regardless of whether or not such Damages relate to any third-party claim)
and which arise from or as a result of:
(i) any inaccuracy in or breach of any representation or warranty set
forth in Article III hereunder or in any certificate delivered by Starfish
in connection with this Agreement;
(ii) any breach of any covenant or obligation of Starfish hereunder;
(iii) any claim relating to Intellectual Property for damages above the
license fees paid or payable under the agreement of November 15, 1996
between Starfish and Day-Timers, the agreement of May 12, 1997 between
Starfish and General Magic, the agreement of March 4, 1998 between Starfish
and Open-Text Inc., the agreement of June 6, 1995 between Starfish and
Franklin Electronic Publishers, the agreement of August 8, 1996 between
Starfish and Franklin Electronic Publishers, the agreement of October
29,1997 between Starfish and Hewlett-Packard, the agreement of March 1,
1997 between Starfish and Acer America, the agreement of September 30, 1997
between Starfish and Sony, the agreement of February 3, 1997 between
Starfish and The Media Farm, or the agreement of March 28, 1997 between
Starfish and The Media Farm;
(iv) any claim under the agreement between Starfish and Intuit arising as
a result of the agreement between Starfish and Day-Timers or as a result of
any modification of that latter agreement entered into before the Closing
Date;
(v) any claim with respect to the fees or expenses of a broker or finder
payable by the Starfish Shareholders in accordance with Section 13.8 of
this Agreement;
(vi) any Legal Proceeding relating to any inaccuracy, breach or expense
of the type referred to in clause "(i)" "(ii)" "(iii)" or "(iv)" above
(including any Legal Proceeding commenced by any Indemnitee for the purpose
of enforcing any of its rights under this Article XI if such Indemnitee is
the prevailing party in any such Legal Proceeding); or
(vii) any obligation or duty agreed to or assumed by Starfish in any
contract, license or agreement not listed in Part 3.8(k) of the Starfish
Disclosure Statement, entered into between Starfish and any other Person,
to indemnify, hold harmless or otherwise assume or incur any obligation or
liability with respect to the infringement by Starfish or such other Person
of the Intellectual Property Rights of any other Person.
(b) If the Surviving Corporation suffers, incurs or otherwise becomes
subject to any Damages as a result of or in connection with any inaccuracy in
or breach of any representation, warranty, covenant or obligation of Starfish
hereunder, then (without limiting any of the rights of the Surviving
Corporation as an Indemnitee) Motorola shall also be deemed, by virtue of its
ownership of the stock of the Surviving Corporation, to have incurred Damages
as a result of and in connection with such inaccuracy or breach.
A1-33
11.3 Threshold; Ceiling; Exclusivity; Claims Process.
(a) The Shareholders shall not be required to make any indemnification
payment pursuant to Section 11.2(a) or for any other reason or on account of
any other provision for any inaccuracy in or breach of any of the
representations and warranties set forth in Article III hereof or in any
certificate delivered by Starfish in connection with this Agreement until such
time as and only to the extent that the total amount of all Damages (including
the Damages arising from such inaccuracy or breach and all other Damages
arising from any other inaccuracies in or breaches of any representations or
warranties) that have been suffered or incurred by any one or more of the
Indemnitees, or to which any one or more of the Indemnitees has or have
otherwise become subject, exceeds Five Hundred Thousand Dollars ($500,000) in
the aggregate; provided, however, that the foregoing shall not apply to
Damages arising under Section 11.2(a)(v);
(b) Except with respect to claims based on knowing and intentional
misrepresentations of representations and warranties, Motorola and Sub agree
on behalf of the Indemnitees that, after the Closing, the sole recourse of the
Indemnitees with respect to Damages shall be against the Holdback Amount and
the Escrowed Non-Cash Merger Consideration in the manner set forth in Section
2.6 of this Agreement.
(c) In the event that an Indemnitee shall have incurred any Damages for
which Indemnitee wishes to seek adjustment to the Holdback Amount pursuant to
Section 11.1, Indemnitee shall deliver to the Shareholder Representative an
Officer's Certificate: (i) stating that Indemnitee has paid or properly
accrued or reasonably anticipates that it will have to pay or accrue Damages,
(ii) specifying in reasonable detail the individual items of Damages included
in the amount so stated, the date each such item was paid or properly accrued
or the basis for such anticipated liability, and the nature of the
misrepresentation, breach of warranty or covenant or other adjustment to the
Holdback Amount to which such item is related and (iii) indicating that
Indemnitee is seeking adjustment to the Holdback Amount under this Article XI.
(d) In the event that an Indemnitee has elected to pursue adjustment to the
Holdback Amount under this Article XI, the Holdback Amount shall be reduced by
the amount stated in the Officer's Certificate, unless the Shareholder
Representative contests such claim in writing within thirty (30) days of such
election. In such event, the parties will follow the procedures set forth in
Section 13.2 below (in which case the Holdback Amount shall be reduced by the
amount of Loss as determined pursuant to Section 13.2 with respect to such
Damages).
(e) In the event that an Indemnitee shall have incurred any Damages for
which Indemnitee wishes to claim pursuant to Section 11.1 against the Escrowed
Non-Cash Merger Consideration in accordance with Section 2.6 of this
Agreement, Indemnitee shall deliver to the Shareholder Representative and the
Exchange Agent an Officer's Certificate: (i) stating that Indemnitee has paid
or properly accrued or reasonably anticipates that it will have to pay or
accrue Damages, (ii) specifying in reasonable detail the individual items of
Damages included in the amount so stated, the date each such item was paid or
properly accrued or the basis for such anticipated liability, and the nature
of the misrepresentation, breach of warranty or covenant or other adjustment
to the Holdback Amount to which such item is related and (iii) indicating that
Indemnitee is seeking the release of all or a portion of the Escrowed Non-Cash
Merger Consideration under this Article XI.
(f) In the event that an Indemnitee has elected to pursue the release of all
or a portion of the Escrowed Non-Cash Merger Consideration under this Article
XI, the Exchange Agent shall, in accordance with the terms of the Exchange
Agreement, release to such Indemnitee a number of shares of Motorola Common
Stock having a value equal to the amount stated in the Officer's Certificate,
unless the Shareholder Representative contests such claim in writing within
thirty (30) days of such election. In such event, the parties will follow the
procedures set forth in Section 13.2 below (in which case the Exchange Agent
shall, in accordance with the terms of the Exchange Agreement, release to such
Indemnitee a number of shares of Motorola Common Stock having a value equal to
the amount of Loss as determined pursuant to Section 13.2 with respect to such
Damages). For the purposes of this Agreement and the Exchange Agreement, the
value of each share of Motorola Common Stock constituting the Escrowed Non-
Cash Merger Consideration shall be the Valuation Period Stock Price.
A1-34
11.4 No Contribution. The Shareholders acknowledge and agree that they shall
not have and shall not exercise or assert (or attempt to exercise or assert),
any right of contribution, right of indemnity or other right or remedy against
the Surviving Corporation in connection with any indemnification obligation or
any other liability to which it may become subject under or in connection with
this Agreement or any certificate delivered by Starfish in connection with
this Agreement.
11.5 Defense Of Third Party Claims. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against
the Surviving Corporation, against Motorola or against any other Person) with
respect to which the Shareholders may become obligated to hold harmless,
indemnify, compensate or reimburse any Indemnitee pursuant to this Section 11,
the procedure set forth in Sections 11.6 and 11.7 below shall be followed.
11.6 Notice. Motorola shall give prompt written notice to the Shareholder
Representative pursuant to Section 11.9 of the commencement of any such Legal
Proceeding against Motorola or the Surviving Corporation for which indemnity
may be sought under Article XI together with a description of such Legal
Proceeding and the specific bases upon which such indemnity may be sought
consistent with the provisions of this Agreement; provided, however, that any
failure on the part of Motorola to so notify the Shareholder Representative
shall not limit any of the obligations of the Shareholders under this Article
XI (except to the extent such failure materially prejudices the defense of
such Legal Proceeding). The Indemnification Period shall be tolled solely with
respect to a particular claim for the period beginning on the date the
Indemnifying Party receives written notice of that claim until the final
resolution of such claim so long as such claim is made within the
Indemnification Period.
11.7 Defense of Claim. The Indemnitee shall have the right to be represented
by counsel of its choice and to defend or otherwise control the handling of
any third party claim or Legal Proceeding for which indemnity is sought.
Notwithstanding the foregoing, the Shareholder Representative may elect on
behalf of the Shareholders (by written notice by the Shareholder
Representative to Motorola within thirty (30) days after receipt of written
notice under Section 11.8(a)) to assume the defense of or otherwise control
the handling of any such third party claim or Legal Proceeding (other than for
matters relating to the intellectual property rights of Motorola (including
Starfish), or claims by customers of Motorola) for which indemnity is sought
so long as, and only in the event that, the maximum amount reasonably expected
to be payable with respect to any such Legal Proceeding by Starfish or
Motorola would not exceed the Holdback Amount in Motorola's reasonable
determination, subject to the further limitations provided herein.
(a) If the Shareholder Representative so elects to assume the defense of any
such claim or Legal Proceeding:
(i) the Shareholders shall proceed to defend such claim or Legal
Proceeding in a diligent manner with counsel reasonably satisfactory to the
Indemnitee;
(ii) the Indemnitee shall make available to the Shareholder
Representative any documents and materials in the possession of the
Indemnitee that may be necessary to the defense of such claim or Legal
Proceeding;
(iii) the Shareholder Representative shall keep the Indemnitee informed
of all material developments and events relating to such claim or Legal
Proceeding;
(iv) the Indemnitee shall have the right to participate in the defense of
such claim or Legal Proceeding at the Indemnitee's expense; and
(v) the Shareholder Representative shall have the right to settle, adjust
or compromise such claim or Legal Proceeding only with the consent of
Motorola; provided, however, that Motorola shall not unreasonably withhold
such consent.
(b) If the Shareholder Representative does not (or cannot) elect to assume
the defense of any such third party claim or Legal Proceeding, the Indemnitee
may proceed with the defense of such claim or Legal Proceeding on its own. If
the Indemnitee so proceeds with the defense of any such claim or Legal
Proceeding on its own:
(i) all expenses relating to the defense of such claim or Legal
Proceeding (whether or not incurred by the Indemnitee) shall be borne and
paid exclusively by the Shareholders out of the Holdback Amount,
A1-35
provided, however, that the Shareholders shall not be liable for the costs
of more than one counsel on behalf of the Indemnities collectively;
(ii) the Shareholders shall make available to the Indemnitee any
documents and materials in the possession or control of the Shareholders
that may be necessary to the defense of such claim or Legal Proceeding
except for documents or materials which are sealed by a court order or are
subject to a nondisclosure agreement prohibiting disclosure by the
Shareholders;
(iii) the Indemnitee shall keep the Shareholder Representative informed
of all material developments and events relating to such claim or Legal
Proceeding; and
(iv) the Indemnitee shall have the right to settle, adjust or compromise
such claim or Legal Proceeding with the consent of the Shareholder
Representative; provided, however, that the Shareholders shall not
unreasonably withhold such consent.
11.8 Exercise of Remedies by Indemnitees Other than Motorola. No Indemnitee
(other than Motorola or any successor thereto or assignee thereof) shall be
permitted to assert any indemnification claim or exercise any other remedy
under this Agreement unless Motorola (or any successor thereto or assign
thereof) shall have consented to the assertion of such indemnification claim
or the exercise of such other remedy.
11.9 Shareholder Representative; Approval of Shareholders.
(a) Xxxxxxxx Xxxx shall be constituted and appointed as agent ("Shareholder
Representative") for and on behalf of the Shareholders to give and receive
notices and communications, to authorize delivery to Motorola of the Holdback
Amount in satisfaction of claims by Motorola, to object to such deliveries, to
agree to, negotiate, enter into settlements and compromises of, and demand
arbitration and comply with orders of courts and awards of arbitrators with
respect to such claims, and to take all actions necessary or appropriate in
the judgment of the Shareholder Representative for the accomplishment of the
foregoing. Such agency may be changed by the holders of a majority in interest
of the Holdback Amount from time to time upon not less than ten (10) business
days' prior written notice to Motorola. No bond shall be required of the
Shareholder Representative, and the Shareholder Representative shall receive
no compensation for his/her services. Notices or communications to or from the
Shareholder Representative shall constitute notice to or from each of the
Shareholders.
(b) The Shareholder Representative shall not be liable for any act done or
omitted hereunder as Shareholder Representative while acting in good faith and
not in a manner constituting gross negligence, and any act done or omitted
pursuant to the advice of counsel shall be conclusive evidence of such good
faith. The Shareholders shall severally indemnify the Shareholder
Representative and hold him/her harmless against any loss, liability or
expense incurred without gross negligence or bad faith on the part of the
Shareholder Representative and arising out of or in connection with the
acceptance or administration of his/her duties hereunder. Subject to the prior
right of Motorola to make claims for damages, the Shareholder Representative,
with the consent of a majority in interest in the Holdback Amount, may recover
from the Holdback Amount prior to any payment to the Shareholders reasonable
costs and expenses incurred by the Shareholder Representative in connection
with acting as same.
(c) The approval by the Shareholders of the Merger shall be deemed to be
approval of the terms of the provisions of this Article XI, including the
appointment of the Shareholder Representative.
(d) A decision, act, consent or instruction of the Shareholder
Representative shall constitute a decision of all Starfish Shareholders and
shall be final, binding and conclusive upon each such Starfish Shareholder,
and Motorola may rely upon any such decision, act, consent or instruction of
the Shareholder Representative as being the decision, act, consent or
instruction of each every such Starfish Shareholder. Motorola is hereby
relieved from any liability to any person for any acts done by it in
accordance with such decision, act, consent or instruction of the Shareholder
Representative.
A1-36
ARTICLE XII
EMPLOYEE ARRANGEMENTS
12.1 Non-Competition and Non-Solicitation Agreements. Motorola and Starfish
acknowledge that each of Xxxxxxxx Xxxx, Xxxxx Xxx, Xxxx Xxxxxx, S. Xxxxxx,
Xxxx Xxxxxx and Xxxxx Xxxxx (each a "Key Employee" and collectively the "Key
Employees") have executed and delivered non-competition and non-solicitation
agreements with Motorola containing, among other things, a three-year non-
competition/non-solicitation term with respect to Xx. Xxxx and Xx. Xxx, and a
two-year non-competition/non-solicitation term for the other Key Employees.
12.2 Bonus Pool. In connection with the Merger, Motorola agrees to establish
a bonus pool for employees of Starfish following the Effective Date (the
"Bonus Pool"). The Bonus Pool shall be in the amount of $19 million and shall
be allocated in three equal installments for the 12-month periods ending on
(or at Motorola's discretion before) the first (1st), second (2nd) and third
(3rd) anniversaries of the Closing Date. The Bonus Pool shall be paid out for
each period from time to time as may be approved by the Board of Directors of
the Surviving Corporation (the "Board"), but in any event the full amount of
the Bonus Pool for each period shall be paid within forty-five (45) days after
the end of each such period. The Shareholders Representative shall participate
with the Board in determining the awards of bonuses, but will not be eligible
for any such bonus. It is expressly understood that the principal purpose of
the Bonus Pool is to provide additional incentives for the current employees
of Starfish. Starfish will establish individual and group business plan
objectives for the purposes of such bonuses. Notwithstanding the foregoing,
with the approval of the Shareholders Representative, current or future
employees of other Motorola divisions who join Starfish and other future
employees of Starfish may be eligible to participate in the Bonus Pool.
12.3 Employee Benefit Plans.
(a) Motorola covenants and agrees that Starfish shall maintain all existing
welfare and retirement benefit plans and arrangements provided to its
employees as of the Closing Date until such time as Starfish and Motorola
agree to terminate or merge such plans with the existing welfare and
retirement benefit plans and arrangements provided by Motorola.
(b) Motorola agrees that to the extent the existing welfare and retirement
benefit plans and arrangements provided by Starfish to its employees are
terminated or merged with existing Motorola plans after the Closing Date, such
employees shall be entitled to participate in all benefit plans and
arrangements which are available and subsequently become available to
Motorola's employees of similar position on the same basis as Motorola's
employees. For purposes of eligibility to participate and vesting requirements
in the Motorola welfare and retirement plans for which any such employee may
be eligible after the termination or merger of Starfish's existing welfare and
retirement plans, such plans provide that service by such employee with
Starfish shall be deemed to have been service with Motorola; provided,
however, that Motorola shall not be required to treat service with Starfish as
service with Motorola for purposes of benefit accrual under the Motorola, Inc.
Pension Plan. To the extent that any Starfish medical plan under section 213
(d) of the Code is terminated, Motorola shall offer continued group health
coverage pursuant to COBRA to those individuals receiving COBRA coverage
through the Starfish medical plan immediately prior to such termination.
ARTICLE XIII
MISCELLANEOUS
13.1 Governing Laws. It is the intention of the parties hereto that the
internal laws of the State of California (irrespective of its choice of law
principles) shall govern the validity of this Agreement, the construction of
its terms, and the interpretation and enforcement of the rights and duties of
the parties hereto.
13.2 Amicable Resolution. Motorola and Starfish mutually desire that
friendly collaboration will develop between themselves. Accordingly, they
shall try to resolve in a friendly manner all disagreements and
misunderstandings connected with their respective rights and obligations under
this Agreement, including any amendments hereof.
A1-37
Excluding Intellectual Property disputes which must be brought before a
court of competent jurisdiction, to the extent that any misunderstanding or
dispute which arises after the Effective Date cannot be resolved agreeably in
a friendly manner, the dispute will be mediated by a mutually-acceptable
mediator to be chosen by Motorola and Starfish within forty-five (45) days
after written notice by one of the parties demanding mediation. Neither party
may unreasonably withhold consent to the selection of a mediator, however, by
mutual agreement Motorola and Starfish may postpone mediation until each has
completed specified but limited discovery with respect to a dispute. The
parties may also agree to attempt some other form of alternative dispute
resolution ("ADR") in lieu of mediation, including by way of example and
without limitation neutral fact-finding or a mini-trial.
Any dispute that the parties cannot resolve through negotiation, mediation
or other form of ADR within six months of the date of the initial demand for
it by one of the parties may then be submitted to the courts for resolution.
The use of any ADR procedures will not be construed under the doctrines of
laches, waiver or estoppel to affect adversely the rights of either party.
Nothing in this Section 13.2 will prevent either party from resorting to
judicial proceedings if (i) good faith efforts to resolve the dispute under
these procedures have been unsuccessful or (ii) interim relief from a court is
necessary to prevent serious and irreparable injury to one party or to others.
13.3 Limitation on Liability. NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR SPECIAL, INCIDENTAL,
INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH ANY
CLAIMS, LOSSES, DAMAGES, OR INJURIES ARISING OUT OF THE CONDUCT OF THE PARTIES
PURSUANT TO THIS AGREEMENT.
13.4 Binding Upon Successors and Assigns. Subject to, and unless otherwise
provided in, this Agreement, each and all of the covenants, terms, provisions,
and agreements contained herein shall be binding upon, and inure to the
benefit of, the permitted successors, executors, heirs, representatives,
administrators and assigns of the parties hereto.
13.5 Severability. If any provision of this Agreement, or the application
thereof, shall for any reason and to any extent be invalid or unenforceable,
the remainder of this Agreement and application of such provision to other
persons or circumstances shall be interpreted so as best to effect reasonably
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 which will achieve, to the extent possible, the economic, business
and other purposes of the void or unenforceable provision.
13.6 Entire Agreement; Assignment. This Agreement, the Exhibits hereto and
the Starfish Disclosure Schedule, and the documents and instruments and other
agreements among the parties hereto referenced herein: (a) constitute the
entire agreement among the 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; (b) are not
intended to confer upon any other person (including, without limitation, any
employee of Starfish or any such employee's spouse, dependents or
beneficiaries) except the Shareholder Representative any rights or remedies
hereunder; (c) shall not be assigned by Starfish whether by operation of law
or otherwise without the prior written consent of Motorola; and (d) shall not
be assigned by Motorola whether by operation of law or otherwise prior to the
Effective Date or after the Effective Date unless Motorola remains liable for
the obligations of the assignee.
13.7 Counterparts. This Agreement may be executed in any number of
counterparts, including counterparts transmitted by telecopier or telefax,
each of which shall be an original as against any party whose signature
appears thereon and all of which together shall constitute one and the same
instrument. This Agreement shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of all of
the parties reflected hereon as signatories.
A1-38
13.8 Expenses. Whether or not the transactions herein contemplated shall be
consummated, Motorola will pay the fees, expenses and disbursements of
Motorola and Sub and its agents, representatives, accountants and counsel
incurred in connection with the subject matter of this Agreement and any
amendments thereto. Whether or not the transactions herein contemplated shall
be consummated, Starfish will pay the fees, expenses and disbursements of
Starfish and its agents, representatives, accountants and counsel incurred in
connection with the subject matter of this Agreement and any amendments
thereto and all other costs and expenses incurred in the performance and
compliance with all conditions to be performed by Starfish under this
Agreement. Notwithstanding the foregoing, neither Motorola nor Starfish shall
be liable for any fees or expenses payable to any broker or finder
contemplated by Section 3.23 of this Agreement, which fees or expenses will be
paid by the Starfish Shareholders through a reduction in the Holdback Amount.
13.9 Amendment and Waivers. Any term or provision of this Agreement may be
amended, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof for default in payment of any amount
due hereunder or default in the performance hereof shall not be deemed to
constitute a waiver of any other default or any succeeding breach or default.
13.10 No Waiver. The failure of any party to enforce any of the provisions
hereof shall not be construed to be a waiver of the right of such party
thereafter to enforce such provisions.
13.11 Notices. Any notice provided for or permitted under this Agreement
will be treated as having been given when (a) delivered personally, (b) sent
by confirmed telecopy, (c) sent by commercial overnight courier with written
verification of receipt, or (d) mailed postage prepaid by certified or
registered mail, return receipt requested, to the party to be notified, at the
address set forth below, or at such other place of which the other party has
been notified in accordance with the provisions of this Section 13.11.
If to Starfish: Starfish Software, Inc. 0000 Xxxxx Xxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000 Facsimile:(000) 000-0000
Attention: President
With copy to: Xxxx Xxxx Xxxx Freidenrich, LLP 000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000 Facsimile:(000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
If to Motorola: Motorola, Inc.50 Commerce DriveSchaumburg, IL
60173Facsimile: (847) 538-0852Attention: Xxxxx
Xxxxx
With copy to: Motorola, Inc. 0000 Xxxx Xxxxxxxxx Xxxx Xxxxxxxxxx,
XX 00000 Facsimile:(000) 000-0000
Attention: General Counsel
If to Shareholder'sRepresentative:
Xxxxxxxx Xxxx 000 Xxxxxxxxx Xxxx Xxxxxx Xxxxxx, XX
00000 Facsimile:(000) 000-0000
Such notice will be treated as having been received upon actual receipt.
A1-39
13.12 Construction of Agreement. This Agreement has been negotiated by the
respective parties hereto and their attorneys and the language hereof shall
not be construed for or against any party. The titles and headings herein are
for reference purposes only and shall not in any manner limit the construction
of this Agreement which shall be considered as a whole.
13.13 No Joint Venture. Nothing contained in this Agreement shall be deemed
or construed as creating a joint venture or partnership between any of the
parties hereto. No party is by virtue of this Agreement authorized as an
agent, employee or legal representative of any other party. No party shall
have the power to control the activities and operations of any other and their
status is, and at all times, will continue to be, that of independent
contractors with respect to each other. No party shall have any power or
authority to bind or commit any other. No party shall hold itself out as
having any authority or relationship in contravention of this Section 13.11.
13.14 Pronouns. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
13.15 Absence of Third Party Beneficiary Rights. No provisions of this
Agreement are intended, nor shall be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, shareholder, partner of any party hereto or any other
person or entity unless specifically provided otherwise herein, and, except as
so provided, all provisions hereof shall be personal solely between the
parties to this Agreement.
[This space intentionally left blank]
A1-40
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
Motorola, Inc., Starfish Software, Inc.,
a Delaware corporation a California corporation
By: /s/ Xxxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxxx Xxxx
---------------------------------- --------------------------------
Name: Xxxxxxxx X. Xxxxxxxx Name: Xxxxxxxx Xxxx
--------------------------------- -------------------------------
Title: Corporate Vice President and Title: President and Chief Executive
-------------------------------- ------------------------------
Corporate Director of Business Officer
-------------------------------- ------------------------------
Development_
--------------------------------
SS Acquisition Corporation, a
California corporation
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
--------------------------------
Title: Treasurer
--------------------------------
A1-41
EXHIBIT A TO
AGREEMENT AND PLAN OF MERGER
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
"ADR" shall have the meaning set forth in Section 13.2.
"Affiliate" shall have the meaning set forth in the rules and regulations
promulgated by the Commission pursuant to the Securities Act.
"Best Efforts" shall mean the efforts that a prudent person desirous of
achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible; provided, however, that an
obligation to use Best Efforts under this Agreement does not require the
person subject to that obligation to take actions that would result in a
Material Adverse Change in the benefits to such person of this Agreement and
the transactions contemplated herein.
"Board" shall have the meaning set forth in Section 12.2.
"Bonus Pool" shall have the meaning set forth in Section 12.2.
"California Code" shall have the meaning set forth in Section 1.1.
"CERCLA" shall have the meaning set forth in Section 3.21(d).
"Closing" shall have the meaning set forth in Section 1.2.
"Closing Date" shall have the meaning set forth in Section 1.2.
"Code" shall have the meaning set forth in the Recitals.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Confidential Information" shall mean confidential information of a party
("Disclosing Party") which is disclosed to another party ("Receiving Party").
Confidential Information shall include, but not be limited to, trade secrets,
know-how, inventions, techniques, processes, algorithms, software programs,
blueprints, engineering drawings, schematics, designs, theories of operation,
contracts, customer lists, financial information, sales and marketing plans
and business information.
"Damages" shall include any loss, damage, injury, liability, claim, demand,
settlement, judgment, award, fine, penalty, tax, fee (including reasonable
attorneys' fees), charge, costs (including reasonable costs of investigation)
or reasonable expenses of any nature.
"Disclosing Party" shall have the meaning set forth in Section 7.1.
"Dissenting Shareholder" shall have the meaning set forth in Section 2.4.
"Dissenting Share(s)" shall have the meaning set forth in Section 2.1(c).
"Effective Time" shall have the meaning set forth in Section 1.2.
"Excluded Licenses" shall have the meaning set forth in Section 3.8(d).
"Entity" shall mean any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
A1-42
"Environmental Lien" shall have the meaning set forth in Section 3.21.
"ERISA" shall have the meaning set forth in Section 3.9.
"Escrowed Non-Cash Merger Consideration" shall have the meaning set forth in
Section 2.1(a)(iv).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any substituted federal statute and the rules and regulations thereunder,
all as the same shall be in effect at the time.
"Exchange Agent" shall have the meaning set forth in Section 2.2(a).
"Exchange Agreement" shall have the meaning set forth in Section 2.2(a).
"Exchange Fund" shall have the meaning set forth in Section 2.2(a).
"Exchanged Option" shall have the meaning set forth in Section 2.3(a).
"Expiration Date" shall have the meaning set forth in Section 5.7.
"GAAP" shall have the meaning set forth in Section 3.4(b).
"Governmental Body" shall mean any: (a) nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of
any nature; (b) federal, state, local, municipal, foreign or other government;
or (c) governmental or quasi-governmental authority of any nature (including
any governmental division, department, agency, commission, instrumentality,
official, organization, unit, body or Entity and any court or other tribunal).
"Holdback Amount" shall have the meaning set forth in Section 2.(i) (but
shall not include any interest paid on the Holdback Amount).
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnitees" shall mean the following Persons: (a) Motorola; (b) Motorola's
current and future affiliates (including, but not limited to, the Surviving
Corporation); (c) the respective Representatives of the Persons referred to in
clauses "(a)" and "(b)" above; and (d) the respective successors of the
Persons referred to in clauses "(a)" and "(b)" and "(c)" above; provided,
however, that any Person receiving Motorola Common Stock pursuant to this
Agreement shall not be deemed to be an "Indemnitee."
"Initial Cash Merger Consideration" shall have the meaning set forth in
Section 2.1(a)(i).
"Initial Non-Cash Merger Consideration" shall have the meaning set forth in
Section 2.1(a)(ii).
"Intellectual Property" shall have the meaning set forth in Section 3.8(a).
"Issued Registered Intellectual Property" shall have the meaning set forth
in Section 3.8(c).
"Key Employee" shall have the meaning set forth in Section 12.1.
"Key Employees" shall have the meaning set forth in Section 12.1.
The terms "knowledge" and "known" when not capitalized shall be construed,
except as specifically otherwise provided, to qualify the matter referred to
as being to the actual knowledge after diligent inquiry of, with respect to
Starfish, Xxxxxxxx Xxxx, Xxxxx Xxx, Xxxx Xxxxxx, Xxxxxx Xxxxxx and Xxxxx
Xxxxxxxxx and, with respect to Motorola, the appropriate executive officer.
A1-43
"Legal Proceeding" shall mean any action, suit, litigation, arbitration
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before, or otherwise involving
any court or other Governmental Body or any arbitrator or arbitration panel.
"Letter of Transmittal" shall have the meaning set forth in Section 2.2(b).
"Material Adverse Change" shall mean a change which would have a Material
Adverse Effect.
A violation or other matter will be deemed to have a "Material Adverse
Effect" on Starfish or Motorola or Sub, as applicable, if such violation or
other matter would be material in impact or amount to Starfish's or Motorola's
or Sub's, as applicable, (and in the case of Motorola, together with its
subsidiaries), business, intellectual property rights or condition, or, taken
as a whole, its assets, liabilities, operations, or financial performance. The
definition of "material" for purposes of Article III shall have no bearing
upon the interpretation of the term "material" for purposes of this
definition.
"Material Consents" shall have the meaning set forth in Section 5.1.
"Material Contract" shall have the meaning set forth in Section 3.11(a).
"Merger" shall have the meaning set forth in Recitals.
"Merger Articles" shall have the meaning set forth in Section 1.2.
"Merger Consideration" shall have the meaning set forth in Section 2.1(d).
"Motorola Common Stock" shall have the meaning set forth in Section
2.1(a)(ii).
"Motorola Financial Statements" shall have the meaning set forth in Section
4.5.
"Nondisclosure Agreement" shall have the meaning set forth in Section
10.3(b).
"Person" shall mean any individual, Entity or Governmental Body.
"Proprietary Asset" shall mean: (a) any patent, patent application,
trademark (whether registered or unregistered), trademark application, trade
name, fictitious business name, service xxxx (whether registered or
unregistered), service xxxx application, copyright (whether registered or
unregistered), copyright application, maskwork, maskwork application, trade
secret, logo, technical data, customer list, industrial design or
registration, know-how, customer list, franchise, system, computer software
(including any source code, object code, firmware, development tools, files,
records and data and all media on which any of the foregoing are recorded),
computer program, invention, design, blueprint, engineering drawing,
proprietary product, technology, proprietary right or other intellectual
property right or intangible asset; and (b) any right to use or exploit any of
the foregoing and all extensions, renewals and revisions of any of the
foregoing and any and all documents relating to the foregoing.
"Proxy Statement" shall have the meaning set forth in Section 5.8.
"Receiving Party" shall have the meaning set forth in Section 7.1.
"Registered Intellectual Property" shall have the meaning set forth in
Section 3.8(b).
"Registration Statement" shall have the meaning set forth in Section 5.8.
"Release" shall have the meaning set forth in Section 3.21.
"SEC" shall mean the Securities and Exchange Commission.
A1-44
"SEC Documents" shall have the meaning set forth in Section 4.5.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
substituted federal statute and the rules and regulations thereunder, all as
the same shall be in effect at the time.
"Shareholder Representative" shall have the meaning set forth in Section
11.9(a).
"Shareholders" shall mean the record holders of shares of capital stock of
Starfish.
"Software" shall have the meaning set forth in Section 3.8(a).
"Software Authors" shall have the meaning set forth in Section 3.8(a).
"Starfish Audited Financial Statements" shall have the meaning set forth in
Section 3.4(a).
"Starfish Capital Stock" shall have the meaning set forth in the Recitals.
"Starfish Common Stock" shall mean the common stock, no par value per share,
of Starfish.
"Starfish Disclosure Schedule" shall have the meaning set forth in Article
3.
"Starfish Financial Statements" shall have the meaning set forth in Section
3.4(a).
"Starfish Intellectual Property" shall have the meaning set forth in Section
3.8(a).
"Starfish Option" shall have the meaning set forth in Section 2.3(a).
"Starfish Preferred Stock" shall mean Starfish Class A Preferred Stock and
Starfish Class B Preferred Stock.
"Starfish Products" shall mean all versions and implementations of any
product which has been or is being marketed by Starfish or currently is under
development, and all patents, patent applications, trade secrets, copyrights,
trademarks, trade names and other proprietary rights related thereto.
"Starfish Series A Preferred Stock" shall mean the Class A Preferred Stock,
no par value per share, of Starfish.
"Starfish Series B Preferred Stock" shall mean the Class B Preferred Stock,
no par value per share, of Starfish.
"Starfish Shareholders Meeting" shall have the meaning set forth in Section
5.8.
"Starfish Shares" shall mean the shares of Starfish capital stock issued and
outstanding at the Effective Date of the Merger, other than the Dissenting
Shares.
"Starfish Stock Plans" shall have the meaning set forth in Section 2.3(a).
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a
majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that Person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control any managing director or general
partner of such limited liability company, partnership, association or other
business entity. Unless otherwise indicated or required by the context, the
term Subsidiary or Subsidiaries shall be deemed to refer to a Subsidiary or
the Subsidiaries of Starfish.
A1-45
"Surviving Corporation" shall have the meaning set forth in Section 1.1.
"Surviving Corporation Board" shall have the meaning set forth in Section
1.5.
"Transaction Documents" shall mean this Agreement (including the Starfish
Disclosure Schedule delivered pursuant to Article III hereof) and the
following documents or agreements required to be delivered hereunder: the
Merger Articles, the Exchange Agreement and the Shareholder Non-Compete
Agreements.
"Valuation Period Stock Price" shall have the meaning set forth in Section
2.1(c)
"Voting Agreements" shall have the meaning set forth in the Recitals.
A1-46
