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EXHIBIT 1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
CISCO SYSTEMS, INC.,
AQUA ACQUISITION CORPORATION
AND
ACTIVE VOICE CORPORATION
November 9, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER.........................................................................2
1.1 The Merger....................................................................2
1.2 Closing; Effective Time.......................................................2
1.3 Effect of the Merger..........................................................2
1.4 Certificate of Incorporation; Bylaws..........................................2
1.5 Directors and Officers........................................................3
1.6 Effect on Capital Stock.......................................................3
1.7 Surrender of Certificates.....................................................4
1.8 No Further Ownership Rights in Company Common Stock...........................5
1.9 Lost, Stolen or Destroyed Certificates........................................6
1.10 Tax Consequences..............................................................6
1.11 Withholding Rights............................................................6
1.12 Termination of Exchange Agent Funding.........................................6
1.13 Taking of Necessary Action; Further Action....................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY.........................................6
2.1 Organization, Standing and Power..............................................7
2.2 Capital Structure.............................................................8
2.3 Authority.....................................................................9
2.4 SEC Documents; Financial Statements..........................................10
2.5 Absence of Certain Changes...................................................10
2.6 Absence of Undisclosed Liabilities...........................................11
2.7 Litigation...................................................................11
2.8 Restrictions on Business Activities..........................................11
2.9 Governmental Authorization...................................................12
2.10 Title to Property............................................................12
2.11 Intellectual Property........................................................12
2.12 Environmental Matters........................................................14
2.13 Taxes........................................................................15
2.14 Employee Benefit Plans.......................................................16
2.15 Certain Agreements Affected by the Merger....................................19
2.16 Employee Matters.............................................................19
2.17 Interested Party Transactions................................................20
2.18 Insurance....................................................................20
2.19 Compliance With Laws.........................................................21
2.20 Minute Books.................................................................21
2.21 Complete Copies of Materials.................................................21
2.22 Brokers' and Finders' Fees...................................................21
2.23 Registration Statement; Proxy Statement/Prospectus...........................21
2.24 Opinion of Financial Advisor.................................................22
2.25 Vote Required................................................................22
2.26 Board Approval...............................................................22
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2.27 Stockholder Agreement; Irrevocable Proxies...................................22
2.28 Chapter 23B.19 of the Washington Business Company Act Not Applicable........22
2.29 Inventory....................................................................22
2.30 Accounts Receivable..........................................................23
2.31 Customers and Suppliers......................................................23
2.32 Export Control Laws..........................................................23
2.33 Year 2000....................................................................24
2.34 Representations Complete.....................................................24
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.........................24
3.1 Organization, Standing and Power.............................................24
3.2 Capital Structure............................................................25
3.3 Authority....................................................................25
3.4 SEC Documents; Financial Statements..........................................25
3.5 Absence of Undisclosed Liabilities...........................................26
3.6 Litigation...................................................................26
3.7 Broker's and Finders' Fees...................................................27
3.8 Registration Statement; Proxy Statement/Prospectus...........................27
3.9 Board Approval...............................................................27
3.10 Representations Complete.....................................................27
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME..............................................27
4.1 Conduct of Business of Company...............................................27
4.2 Restrictions on Conduct of Business of Company...............................28
4.3 No Solicitation..............................................................31
ARTICLE V ADDITIONAL AGREEMENTS.............................................................32
5.1 Proxy Statement/Prospectus; Registration Statement...........................32
5.2 Meeting of Stockholders......................................................32
5.3 Access to Information........................................................33
5.4 Confidentiality..............................................................33
5.5 Public Disclosure............................................................33
5.6 Consents; Cooperation........................................................34
5.7 Legal Requirements...........................................................35
5.8 Blue Sky Laws................................................................35
5.9 Employee Benefit Plans.......................................................35
5.10 Forms S-3 and S-8............................................................37
5.11 Option Agreement.............................................................37
5.12 Nasdaq Quotation.............................................................37
5.13 Employees....................................................................38
5.14 Action Under Stock Option Plan...............................................38
5.15 Notice to Certain Employees..................................................38
5.16 Indemnification..............................................................38
5.17 Tax Treatment................................................................39
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5.18 Stockholder Litigation.......................................................39
5.19 Section 280G/83(b) Agreement.................................................40
5.20 Spreadsheet..................................................................40
5.21 Execution of Stockholder Agreement by NEC....................................40
5.22 Termination of Company ESPP..................................................40
5.23 Resolution of Certain Litigation Matters.....................................40
5.24 Best Efforts and Further Assurances..........................................40
ARTICLE VI CONDITIONS TO THE MERGER.........................................................40
6.1 Conditions to Obligations of Each Party to Effect the Merger.................40
6.2 Additional Conditions to Obligations of Company..............................41
6.3 Additional Conditions to the Obligations of Parent and Merger Sub............42
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER...............................................44
7.1 Termination..................................................................44
7.2 Effect of Termination........................................................45
7.3 Expenses and Termination Fees................................................46
7.4 Amendment....................................................................48
7.5 Extension; Waiver............................................................48
ARTICLE VIII GENERAL PROVISIONS.............................................................48
8.1 Non-Survival at Effective Time...............................................48
8.2 Notices......................................................................48
8.3 Interpretation...............................................................49
8.4 Counterparts.................................................................50
8.5 Entire Agreement; Nonassignability; Parties in Interest......................50
8.6 Severability.................................................................50
8.7 Remedies Cumulative..........................................................50
8.8 Governing Law................................................................50
8.9 Rules of Construction........................................................50
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SCHEDULES
Company Disclosure Schedule
Schedule 2.0 - Revenue Levels
Schedule 2.1 - Organization, Standing and Power
Schedule 2.2 - Capital Structure
Schedule 2.3 - Authority
Schedule 2.4 - SEC Documents; Financial Statements
Schedule 2.5 - Absence of Certain Changes
Schedule 2.6 - Absence of Undisclosed Liabilities
Schedule 2.7 - Litigation
Schedule 2.9 - Governmental Authorization
Schedule 2.10 - Company Real Property
Schedule 2.11 - Intellectual Property
Schedule 2.13 - Taxes
Schedule 2.14(a) - Employee Benefit Plans
Schedule 2.14(d) - COBRA/Family Act Obligations
Schedule 2.14(e) - Certain Benefit Payments Affected by the Merger
Schedule 2.14(i) - Company Foreign Plans
Schedule 2.14(j) - List of Employees on Disability/Other Leave
Schedule 2.15 - Certain Agreements
Schedule 2.16 - Employee Matters
Schedule 2.18 - Insurance
Schedule 2.19 - Compliance with Law
Schedule 2.22 - Broker's and Finder's Fees
Schedule 2.27 - Signatories to Stockholder Agreement
Schedule 2.33 - Year 2000
Schedule 4.2(h) - Dispositions
Schedule 5.9(a) - Outstanding Options
Schedule 5.9(b) - Options Subject to Acceleration
Schedule 5.9(d) - Disqualified Persons
Schedule 5.9(f) - Acceleration Waivers
Schedule 5.10(a) - S-8 Eligible Optionees
Schedule 5.10(b) - S-3 Eligible Optionees
Schedule 5.13 - Cisco Employees
Schedule 5.15 - Transferred Employees
Schedule 5.15(a) - Key Newco Employees
Schedule 5.15(b) - Newco Employees
Schedule 6.3(c) - Material Third Party Consents
Schedule 6.3(r) - Non-terminated Consultants and Independent Contractors
Parent Disclosure Schedule
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EXHIBITS
Exhibit A - Stock Option Agreement
Exhibit B - Stockholder Agreement
Exhibit C - Asset Purchase Agreement
Exhibit D - Articles of Merger
Exhibit E - Waivers
Exhibit F - Employment Agreements
Exhibit G - Notice to Transferred Employees
Exhibit H - 280 G/83(b) Agreements
Exhibit I - General Release and Non-Competition Agreements
Exhibit J - General Release
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the
"Agreement") is made and entered into as of November 9, 2000, by and among Cisco
Systems, Inc., a California corporation ("Parent"), Aqua Acquisition
Corporation, a Delaware corporation ("Merger Sub") and wholly owned subsidiary
of Parent, and Active Voice Corporation, a Washington corporation ("Company").
RECITALS
A. The Boards of Directors of Company, Parent and Merger Sub
believe it is in the best interests of their respective companies and the
stockholders of their respective companies that Company and Merger Sub combine
into a single company through the statutory merger of Merger Sub with and into
Company (the "Merger") and, in furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, the outstanding
shares of Company Common Stock, no par value ("Company Common Stock"), shall be
converted into shares of Parent Common Stock, $0.001 par value ("Parent Common
Stock"), at the rate set forth herein.
C. Company, Parent and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
D. The parties intend, by executing this Agreement, to adopt a
plan of reorganization within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code"), and to cause the Merger to qualify as a
reorganization under the provisions of Sections 368 of the Code.
E. Concurrently with the execution of this Agreement and as an
inducement to Parent and Merger Sub to enter into this Agreement, (a) Company
and Parent have entered into a stock option agreement dated the date hereof in
the form attached hereto as Exhibit A (the "Option Agreement") providing for the
purchase by Parent of newly-issued shares of Company Common Stock, and (b)
certain stockholders of Company have on the date hereof entered into a
stockholder agreement in the form attached hereto as Exhibit B (the "Stockholder
Agreement") to, among other things, vote the shares of Company Common Stock
owned by such persons to approve the Merger and against any competing proposals.
F. Also, concurrently with the execution of this Agreement,
Company and Atlantis Group, Inc., a Washington corporation ("Newco"), have
entered into an Asset Purchase Agreement of even date herewith in the form
attached hereto as Exhibit C (the "Asset Purchase Agreement") which agreement
provides for the sale of certain of Company's assets to Newco and the assumption
of certain of Company's obligations and liabilities by Newco.
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NOW, THEREFORE, in consideration of the covenants and
representations set forth herein, and for other good and valuable consideration
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2)
and subject to and upon the terms and conditions of this Agreement, the
Certificate of Merger and the Articles of Merger attached hereto as Exhibit D
and in accordance with the applicable provisions of the Delaware General
Corporation Law ("Delaware Law") and Washington Business Corporation Act
("Washington Law"), respectively, Merger Sub shall be merged with and into
Company, the separate corporate existence of Merger Sub shall cease and Company
shall continue as the surviving corporation. Company as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation."
1.2 Closing; Effective Time. The closing of the transactions
contemplated hereby (the "Closing") shall take place as soon as practicable
after the satisfaction or waiver of each of the conditions set forth in Article
VI hereof or at such other time as the parties hereto agree (the "Closing
Date"). The Closing shall take place at the offices of Xxxxxxx, Xxxxxxx &
Xxxxxxxx LLP, Two Embarcadero Place, 0000 Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx
00000, or at such other location as the parties hereto agree. In connection with
the Closing, the parties hereto shall cause the Merger to be consummated by
filing the Certificate of Merger with the Secretary of State of the State of
Delaware and the Articles of Merger with the Secretary of State of the State of
Washington, in accordance with the relevant provisions of Delaware Law and
Washington Law (the time of the last such filing being the "Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement, the Certificate of Merger,
the Articles of Merger and the applicable provisions of Delaware Law and
Washington Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of Company and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Articles of Incorporation
of Company shall be amended so as to read in its entirety as set forth in
Exhibit A to the Articles of Merger and as so amended shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
by Washington Law and such Articles of Incorporation.
(b) The Bylaws of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving Corporation
until thereafter amended.
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1.5 Directors and Officers. At the Effective Time, the directors
of the Surviving Corporation shall be those persons who were the directors of
Merger Sub, in each case until their successors are elected or appointed and
qualified or until their earlier resignation or removal. The officers of the
Surviving Corporation shall be the initial officers of Merger Sub, until their
respective successors are duly elected or appointed and qualified or until their
earlier resignation or removal.
1.6 Effect on Capital Stock. By virtue of the Merger and without
any action on the part of Merger Sub, Company or the holders of any of the
following securities:
(a) Conversion of Company Common Stock. At the Effective
Time, each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (other than any shares of Company Common Stock to be
canceled pursuant to Section 1.6(b)) will be canceled and extinguished and be
converted automatically into the right to receive shares of Parent Common Stock,
all of which shall have been registered pursuant to Section 5.1, based on the
Exchange Ratio, subject to any adjustments made pursuant to Section 1.6(d). The
Exchange Ratio shall equal the ratio of (x) a quotient, the numerator of which
is $295,332,740 and the denominator of which is the Parent Stock Price and (y)
the total number of Company Common Stock issued and outstanding on a fully
diluted basis at the Effective Time (after giving effect to the conversion,
exchange or exercise as the case may be of all securities convertible into, or
exercisable or exchangeable for, Company Common Stock, including all unexpired
and unexercised options, warrants or other rights to acquire Company Common
Stock). The Parent Stock Price shall equal the average of the closing prices of
Parent Common Stock as quoted on Nasdaq for the ten consecutive trading days
ending on the third trading day prior to the Effective Time.
(b) Cancellation of Company Common Stock Owned by Parent
or Company. At the Effective Time, all shares of Company Common Stock that are
owned by Company as treasury stock and each share of Company Common Stock owned
by Parent or any direct or indirect wholly owned subsidiary of Parent or of
Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
(c) Company Stock Option Plans. At the Effective Time, the
Company Stock Option Plans (as defined below) and all options to purchase
Company Common Stock then outstanding under the Company Stock Option Plans and
all obligations of Company under the Company ESPP (as defined below) shall be
assumed by Parent in accordance with Section 5.9.
(d) Capital Stock of Merger Sub. At the Effective Time,
each share of common stock, $0.001 par value, of Merger Sub ("Merger Sub Common
Stock") issued and outstanding immediately prior to the Effective Time shall be
converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation, and the
Surviving Corporation shall be a wholly owned subsidiary of Parent. Each stock
certificate of Merger Sub evidencing ownership of any such shares shall continue
to evidence ownership of such shares of capital stock of the Surviving
Corporation.
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(e) Adjustments to Exchange Ratio. The Exchange Ratio
shall be adjusted to reflect fully the effect of any stock split, reverse split,
stock dividend (including any dividend or distribution of securities convertible
into Parent Common Stock or Company Common Stock), reorganization,
recapitalization or other like change with respect to Parent Common Stock or
Company Common Stock occurring after the date hereof and prior to the Effective
Time, so as to provide holders of Company Common Stock and Parent the same
economic effect as contemplated by this Agreement prior to such stock split,
reverse split, stock dividend, reorganization, recapitalization or like change.
(f) Fractional Shares. No fraction of a share of Parent
Common Stock will be issued, but in lieu thereof each holder of shares of
Company Common Stock who would otherwise be entitled to a fraction of a share of
Parent Common Stock (after aggregating all fractional shares of Parent Common
Stock to be received by such holder) shall receive from Parent an amount of cash
(rounded to the nearest whole cent) equal to the product of (i) such fraction,
multiplied by (ii) the Parent Stock Price.
1.7 Surrender of Certificates.
(a) Exchange Agent. Parent's transfer agent shall act as
exchange agent (the "Exchange Agent") in the Merger.
(b) Parent to Provide Common Stock and Cash. Promptly
after the Effective Time, Parent shall make available to the Exchange Agent for
exchange in accordance with this Article I, through such reasonable procedures
as Parent may adopt, (i) the shares of Parent Common Stock issuable pursuant to
Section 1.6(a) in exchange for shares of Company Common Stock outstanding
immediately prior to the Effective Time (provided that delivery of any shares
that are subject to vesting and/or repurchase rights or other restrictions shall
be in book entry form until such vesting and/or repurchase rights or other
restrictions lapse) and (ii) cash in an amount sufficient to permit payment of
cash in lieu of fractional shares pursuant to Section 1.6(e).
(c) Exchange Procedures. Promptly after the Effective
Time, the Surviving Corporation shall cause to be mailed to each holder of
record of a certificate or certificates (the "Certificates") which immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock, whose shares were converted into the right to receive shares of Parent
Common Stock (and cash in lieu of fractional shares) pursuant to Section 1.6,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
receipt of the Certificates by the Exchange Agent, and shall be in such form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates (or book entries in the case of shares that are subject to
vesting and/or repurchase rights or other restrictions) representing shares of
Parent Common Stock (and cash in lieu of fractional shares). Upon surrender of a
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
the holder of such Certificate shall be entitled to receive in exchange therefor
a certificate (or book entry in the case of shares that are subject to vesting
and/or repurchase rights or other
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restrictions) representing the number of whole shares of Parent Common Stock and
payment in lieu of fractional shares which such holder has the right to receive
pursuant to Section 1.6, and the Certificate so surrendered shall forthwith be
canceled. Until so surrendered, each outstanding Certificate that, prior to the
Effective Time, represented shares of Company Common Stock will be deemed from
and after the Effective Time, for all corporate purposes, other than the payment
of dividends, to evidence the ownership of the number of full shares of Parent
Common Stock into which such shares of Company Common Stock shall have been so
converted and the right to receive an amount in cash in lieu of the issuance of
any fractional shares in accordance with Section 1.6. Notwithstanding any other
provision of this Agreement, no interest will be paid or will accrue on any cash
payable to holders of Certificates pursuant to the provisions of this Article I.
(d) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time will be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby until the holder of record of such Certificate shall
surrender such Certificate. Subject to applicable law, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, at the time of such surrender, the amount of any
such dividends or other distributions with a record date after the Effective
Time theretofore payable (but for the provisions of this Section 1.7(d)) with
respect to such shares of Parent Common Stock.
(e) Transfers of Ownership. If any certificate for shares
of Parent Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of a certificate
for shares of Parent Common Stock in any name other than that of the registered
holder of the Certificate surrendered, or established to the satisfaction of
Parent or any agent designated by it that such tax has been paid or is not
payable.
(f) No Liability. Notwithstanding anything to the contrary
in this Section 1.7, none of the Exchange Agent, the Surviving Corporation,
Parent or any party hereto shall be liable to any person for any amount properly
paid to a public official pursuant to any applicable abandoned property, escheat
or similar law.
1.8 No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of shares
of Company Common Stock in accordance with the terms hereof (including any cash
paid in lieu of fractional shares) shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of Company Common Stock,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article I.
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1.9 Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such shares of Parent
Common Stock (and cash in lieu of fractional shares) as may be required pursuant
to Section 1.6; provided, however, that Parent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.10 Tax Consequences. It is intended by the parties hereto that
the Merger shall constitute a reorganization within the meaning of Section 368
of the Code.
1.11 Withholding Rights. Parent and the Surviving Corporation
shall be entitled to deduct and withhold from the number of shares of Parent
Common Stock otherwise deliverable under this Agreement, and from any other
payments made pursuant to this Agreement, such amounts as Parent and the
Surviving Corporation are required to deduct and withhold with respect to such
delivery and payment under the Code or any provision of state, local, provincial
or foreign tax law. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes of this Agreement as having been
delivered and paid to the holder of shares of Company Common Stock in respect of
which such deduction and withholding was made by Parent and the Surviving
Corporation.
1.12 Termination of Exchange Agent Funding. Any portion of funds
(including any interest earned thereon) or certificates for shares of Parent
Common Stock held by the Exchange Agent which have not been delivered to holders
of Certificates pursuant to this Article I within six months after the Effective
Time shall promptly be paid or delivered, as appropriate, to Parent, and
thereafter holders of Certificates who have not theretofore complied with the
exchange procedures set forth in and contemplated by Section 1.7 shall
thereafter look only to Parent (subject to abandoned property, escheat and
similar laws) for their claim for shares of Parent Common Stock and, only as
general creditors thereof, any cash in lieu of fractional shares of Parent
Common Stock and any dividends or distributions (with a record date after the
Effective Time) with respect to Parent Common Stock to which they are entitled.
1.13 Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of Company and Merger Sub, the officers and directors of
Company and Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action, so long as such action is not inconsistent with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
In this Agreement, any reference to any event, change, condition
or effect being "material" with respect to any person means any material event,
change, condition or effect
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related to the condition (financial or otherwise), properties, assets (including
intangible assets), liabilities, business, operations or results of operations
of such person and its subsidiaries, taken as a whole. In this Agreement, any
reference to a "Material Adverse Effect" with respect to any person means any
event, change or effect that is materially adverse to the condition (financial
or otherwise), properties, assets, liabilities, business, operations or results
of operations of such person and its subsidiaries, taken as a whole, provided,
however, that a "Material Adverse Effect" with respect to Company shall not
include the following (collectively, "Non-Controllable Events"): (i) general
changes in the telecommunications industry or economic conditions that affect
Company and its subsidiaries, taken as a whole, substantially proportionately
relative to the Parent and its subsidiaries, taken as a whole or (ii) a decline
in the revenues of Company following the date of this Agreement which is
attributable to a delay of, reduction in or cancellation or change in the
purchase orders by customers of Company arising as a result of the execution or
announcement of this Agreement (provided that revenues do not decline below the
amounts set forth in Schedule 2.0). A decline of revenues below such levels
shall be deemed to be a Material Adverse Effect on Company.
In this Agreement, any reference to a party's "knowledge" means
such party's actual knowledge after reasonable inquiry of officers, directors
and other employees of such party charged with senior administrative or
operational responsibility for such matters.
Except as disclosed in that section of the document of even date
herewith delivered by Company to Parent prior to the execution and delivery of
this Agreement (the "Company Disclosure Schedule") corresponding to the Section
of this Agreement to which any of the following representations and warranties
specifically relate or as disclosed in another section of the Company Disclosure
Schedule if it is reasonably apparent from the nature of the disclosure that it
is applicable to another Section of this Agreement, Company represents and
warrants to Parent and Merger Sub as follows:
2.1 Organization, Standing and Power. Each of Company and its
subsidiaries is a corporation duly organized, validly existing and no articles
of dissolution have been filed under the laws of its jurisdiction of
organization. Each of Company and its subsidiaries has the corporate power to
own its properties and to carry on its business as now being conducted and as
presently proposed to be conducted and is duly authorized and qualified to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified and in good standing would have a Material Adverse Effect on
Company. Company has delivered to Parent a true and correct copy of the Amended
and Restated Articles of Incorporation, as amended (the "Articles of
Incorporation"), and the Amended and Restated Bylaws, as amended, or other
charter documents, as applicable, of Company and each of its subsidiaries, each
as amended to date. Neither Company nor any of its subsidiaries is in violation
of any of the provisions of its respective charter or bylaws or equivalent
organization documents. Company is the owner of all outstanding shares of
capital stock of each of its subsidiaries and all such shares are duly
authorized, validly issued, fully paid and nonassessable. All of the outstanding
shares of capital stock of each such subsidiary are owned by Company free and
clear of all liens, charges, claims or encumbrances or rights of others. There
are no outstanding subscriptions, options, warrants, puts, calls, rights,
exchangeable or convertible securities or other commitments or agreements of any
character relating to the issued or unissued capital stock or other securities
of any such subsidiary, or otherwise obligating Company or any such subsidiary
to issue, transfer, sell,
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purchase, redeem or otherwise acquire any such securities. Except as disclosed
in the Company SEC Documents (as defined in Section 2.4), Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible or exchangeable or exercisable for, any equity or similar interest
in, any corporation, partnership, joint venture or other business association or
entity.
2.2 Capital Structure. The authorized capital stock of Company
consists of 60,000,000 shares of Common Stock, no par value, and 2,000,000
shares of Preferred Stock, no par value, of which there were issued and
outstanding as of the close of business on November 9, 2000, 11,436,453 shares
of Common Stock and no shares of Preferred Stock. There are no other outstanding
shares of capital stock or voting securities and no outstanding commitments to
issue any shares of capital stock or voting securities after November 9, 2000,
other than pursuant to the Option Agreement, the exercise of options outstanding
as of such date under the Company's 2000 Stock Option Plan, 1998 Stock Option
Plan, 1996 Stock Option Plan, 1993 Stock Option Plan, 1988 Non-qualified Stock
Option Plan and 2000 Director Stock Option Plan, 1997 Director Stock Option
Plan, Directors Stock Option Plan and non-plan stock option grant to each of Xxx
Xxxxxx and Xxxxxx Xxxxxxxx (collectively, the "Company Stock Option Plans") or
pursuant to the Company Employee Stock Purchase Plan (the "Company ESPP"). All
outstanding shares of Company Common Stock are duly authorized, validly issued,
fully paid and non-assessable and are free of any liens or encumbrances other
than any liens or encumbrances created by or imposed upon the holders thereof,
and are not subject to preemptive rights or rights of first refusal created by
statute, the Articles of Incorporation or Bylaws of Company or any agreement to
which Company is a party or by which it is bound. As of the close of business on
November 9, 2000, Company has reserved (i) 6,432,330 shares of Common Stock for
issuance to employees, consultants and directors pursuant to the Company Stock
Option Plans, of which 1,920,506 shares have been issued pursuant to option
exercises or direct stock purchases, 3,330,184 shares are subject to
outstanding, unexercised options, no shares are subject to outstanding stock
purchase rights, and 1,181,640 shares are available for issuance thereunder and
(ii) 700,000 shares of Common Stock for issuance to employees pursuant to the
Company ESPP, of which no shares have been issued. Since November 8, 2000,
Company has not (i) issued or granted additional options under the Company Stock
Option Plans, or (ii) accepted enrollments in the Company ESPP. Except for (i)
the rights created pursuant to this Agreement, the Option Agreement, the Company
Stock Option Plans and the Company ESPP and (ii) the Company's rights to
repurchase any unvested shares under the Company Stock Option Plans or the stock
option agreements thereunder, there are no other options, warrants, calls,
rights, commitments or agreements of any character to which Company is a party
or by which it is bound obligating Company to issue, deliver, sell, repurchase
or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of capital stock of Company or obligating Company to grant, extend,
accelerate the vesting and/or repurchase rights of, change the price of, or
otherwise amend or enter into any such option, warrant, call, right, commitment
or agreement. There are no contracts, commitments or agreements relating to
voting, purchase or sale of Company's capital stock (i) between or among Company
and any of its stockholders and (ii) to the best of Company's knowledge, between
or among any of Company's stockholders. The terms of the Company Stock Option
Plans permit the assumption or substitution of options to purchase Parent Common
Stock as provided in this Agreement, without the consent or approval of the
holders of such securities, stockholders, or otherwise. The current "Payment
Period" (as defined in the Company ESPP) commenced under the Company ESPP on
October 1, 2000, and will end on the
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earlier of the day immediately prior to the Effective Time and December 31,
2000, and except for the purchase rights granted on such commencement date to
participants in the current Payment Period, there are no other purchase rights
or options outstanding under the Company ESPP. True and complete copies of all
agreements and instruments relating to or issued under the Company Stock Option
Plans or Company ESPP have been made available to Parent and such agreements and
instruments have not been amended, modified or supplemented, and there are no
agreements to amend, modify or supplement such agreements or instruments in any
case from the form made available to Parent. The shares of Company Common Stock
issued under the Company Stock Option Plans, as amended and under all prior
versions thereof, have either been registered under the Securities Act or were
issued in transactions which qualified for exemptions under, either Section 4(2)
of, or Rule 701 under, the Securities Act for stock issuances under compensatory
benefit plans.
2.3 Authority. Company has all requisite corporate power and
authority to enter into this Agreement, the Asset Purchase Agreement and the
Option Agreement and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement, the Asset Purchase
Agreement and the Option Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Company, subject only to the adoption of this
Agreement by Company's stockholders holding a majority of the outstanding shares
of Company Common Stock as contemplated by Section 6.1(a). Each of this
Agreement, the Asset Purchase Agreement and the Option Agreement has been duly
executed and delivered by Company and constitutes the valid and binding
obligation of Company enforceable against Company in accordance with its terms,
except as enforceability may be limited by bankruptcy and other laws affecting
the rights and remedies of creditors generally and general principles of equity.
The execution and delivery of this Agreement, the Asset Purchase Agreement and
the Option Agreement by Company does not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit under (i) any provision of the Articles of
Incorporation or Bylaws of Company or any of its subsidiaries, as amended, or
(ii) any material mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Company or any of its
subsidiaries or any of their properties or assets. No consent, approval, order
or authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality ("Governmental Entity") is required by or with respect to
Company or any of its subsidiaries in connection with the execution and delivery
of this Agreement, the Asset Purchase Agreement, the Option Agreement, or the
consummation of the transactions contemplated hereby and thereby, except for (i)
the filing of the Certificate of Merger and Articles of Merger as provided in
Section 1.2; (ii) the filing with the Securities and Exchange Commission (the
"SEC") and the National Association of Securities Dealers, Inc. (the "NASD") of
the Proxy Statement (as defined in Section 2.23) relating to the Company
Stockholders Meeting (as defined in Section 2.23); (iii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws and the securities laws
of any foreign country; (iv) such filings as may be required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended ("HSR"); (v)
the filing of a Form S-4 Registration Statement with the SEC in
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accordance with the Securities Act of 1933, as amended; (vi) the filing of a
Current Report on Form 8-K with the SEC; and (vii) such other consents,
authorizations, filings, approvals and registrations which, if not obtained or
made, would not have a Material Adverse Effect on Company and would not prevent,
or materially alter or delay any of the transactions contemplated by this
Agreement, the Asset Purchase Agreement or the Option Agreement.
2.4 SEC Documents; Financial Statements. Company has made
available to Parent a true and complete copy of each statement, report,
registration statement (with the prospectus in the form filed pursuant to Rule
424(b) of the Securities Act of 1933, as amended (the "Securities Act")),
definitive proxy statement and other filings made with the SEC by Company since
October 29, 1995, and, prior to the Effective Time, Company will have furnished
to Parent true and complete copies of any additional documents filed with the
SEC by Company prior to the Effective Time (collectively, the "Company SEC
Documents"). Company has timely filed all forms, statements and documents
required to be filed by it with the SEC and The Nasdaq National Market since
October 29, 1995. In addition, Company has made available to Parent all exhibits
to the Company SEC Documents filed prior to the date hereof, and will promptly
make available to Parent all exhibits to any additional Company SEC Documents
filed prior to the Effective Time. All documents required to be filed as
exhibits to the Company SEC Documents have been so filed, and all material
contracts so filed as exhibits are in full force and effect, except those which
have expired in accordance with their terms, and neither Company nor any of its
subsidiaries is in material default thereunder. As of their respective filing
dates, the Company SEC Documents complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Securities Act, and none of the Company SEC Documents contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading, except to
the extent corrected by a subsequently filed Company SEC Document. The financial
statements of Company, including the notes thereto, included in the Company SEC
Documents (the "Company Financial Statements") were complete and correct in all
material respects as of their respective dates, complied as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto as of their respective
dates, and have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a basis consistent throughout
the periods indicated and consistent with each other (except as may be indicated
in the notes thereto or, in the case of unaudited statements included in
Quarterly Reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The
Company Financial Statements fairly present the consolidated financial condition
and operating results of Company and its subsidiaries at the dates and during
the periods indicated therein (subject, in the case of unaudited statements, to
normal, recurring year-end adjustments). There has been no change in Company
accounting policies since June 30, 2000, except as described in the notes to the
Company Financial Statements.
2.5 Absence of Certain Changes. Since June 30, 2000, (the
"Company Balance Sheet Date"), Company has conducted its business in the
ordinary course consistent with past practice and, other than the execution and
delivery of the Asset Purchase Agreement and the performance of the transactions
contemplated thereby, there has not occurred: (i) any change, event or condition
(whether or not covered by insurance) that has resulted in, or is reasonably
likely to result in, or to the best of Company's knowledge any event beyond
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Company's control that is reasonably likely to result in, a Material Adverse
Effect to Company; (ii) any acquisition, sale or transfer of any material asset
of Company or any of its subsidiaries other than in the ordinary course of
business and consistent with past practice; (iii) any change in accounting
methods or practices (including any change in depreciation or amortization
policies or rates) by Company or any revaluation by Company of any of its or any
of its subsidiaries' assets; (iv) any declaration, setting aside, or payment of
a dividend or other distribution with respect to the shares of Company, or any
direct or indirect redemption, purchase or other acquisition by Company of any
of its shares of capital stock; (v) any material contract entered into by
Company or any of its subsidiaries, other than in the ordinary course of
business and as provided to Parent, or any material amendment or termination of,
or default under, any material contract to which Company or any of its
subsidiaries is a party or by which it is bound; (vi) any amendment or change to
the Articles of Incorporation or Bylaws; or (vii) any increase in or
modification of the compensation or benefits payable, or to become payable, by
Company to any of its directors or employees, other than pursuant to scheduled
annual performance reviews, provided that any resulting modifications are in the
ordinary course of business and consistent with Company's past practices.
Company has not agreed since June 30, 2000 to do any of the things described in
the preceding clauses (i) through (vii) and is not currently involved in any
negotiations to do any of the things described in the preceding clauses (i)
through (vii) (other than negotiations with Parent and its representatives
regarding the transactions contemplated by this Agreement).
2.6 Absence of Undisclosed Liabilities. Company has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet included in Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 2000 (the "Company Balance Sheet"), (ii) those incurred
in the ordinary course of business and not required to be set forth in the
Company Balance Sheet under GAAP, (iii) those incurred in the ordinary course of
business since the Company Balance Sheet Date and not reasonably likely to have
a Material Adverse Effect on Company; and (iv) those incurred in connection with
the execution of this Agreement.
2.7 Litigation. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Company or any of its
subsidiaries, threatened against Company or any of its subsidiaries or any of
their respective properties or any of their respective officers or directors (in
their capacities as such) that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on Company. There is no
judgment, decree or order against Company or any of its subsidiaries, or, to the
knowledge of Company and its subsidiaries, any of their respective directors or
officers (in their capacities as such), that would prevent, enjoin, alter or
materially delay any of the transactions contemplated by this Agreement, or that
could reasonably be expected to have a Material Adverse Effect on Company.
Schedule 2.7 lists all actions, suits, proceedings, claims, arbitrations and
investigations pending before any agency, court or tribunal that involve Company
or any of its subsidiaries.
2.8 Restrictions on Business Activities. There is no agreement,
judgment, injunction, order or decree binding upon Company or any of its
subsidiaries which has or reasonably could be expected to have the effect of
prohibiting or materially impairing any
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business practice of Company or any of its subsidiaries, any acquisition of
property by Company or any of its subsidiaries or the conduct of business by
Company or any of its subsidiaries.
2.9 Governmental Authorization. Company and each of its
subsidiaries have obtained each federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization of a
Governmental Entity (i) pursuant to which Company or any of its subsidiaries
currently operates or holds any interest in any of its properties or (ii) that
is required for the operation of Company's or any of its subsidiaries' business
or the holding of any such interest ((i) and (ii) herein collectively called
"Company Authorizations"), and all of such Company Authorizations are in full
force and effect, except where the failure to obtain or have any of such Company
Authorizations or where the failure of such Company Authorizations to be in full
force and effect would not reasonably be expected to have a Material Adverse
Effect on Company.
2.10 Title to Property. Company and its subsidiaries have good
and valid title to all of their respective properties, interests in properties
and assets, real and personal, reflected in the Company Balance Sheet or
acquired after the Company Balance Sheet Date (except properties, interests in
properties and assets sold or otherwise disposed of since the Company Balance
Sheet Date in the ordinary course of business), or in the case of leased
properties and assets, valid leasehold interests in, free and clear of all
mortgages, liens, pledges, charges or encumbrances of any kind or character,
except (i) the lien of current taxes not yet due and payable, (ii) such
imperfections of title, liens and easements as do not and will not materially
detract from or interfere with the use of the properties subject thereto or
affected thereby, or otherwise materially impair business operations involving
such properties, (iii) liens securing debt which is reflected on the Company
Balance Sheet, and (iv) liens that in the aggregate would not have a Material
Adverse Effect on Company. The plants, property and equipment of Company and its
subsidiaries that are used in the operations of their businesses are in good
operating condition and repair, except where the failure to be in good operating
condition or repair would not have a Material Adverse Effect. All properties
used in the operations of Company and its subsidiaries are reflected in the
Company Balance Sheet to the extent generally accepted accounting principles
require the same to be reflected. Schedule 2.10 identifies each parcel of real
property owned or leased by Company or any of its subsidiaries. No lease
relating to a foreign parcel contains any extraordinary payment obligation.
2.11 Intellectual Property.
(a) Company and its subsidiaries own, or are licensed or
otherwise possess legally enforceable and unencumbered rights to use all
patents, trademarks, trade names, service marks, domain names, database rights,
copyrights, and any applications therefor, maskworks, net lists, schematics,
technology, know-how, trade secrets, inventory, ideas, algorithms, processes,
computer software programs or applications (in both source code, except in
circumstances where Company only possesses a license to the object code form,
and object code form), and tangible or intangible proprietary information or
material ("Intellectual Property") that are used in the business of Company and
its subsidiaries. Company owns and possesses source code for all software owned
by Company and owns or has valid licenses and possesses source code for all
products owned, distributed and presently supported by Company. Company has not
(i) licensed any of its Intellectual Property in source code form to any party
or
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(ii) entered into any exclusive agreements relating to its Intellectual
Property. No royalties or other continuing payment obligations are due in
respect of Third Party Intellectual Property Rights.
(b) Schedule 2.11 lists (i) all patents and patent
applications and all registered trademarks, trade names and service marks,
registered copyrights, and maskworks included in the Intellectual Property,
including the jurisdictions in which each such Intellectual Property right has
been issued or registered or in which any application for such issuance and
registration has been filed, (ii) all licenses, sublicenses and other agreements
as to which Company is a party and pursuant to which any person is authorized to
use any Intellectual Property (except for non-material licenses entered into by
Company in the ordinary course of business), and (iii) all licenses, sublicenses
and other agreements as to which Company is a party and pursuant to which
Company is authorized to use any third party patents, trademarks or copyrights,
including software ("Third Party Intellectual Property Rights") which are
incorporated in, are, or form a part of any Company product, other than
commercially available, off-the-shelf software.
(c) There is no unauthorized use, disclosure, infringement
or misappropriation of any Intellectual Property rights of Company or any of its
subsidiaries, or any Intellectual Property right of any third party to the
extent licensed by or through Company or any of its subsidiaries, by any third
party, including any employee or former employee of Company or any of its
subsidiaries. Neither Company nor any of its subsidiaries has entered into any
agreement to indemnify any other person against any charge of infringement of
any Intellectual Property, other than indemnification provisions contained in
purchase orders, license agreements and distribution and other customer
agreements arising in the ordinary course of business.
(d) Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any license, sublicense or other agreement
relating to the Intellectual Property or Third Party Intellectual Property
Rights.
(e) All patents, trademarks, service marks and copyrights
held by Company are valid and subsisting. Company (i) has not been sued in any
suit, action or proceeding (or received any notice or, to Company's knowledge,
threat) which involves a claim of infringement of any patents, trademarks,
service marks, copyrights or violation of any trade secret or other proprietary
right of any third party and (ii) has not brought any action, suit or proceeding
for infringement of Intellectual Property or breach of any license or agreement
involving Intellectual Property against any third party. The manufacture,
marketing, licensing or sale of Company's products does not infringe any patent,
trademark, service xxxx, copyright, trade secret or other proprietary right of
any third party.
(f) Company has secured valid written assignments from all
consultants and employees who contributed to the creation or development of
Intellectual Property of the rights to such contributions that Company does not
already own by operation of law.
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(g) Company has taken all reasonably necessary steps to
protect and preserve the confidentiality of all Intellectual Property not
otherwise protected by patents or patent applications or copyright
("Confidential Information"). All use, disclosure or appropriation of
Confidential Information owned by Company by or to a third party has been
pursuant to the terms of a written agreement between Company and such third
party. All use, disclosure or appropriation of Confidential Information not
owned by Company has been pursuant to the terms of a written agreement between
Company and the owner of such Confidential Information, or is otherwise lawful.
(h) There are no actions that must be taken by Company or
any subsidiary within sixty (60) days of the Closing Date that, if not taken,
will result in the loss of any Intellectual Property, including the payment of
any registration, maintenance or renewal fees or the filing of any responses to
the U.S. Patent and Trademark Office actions, documents, applications or
certificates for the purposes of obtaining, maintaining, perfecting or
preserving or renewing any Intellectual Property.
(i) Company has not received any opinion of counsel that
any third party patents apply to the Company's products.
2.12 Environmental Matters.
(a) The following terms shall be defined as follows:
(i) "Environmental and Safety Laws" shall mean any
federal, state or local laws, ordinances, codes, regulations, rules, policies
and orders that are intended to assure the protection of the environment, or
that classify, regulate, call for the remediation of, require reporting with
respect to, or list or define air, water, groundwater, solid waste, hazardous or
toxic substances, materials, wastes, pollutants or contaminants, or which are
intended to assure the safety of employees, workers or other persons, including
the public.
(ii) "Hazardous Materials" shall mean any toxic or
hazardous substance, material or waste or any pollutant or contaminant, or
infectious or radioactive substance or material, including without limitation,
those substances, materials and wastes defined in or regulated under any
Environmental and Safety Laws.
(iii) "Property" shall mean all real property
leased or owned by Company or its subsidiaries either currently or in the past.
(iv) "Facilities" shall mean all buildings and
improvements on the Property.
(b) Company represents and warrants that, except in all
cases as, in the aggregate, would not have a Material Adverse Effect on Company,
as follows: (i) no methylene chloride or asbestos is contained in or has been
used at or released from the Facilities; (ii) all Hazardous Materials and wastes
have been disposed of in accordance with all Environmental and Safety Laws;
(iii) Company and its subsidiaries have received no notice (verbal or written)
of any noncompliance of the Facilities or its past or present operations with
Environmental and Safety Laws; (iv) no notices, administrative actions or suits
are pending or, to Company's
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knowledge, threatened relating to a violation of any Environmental and Safety
Laws; (v) to Company's knowledge, neither Company nor its subsidiaries are a
potentially responsible party under the federal Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA), or state analog statute,
arising out of events occurring prior to the Closing Date; (vi) there have not
been in the past, and are not now, any Hazardous Materials on, under or
migrating to or from the Facilities or Property; (vii) there have not been in
the past, and are not now, any underground tanks or underground improvements at,
on or under the Property including without limitation, treatment or storage
tanks, sumps, or water, gas or oil xxxxx; (viii) there are no polychlorinated
biphenyls (PCBs) deposited, stored, disposed of or located on the Property or
Facilities or any equipment on the Property containing PCBs at levels in excess
of 50 parts per million; (ix) there is no formaldehyde on the Property or in the
Facilities, nor any insulating material containing urea formaldehyde in the
Facilities; (x) the Facilities and Company's and its subsidiaries uses and
activities therein have at all times complied with all Environmental and Safety
Laws; and (xi) Company and its subsidiaries have all the permits and licenses
required to be issued under applicable Environmental and Safety Laws and are in
full compliance with the terms and conditions of those permits and licenses.
2.13 Taxes. Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax (as defined below)
purposes of which Company or any of its subsidiaries is or has been a member,
have properly completed and timely filed all Tax Returns required to be filed by
them and have paid all Taxes shown thereon to be due. All unpaid Taxes of
Company and its subsidiaries for periods through June 30, 2000 are reflected in
the Company Balance Sheet. The Company has no material liability for unpaid
Taxes accruing after June 30, 2000 other than Taxes arising in the ordinary
course of its business subsequent to June 30, 2000. There is (i) no material
claim for Taxes that is a lien against the property of Company or any of its
subsidiaries or is being asserted against Company or any of its subsidiaries
other than liens for Taxes not yet due and payable; (ii) no audit of any Tax
Return of Company or any of its subsidiaries that is being conducted by a Tax
authority; (iii) no extension of the statute of limitations on the assessment of
any Taxes that has been granted by Company or any of its subsidiaries and that
is currently in effect; and (iv) no agreement, contract or arrangement to which
Company or any of its subsidiaries is a party that may result in the payment of
any amount that would not be deductible by reason of Sections 280G, 162 or 404
of the Code. Neither Company nor any of its subsidiaries has been or will be
required to include any material adjustment in Taxable income for any Tax period
(or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Merger. Neither
Company nor any of its subsidiaries has filed or will file any consent to have
the provisions of paragraph 341(f)(2) of the Code (or comparable provisions of
any state Tax laws) apply to Company or any of its subsidiaries. There are no
Tax sharing or Tax allocation agreements to which Company or any of its
subsidiaries is a party or to which it or any of them is bound. Neither Company
nor any of its subsidiaries has filed any disclosures under Section 6662 or
comparable provisions of state, local or foreign law to prevent the imposition
of penalties with respect to any Tax reporting position taken on any Tax Return.
Except as set forth on Schedule 2.13, neither Company nor any of its
subsidiaries has ever been a member of a consolidated, combined or unitary group
of which Company was not the ultimate parent corporation. Company and each of
its subsidiaries have in their possession receipts for any Taxes paid to foreign
Tax authorities. For purposes of this Agreement, the following terms have
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the following meanings: "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") means (i) any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom, duty or other
tax, governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Governmental Entity (a "Tax authority") responsible for the
imposition of any such tax (domestic or foreign); (ii) any liability for the
payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group for any Taxable
period; and (iii) any liability for the payment of any amounts of the type
described in (i) or (ii) as a result of being a transferee of or successor to
any person or as a result of any express or implied obligation to indemnify any
other person, including pursuant to any Tax sharing or Tax allocation agreement.
As used herein, "Tax Return" shall mean any return, statement, report or form
(including, without limitation estimated Tax returns and reports, withholding
Tax returns and reports and information reports and returns) required to be
filed with respect to Taxes. Neither Company nor any of its subsidiaries has
ever been a United States real property holding corporation within the meaning
of Section 897 of the Code.
2.14 Employee Benefit Plans.
(a) Schedule 2.14(a) lists, with respect to Company, any
subsidiary of Company and any trade or business (whether or not incorporated)
which is treated as a single employer with Company (an "ERISA Affiliate") within
the meaning of Section 414(b), (c), (m) or (o) of the Code, (i) all material
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") other than Foreign Plans (as
defined below)); (ii) each loan to a non-officer employee in excess of $50,000,
loans to officers and directors and any stock option, stock purchase, phantom
stock, stock appreciation right, supplemental retirement, severance, sabbatical,
medical, dental, vision care, disability, employee relocation, cafeteria benefit
(Code section 125) or dependent care (Code Section 129), life insurance or
accident insurance plans, programs or arrangements; (iii) all bonus, pension,
profit sharing, savings, deferred compensation or incentive plans, programs or
arrangements; (iv) other fringe or employee benefit plans, programs or
arrangements that apply to senior management of Company and that do not
generally apply to all employees; and (v) any current or former employment or
executive compensation or severance agreements, written or otherwise, as to
which unsatisfied obligations of Company of greater than $50,000 remain for the
benefit of, or relating to, any present or former employee, consultant or
director of Company (together, the "Company Employee Plans").
(b) Company has furnished or made available to Parent a
copy of each of the Company Employee Plans and related plan documents (including
trust documents, insurance policies or contracts, employee booklets, summary
plan descriptions and other authorizing documents, and any material employee
communications relating thereto) and has, with respect to each Company Employee
Plan which is subject to ERISA reporting requirements, provided copies of the
Form 5500 reports filed for the last three plan years. Any Company Employee Plan
intended to be qualified under Section 401(a) of the Code has either obtained
from the Internal Revenue Service a favorable determination letter as to its
qualified status under the Code, including all amendments to the Code effected
by the Tax Reform Act of 1986 and
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subsequent legislation other than the Uruguay Round Agreements Act of 1994, the
Uniformed Services Employment and Reemployment Rights Act of 1994, the Small
Business Job Protection Act of 1996, and the Taxpayer Relief Act of 1997, or has
applied to the Internal Revenue Service for such a determination letter prior to
the expiration of the requisite period under applicable Treasury Regulations or
Internal Revenue Service pronouncements in which to apply for such determination
letter and to make any amendments necessary to obtain a favorable determination.
Company has also furnished Parent with the most recent Internal Revenue Service
determination letter issued with respect to each such Company Employee Plan, and
nothing has occurred since the issuance of each such letter which would
reasonably be expected to cause the loss of the tax-qualified status of any
Company Employee Plan subject to Code Section 401(a). Company has also furnished
Parent with all registration statements and prospectuses prepared in connection
with each Company Employee Plan.
(c) None of the Company Employee Plans (including but not
limited to Foreign Plans) promises or provides retiree medical or other retiree
welfare benefits to any person, except as required by applicable law; (ii) there
has been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975 of the Code, with respect to any Company Employee Plan,
which would reasonably be expected to have, in the aggregate, a Material Adverse
Effect on Company; (iii) each Company Employee Plan has been administered in
accordance with its terms and in compliance with the requirements prescribed by
any and all statutes, rules and regulations (including ERISA and the Code),
except as would not have, in the aggregate, a Material Adverse Effect on
Company, and Company and each subsidiary or ERISA Affiliate have performed in
all material respects all obligations required to be performed by them under,
are not in default in any material respect under or violation of, and have no
knowledge of any material default or violation by any other party to, any of the
Company Employee Plans; (iv) neither Company nor any subsidiary or ERISA
Affiliate is subject to any material liability or material penalty under
Sections 4976 through 4980 of the Code or Title I of ERISA with respect to any
of the Company Employee Plans; (v) all material contributions required to be
made by Company or any subsidiary or ERISA Affiliate to any Company Employee
Plan have been made on or before their due dates and a reasonable amount has
been accrued for contributions to each Company Employee Plan for the current
plan years; (vi) with respect to each Company Employee Plan, no "reportable
event" within the meaning of Section 4043 of ERISA (excluding any such event for
which the thirty (30) day notice requirement has been waived under the
regulations to Section 4043 of ERISA) nor any event described in Section 4062,
4063 or 4041 or ERISA has occurred; (vii) no Company Employee Plan is covered
by, and neither Company nor any subsidiary or ERISA Affiliate has incurred or
expects to incur any liability under Title IV of ERISA or Section 412 of the
Code; and (viii) each Company Employee Plan can be amended, terminated or
otherwise discontinued after the Effective Time in accordance with its terms,
without liability to Parent (other than for benefits accrued through the date of
termination and ordinary administrative expenses typically incurred in a
termination event). With respect to each Company Employee Plan subject to ERISA
as either an employee pension plan within the meaning of Section 3(2) of ERISA
or an employee welfare benefit plan within the meaning of Section 3(1) of ERISA,
Company has prepared in good faith and timely filed all requisite governmental
reports (which were true and correct as of the date filed) and has properly and
timely filed and distributed or posted all notices and reports to employees
required to be filed, distributed or posted with respect to each such Company
Employee Plan, except where the failure to do so would not have a Material
Adverse Effect. No suit, administrative proceeding,
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action or other litigation has been brought, or to the knowledge of Company is
threatened, against or with respect to any such Company Employee Plan, including
any audit or inquiry by the IRS or United States Department of Labor. No payment
or benefit which will or may be made by Company to any employee will be
characterized as an "excess parachute payment" within the meaning of Section
280G(b)(1) of the Code.
(d) With respect to each Company Employee Plan, Company
and each of its United States subsidiaries have complied except to the extent
that such failure to comply would not, individually or in the aggregate, have a
Material Adverse Effect on Company, with (i) the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and the regulations (including proposed
regulations) thereunder, (ii) the applicable requirements of the Family Medical
and Leave Act of 1993 and the regulations thereunder, and (iii) the applicable
requirements of the Health Insurance Portability and Accountability Act of 1996
and the regulations (including proposed regulations) thereunder. Schedule
2.14(d) describes all obligations of the Company as of the date of this
Agreement under any of the provisions of COBRA and the Family and Medical Leave
Act of 1993.
(e) The consummation of the transactions contemplated by
this Agreement will not (i) entitle any current or former employee or other
service provider of Company, any Company subsidiary or any other ERISA Affiliate
to severance benefits or any other payment, except as expressly provided in this
Agreement, or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or service provider.
(f) There has been no amendment to, written interpretation
or announcement (whether or not written) by Company, any Company subsidiary or
other ERISA Affiliate relating to, or change in participation or coverage under,
any Company Employee Plan which would materially increase the expense of
maintaining such Plan above the level of expense incurred with respect to that
Plan for the most recent fiscal quarter included in Company's financial
statements.
(g) Company does not currently maintain, sponsor,
participate in or contribute to, nor has it ever maintained, established,
sponsored, participated in, or contributed to, any pension plan (within the
meaning of Section 3(2) of ERISA) which is subject to Part 3 of Subtitle B of
Title I of ERISA, Title IV of ERISA or Section 412 of the Code.
(h) Neither Company nor any Company subsidiary or other
ERISA Affiliate is a party to, or has made any contribution to or otherwise
incurred any obligation under, any "multiemployer plan" as defined in Section
3(37) of ERISA.
(i) With regard to each compensation and benefit plan
required to be maintained or contributed to by the law or applicable custom or
rule of the relevant jurisdiction outside of the United States (the "Foreign
Plans"), (i) each of the Foreign Plans is listed in Schedule 2.14(i) and is in
material compliance with the provisions of the laws of each jurisdiction in
which each such Foreign Plan is maintained, to the extent those laws are
applicable to the Foreign Plans; (ii) all material contributions to, and
material payments from, the
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Foreign Plans which may have been required to be made in accordance with the
terms of any such Foreign Plan, and, when applicable, the law of the
jurisdiction in which such Foreign Plan is maintained, have been timely made or
shall be made by the Closing Date, and all such contributions to the Foreign
Plans, and all payments under the Foreign Plans, for any period ending before
the Closing Date that are not yet, but will be, required to be made, are
reflected as an accrued liability on the Balance Sheet; (iii) Company, each
Company subsidiary and ERISA Affiliates have materially complied with all
applicable reporting and notice requirements, and all of the Foreign Plans have
obtained from the governmental body having jurisdiction with respect to such
plans any required determinations, if any, that such Foreign Plans are in
compliance with the laws of the relevant jurisdiction if such determinations are
required in order to give effect to the Foreign Plan; (iv) each of the Foreign
Plans has been administered in all material respects at all times in accordance
with its terms and applicable law and regulations; (v)to the knowledge of
Company, there are no pending investigations by any governmental body involving
the Foreign Plans, and no pending claims (except for claims for benefits payable
in the normal operation of the Foreign Plans), suits or proceedings against any
Plan or asserting any rights or claims to benefits under any Foreign Plan; (vi)
the consummation of the transactions contemplated by this Agreement will not by
itself create or otherwise result in any liability with respect to any Foreign
Plan other than the triggering of payment to participants; and (vii) the
benefits available under any Foreign Plan in the aggregate do not provide
substantially greater benefits to employees of Company or any of its
subsidiaries participating in such plans than the benefits available under
Company Employee Plans for employees of Company in the United States.
(j) Schedule 2.14(j) identifies each employee of any of
the Company who is not fully available to perform work because of disability or
other leave and sets forth the basis of such disability or leave and the
anticipated date of return to full service.
2.15 Certain Agreements Affected by the Merger. Neither the
execution and delivery of this Agreement nor the consummation of the transaction
contemplated hereby will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any director or employee of Company or any of its
subsidiaries, (ii) materially increase any benefits otherwise payable by Company
or (iii) result in the acceleration of the time of payment or vesting of any
such benefits.
2.16 Employee Matters. Schedule 2.16 contains a true, complete
and accurate list (and, as indicated below, description) of (i) the names and
titles of all consultants, independent contractors, full-time, part-time or
casual employees employed by the Company or any of its subsidiaries
(collectively, "Employees"), together with their status and location of their
employment; (ii) the date each Employee was hired or retained; (iii) a list of
all written employment, consulting or service contracts between the Company or
any of its subsidiaries and the Employees; (iv) the rate of annual remuneration
of each Employee at the date hereof, any bonuses paid since the end of the last
completed financial year and all other bonuses, incentive schemes and benefits
to which such Employee is entitled; (v) the amount of vacation pay or number of
weeks of vacation to which each Employee is entitled as of the date hereof; (vi)
the names of all inactive Employees, the reason they are inactive Employees,
whether they are expected to return to work, and if so when, and the nature of
any benefits to which such inactive Employees are entitled from the Company or
any of its subsidiaries; and (vii) particulars of all other material terms and
conditions of employment or engagement of the Employees and the
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positions, title or classification held by them. Company and each of its
subsidiaries are in compliance in all respects with all currently applicable
laws and regulations respecting employment, discrimination in employment, terms
and conditions of employment, wages, hours and occupational safety and health
and employment practices, and are not engaged in any unfair labor practice,
except where the failure to be in compliance or the engagement in such unfair
labor practices would not have a Material Adverse Effect on Company. Company has
in all material respects withheld all amounts required by law or by agreement to
be withheld from the wages, salaries, and other payments to employees; and is
not liable for any material arrears of wages or any material taxes or any
material penalty for failure to comply with any of the foregoing. Company is not
liable for any material payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice). There are no pending claims against
Company or any of its subsidiaries for any material amounts under any workers
compensation plan or policy or for long term disability. Neither Company nor any
of its subsidiaries has any obligations under COBRA with respect to any former
Employees or qualifying beneficiaries thereunder, except for obligations that
are not material in amount. To the knowledge of Company or any of its
subsidiaries, there are no controversies pending or threatened, between Company
or any of its subsidiaries and any of their respective Employees, which
controversies have or would reasonably be expected to result in an action, suit,
proceeding, claim, arbitration or investigation before any agency, court or
tribunal, foreign or domestic. Neither Company nor any of its subsidiaries is a
party to any collective bargaining agreement or other labor union contract nor
does Company nor any of its subsidiaries know of any activities or proceedings
of any labor union to organize any such Employees. To Company's knowledge, no
employees of Company or any of its subsidiaries are in violation of any term of
any employment contract, patent disclosure agreement, noncompetition agreement,
or any restrictive covenant to a former employer relating to the right of any
such Employee to be employed by Company because of the nature of the business
conducted or presently proposed to be conducted by Company or any of its
subsidiaries or to the use of trade secrets or proprietary information of
others. No Employees of Company or any of its subsidiaries have given notice to
Company, nor is Company otherwise aware, that any such Employee intends to
terminate his or her employment with Company or any subsidiary.
2.17 Interested Party Transactions. Except as disclosed in the
Company SEC Documents, neither Company nor any of its subsidiaries is indebted
to any director or officer of Company or any of its subsidiaries (except for
amounts due as normal salaries and bonuses and in reimbursement of ordinary
expenses), and no such person is indebted to Company or any of its subsidiaries,
and there are no other transactions of the type required to be disclosed
pursuant to Items 402 or 404 of Regulation S-K under the Securities Act and the
Exchange Act.
2.18 Insurance. Company and each of its subsidiaries have
policies of insurance and bonds of the type and in amounts customarily carried
by persons conducting businesses or owning assets similar to those of Company
and its subsidiaries. There is no material claim pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds. All premiums due and payable
under all such policies and bonds have been paid and Company and its
subsidiaries are otherwise in compliance in all material respects with the terms
of such policies and bonds.
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Company has no knowledge of any threatened termination of, or material premium
increase with respect to, any of such policies.
2.19 Compliance With Laws. Each of Company and its subsidiaries
has complied with, are not in violation of, and have not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for such violations or failures to comply as
would not be reasonably expected to have a Material Adverse Effect on Company.
2.20 Minute Books. The minute books of Company and its
subsidiaries made available to Parent contain a complete and accurate summary of
all meetings of directors and stockholders or actions by written consent since
the time of incorporation of Company and the respective subsidiaries through the
date of this Agreement, and reflect all transactions referred to in such minutes
accurately in all material respects.
2.21 Complete Copies of Materials. Company has delivered or
made available true and complete copies of each document that has been requested
by Parent or its counsel in connection with their legal and accounting review of
Company and its subsidiaries.
2.22 Brokers' and Finders' Fees. Except for payment obligations
to Xxxxxxx Xxxxx & Company, L.L.C., whose fees and expenses will be paid in the
manner contemplated by the Asset Purchase Agreement, Company has not incurred,
nor will it incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or investment bankers' fees or any similar
charges in connection with this Agreement or any transaction contemplated
hereby. Company has provided to Parent a true and correct copy of Xxxxxxx Xxxxx
& Company L.L.C.'s engagement letter with Company in connection with the
transactions contemplated hereby and by the Asset Purchase Agreement.
2.23 Registration Statement; Proxy Statement/Prospectus. The
information supplied by Company for inclusion in the registration statement on
Form S-4 (or such other or successor form as shall be appropriate) pursuant to
which the shares of Parent Common Stock to be issued in the Merger will be
registered with the SEC (the "Registration Statement") shall not at the time the
Registration Statement (including any amendments or supplements thereto) is
declared effective by the SEC contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The information supplied by Company for
inclusion in the proxy statement/prospectus to be sent to the stockholders of
Company in connection with the meeting of Company's stockholders to consider the
Merger and the transactions contemplated by the Asset Purchase Agreement (the
"Company Stockholders Meeting") (such proxy statement/prospectus as amended or
supplemented is referred to herein as the "Proxy Statement") shall not, on the
date the Proxy Statement is first mailed to Company's stockholders, at the time
of the Company Stockholders Meeting and at the Effective Time, contain any
statement which, at such time, is false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they are
made, not false or misleading; or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Company Stockholders Meeting which has
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become false or misleading. If at any time prior to the Effective Time any event
or information should be discovered by Company which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy Statement,
Company shall promptly inform Parent and Merger Sub. Notwithstanding the
foregoing, Company makes no representation, warranty or covenant with respect to
any information supplied by Parent or Merger Sub or any other third party which
is contained in any of the foregoing documents.
2.24 Opinion of Financial Advisor. Company has been advised in
writing by its financial advisor, Xxxxxxx Xxxxx & Company, L.L.C., that in such
advisor's opinion, as of the date hereof, the consideration to be received by
the stockholders of Company is fair, from a financial point of view, to the
stockholders of Company, a signed copy of which opinion will be delivered to
Parent.
2.25 Vote Required. The affirmative vote of the holders of at
least a majority of the shares of Company Common Stock outstanding on the record
date set for the Company Stockholders Meeting is the only vote of the holders of
any of Company's capital stock necessary to approve this Agreement and the
transactions contemplated hereby.
2.26 Board Approval. The Board of Directors of Company has (i)
approved this Agreement and the Merger, (ii) determined that this Agreement and
the Merger are advisable and in the best interests of the stockholders of
Company and are on terms that are fair to such stockholders and (iii)
recommended that the stockholders of Company approve this Agreement and
consummation of the Merger.
2.27 Stockholder Agreement; Irrevocable Proxies. All of the
persons listed on Schedule 2.27 have agreed in writing to vote for approval of
the Merger pursuant to a Stockholder Agreement, and pursuant to an Irrevocable
Proxy attached thereto as Exhibit A.
2.28 Chapter 23B.19 of the Washington Business Company Act Not
Applicable. The Board of Directors of Company has taken all actions so that the
restrictions contained in Chapter 23B.19 of the Washington Law applicable to a
"significant business transaction" (as defined in Chapter 23B.19) will not apply
to the execution, delivery or performance of this Agreement, the Stockholder
Agreement, the Asset Purchase Agreement or the Option Agreement or the
consummation of the Merger or the other transactions contemplated by this
Agreement or by the Stockholder Agreement, the Asset Purchase Agreement or the
Option Agreement. No other state takeover statute is applicable to the Merger,
the Merger Agreement, the Stockholder Agreement, the Asset Purchase Agreement,
the Option Agreement or the transactions contemplated hereby or thereby.
2.29 Inventory. The inventories of Company disclosed in the
Company SEC Documents as of June 30, 2000 and in any subsequently filed Company
SEC Documents are stated consistently with the audited financial statements of
Company and consist of items of a quantity usable or salable in the ordinary
course of business. Since June 30, 2000, Company has continued to replenish
inventories in a normal and customary manner consistent with past practices.
Company has not received written or oral notice that it will experience in the
foreseeable future any difficulty in obtaining, in the desired quantity and
quality and at a reasonable price and upon reasonable terms and conditions, the
raw materials, supplies or
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component products required for the manufacture, assembly or production of its
products. The values at which inventories are carried reflect the inventory
valuation policy of Company, which is consistent with its past practice and in
accordance with GAAP applied on a consistent basis. Since June 30, 2000 due
provision was made on the books of Company in the ordinary course of business
consistent with past practices to provide for all slow-moving, obsolete, or
unusable inventories to their estimated useful or scrap values and such
inventory reserves are adequate to provide for such slow-moving, obsolete or
unusable inventory and inventory shrinkage. As of the date hereof, Company had
no inventory in the distribution channel and had no commitments to purchase
inventory (other than purchases of supplies in the ordinary course).
2.30 Accounts Receivable. The accounts receivable disclosed in
the Company SEC Documents as of June 30, 2000, and, with respect to accounts
receivable created since such date, disclosed in any subsequently filed Company
SEC Documents, or as accrued on the books of Company in the ordinary course of
business consistent with past practices in accordance with GAAP since the last
filed Company SEC Documents, represent and will represent bona fide claims
against debtors for sales and other charges, are not subject to discount except
for normal cash and immaterial trade discount. The amount carried for doubtful
accounts and allowances disclosed in each of such Company SEC Document or
accrued on such books is sufficient to provide for any losses that may be
sustained on realization of the receivables.
2.31 Customers and Suppliers. None of Company's customers which
individually accounted for more than 10% of Company's gross revenues during the
12-month period preceding the date hereof has terminated any agreement with
Company. As of the date hereof, no material supplier of Company has indicated
that it will stop, or decrease the rate of, supplying materials, products or
services to Company. Company has not knowingly breached, so as to provide a
benefit to Company that was not intended by the parties, any agreement with, or
engaged in any fraudulent conduct with respect to, any customer or supplier of
Company.
2.32 Export Control Laws. Company has conducted its export
transactions in accordance with applicable provisions of United States export
control laws and regulations, including but not limited to the Export
Administration Act and implementing Export Administration Regulations, except
for such violations which would not have a Material Adverse Effect on Company.
Without limiting the foregoing, Company represents and warrants that:
(a) Company has obtained all export licenses and other
approvals required for its exports of products, software and technologies from
the United States;
(b) Company is in compliance with the terms of all
applicable export licenses or other approvals;
(c) There are no pending or threatened claims against
Company with respect to such export licenses or other approvals;
(d) There are no actions, conditions or circumstances
pertaining to Company's export transactions that may give rise to any future
claims; and
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(e) No consents or approvals for the transfer of export
licenses to Parent are required, or such consents and approvals can be obtained
expeditiously without material cost.
2.33 Year 2000. Company's current products and services are "Year
2000 Compliant," where "Year 2000 Compliant" means that such products and
services have been designed and tested so that, when used in accordance with
their associated documentation, they are capable of accurately processing,
providing and/or receiving (i) date-related data from, into and between the
Twentieth (20th) and Twenty-First (21st) centuries, or (ii) date-related data in
connection with any valid date in the Twentieth (20th) and Twenty-First (21st)
centuries; provided that all other products and services used in combination in
any way with Company's current products and services properly exchange
date-related data with them. The information technology systems and
non-information technology systems used by Company in its internal operations
will function properly beyond 1999. Neither Company nor any of its subsidiaries
has made any representations or warranties relating to the ability of any
product or service of Company or its subsidiaries to be Year 2000 Compliant.
Company has made inquiries to its key third-party vendors and providers as to
the status of their Year 2000 efforts, and has not uncovered any problems that
would aversely affect the operation of the products or that could disrupt or
harm the day-to-day functioning of the business or operations of Company.
2.34 Representations Complete. None of the representations or
warranties made by Company herein or in any Schedule hereto, including the
Company Disclosure Schedule, or certificate furnished by Company pursuant to
this Agreement, or the Company SEC Documents, when all such documents are read
together in their entirety, contains or will contain at the Effective Time any
untrue statement of a material fact, or omits or will omit at the Effective Time
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in that section of the document of even date
herewith delivered by Parent to Company prior to the execution and delivery of
this Agreement (the "Parent Disclosure Schedule") corresponding to the Section
of this Agreement to which any of the following representations and warranties
specifically relate or as disclosed in another section of the Parent Disclosure
Schedule if it is reasonably apparent on the face of the disclosure that it is
applicable to another Section of this Agreement, Parent represents and warrants
to Company as follows:
3.1 Organization, Standing and Power. Each of Parent and Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization. Each of Parent and Merger Sub has
the corporate power to own its properties and to carry on its business as now
being conducted and as proposed to be conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified and in good standing would have a Material Adverse Effect on
Parent. Neither Parent nor Merger Sub is in violation of any of the provisions
of its Articles of Incorporation or Bylaws or equivalent organizational
documents.
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3.2 Capital Structure. The authorized capital stock of Parent
consists of 20,000,000,000 shares of Common Stock, $0.001 par value, and
5,000,000 shares of Preferred Stock, no par value, of which there were issued
and outstanding as of the close of business on September 8, 2000, 7,122,688,341
shares of Common Stock and no shares of Preferred Stock. The shares of Parent
Common Stock to be issued pursuant to the Merger will be duly authorized,
validly issued, fully paid, and non-assessable, free of any liens or
encumbrances imposed by Parent or Merger Sub.
3.3 Authority. Parent and Merger Sub have all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Merger
Sub. This Agreement has been duly executed and delivered by Parent and Merger
Sub and constitutes the valid and binding obligations of Parent and Merger Sub.
The execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of a benefit under (i) any provision of the Articles of
Incorporation or Bylaws of Parent or any of its subsidiaries, as amended, or
(ii) any material mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or any of its
subsidiaries or their properties or assets, except where such conflict,
violation, default, termination, cancellation or acceleration with respect to
the foregoing provisions of (ii) would not have had and would not reasonably be
expected to have a Material Adverse Effect on Parent. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity, is required by or with respect to Parent or any of its
subsidiaries in connection with the execution and delivery of this Agreement by
Parent and Merger Sub or the consummation by Parent and Merger Sub of the
transactions contemplated hereby, except for (i) the filing of the Certificate
of Merger and Articles of Merger as provided in Section 1.2; (ii) the filing
with the SEC and NASD of the Registration Statement; (iii) the filing of a Form
8-K with the SEC and NASD within 15 days after the Closing Date; (iv) any
filings as may be required under applicable state securities laws and the
securities laws of any foreign country; (v) such filings as may be required
under HSR; (vi) the filing with The Nasdaq National Market of a Notification
Form for Listing of Additional Shares with respect to the shares of Parent
Common Stock issuable upon conversion of the Company Common Stock in the Merger
and upon exercise of the options under the Company Stock Option Plans assumed by
Parent; (vii) the filing of a registration statement on Form S-8 with the SEC,
or other applicable form covering the shares of Parent Common Stock issuable
pursuant to outstanding options under the Company Stock Option Plans assumed by
Parent; and (viii) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material Adverse
Effect on Parent and would not prevent or materially alter or delay any of the
transactions contemplated by this Agreement.
3.4 SEC Documents; Financial Statements. Parent has made
available to Company each statement, report, registration statement (with the
prospectus in the form filed pursuant to Rule 424(b) of the Securities Act),
definitive proxy statement, and other filings filed with the SEC by Parent since
July 29, 2000, and, prior to the Effective Time, Parent will have
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furnished or made available to Company true and complete copies of any
additional documents filed with the SEC by Parent prior to the Effective Time
(collectively, the "Parent SEC Documents"). Parent has timely filed all forms,
statements and documents required to be filed by it with the SEC and The Nasdaq
National Market since July 29, 2000. In addition, Parent has made available to
Company all exhibits to the Parent SEC Documents filed prior to the date hereof,
and will promptly make available to Company all exhibits to any additional
Parent SEC Documents filed prior to the Effective Time. All documents required
to be filed as exhibits to the Company SEC Documents have been so filed, and all
material contracts so filed as exhibits are in full force and effect, except
those which have expired in accordance with their terms, and neither Parent nor
any of its subsidiaries is in default thereunder. As of their respective filing
dates, the Parent SEC Documents complied in all material respects with the
requirements of the Exchange Act and the Securities Act, and none of the Parent
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a subsequently filed Parent
SEC Document. The financial statements of Parent, including the notes thereto,
included in the Parent SEC Documents (the "Parent Financial Statements") were
complete and correct in all material respects as of their respective dates,
complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto as of their respective dates, and have been prepared in
accordance with GAAP applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be indicated in the
notes thereto or, in the case of unaudited statements included in Quarterly
Reports on Form 10-Q, as permitted by Form 10-Q of the SEC). The Parent
Financial Statements fairly present the consolidated financial condition and
operating results of Parent and its subsidiaries at the dates and during the
periods indicated therein (subject, in the case of unaudited statements, to
normal, recurring year-end adjustments).
3.5 Absence of Undisclosed Liabilities. Parent has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
Balance Sheet or in the related Notes to Consolidated Financial Statements
included in Parent's Annual Report on Form 10-K for the year ended July 29, 2000
(the "Parent Balance Sheet"), (ii) those disclosed in Parent SEC documents filed
subsequent to such Annual Report on Form 10-K for the year ended July 29, 2000,
(iii) those incurred in the ordinary course of business and not required to be
set forth in the Parent Balance Sheet under GAAP, and (iv) those incurred in the
ordinary course of business since the Parent Balance Sheet Date and consistent
with past practice.
3.6 Litigation. There is no litigation pending against Parent or
any of its subsidiaries or, to the knowledge of Parent, threatened against
Parent or any of its subsidiaries that would prevent, enjoin, alter or
materially delay any of the transactions contemplated by this Agreement, or that
would have a Material Adverse Effect on the ability of Parent to consummate the
transactions contemplated by this Agreement. There is no judgment, decree or
order against Parent or any of its subsidiaries, or, to the knowledge of Parent,
any of their respective directors or officers (in their capacities as such),
that would prevent, enjoin, alter or materially delay any of the transactions
contemplated by this Agreement, or that would have a Material Adverse Effect on
the ability of Parent to consummate the transactions contemplated by this
Agreement.
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3.7 Broker's and Finders' Fees. Except for the fees of Xxxxxx
Xxxxxx Partners, whose fees will be paid by Parent, Parent has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or investment bankers' fees or any similar charges
in connection with this Agreement or any transaction contemplated hereby.
3.8 Registration Statement; Proxy Statement/Prospectus. The
information supplied by Parent and Merger Sub for inclusion in the Registration
Statement shall not, at the time the Registration Statement (including any
amendments or supplements thereto) is declared effective by the SEC, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The information supplied by Parent for
inclusion in the Proxy Statement shall not, on the date the Proxy Statement is
first mailed to Company's stockholders, at the time of the Company Stockholders
Meeting and at the Effective Time, contain any statement which, at such time, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which it is made, not false or misleading; or omit to state
any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the Company
Stockholders Meeting which has become false or misleading. If at any time prior
to the Effective Time any event or information should be discovered by Parent or
Merger Sub which should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement, Parent or Merger Sub will
promptly inform Company. Notwithstanding the foregoing, Parent and Merger Sub
make no representation, warranty or covenant with respect to any information
supplied by Company or any third party which is contained in any of the
foregoing documents.
3.9 Board Approval. The Boards of Directors of Parent and Merger
Sub have (i) approved this Agreement and the Merger, (ii) determined that the
Merger is advisable and in the best interests of their respective stockholders
and is on terms that are fair to such stockholders and (iii) recommended that
the stockholder of Merger Sub approve this Agreement and the consummation of the
Merger.
3.10 Representations Complete. None of the representations or
warranties made by Parent or Merger Sub herein or in any Schedule hereto,
including the Parent Disclosure Schedule, or certificate furnished by Parent or
Merger Sub pursuant to this Agreement, or the Parent SEC Documents, when all
such documents are read together in their entirety, contains or will contain at
the Effective Time any untrue statement of a material fact, or omits or will
omit at the Effective Time to state any material fact necessary in order to make
the statements contained herein or therein, in the light of the circumstances
under which made, not misleading.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business of Company. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, Company agrees (except to the extent
expressly contemplated by this Agreement or as consented to in writing by
Parent), to carry on its and its subsidiaries' business in the ordinary
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course in substantially the same manner as heretofore conducted, to pay and to
cause its subsidiaries to pay debts and Taxes when due subject to good faith
disputes over such debts or taxes, to pay or perform other obligations when due,
and to use all reasonable efforts consistent with past practice and policies to
preserve intact its and its subsidiaries' present business organizations, use
its reasonable best efforts consistent with past practice to keep available the
services of its and its subsidiaries' present officers and key employees and use
its reasonable best efforts consistent with past practice to preserve its and
its subsidiaries' relationships with customers, suppliers, distributors,
licensors, licensees, and others having business dealings with it or its
subsidiaries, to the end that its and its subsidiaries' goodwill and ongoing
businesses shall be unimpaired at the Effective Time. Company agrees to promptly
notify Parent of any material event or occurrence not in the ordinary course of
its or its subsidiaries' business, and of any event which would have a Material
Adverse Effect on Company.
4.2 Restrictions on Conduct of Business of Company. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, except as expressly
contemplated by this Agreement, Company shall not do, cause or permit any of the
following, or allow, cause or permit any of its subsidiaries to do, cause or
permit any of the following, without the prior written consent of Parent:
(a) Charter Documents. Cause or permit any amendments to
its Articles of Incorporation or Bylaws;
(b) Dividends; Changes in Capital Stock. Declare or pay
any dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of its capital stock, or split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or repurchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares
in connection with any termination of service to it or its subsidiaries;
(c) Stock Option Plans, Etc. Except as required by Section
5.9 hereof, take any action to accelerate, amend or change the period of
exercisability or vesting of options or other rights granted under its stock
plans or authorize cash payments in exchange for any options or other rights
granted under any of such plans.
(d) Material Contracts. Enter into any contract or
commitment, or violate, amend or otherwise modify or waive any of the terms of
any of its contracts, other than in the ordinary course of business consistent
with past practice and in no event shall such contract, commitment, amendment,
modification or waiver (other than those relating to sales of products or
purchases of supplies in the ordinary course) involve the payment by Company or
its subsidiaries in excess of $300,000;
(e) Issuance of Securities. Issue, deliver or sell or
authorize or propose the issuance, delivery or sale of, or purchase or propose
the purchase of, any shares of its capital stock or securities convertible into,
or subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such
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shares or other convertible securities, other than the issuance of shares of its
Common Stock pursuant to the exercise of stock options, warrants or other rights
therefor outstanding as of the date of this Agreement.
(f) Intellectual Property. Transfer or license to any
person or entity any rights to its Intellectual Property other than the license
of non-exclusive rights to its Intellectual Property in the ordinary course of
business consistent with past practice and except pursuant to the terms of the
Asset Purchase Agreement, place any of its Intellectual Property into a
source-code escrow, or grant any source-code license of any kind;
(g) Exclusive Rights. Enter into or amend any agreements
pursuant to which any other party is granted exclusive marketing or other
exclusive rights of any type or scope with respect to any of its products or
technology;
(h) Dispositions. Except as set forth in Schedule 4.2(h),
sell, lease, license or otherwise dispose of or encumber any of its properties
or assets which are material, individually or in the aggregate, to its and its
subsidiaries' business, taken as a whole, except in the ordinary course of
business consistent with past practice and except pursuant to the terms of the
Asset Purchase Agreement;
(i) Indebtedness. Incur any indebtedness for borrowed
money or guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;
(j) Leases. Enter into any operating lease in excess of
$100,000;
(k) Payment of Obligations. Pay, discharge or satisfy in
an amount in excess of $100,000 in any one case, any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or otherwise)
arising other than in the ordinary course of business, other than the payment,
discharge or satisfaction of liabilities reflected or reserved against in the
Company Financial Statements;
(l) Capital Expenditures. Make any capital expenditures,
capital additions or capital improvements except in the ordinary course of
business and consistent with past practice that do not exceed $100,000
individually or $500,000 in the aggregate;
(m) Insurance. Materially reduce the amount of any
material insurance coverage provided by existing insurance policies;
(n) Termination or Waiver. Terminate or waive any right of
substantial value;
(o) Employee Benefit Plans; New Hires; Pay Increases.
Except as required by Section 5.9(g) hereof, adopt or amend any employee benefit
or stock purchase or option plan or hire any new director level or officer level
employee, pay any special bonus or special remuneration to any employee or
director, or increase the salaries or wage rates of its employees other than
pursuant to scheduled annual performance reviews, provided that any
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resulting modifications are in the ordinary course of business and consistent
with Company's past practices.
(p) Severance Arrangements. Grant any severance or
termination pay (i) to any director or officer, or (ii) to any other employee
except payments made pursuant to standard written agreements outstanding on the
date hereof;
(q) Lawsuits. Commence a lawsuit other than (i) for the
routine collection of bills, (ii) in such cases where it in good faith
determines that failure to commence suit would result in the material impairment
of a valuable aspect of its business, provided that it consults with Parent
prior to the filing of such a suit, (iii) for a breach of this Agreement, or
(iv) to clarify its obligations under this Agreement or the Option Agreement;
(r) Acquisitions. Acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial portion of the assets of,
or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to its and its subsidiaries' business, taken as a whole, or
acquire or agree to acquire any equity securities of any corporation,
partnership, association or business organization;
(s) Taxes. Other than in the ordinary course of business,
make or change any material election in respect of Taxes, adopt or change any
accounting method in respect of Taxes, file any material Tax Return or any
amendment to a material Tax Return, enter into any closing agreement, settle any
claim or assessment in respect of Taxes, or consent to any extension or waiver
of the limitation period applicable to any claim or assessment in respect of
Taxes;
(t) Notices. Company shall give all notices and other
information required by applicable law to be given to the employees of Company,
any collective bargaining unit representing any group of employees of Company,
and any applicable government authority under the WARN Act, the National Labor
Relations Act, the Internal Revenue Code, the Consolidated Omnibus Budget
Reconciliation Act, and other applicable law in connection with the transactions
provided for in this Agreement;
(u) Revaluation. Revalue any of its assets, including
without limitation writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business;
(v) Accounting Policies and Procedures. Make any change to
its accounting methods, principles, policies, procedures or practices, except as
may be required by GAAP, Regulation S-X promulgated by the SEC or applicable
statutory accounting principles;
(w) Year 2000 Compliance. Fail to carry forward in all
material respects Company's Year 2000 assessment and compliance programs, as
made available to Parent by Company;
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(x) Asset Purchase Agreement. Seek to amend or waive, or
consent to an amendment or waiver of, any provision of the Asset Purchase
Agreement or the Noteholder Rights and Security Agreement (as defined in the
Asset Purchase Agreement) or any of the forms of agreements contemplated by such
agreements; or
(y) Line of Credit. Company shall not draw down any
amounts from that certain Revolving Line of Credit, dated as of November 30,
1998, by and between Company and Xxxxx Fargo Bank, National Association, as
amended (the "Line of Credit").
(z) Other. Take or agree in writing or otherwise to take,
any of the actions described in Sections 4.2(a) through (y) above, or any action
which would make any of its representations or warranties contained in this
Agreement untrue or incorrect or prevent it from performing or cause it not to
perform its covenants hereunder.
4.3 No Solicitation. Company and its subsidiaries and the
officers, directors, employees or other agents of Company and its subsidiaries
(collectively, "Company Representatives") will not, directly or indirectly, (i)
take any action to solicit, initiate or encourage or agree to any Takeover
Proposal (as defined in Section 7.3(f)) or (ii) subject to the terms of the
immediately following sentence, engage in any discussions or negotiations with,
or disclose any nonpublic information relating to Company or any of its
subsidiaries to, or afford access to the properties, books or records of Company
or any of its subsidiaries to, any person that has advised Company that it may
be considering making, or that has made, a Takeover Proposal; provided, that
nothing herein shall prohibit Company's Board of Directors from complying with
Rules 14d-9 and 14e-2 promulgated under the Exchange Act. Notwithstanding the
immediately preceding sentence, if, prior to adoption of this Agreement by
Company stockholders, an unsolicited written Takeover Proposal shall be received
by the Board of Directors of Company, then, to the extent the Board of Directors
of Company believes in good faith (after advice from its financial advisor and
after considering all terms and conditions of such written Takeover Proposal,
including the likelihood and timing of its consummation) that such Takeover
Proposal would result in a transaction more favorable to Company's stockholders
from a financial point of view than the transaction contemplated by this
Agreement (any such more favorable Takeover Proposal being referred to in this
Agreement as a "Superior Proposal") and the Board of Directors of Company
determines in good faith after advice from outside legal counsel that it is
necessary for the Board of Directors of Company to comply with its fiduciary
duties to stockholders under applicable law, Company Representatives may furnish
in connection therewith information to the party making such Superior Proposal
and, subject to the provisions hereof, engage in negotiations with such party,
and such actions shall not be considered a breach of this Section 4.3 or any
other provisions of this Agreement; provided that in each such event Company
notifies Parent of such determination by the Company Board of Directors and
provides Parent with a true and complete copy of the Superior Proposal received
from such third party, and provides (or has provided) Parent with all documents
containing or referring to non-public information of Company that are supplied
to such third party; provided, however, that Company provides such non-public
information pursuant to a non-disclosure agreement at least as restrictive on
such third party as the Confidentiality Agreement (as defined in Section 5.4) is
on Parent; and provided further that Company shall not, and shall not permit any
of its officers, directors, employees or other representatives, as agents, to
agree to or endorse any Takeover Proposal or withdraw its recommendation of the
Merger and adoption of this Agreement unless
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Company has provided Parent at least three (3) days prior notice thereof.
Company will promptly (and in any event within 24 hours) notify Parent after
receipt of any Takeover Proposal or any notice that any person is considering
making a Takeover Proposal or any request for non-public information relating to
Company or any of its subsidiaries or for access to the properties, books or
records of Company or any of its subsidiaries by any person that has advised
Company that it may be considering making, or that has made, a Takeover
Proposal, or whose efforts to formulate a Takeover Proposal would be assisted
thereby (such notice to include the identity of such person or persons), and
will keep Parent fully informed of the status and details of any such Takeover
Proposal notice, request or correspondence or communications related thereto,
and shall provide Parent with a true and complete copy of such Takeover Proposal
notice or any amendment thereto, if it is in writing, or a complete written
summary thereof, if it is not in writing. Company shall immediately cease and
cause to be terminated all existing discussions or negotiations with any persons
conducted heretofore with respect to a Takeover Proposal.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement. As
promptly as practicable after the execution of this Agreement, Company and
Parent shall prepare, and Company shall file with the SEC, preliminary proxy
materials relating to the approval of the Merger and the transactions
contemplated hereby by the stockholders of Company. As promptly as practicable
following receipt of SEC comments thereon, Company shall file with the SEC
definitive proxy materials and Parent shall file with the SEC a Registration
Statement on Form S-4 (or such other or successor form as shall be appropriate),
in each case which complies in form with applicable SEC requirements and shall
use all reasonable efforts to cause the Registration Statement to become
effective as soon thereafter as practicable. Company and Parent will notify each
other promptly of the receipt of any comments from the SEC or its staff and of
any request by the SEC or its staff or any other government officials for
amendments or supplements to the Proxy Statement or any other filing or for
additional information and will supply each other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the Proxy Statement or other filing. Whenever any event
occurs that is required to be set forth in an amendment or supplement to the
Proxy Statement or any other filing, Company shall promptly inform Parent of
such occurrence and cooperate in filing with the SEC or its staff or any other
government officials, and/or mailing to shareholders of Company, such amendment
or supplement. Subject to Section 4.3, the Proxy Statement shall solicit the
adoption of this Agreement by stockholders of Company and shall include the
approval of this Agreement and the Merger by the Board of Directors of Company
and the recommendation of the Board of Directors of Company to Company's
stockholders that they vote in favor of adoption of this Agreement and the
Merger. All shares of Parent Company Stock issued pursuant to Section 1.6 hereof
shall be registered pursuant to this Section 5.1.
5.2 Meeting of Stockholders. Company shall promptly after the
date hereof take all action necessary in accordance with Washington Law and its
Articles of Incorporation and Bylaws to convene the Company Stockholders Meeting
within 45 days of the Registration Statement being declared effective by the
SEC. Company shall consult with Parent regarding the date of the Company
Stockholders Meeting and use all reasonable efforts and shall not postpone
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or adjourn (other than for the absence of a quorum) the Company Stockholders
Meeting, without the consent of Parent. Company shall use its reasonable best
efforts to solicit from stockholders of Company proxies in favor of adoption of
this Agreement and the Merger and shall take all other action necessary or
advisable to secure the vote or consent of stockholders required to effect the
Merger.
5.3 Access to Information.
(a) Company shall afford Parent and its accountants,
counsel and other representatives, reasonable access during normal business
hours during the period prior to the Effective Time to (i) all of Company's and
its subsidiaries' properties, books, contracts, commitments and records, and
(ii) all other information concerning the business, properties and personnel of
Company and its subsidiaries as Parent may reasonably request. Company agrees to
provide to Parent and its accountants, counsel and other representatives copies
of internal financial statements promptly upon request.
(b) Subject to compliance with applicable law, from the
date hereof until the Effective Time, each of Parent and Company shall confer on
a regular and frequent basis with one or more representatives of the other party
to report operational matters of materiality and the general status of ongoing
operations.
(c) No information or knowledge obtained in any
investigation pursuant to this Section 5.3 shall affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
(d) Company shall provide Parent and its accountants,
counsel and other representatives reasonable access, during normal business
hours during the period prior to the Effective Time, to all of Company's and
subsidiaries Tax Returns and other records and workpapers relating to Taxes, and
shall also provide the following information upon the request of Parent or its
subsidiaries: (i) a schedule of the types of Tax Returns being filed by Company
and each of its subsidiaries in each taxing jurisdiction, (ii) a schedule of the
year of the commencement of the filing of each such type of Tax Return, (iii) a
schedule of all closed years with respect to each such type of Tax Return filed
in each jurisdiction, (iv) a schedule of all material Tax elections filed in
each jurisdiction by Company and each of its subsidiaries, (v) a schedule of any
deferred intercompany gain with respect to transactions to which Company or any
of its subsidiaries has been a party, and (vi) receipts for any Taxes paid to
foreign Tax authorities.
5.4 Confidentiality. The parties acknowledge that each of Parent
and Company have previously executed a non-disclosure agreement, which agreement
shall continue in full force and effect in accordance with its terms; provided,
however, the fifth, sixth, eighth and ninth paragraphs of such non-disclosure
agreement shall be superseded by the terms hereof.
5.5 Public Disclosure. Unless otherwise permitted by this
Agreement, Parent and Company shall consult with each other before issuing any
press release or otherwise making any public statement or making any other
public (or non-confidential) disclosure (whether or not in response to an
inquiry) regarding the terms of this Agreement and the transactions
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contemplated hereby, and neither shall issue any such press release or make any
such statement or disclosure without the prior approval of the other (which
approval shall not be unreasonably withheld), except as may be required by law
or by obligations pursuant to any listing agreement with any national securities
exchange or with the NASD, in which case the party proposing to issue such press
release or make such public statement or disclosure shall use its commercially
reasonable efforts to consult with the other party before issuing such press
release or making such public statement or disclosure.
5.6 Consents; Cooperation.
(a) Each of Parent and Company shall promptly apply for or
otherwise seek, and use its reasonable best efforts to obtain, all consents and
approvals required to be obtained by it for the consummation of the Merger,
including those required under HSR. Company shall use its reasonable best
efforts to obtain all necessary consents, waivers and approvals under any of its
material contracts in connection with the Merger for the assignment thereof or
otherwise. The parties hereto will consult and cooperate with one another, and
consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to HSR or any other federal or state
antitrust or fair trade law.
(b) Each of Parent and Company shall use its reasonable
best efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the transactions contemplated by this
Agreement under HSR, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as amended,
the Federal Trade Commission Act, as amended, and any other Federal, state or
foreign statutes, rules, regulations, orders or decrees that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, each of Parent
and Company shall cooperate and use its reasonable best efforts vigorously to
contest and resist any such action or proceeding and to have vacated, lifted,
reversed, or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent (each, an "Order"), that is in effect and
that prohibits, prevents, or restricts consummation of the Merger or any such
other transactions, unless by mutual agreement Parent and Company decide that
litigation is not in their respective best interests. Notwithstanding the
provisions of the immediately preceding sentence, it is expressly understood and
agreed that neither Parent nor Company shall have any obligation to litigate or
contest any administrative or judicial action or proceeding or any Order beyond
the Final Date (as defined in Section 7.1(b)). Each of Parent and Company shall
use its reasonable best efforts to take such action as may be required to cause
the expiration of the notice periods under the HSR or other Antitrust Laws with
respect to such transactions as promptly as possible after the execution of this
Agreement. Parent and Company also agree to take any and all of the following
actions to the extent necessary to obtain the approval of any Governmental
Entity with jurisdiction over the enforcement of any applicable laws regarding
the transactions contemplated hereby: entering into negotiations; providing
information required by law or governmental regulation; and substantially
complying with any second request for information pursuant to the Antitrust
Laws.
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(c) Notwithstanding anything to the contrary in Section
5.6(a) or (b), (i) neither Parent nor any of it subsidiaries shall be required
to divest any of their respective businesses, product lines or assets, or to
take or agree to take any other action or agree to any limitation that would
reasonably be expected to have a Material Adverse Effect on Parent or of Parent
combined with the Surviving Corporation after the Effective Time and (ii)
neither Company nor its subsidiaries shall be required to divest any of their
respective businesses, product lines or assets, or to take or agree to take any
other action or agree to any limitation that would reasonably be expected to
have a Material Adverse Effect on Company.
5.7 Legal Requirements. Each of Parent, Merger Sub and Company
will, and will cause their respective subsidiaries to, take all reasonable
actions necessary to comply promptly with all legal requirements which may be
imposed on them with respect to the consummation of the transactions
contemplated by this Agreement and will promptly cooperate with and furnish
information to any party hereto necessary in connection with any such
requirements imposed upon such other party in connection with the consummation
of the transactions contemplated by this Agreement and will take all reasonable
actions necessary to obtain (and will cooperate with the other parties hereto in
obtaining) any consent, approval, order or authorization of, or any
registration, declaration or filing with, any Governmental Entity or other
person, required to be obtained or made in connection with the taking of any
action contemplated by this Agreement.
5.8 Blue Sky Laws. Parent shall take such steps as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable to the issuance of the Parent Common Stock in connection
with the Merger. Company shall use its reasonable best efforts to assist Parent
as may be necessary to comply with the securities and blue sky laws of all
jurisdictions which are applicable in connection with the issuance of Parent
Common Stock in connection with the Merger.
5.9 Employee Benefit Plans.
(a) At the Effective Time, each outstanding option to
purchase shares of Company Common Stock under the Company Stock Option Plans
whether vested or unvested, will be assumed by Parent as set forth below.
Company represents and warrants to Parent that Schedule 5.9(a) hereto sets forth
a true and complete list as of the date hereof of all holders of outstanding
options under the Company Stock Option Plans, including the number of shares of
Company capital stock subject to each such option, the exercise or vesting
schedule, the exercise price per share and the term of each such option. On the
Closing Date, Company shall deliver to Parent an updated Schedule 5.9(a) hereto
current as of such date. Each such option so assumed by Parent under this
Agreement shall continue to have, and be subject to, the same terms and
conditions set forth in the applicable Company Stock Option Plans and the
applicable stock option agreements, immediately prior to the Effective Time,
except that (i) such option will be exercisable for that number of whole shares
of Parent Common Stock equal to the product of the number of shares of Company
Common Stock that were issuable upon exercise of such option immediately prior
to the Effective Time multiplied by the Exchange Ratio and rounded down to the
nearest whole number of shares of Parent Common Stock, and (ii) the per share
exercise price for the shares of Parent Common Stock issuable upon exercise of
such assumed option will be equal to the quotient determined by dividing the
exercise price per share of Company
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Common Stock at which such option was exercisable immediately prior to the
Effective Time by the Exchange Ratio, rounded up to the nearest whole cent. At
or prior to the Closing, Company shall take all actions required to prevent the
cancellation or termination of such options upon the closing of the Merger or
the transactions contemplated hereby, and to allow such options at the Effective
Time to be converted into options to purchase Parent Common Stock as described
above, without requiring the consent of the optionees. Except as set forth in
Schedule 5.9(a)(i) of the Company Disclosure Schedule, neither the Merger nor
the transactions contemplated by the Asset Purchase Agreement will terminate any
of the outstanding options under the Company Stock Plans or accelerate the
exercisability or vesting of such options or the shares of Parent Common Stock
which will be subject to those options upon Parent's assumption of the options
in the Merger. Company has not granted any options under the Company Stock
Option Plans intended to qualify as "incentive stock options" as defined in
Section 422 of the Code. Within 30 business days after the Effective Time,
Parent will issue to each person who, immediately prior to the Effective Time
was a holder of an outstanding option under the Company Stock Option Plans a
document evidencing the foregoing assumption of such option by Parent. At or
prior to the Effective Time, Parent shall take all corporate action necessary to
reserve for future issuance, and shall maintain such reservation for so long as
any of the assumed options remain outstanding, a sufficient number of shares of
Parent Common Stock for delivery upon the exercise of such options.
(b) All outstanding rights of Company which it may hold
immediately prior to the Effective Time to repurchase unvested shares of Company
Common Stock (the "Repurchase Options") shall continue in effect following the
Merger and shall thereafter continue to be exercisable by Parent upon the same
terms and conditions in effect immediately prior to the Effective Time, except
that the shares purchasable pursuant to the Repurchase Options and the purchase
price per share shall be adjusted to reflect the Exchange Ratio.
(c) Outstanding purchase rights under the Company ESPP
shall be exercised upon the next scheduled purchase date, December 31, 2000,
under the Company ESPP, and each participant in the Company ESPP shall
accordingly be issued shares of Company Common Stock at that. Company shall
cause the Company ESPP to terminate with such exercise date, and no purchase
rights shall be subsequently granted or exercised under the Company ESPP.
Company employees who meet the eligibility requirements for participation in the
Parent Employee Stock Purchase Plan shall be eligible to begin payroll
deductions under that plan as of the start date of the first offering period
thereunder beginning after the Effective Time.
(d) Within five (5) business days following the date of
this Agreement, Company shall set forth on Schedule 5.9(d) a list of all persons
who Company reasonably believes are, with respect to Company and as of the date
of this Agreement, "disqualified individuals" (within the meaning of Section
280G of the Code and the regulations promulgated thereunder). For this purpose,
Company shall assume that the fair market value of Company Common Stock is $20
per share. Within a reasonable period of time after the last business day of
each month after the date of this Agreement and on or about the date five
business days prior to the expected Closing Date, Company shall revise Schedule
5.9(d) to reflect the most recently available closing price of Company Common
Stock as of the last business day of such month and to reflect any additional
information which Company reasonably believes would impact the determination of
persons who are, with respect to Company and as of the each such date,
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"disqualified individuals" (within the meaning of Section 280G of the Code and
the regulations promulgated thereunder).
(e) If required by Parent in a written notice delivered to
Company, the Board of Directors of the Company shall, prior to the Closing Date,
execute a resolution either terminating or freezing the Company's benefit plan,
that is intended to be qualified under sections 401(a) and 401(k) of the Code
(the "Company's 401(k) Plan"), to be effective prior to the Closing Date. The
Board of Directors of the Company shall adopt a corresponding amendment to
Company's 401(k) Plan freezing contributions and participation as well as
amending it for the relevant provisions of the Taxpayer Relief Act of 1997 ("TRA
`97"), the Small Business Job Protection Act of 1996 ("SBJPA"), the Uruguay
Round Agreements Act ("GATT"), the Uniformed Services Employment and
Reemployment Rights Act of 1994 ("USERRA"), and the Restructuring and Reform Act
of 1998 ("RRA"). Company's Employees shall be eligible to participate in
Parent's benefit plan that is intended to be qualified under sections 401(a) and
401(k) of the Code as soon as administratively feasible following the Closing
Date.
(f) Company shall use its reasonable best efforts to
obtain acceleration waivers in the form attached hereto as Exhibit E (the
"Waivers") from each of the individuals listed on Schedule 5.9(f) hereto and
from any other employee other than a Transferred Employee who agrees to continue
to be employed by Company and/or Parent after the Closing.
(g) Company shall amend the Company Stock Option Plans and
all options outstanding under such Company Stock Option Plans to give each
optionee a thirty (30) day period following his or her termination of employment
to exercise his or her option and shall send to each optionee a notice of such
change in form and substance satisfactory to Parent.
5.10 Forms S-3 and S-8. Parent agrees to file, no later than 30
business days after Parent's receipt of the Spreadsheet (as defined in Section
5.21)(provided that Parent has received within 10 business days after the
Closing all option documentation it requires relating to the outstanding
options), (i) a registration statement on Form S-8 under the Securities Act
covering the shares of Parent Common Stock issuable pursuant to outstanding
options granted to individuals for which a Form S-8 registration statement is
available and listed on Schedule 5.10(a) hereto and (ii) a registration
statement on Form S-3 under the Securities Act covering the shares of Parent
Common Stock issuable pursuant to outstanding options granted to entities or to
individuals for which a Form S-8 registration statement is not available, which
Form S-3 shall remain current for one year from the Effective Time, under the
Company Stock Option Plans assumed by Parent or otherwise issued in compensatory
transactions to entities or to individuals not currently providing services to
Company as employees or consultants and listed on Schedule 5.10(b). Company
shall cooperate with and assist Parent in the preparation of such registration
statements.
5.11 Option Agreement. Company agrees to fully perform its
obligations under the Option Agreement.
5.12 Nasdaq Quotation. Company and Parent agree to continue the
quotation of Company Common Stock and Parent Common Stock, respectively, on The
Nasdaq National Market during the term of the Agreement.
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5.13 Employees. Company shall use its reasonable best efforts to
cause each of the individuals set forth on Schedule 5.13 to deliver to Parent an
executed Employment and Non-Competition Agreement in the form attached hereto as
Exhibit F.
5.14 Action Under Stock Option Plan. The Board of Directors of
Company shall take all action necessary to prevent the cancellation or
termination of options under the Company Stock Option Plans upon the closing of
the Merger and to allow such options to be assumed by Parent as described in
Section 5.9
5.15 Notice to Certain Employees. Company shall provide written
notice in the form attached hereto as Exhibit G ("Notice to Transferred
Employees") to each of the employees listed on Schedule 5.15 (the "Transferred
Employees"), as such Schedule is amended from time to time by Parent prior to
the Effective Time, that such employee will be assigned to Newco and that
Company's rights under such employee's employment agreement shall be assigned to
Newco as of the Effective Time.
5.16 Indemnification.
(a) After the Effective Time, Parent will fulfill and
honor in all respects the obligations of Company pursuant to the indemnification
provisions of Company's Articles of Incorporation and Bylaws or any
indemnification agreement with Company officers and directors to which Company
is a party, in each case in effect on the date hereof; provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law. Without limitation of the foregoing, in the event any
person so indemnified (an "Indemnified Party") is or becomes involved in any
capacity in any action, proceeding or investigation in connection with any
matter relating to this Agreement or the transactions contemplated hereby
occurring on or prior to the Effective Time, Parent shall, or shall cause the
Surviving Corporation to, pay as incurred such Indemnified Party's reasonable
legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith to the fullest extent permitted by
the Delaware Law upon receipt of any undertaking contemplated by Section 145(e)
of the Delaware Law. Any Indemnified Party wishing to claim indemnification
under this Section 5.16, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Parent and the Surviving
Corporation, and shall deliver to Parent and the Surviving Corporation the
undertaking contemplated by Section 145(e) of the Delaware Law.
(b) For five years after the Effective Time, Parent will
either (i) at all times maintain at least $50,000,000 in cash, marketable
securities or unrestricted lines of credit (or any combination thereof) to be
available to indemnify the Indemnified Parties in accordance with Section
5.16(a) above or (ii) cause the Surviving Corporation to provide officers' and
directors' liability insurance in respect of acts or omissions occurring on or
prior to the Effective Time covering each such person currently covered by
Company's officers' and directors' liability insurance policy on terms
substantially similar to those of such policy in effect on the date hereof,
provided that in satisfying its obligation under this Section, Parent shall not
be obligated to cause the Surviving Corporation to pay premiums in excess of
150% of the amount per annum Company paid in its last full fiscal year, which
amount has been disclosed to Parent, and if the Surviving Corporation is unable
to obtain the insurance required by this Section 5.16,
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it shall obtain as much comparable insurance as possible for an annual premium
equal to such maximum amount.
(c) To the extent there is any claim, action, suit,
proceeding or investigation (whether arising before or after the Effective Time)
against an Indemnified Party that arises out of or pertains to any action or
omission in his or her capacity as director, officer, employee, fiduciary or
agent of Company occurring prior to the Effective Time, or arises out of or
pertains to the transactions contemplated by this Agreement for a period lasting
until the expiration of five years after the Effective Time (whether arising
before or after the Effective Time), in each case for which such Indemnified
Party is indemnified under this Section 5.16, such Indemnified Party shall be
entitled to be represented by counsel, which counsel shall be counsel of Parent
(provided that if use of counsel of Parent would be expected under applicable
standards of professional conduct to give rise to a conflict between the
position of the Indemnified Person and of Parent, the Indemnified Party shall be
entitled instead to be represented by counsel selected by the Indemnified Party
and reasonably acceptable to Parent) and following the Effective Time the
Surviving Corporation and Parent shall pay the reasonable fees and expenses of
such counsel, promptly after statements therefor are received and the Surviving
Corporation and Parent will cooperate in the defense of any such matter;
provided, however, that neither the Surviving Corporation nor Parent shall be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld); and provided, further, that, in the event
that any claim or claims for indemnification are asserted or made prior to the
expiration of such five year period, all rights to indemnification in respect to
any such claim or claims shall continue until the disposition of any and all
such claims. The Indemnified Parties as a group may retain only one law firm (in
addition to local counsel) to represent them with respect to any single action
unless there is, under applicable standards of professional conduct, a conflict
on any significant issue between the position of any two or more Indemnified
Parties.
(d) The provisions of this Section 5.16 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party, his or
her heirs and representatives.
5.17 Tax Treatment. For U.S. federal income tax purposes, it is
intended that the Merger qualify as a reorganization within the meaning of the
Code, and the parties hereto intend that the transactions contemplated by this
Agreement shall constitute a "plan of reorganization" within the meaning of
Section 368 of the Code and Treasury Regulations Sections 1.368-2(g) and
1.368-3(a). Parent will report the Merger on its income tax returns in a manner
consistent with treatment of the Merger as a Code Section 368(a) reorganization.
Neither Parent, the Company nor any of there respective affiliates has taken any
action, nor will they take any action, that would prevent or impede the Merger
from qualifying as a reorganization under Section 368 of the Code.
5.18 Stockholder Litigation. Unless and until the Board of
Directors of Company has withdrawn its recommendation of the Merger, Company
shall give Parent the opportunity to participate at its own expense in the
defense of any stockholder litigation against Company and/or its directors
relating to the transactions contemplated by this Agreement and the Option
Agreement.
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5.19 Section 280G/83(b) Agreement. Company shall use its
reasonable best efforts to obtain, prior to the Closing Date, a properly
executed Section 280G/83(b) Agreement in the form attached hereto as Exhibit H
(the "280G/83(b) Agreement") from each person reasonably identified by Company
or Parent as potentially receiving excess parachute payments, as defined in
Section 280G of the Code, in connection with the Merger. Prior to the Closing
Date, Company shall disclose the contents, and provide a copy, of the 280G/83(b)
Agreement to each person that Company reasonably believes may potentially
receive excess parachute payments, as defined in Section 280G of the Code, in
connection with the Merger.
5.20 Spreadsheet. Company shall use all reasonable efforts to
prepare a spreadsheet in form acceptable to Parent which spreadsheet shall be
certified as complete and correct by a duly elected officer of Company as of the
Closing and shall list, as of the Closing, all optionholders and their
respective addresses, the number of Company options to purchase shares held by
such persons (including in the case of shares, the respective certificate
numbers), the Exchange Ratio applicable to each holder, the number of shares of
options to purchase Parent Common Stock to be issued to each holder, and the
vesting arrangement with respect to Company Options (the "Spreadsheet").
5.21 Execution of Stockholder Agreement by NEC. Company shall use
its reasonable best efforts to have NEC Corporation execute and deliver a
Stockholder Agreement promptly after the date hereof.
5.22 Termination of Company ESPP. The Board of Directors of
Company shall take all action necessary to terminate the Company ESPP
immediately following the December 31, 2000 purchase date under such plan.
5.23 Resolution of Certain Litigation Matters. Company shall use
its reasonable best efforts to settle, in an aggregate amount not to exceed
$30,000, or have dismissed, each of the litigation items listed as items 1,2 and
3 on Schedule 2.7 hereof.
5.24 Best Efforts and Further Assurances. Each of the parties to
this Agreement shall use its best efforts to effectuate the transactions
contemplated hereby and to fulfill and cause to be fulfilled the conditions to
closing under this Agreement. Each party hereto, at the reasonable request of
another party hereto, shall execute and deliver such other instruments and do
and perform such other acts and things as may be necessary or desirable for
effecting completely the consummation of this Agreement and the transactions
contemplated hereby.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger.
The respective obligations of each party to this Agreement to consummate and
effect this Agreement and the transactions contemplated hereby shall be subject
to the satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by agreement of all the
parties hereto:
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(a) Stockholder Approval. This Agreement and the Merger
shall have been approved and adopted by the requisite vote of the stockholders
of Company under Washington Law.
(b) Registration Statement Effective. The SEC shall have
declared the Registration Statement effective. No stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose, and no similar proceeding in respect
of the Proxy Statement, shall have been initiated or threatened by the SEC; and
all requests for additional information on the part of the SEC shall have been
complied with to the reasonable satisfaction of the parties hereto.
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Merger shall be in effect, nor
shall any proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal. In the event an
injunction or other order shall have been issued, each party agrees to use its
reasonable best efforts to have such injunction or other order lifted.
(d) Governmental Approvals. Parent, Company and Merger Sub
and their respective subsidiaries shall have timely obtained from each
Governmental Entity all approvals, waivers and consents, if any, necessary for
consummation of or in connection with the Merger and the several transactions
contemplated hereby, including such approvals, waivers and consents as may be
required under the Securities Act, under state Blue Sky laws, and under HSR.
(e) Tax Opinion. Parent and Company shall have received
substantially similar written opinions of Xxxxxxx, Xxxxxxx and Xxxxxxxx LLP and
Xxxx Xxxx Xxxx & Freidenrich LLP, respectively, in form and substance reasonably
satisfactory to them, dated on or about the date of Closing to the effect that
the Merger will constitute a reorganization within the meaning of Section 368(a)
of the Code, and such opinions shall not have been withdrawn. In rendering such
opinions, counsel shall be entitled to rely upon, among other things, reasonable
assumptions as well as representations of Parent, Merger Sub and Company. In
addition, Parent and Company shall have received from such respective firms such
tax opinions as may be required by the SEC in connection with the filing of the
Registration Statement.
6.2 Additional Conditions to Obligations of Company. The
obligations of Company to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by Company:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of Parent and Merger Sub in this Agreement shall
be true and correct in all material respects (except for such representations
and warranties that are qualified
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by their terms by a reference to materiality which representations and
warranties as so qualified shall be true and correct in all respects) both when
made and on and as of the Effective Time as though such representations and
warranties were made on and as of such time (provided that those representations
and warranties which address matters only as of a particular date shall be true
and correct as of such date) and (ii) Parent and Merger Sub shall have performed
and complied in all material respects with all covenants, obligations and
conditions of this Agreement required to be performed and complied with by them
as of the Effective Time.
(b) Certificate of Parent. Company shall have been
provided with a certificate executed on behalf of Parent by an authorized
officer certifying that the condition set forth in Section 6.2(a) shall have
been fulfilled.
6.3 Additional Conditions to the Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to consummate and effect this
Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by Parent:
(a) Representations, Warranties and Covenants. (i) The
representations and warranties of Company in this Agreement shall be true and
correct in all material respects (except for such representations and warranties
that are qualified by their terms by a reference to materiality, which
representations and warranties as so qualified shall be true and correct in all
respects) both when made and on and as of the Effective Time as though such
representations and warranties were made on and as of such time (provided that
those representations and warranties which address matters only as of a
particular date shall be true and correct as of such date) and (ii) Company
shall have performed and complied in all material respects with all covenants,
obligations and conditions of this Agreement required to be performed and
complied with by it as of the Effective Time.
(b) Certificate of Company. Parent shall have been
provided with a certificate executed on behalf of Company by its President and
Chief Financial Officer certifying that the condition set forth in Section
6.3(a) shall have been fulfilled.
(c) Third Party Consents. Parent shall have been furnished
with evidence satisfactory to it of the consent or approval of those persons
whose consent or approval shall be required in connection with the Merger under
the contracts of Company set forth on Schedule 6.3(c) hereto.
(d) Injunctions or Restraints on Conduct of Business. No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint provision limiting or restricting Parent's conduct or operation of the
business of Company and its subsidiaries, following the Merger shall be in
effect, nor shall any proceeding brought by an administrative agency or
commission or other Governmental Entity, domestic or foreign, seeking the
foregoing be pending.
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(e) No Material Adverse Changes. There shall not have
occurred any Material Adverse Effect on Company, or any change that has a
Material Adverse Effect on Company (other than Non-Controllable Events).
(f) Employment and Non-Competition Agreements. The
employees of Company set forth on Schedule 5.13 shall have accepted employment
with Parent and shall have entered into an Employment and Non-Competition
Agreement in the form attached hereto as Exhibit F.
(g) Action Under Stock Option Plans. The Board of
Directors of Company shall have taken all action necessary to prevent the
cancellation or termination of options under the Company Stock Option Plans upon
the closing of the Merger and to allow such options to be assumed by Parent as
described in Section 5.9.
(h) Warrants. All outstanding warrants to acquire Company
capital stock shall have been exercised in accordance with their terms.
(i) Asset Sale. All of the conditions to closing set forth
in the Asset Purchase Agreement shall have been satisfied.
(j) Dissenters' Rights. Holders of not more than 5%, or in
the case that NEC Corporation is a dissenting shareholder, 14.9%, of the shares
of Company Common Stock shall have not voted in favor of the Merger or not
consented thereto in writing and shall have delivered prior to the Effective
Time timely written notice of such holder's intent to demand payment as a
dissenting shareholder for such shares in accordance with Washington Law.
(k) Waivers. Each individual listed on Schedule 5.9(f)
hereto and any Interviewed Employee (as defined below) who agrees to remain an
employee of Parent after the Closing shall have executed a Waiver and accepted
employment with Parent and delivered a Waiver and a transition letter to Parent.
(l) Notice to Employees. Company shall have provided a
Notice to Transferred Employees to each of the employees listed on Schedule 5.15
and each such employee listed on Schedule 5.15(a) shall have executed a General
Release and Non-Competition Agreement in the form attached hereto as Exhibit I,
and each such employee listed on Schedule 5.15(b) shall have executed a General
Release in one of the forms attached hereto as Exhibit J, which shall have been
delivered to Parent. Prior to the Closing, Parent may interview and consider for
employment and may, in its sole discretion, offer employment to any of the
employees of Company listed on Schedule 5.15(b) (the "Interviewed Employees")
upon such terms and conditions determined by Parent. In the event that any
Interviewed Employee is offered employment by Parent and accepts an offer of
employment with Parent prior to the Closing, such employee shall fulfill the
conditions of Section 6.3(k) prior to the Closing.
(m) Spreadsheet. Parent shall have received the
Spreadsheet, which shall have been certified as true and correct by an
authorized officer of Company.
(n) Amendment of Stock Option Plans. Company shall have
amended the Company Stock Option Plans and all options outstanding under such
Company Stock Option
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Plans to give each optionee a thirty (30) day period following his or her
termination of employment to exercise his or her option and shall have sent each
optionee a notice of such change in form and substance satisfactory to Parent.
(o) OEM Agreement. The Original Equipment Manufacturer
Agreement, dated as of October 31, 2000 by and between Parent and Company shall
be in full force and effect.
(p) Line of Credit. Company shall provide evidence in a
form satisfactory to Parent that there are no amounts outstanding under the Line
of Credit.
(q) Termination of Company ESPP. The Board of Directors of
Company shall have taken all action necessary to terminate the Company ESPP
immediately following the December 31, 2000 purchase date under such plan.
(r) Termination of Consultants and Independent
Contractors. Prior to the Closing Date, the Company shall have terminated
each agreement in effect for each consultant and independent contractor, other
than those listed in Schedule 6.3(r), consistent with the termination provisions
of each such agreement; and the Company shall have satisfied all termination
liabilities existing under such agreements prior to the Closing Date by
sufficient notice of termination or otherwise.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. At any time prior to the Effective Time, whether
before or after approval of the matters presented in connection with the Merger
by the stockholders of Company, this Agreement may be terminated:
(a) by mutual consent of Parent and Company;
(b) by either Parent or Company, if, without fault of the
terminating party, the Closing shall not have occurred on or before February 28,
2001 or such later date as may be agreed upon in writing by the parties hereto
(the "Final Date"); provided, however, that the Final Date shall be extended to
March 30, 2001 in the event that if the only reason the Closing shall not have
occurred by February 28, 2001 is the failure of the conditions set forth in
Section 6.1(b) and/or Section 6.1(d) (although such extension shall not occur if
the failure of such conditions has been caused or resulted from one party's
action or failure to act constituting a breach of this Agreement and the other
party does not consent to such extension); and provided further that the right
to terminate this Agreement under this Section 7.1(b) shall not be available to
any party whose action or failure to act has been the cause of or resulted in
the failure of the Merger to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement;
(c) by Parent, if (i) Company shall breach any of its
representations, warranties or obligations hereunder to an extent that would
cause the condition set forth in Section 6.3(a) not to be satisfied and such
breach shall not have been cured within ten (10) business days of receipt by
Company of written notice of such breach (and Parent shall not have
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willfully breached any of its covenants hereunder, which breach is not cured),
(ii) the Board of Directors of Company shall have withdrawn or modified its
recommendation of this Agreement or the Merger in a manner adverse to Parent or
shall have resolved to do any of the foregoing, (iii) Company shall have failed
to comply with Section 4.3, (iv) the Board of Directors of Company shall have
recommended, endorsed, accepted or agreed to a Takeover Proposal or shall have
resolved to do so, or (v) for any reason Company fails to call and hold the
Company Stockholders Meeting by February 14, 2001 or in the event the condition
set forth in Section 6.1(b) shall not have been satisfied by February 14, 2001
under circumstances in which it can be reasonably expected that the Final Date
will be extended pursuant to the proviso set forth in Section 7.1(b), March 15,
2001;
(d) by Company, if Parent shall breach any of its
representations, warranties or obligations hereunder to an extent that would
cause the condition set forth in Section 6.2(a) not to be satisfied and such
breach shall not have been cured within ten (10) business days following receipt
by Parent of written notice of such breach (and Company shall not have willfully
breached any of its covenants hereunder, which breach is not cured);
(e) by Parent if a Trigger Event (as defined in Section
7.3(e)) or Takeover Proposal shall have occurred and the Board of Directors of
Company in connection therewith, does not within ten (10) business days of such
occurrence (i) reconfirm its approval and recommendation of this Agreement and
the transactions contemplated hereby, and (ii) reject such Takeover Proposal or
Trigger Event (in the case of a Trigger Event involving a tender or exchange
offer); or
(f) by either Parent or Company if (i) any permanent
injunction or other order of a court or other competent authority preventing the
consummation of the Merger shall have become final and nonappealable or (ii) any
required approval of the stockholders of Company shall not have been obtained by
reason of the failure to obtain the required vote upon a vote held at a duly
held meeting of stockholders or at any adjournment thereof (provided that the
right to terminate this Agreement under this subsection (ii) shall not be
available to Company where the failure to obtain such stockholder approval shall
have been caused by the action or failure to act of Company and such action or
failure constitutes a breach by Company of this Agreement).
7.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent, Merger Sub
or Company or their respective officers, directors, stockholders or affiliates,
except to the extent that such termination results from the breach by a party
hereto of any of its representations, warranties or covenants set forth in this
Agreement; provided that, the provisions of Section 5.4 (Confidentiality),
Section 7.3 (Expenses and Termination Fees), this Section 7.2 and Section 8.1
shall remain in full force and effect and survive any termination of this
Agreement. Nothing herein shall relieve any party from liability in connection
with a breach by such party of the representations, warranties or covenants of
such party to this Agreement.
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7.3 Expenses and Termination Fees.
(a) Subject to subsections (b), (c), (d) and (e) of this
Section 7.3, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby (including, without limitation, the fees and expenses of its advisers,
accountants and legal counsel) shall be paid by the party incurring such
expense, except that expenses incurred in connection with printing the Proxy
Materials and the Registration Statement, registration and filing fees incurred
in connection with the Registration Statement, the Proxy Materials and the
listing of additional shares pursuant to Section 6.1(f) and fees, costs and
expenses associated with compliance with applicable state securities laws in
connection with the Merger shall be shared equally by Company and Parent.
(b) In the event that (i) Parent shall terminate this
Agreement pursuant to Section 7.1(e); (ii) Parent shall terminate this Agreement
pursuant to Section 7.1(c)(iii) as a result of the failure by Company, its
stockholders who are parties to the Stockholder Agreements, and each of their
respective directors, officers, employees, affiliates and controlling persons,
or any person authorized by such persons, to comply with the requirements of
Section 4.3; (iii) Parent shall terminate this Agreement pursuant to Section
7.1(c)(iv); (iv) Parent (or in the case of Section 7.1(f)(ii), Company) shall
terminate this Agreement pursuant to Section 7.1(c)(ii) or 7.1(f)(ii) and, prior
to such withdrawal, modification or stockholder rejection, there shall have been
(A) a Trigger Event with respect to Company or (B) a Takeover Proposal with
respect to Company which at the time of such withdrawal, modification or
stockholder rejection shall not have been rejected by Company; or (v) Parent (or
in the case of Section 7.1(b), Company) shall terminate this Agreement pursuant
to Section 7.1(b), 7.1(c)(i) or 7.1(c)(v) due in whole or in part to any failure
by Company to use its reasonable best efforts to perform and comply with all
agreements and conditions required by this Agreement to be performed or complied
with by Company prior to or on the Closing Date or any failure by Company's
affiliates to take any actions required to be taken hereby, and prior thereto
there shall have been (A) a Trigger Event with respect to Company or (B) a
Takeover Proposal with respect to Company which shall not have been rejected by
Company, then Company shall promptly reimburse Parent for all of the
out-of-pocket costs and expenses incurred by Parent in connection with this
Agreement and the transactions contemplated hereby (including, without
limitation, the fees and expenses of its advisors, accountants and legal
counsel), and, in addition to any other remedies Parent may have, Company shall
promptly pay to Parent the sum of $10,300,000.
(c) In the event that (i) Parent shall terminate this
Agreement pursuant to Section 7.1(c)(i) or 7.1(c)(v) under circumstances not
described in Section 7.3(b)(v); or (ii) Parent shall terminate this Agreement
pursuant to Section 7.1(c)(ii) or 7.1(f)(ii) (under circumstances not described
in Section 7.3(b)(iv)), Company shall promptly reimburse Parent for all of the
out-of-pocket costs and expenses incurred by Parent in connection with this
Agreement and the transactions contemplated hereby (including, without
limitation, the fees and expenses of its advisors, accountants and legal
counsel); and, in the event (A) any Takeover Proposal or Trigger Event is,
within twelve months of the later of (x) such termination of this Agreement and
(y) the payment of the above described expenses, consummated (as defined in
Section 7.3(g)) by or with any person (or any affiliate of any person) that made
a Takeover Proposal prior to termination of this Agreement or that caused a
Trigger Event prior to such termination, or (B) any other Takeover Proposal or
Trigger Event not described in clause (A) is consummated (as
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defined in Section 7.3(g)) within six months of the later of (x) such
termination of this Agreement and (y) the payment of the above-described
expenses, Company shall promptly pay to Parent the sum of $10,300,000 (less any
amounts paid by Company to Parent under Section 7.3(b)).
(d) In the event that Company shall terminate this
Agreement pursuant to Section 7.1(d) Parent shall promptly reimburse Company for
all of the out-of-pocket costs and expenses incurred by Company in connection
with this Agreement and the transactions contemplated hereby (including, without
limitation, the fees and expenses of its advisors, accountants and legal
counsel).
(e) As used herein, a "Trigger Event" shall occur if any
Person (as that term is defined in Section 13(d) of the Exchange Act and the
regulations promulgated thereunder) acquires securities representing 15%, or in
the case of NEC Corporation, 19.9%, or more, or commences a tender or exchange
offer, open market purchase program or other publicly announced initiative
following the successful consummation of which the offeror and its affiliate
would beneficially own securities representing 15%, or in the case of NEC
Corporation, 19.9%, or more, of the voting power of Company; provided, however,
a Trigger Event shall not be deemed to include the acquisition by any Person of
securities representing 15%, or in the case of NEC Corporation, 19.9%, or more
of Company if such Person has acquired such securities not with the purpose nor
with the effect of changing or influencing the control of Company, nor in
connection with or as a participant in any transaction having such purpose or
effect, including without limitation not in connection with such Person (i)
making any public announcement with respect to the voting of such shares at any
meeting to consider any merger, consolidation, sale of substantial assets or
other business combination or extraordinary transaction involving Company; (ii)
making, or in any way participating in, any "solicitation" of "proxies" (as such
terms are defined or used in Regulation 14A under the Exchange Act) to vote any
voting securities of Company (including, without limitation, any such
solicitation subject to Rule 14a-11 under the Exchange Act) or seeking to advise
or influence any Person with respect to the voting of any voting securities of
Company, directly or indirectly, relating to a merger or other business
combination involving Company or the sale or transfer of a significant portion
of assets (excluding the sale or disposition of assets in the ordinary course of
business) of Company; (iii) forming, joining or in any way participating in any
"group" within the meaning of Section 13(d)(3) of the Exchange Act with respect
to any voting securities of Company, directly or indirectly, relating to a
merger or other business combination involving Company or the sale or transfer
of a significant portion of assets (excluding the sale or disposition of assets
in the ordinary course of business) of Company; or (iv) otherwise acting, alone
or in concert with others, to seek control of Company or to seek to control or
influence the management or policies of Company.
(f) For purposes of this Agreement, "Takeover Proposal"
means any offer or proposal for, or any indication of interest in, a merger or
other business combination involving Company or any of its subsidiaries or the
acquisition of 15%, or in the case of NEC Corporation, 19.9%, or more of the
outstanding shares of capital stock of Company, or a significant portion of the
assets of, Company or any of its subsidiaries, other than the transactions
contemplated by this Agreement.
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(g) For purposes of Section 7.3(c) above, (A)
"consummation" of a Takeover Proposal shall occur on the date a written
agreement is entered into with respect to a merger or other business combination
involving Company or the acquisition of 15%, or in the case of NEC Corporation,
19.9%, or more of the outstanding shares of capital stock of Company, or sale or
transfer of any material assets (excluding the sale or disposition of assets in
the ordinary course of business) of Company or any of its subsidiaries and (B)
"consummation" of a Trigger Event shall occur on the date any Person (other than
any stockholder which currently owns 15% or more of the outstanding shares of
capital stock of Company provided such shareholder does not increase its
ownership) or any of its affiliates or associates would beneficially own
securities representing 15%, or in the case of NEC Corporation, 19.9%, or more
of the voting power of Company, following a tender or exchange offer.
7.4 Amendment. The boards of directors of the parties hereto may
cause this Agreement to be amended at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto; provided that an
amendment made subsequent to adoption of the Agreement by the stockholders of
Company or Merger Sub shall not (i) alter or change the amount or kind of
consideration to be received on conversion of the Company Common Stock, (ii)
alter or change any term of the Certificate of Incorporation of the Surviving
Corporation to be effected by the Merger, or (iii) alter or change any of the
terms and conditions of the Agreement if such alteration or change would
materially adversely affect the holders of Company Common Stock or Merger Sub
Common Stock.
7.5 Extension; Waiver. At any time prior to the Effective Time
any party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival at Effective Time. The representations,
warranties and agreements set forth in this Agreement shall terminate at the
Effective Time, except that the agreements set forth in Article I, Section 5.4
(Confidentiality), 5.10 (Forms S-3 and S-8), 5.17 (Indemnification), 5.20 (Best
Efforts and Further Assurances), 7.3 (Expenses and Termination Fees), 7.4
(Amendment), and this Article VIII shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the following address (or at such other address for a party as shall be
specified by like notice):
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(a) if to Parent or Merger Sub, to:
Cisco Systems, Inc.
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Senior Vice President, Legal and
Government Affairs
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxx Xxxx
Xxx Xxxxxxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
(b) if to Company, to:
Active Voice Corporation
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich LLP
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Steel, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
8.3 Interpretation. When a reference is made in this Agreement to
Exhibits or Schedules, such reference shall be to an Exhibit or Schedule to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement", "the date hereof", and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to November 9, 2000.
The table of contents and headings
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contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Nonassignability; Parties in Interest. This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits, the
Schedules, including the Company Disclosure Schedule and the Parent Disclosure
Schedule (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, except for the Confidentiality Agreement, which shall continue in full
force and effect, and shall survive any termination of this Agreement or the
Closing, in accordance with its terms; (b) are not intended to confer upon any
other person any rights or remedies hereunder, except as set forth in Sections
1.6(a)-(c) and (f), 1.7-1.9, 5.9, 5.10, 5.12 and 5.17; and (c) shall not be
assigned by operation of law or otherwise except as otherwise specifically
provided.
8.6 Severability. In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
8.7 Remedies Cumulative. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy.
8.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the laws that might otherwise govern under applicable principles of conflicts
of law. Each of the parties hereto irrevocably consents to the exclusive
jurisdiction of any court located within the State of California in connection
with any matter based upon or arising out of this Agreement or the matters
contemplated herein, agrees that process may be served upon them in any manner
authorized by the laws of the State of California for such persons and waives
and covenants not to assert or plead any objection which they might otherwise
have to such jurisdiction and such process.
8.9 Rules of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of any law,
regulation, holding or rule of construction providing
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that ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Company, Parent and Merger Sub have caused
this Agreement and Plan of Merger and Reorganization to be executed and
delivered by their respective officers thereunto duly authorized, all as of the
date first written above.
ACTIVE VOICE CORPORATION
By:
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Name:
-----------------------------------
Title:
-----------------------------------
CISCO SYSTEMS, INC.
By:
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Name:
-----------------------------------
Title:
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AQUA ACQUISITION CORPORATION
By:
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Name:
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Title:
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[SIGNATURE PAGE TO AGREEMENT AND
PLAN OF MERGER AND REORGANIZATION]
