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