EXHIBIT 1
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
Applied Micro Circuits Corporation
a Delaware corporation;
Mercury Acquisition Corp.,
a Delaware corporation; and
MMC Networks, Inc.,
a Delaware corporation
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Dated as of August 28, 2000
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Table Of Contents
Page
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SECTION 1. Description of Transaction..................................... X- 0
1.1 Merger of Merger Sub into the Company............................ X- 0
1.2 Effect of the Merger............................................. X- 0
1.3 Closing; Effective Time.......................................... X- 0
1.4 Certificate of Incorporation and Bylaws; Directors............... X- 0
1.5 Conversion of Shares............................................. X- 0
1.6 Closing of the Company's Transfer Books.......................... X- 0
1.7 Exchange of Certificates......................................... X- 0
1.8 No Appraisal Rights.............................................. A- 4
1.9 Tax Consequences................................................. X- 0
1.10 Further Action................................................... X- 0
SECTION 2. Representations and Warranties of the Company.................. A- 4
2.1 Due Organization; Subsidiaries................................... X- 0
2.2 Authority; Binding Nature of Agreement........................... X- 0
2.3 Capitalization, Etc. ............................................ X- 0
2.4 SEC Filings; Financial Statements................................ A- 6
2.5 Absence of Changes............................................... X- 0
2.6 Proprietary Assets............................................... X- 0
2.7 Contracts........................................................ A- 9
2.8 Sale of Products; Performance of Services........................ A-10
2.9 Liabilities...................................................... A-10
2.10 Compliance with Legal Requirements............................... A-10
2.11 Governmental Authorizations...................................... A-10
2.12 Tax Matters...................................................... A-11
2.13 Employee and Labor Matters; Benefit Plans........................ A-11
2.14 Environmental Matters............................................ A-14
2.15 Legal Proceedings; Orders........................................ A-14
2.16 Vote Required.................................................... A-14
2.17 Non-Contravention; Consents...................................... A-14
2.18 Fairness Opinion................................................. A-15
2.19 Financial Advisor................................................ A-15
2.20 Takeover Statutes................................................ A-15
2.21 Full Disclosure.................................................. A-15
SECTION 3. Representations and Warranties of Parent and Merger Sub........ A-16
3.1 Due Organization; Subsidiaries................................... A-16
3.2 Authority; Binding Nature of Agreement........................... A-16
Table Of Contents
(continued)
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3.3 Capitalization, Etc. ............................................ A-16
3.4 SEC Filings; Financial Statements................................ A-17
3.5 Absence of Changes............................................... A-17
3.6 Non-Contravention; Consents...................................... A-18
3.7 Liabilities...................................................... A-18
3.8 Compliance with Legal Requirements............................... A-18
3.9 Governmental Authorizations...................................... A-18
3.10 Environmental Matters............................................ A-18
3.11 Legal Proceedings; Orders........................................ A-19
3.12 Full Disclosure.................................................. A-19
SECTION 4. Certain Covenants of the Company............................... A-19
4.1 Operation of the Company's Business.............................. A-19
4.2 No Solicitation.................................................. A-21
SECTION 5. Additional Covenants of the Parties............................ A-22
5.1 Registration Statement; Proxy Statement.......................... A-22
5.2 Company Stockholders' Meeting.................................... A-22
5.3 Regulatory Approvals............................................. A-23
5.4 Stock Options.................................................... A-24
5.5 Employee Benefits................................................ A-24
5.6 Indemnification of Officers and Directors........................ A-25
5.7 Additional Agreements............................................ A-25
5.8 Disclosure....................................................... A-27
5.9 Tax Matters...................................................... A-27
5.10 Listing.......................................................... A-27
5.11 Access and Investigation......................................... A-27
5.12 Exemption from Liability Under Section 16(b)..................... A-27
5.13 Board of Directors of Parent..................................... A-28
SECTION 6. Conditions Precedent to Obligations of Parent and Merger Sub... A-28
6.1 Accuracy of Representations...................................... A-28
6.2 Performance of Covenants......................................... A-28
6.3 Effectiveness of Registration Statement.......................... A-29
6.4 Stockholder Approval............................................. A-29
6.5 Agreements and Documents......................................... A-29
6.6 No Material Adverse Effect....................................... A-29
6.7 HSR Act.......................................................... A-29
6.8 No Restraints.................................................... A-29
6.9 No Governmental Litigation....................................... A-29
Table Of Contents
(continued)
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SECTION 7. Conditions Precedent to Obligation of the Company.............. A-29
7.1 Accuracy of Representations...................................... A-29
7.2 Performance of Covenants......................................... A-30
7.3 Effectiveness of Registration Statement.......................... A-30
7.4 Stockholder Approval............................................. A-30
7.5 Documents........................................................ A-30
7.6 No Material Adverse Effect....................................... A-30
7.7 HSR Act.......................................................... A-30
7.8 Listing.......................................................... A-30
7.9 No Restraints.................................................... A-30
7.10 No Governmental Litigation....................................... A-30
SECTION 8. Termination.................................................... A-31
8.1 Termination...................................................... A-31
8.2 Effect of Termination............................................ A-32
8.3 Expenses; Termination Fees....................................... A-32
SECTION 9. Miscellaneous Provisions....................................... A-33
9.1 Amendment........................................................ A-33
9.2 Waiver........................................................... A-33
9.3 No Survival of Representations and Warranties.................... A-33
9.4 Entire Agreement; Counterparts................................... A-33
9.5 Applicable Law; Jurisdiction..................................... A-33
9.6 Attorneys' Fees.................................................. A-34
9.7 Assignability.................................................... A-34
9.8 Notices.......................................................... A-34
9.9 Construction..................................................... A-35
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization ("Agreement") is made
and entered into as of August 28, 2000, by and among Applied Micro Circuits
Corporation, a Delaware corporation ("Parent"); Mercury Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub");
and MMC Networks, Inc., a Delaware corporation (the "Company"). Certain
capitalized terms used in this Agreement are defined in Exhibit A.
Recitals
A. Parent, Merger Sub and the Company intend to effect a merger of Merger
Sub into the Company in accordance with this Agreement and the Delaware General
Corporation Law (the "Merger"). Upon consummation of the Merger, Merger Sub
will cease to exist, and the Company will become a wholly owned subsidiary of
Parent.
B. It is intended that the Merger qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
C. The respective boards of directors of Parent, Merger Sub and the Company
have approved this Agreement and the Merger.
D. In order to induce Parent to enter into this Agreement and to consummate
the Merger, concurrently with the execution and delivery of this Agreement: (i)
certain stockholders of the Company are executing voting agreements in favor of
Parent (the "Company Stockholder Voting Agreements"); and (ii) certain key
employees of the Company are executing employment and noncompetition agreements
with Parent and Merger Sub.
Agreement
The parties to this Agreement, intending to be legally bound, agree as
follows:
SECTION 1. Description of Transaction
1.1 Merger of Merger Sub into the Company. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), Merger Sub shall be merged with and into the Company, and the
separate existence of Merger Sub shall cease. The Company will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
1.2 Effect of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the Delaware General
Corporation Law (the "DGCL").
1.3 Closing; Effective Time. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxx Godward LLP, 0000 Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx,
at 10:00 a.m. on a date to be designated by Parent (the "Closing Date"), which
shall be no later than the second business day after the last to be satisfied
or waived of the conditions set forth in Sections 6 and 7 shall have been so
satisfied or waived (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of such
conditions). Subject to the provisions of this Agreement, a certificate of
merger satisfying the applicable requirements of the DGCL (the "Certificate of
Merger") shall be duly executed by the Company and concurrently with or as soon
as practicable following the Closing delivered to the Secretary of State of the
State of Delaware for filing. The Merger shall become effective upon the date
and time of the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware or such other date and time as Parent and the Company
may mutually agree and include in the Certificate of Merger (the "Effective
Time").
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1.4 Certificate of Incorporation and Bylaws; Directors. Unless otherwise
determined by Parent prior to the Effective Time:
(a) the Certificate of Incorporation of the Surviving Corporation shall be
the Certificate of Incorporation of the Company as in effect immediately prior
to the Effective Time;
(b) the Bylaws of the Surviving Corporation shall be the Bylaws of the
Company as in effect immediately prior to the Effective Time; and
(c) the directors of the Surviving Corporation immediately after the
Effective Time shall be the respective individuals who are directors of Merger
Sub immediately prior to the Effective Time.
1.5 Conversion of Shares.
(a) At the Effective Time, by virtue of the Merger and without any further
action on the part of Parent, Merger Sub, the Company or any stockholder of the
Company:
(i) any shares of Company Common Stock then held by the Company or any
wholly owned Subsidiary of the Company (or held in the treasury of the Company)
shall cease to exist, and no consideration shall be delivered in exchange
therefor;
(ii) any shares of Company Common Stock then held by Parent, Merger Sub
or any other wholly owned Subsidiary of Parent shall cease to exist, and no
consideration shall be delivered in exchange therefor;
(iii) except as provided in clauses "(i)" and "(ii)" above and subject
to Sections 1.5(c), 1.5(d) and 1.5(e), each share of Company Common Stock then
outstanding shall be converted into the right to receive that fraction of a
share of Parent Common Stock equal to the Exchange Ratio (as defined in Section
1.5(b)); and
(iv) each share of the Common Stock, $0.01 par value per share, of
Merger Sub then outstanding shall be converted into one share of Common Stock
of the Surviving Corporation.
(b) For purposes of this Agreement the "Exchange Ratio" (as such Exchange
Ratio may be adjusted in accordance with Section 1.5(c)) shall be .619;
provided however, the maximum number of shares of Common Stock which Parent
shall be obligated to issue in connection with the Merger shall be no more than
20% of the number of shares of Parent Common Stock outstanding as of the
Effective Time.
(c) If, between the date of this Agreement and the Effective Time, the
outstanding shares of Company Common Stock or Parent Common Stock are changed
into, or there is a record date for a transaction in which the outstanding
shares of Company Common Stock or Parent Common Stock will be changed into, a
different number or class of shares by reason of any stock split, stock
dividend, reverse stock split, reclassification, recapitalization or other
similar transaction, then the Exchange Ratio shall be appropriately adjusted.
(d) If any shares of Company Common Stock outstanding immediately prior to
the Effective Time are unvested or are subject to a repurchase option, risk of
forfeiture or other condition under any applicable restricted stock purchase
agreement or other agreement with the Company or under which the Company has
any rights, then the shares of Parent Common Stock issued in exchange for such
shares of Company Common Stock will also be unvested and subject to the same
repurchase option, risk of forfeiture or other condition, and the certificates
representing such shares of Parent Common Stock may accordingly be marked with
appropriate legends. The Company shall take commercially reasonable efforts to
ensure that, from and after the Effective Time, Parent is entitled to exercise
any such repurchase option or other right set forth in any such restricted
stock purchase agreement or other agreement.
(e) No fractional shares of Parent Common Stock shall be issued in
connection with the Merger, and no certificates or scrip for any such
fractional shares shall be issued. Any holder of Company Common Stock who would
otherwise be entitled to receive a fraction of a share of Parent Common Stock
(after aggregating all fractional shares of Parent Common Stock issuable to
such holder) shall, in lieu of such fraction of a share and
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upon surrender of such holder's Company Stock Certificate(s) (as defined in
Section 1.6), be paid in cash the dollar amount (rounded to the nearest whole
cent), without interest, determined by multiplying such fraction by the closing
price of a share of Parent Common Stock on The Nasdaq National Market on the
date the Merger becomes effective.
1.6 Closing of the Company's Transfer Books. At the Effective Time: (a) all
shares of Company Common Stock outstanding immediately prior to the Effective
Time shall automatically be canceled and retired and shall cease to exist, and
all holders of certificates representing shares of Company Common Stock that
were outstanding immediately prior to the Effective Time shall cease to have
any rights as stockholders of the Company; and (b) the stock transfer books of
the Company shall be closed with respect to all shares of Company Common Stock
outstanding immediately prior to the Effective Time. No further transfer of any
such shares of Company Common Stock shall be made on such stock transfer books
after the Effective Time. If, after the Effective Time, a valid certificate
previously representing any shares of Company Common Stock (a "Company Stock
Certificate") is presented to the Exchange Agent (as defined in Section 1.7) or
to the Surviving Corporation or Parent, such Company Stock Certificate shall be
canceled and shall be exchanged as provided in Section 1.7.
1.7 Exchange of Certificates.
(a) On or prior to the Closing Date, Parent shall select a reputable bank or
trust company reasonably acceptable to the Company to act as exchange agent in
the Merger (the "Exchange Agent"). Promptly after the Effective Time and in any
event within three (3) business days, Parent shall deposit with the Exchange
Agent (i) a sufficient number of certificates to cover the shares of Parent
Common Stock issuable pursuant to this Section 1, and (ii) cash sufficient to
make payments in lieu of fractional shares in accordance with Section 1.5(e).
The shares of Parent Common Stock and cash amounts so deposited with the
Exchange Agent, together with any dividends or distributions received by the
Exchange Agent with respect to such shares, are referred to collectively as the
"Exchange Fund."
(b) As soon as reasonably practicable after the Effective Time, the Exchange
Agent will mail to the record holders of Company Stock Certificates (i) a
letter of transmittal in customary form and containing such provisions as
Parent may reasonably specify (including a provision confirming that delivery
of Company Stock Certificates shall be effected, and risk of loss and title to
Company Stock Certificates shall pass, only upon delivery of such Company Stock
Certificates to the Exchange Agent), and (ii) instructions for use in effecting
the surrender of Company Stock Certificates in exchange for certificates
representing Parent Common Stock. Upon surrender of a Company Stock Certificate
to the Exchange Agent for exchange, together with a duly executed letter of
transmittal and such other documents as may be reasonably required by the
Exchange Agent or Parent, (1) the holder of such Company Stock Certificate
shall be entitled to receive in exchange therefor a certificate representing
the number of whole shares of Parent Common Stock that such holder has the
right to receive pursuant to the provisions of Section 1.5 (and cash in lieu of
any fractional share of Parent Common Stock), and (2) the Company Stock
Certificate so surrendered shall be canceled. Until surrendered as contemplated
by this Section 1.7, each Company Stock Certificate shall be deemed, from and
after the Effective Time, to represent only the right to receive shares of
Parent Common Stock (and cash in lieu of any fractional share of Parent Common
Stock) as contemplated by Section 1. If any Company Stock Certificate shall
have been lost, stolen or destroyed, Parent may, in its discretion and as a
condition precedent to the issuance of any certificate representing Parent
Common Stock, require the owner of such lost, stolen or destroyed Company Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such
sum as Parent may reasonably direct) as indemnity against any claim that may be
made against the Exchange Agent, Parent or the Surviving Corporation with
respect to such Company Stock Certificate.
(c) No dividends or other distributions declared or made with respect to
Parent Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Company Stock Certificate with respect to
the shares of Parent Common Stock that such holder has the right to receive in
the Merger until such holder surrenders such Company Stock Certificate in
accordance with this Section 1.7 (at which time such
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holder shall be entitled, subject to the effect of applicable escheat or
similar laws, to receive all such dividends and distributions, without
interest).
(d) Any portion of the Exchange Fund that remains undistributed to holders
of Company Stock Certificates as of the date 180 days after the date on which
the Merger becomes effective shall be delivered to Parent upon demand, and any
holders of Company Stock Certificates who have not theretofore surrendered
their Company Stock Certificates in accordance with this Section 1.7 shall
thereafter look only to Parent for satisfaction of their claims for Parent
Common Stock, cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock.
(e) Each of the Exchange Agent, Parent and the Surviving Corporation shall
be entitled to deduct and withhold from any consideration payable or otherwise
deliverable pursuant to this Agreement to any holder or former holder of
Company Common Stock such amounts as may be required to be deducted or withheld
therefrom under the Code or any provision of state, local or foreign tax law or
under any other applicable Legal Requirement. To the extent such amounts are so
deducted or withheld, such amounts shall be treated for all purposes under this
Agreement as having been paid to the Person to whom such amounts would
otherwise have been paid.
(f) Neither Parent nor the Surviving Corporation shall be liable to any
holder or former holder of Company Common Stock or to any other Person with
respect to any shares of Parent Common Stock (or dividends or distributions
with respect thereto), or for any cash amounts, delivered to any public
official pursuant to any applicable abandoned property law, escheat law or
similar Legal Requirement.
1.8 No Appraisal Rights. In accordance with Section 262 of the DGCL, no
appraisal rights shall be available to the holders of shares of Company Common
Stock in connection with the Merger.
1.9 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of
the Code. The parties to this Agreement hereby adopt this Agreement as a "plan
of reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of
the United States Treasury Regulations.
1.10 Further Action. If, at any time after the Effective Time, any further
action is determined by Parent to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full
right, title and possession of and to all rights and property of Merger Sub and
the Company, the officers and directors of the Surviving Corporation and Parent
shall be fully authorized (in the name of Merger Sub, in the name of the
Company and otherwise) to take such action.
SECTION 2. Representations and Warranties of the Company
The Company represents and warrants to Parent and Merger Sub (subject to
such exceptions or qualifications as are disclosed in writing in the disclosure
schedule supplied by the Company to Parent dated as of the date hereof (the
"Company Disclosure Schedule"), which disclosure shall provide an exception to
or otherwise qualify only those representations and warranties of the Company
contained in the section of this Agreement corresponding to the part or section
reference of the Company Disclosure Schedule where such disclosure appears and
such exceptions or qualifications shall not be deemed to be an exception to, or
qualify, any other representation or warranty) as follows:
2.1 Due Organization; Subsidiaries. Each of the Acquired Corporations (as
defined below) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
necessary power and authority: (i) to conduct its business in the manner in
which its business is currently being conducted; (ii) to own and use its assets
in the manner in which its assets are currently owned and used; and (iii) to
perform its obligations under all Contracts by which it is bound. Each of the
Acquired Corporations is qualified to do business as a foreign corporation, and
is in good standing, under
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the laws of all jurisdictions where the nature of its business requires such
qualification and where the failure to be so qualified would have a Material
Adverse Effect on any of the Acquired Corporations. The Company has delivered
to Parent accurate and complete copies of the certificate of incorporation,
bylaws and other charter or organizational documents of each of the Acquired
Corporations, including all amendments thereto. The Company has no
Subsidiaries, except for the corporations identified in Part 2.1 of the Company
Disclosure Schedule. (The Company and each of its Subsidiaries are collectively
referred to herein as the "Acquired Corporations"). None of the Acquired
Corporations has any equity interest or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any Entity, other than (i) the Company's interest in its
Subsidiaries identified in Part 2.1 of the Company Disclosure Schedule, or
(ii) any interest in any publicly traded company held for investment and
comprising less than five percent of the outstanding capital stock of such
company. None of the Acquired Corporations has, at any time, been a general
partner of, or has otherwise been liable for any of the debts or other
obligations of, any general partnership, limited partnership or other Entity.
2.2 Authority; Binding Nature of Agreement. Subject to obtaining the
requisite approval of the Company's stockholders in accordance with the DGCL,
the Company has the absolute and unrestricted right, power and authority to
enter into and to perform its obligations under this Agreement. The Board of
Directors of the Company (at a meeting duly called and held) has (a) determined
that the Merger is advisable and fair and in the best interests of the Company
and its stockholders, (b) authorized and approved the execution, delivery and
performance of this Agreement by the Company and approved the Merger, (c)
recommended the adoption of this Agreement by the holders of Company Common
Stock and directed that this Agreement and the Merger be submitted for
consideration by the Company's stockholders at the Company Stockholders'
Meeting (as defined in Section 5.2), and (d) adopted a resolution having the
effect of causing the Company not to be subject to any state takeover law or
similar Legal Requirement that might otherwise apply to the Merger or any of
the other transactions contemplated by this Agreement. This Agreement
constitutes the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief
of debtors, and (ii) rules of law governing specific performance, injunctive
relief and other equitable remedies. Prior to the execution of the Company
Stockholder Voting Agreements, the Board of Directors of the Company approved
the Company Stockholder Voting Agreements and the transactions contemplated
thereby. As a result of the approval of this Agreement and the Merger by the
Board of Directors of the Company, no state takeover statute or similar Legal
Requirement applies or purports to apply to the Merger, this Agreement or any
of the transactions contemplated hereby.
2.3 Capitalization, Etc.
(a) The authorized capital stock of the Company consists of: (i) 100,000,000
shares of Company Common Stock; and (ii) 10,000,000 shares of Preferred Stock,
par value $.001 per share. As of August 24, 2000, 33,109,850 shares of Company
Common Stock have been issued and are outstanding and no shares of the
Company's Preferred Stock have been issued or are outstanding. No shares of
capital stock of the Company are held in the Company's treasury. All of the
outstanding shares of Company Common Stock have been duly authorized and
validly issued, and are fully paid and nonassessable. There are no shares of
Company Common Stock held by any of the Company's Subsidiaries. None of the
outstanding shares of Company Common Stock is entitled or subject to any
preemptive right, right of participation, right of maintenance or any similar
right or subject to any right of first refusal in favor of the Company and
there is no Acquired Corporation Contract relating to the voting or
registration of, or restricting any Person from purchasing, selling, pledging
or otherwise disposing of (or granting any option or similar right with respect
to), any shares of Company Common Stock. None of the Acquired Corporations is
under any obligation, or is bound by any Contract pursuant to which it may
become obligated, to repurchase, redeem or otherwise acquire any outstanding
shares of Company Common Stock.
(b) As of August 24, 2000: (i) 931,137 shares of Company Common Stock are
subject to issuance pursuant to stock options granted and outstanding under the
Company's 1993 Stock Plan; (ii) 5,621,826 shares
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of Company Common Stock are subject to issuance pursuant to stock options
granted and outstanding under the Company's 1997 Stock Plan; (iii) 130,000
shares of Company Common Stock are subject to issuance pursuant to stock
options granted and outstanding under the Company's Director Option Plan; and
(iv) 577,664 shares of Company Common Stock are reserved for future issuance
pursuant to the Company's 1997 Employee Stock Purchase Plan (the "Company
ESPP"), 52,670 of which are subject to issuance pursuant to stock options
granted and outstanding under the Company ESPP. (Stock options granted by the
Company pursuant to the 1993 Stock Plan, the 1997 Stock Plan and the 1997
Director Stock Plan are referred to collectively herein as "Company Options.")
Part 2.3(b) of the Company Disclosure Schedule sets forth the following
information with respect to each Company Option outstanding as of the date of
this Agreement: (i) the particular plan pursuant to which such Company Option
was granted; (ii) the name of the optionee; (iii) the number of shares of
Company Common Stock subject to such Company Option; (iv) the exercise price of
such Company Option; (v) the date on which such Company Option was granted;
(vi) the extent to which such Company Option is vested and exercisable as of
the date of this Agreement; and (vii) the date on which such Company Option
expires. The Company has delivered to Parent accurate and complete copies of
all stock option plans pursuant to which the Company has granted Company
Options, and the forms of all stock option agreements evidencing such options
to the extent such plans or agreements have not been filed as exhibits to the
Company SEC Documents (as defined in Section 2.4(a)).
(c) Except as set forth in Sections 2.3(a) or 2.3(b), as of the date hereof
there is no: (i) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any shares of the capital
stock or other securities of any of the Acquired Corporations; (ii) outstanding
security, instrument or obligation that is or may become convertible into or
exchangeable for any shares of the capital stock or other securities of any of
the Acquired Corporations; (iii) rights agreement, stockholder rights plan (or
similar plan commonly referred to as a "poison pill") or Contract under which
any of the Acquired Corporations is or may become obligated to sell or
otherwise issue any shares of its capital stock or any other securities; or
(iv) condition or circumstance that may give rise to or provide a basis for the
assertion of a claim by any Person to the effect that such Person is entitled
to acquire or receive any shares of capital stock or other securities of any of
the Acquired Corporations.
(d) All outstanding shares of Company Common Stock, all outstanding Company
Options and all outstanding shares of capital stock of each Subsidiary of the
Company have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Legal Requirements, and (ii) all
requirements set forth in applicable Contracts. All of the outstanding shares
of capital stock of each of the Company's Subsidiaries have been duly
authorized and are validly issued, are fully paid and nonassessable and are
owned beneficially and of record by the Company, free and clear of any
Encumbrances.
2.4 SEC Filings; Financial Statements.
(a) The Company has made available to Parent all registration statements,
proxy statements and other statements, reports, schedules, forms and other
documents filed by the Company with the SEC since December 31, 1999 (the
"Company SEC Documents"). All statements, reports, schedules, forms and other
documents required to have been filed by the Company with the SEC since
December 31, 1999 have been so filed. As of the time it was filed with the SEC
(or, if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing): (i) each of the Company SEC Documents
complied in all material respects with the applicable requirements of the
Securities Act or the Exchange Act (as the case may be); and (ii) 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 in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The financial statements (including any related notes) contained in the
Company SEC Documents (the "Company Financial Statements"): (i) complied as to
form in all material respects with the published rules and regulations of the
SEC applicable thereto; (ii) were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered (except as may be indicated in the notes
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to such financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC, and except that the unaudited financial
statements may not contain footnotes and are subject to normal and recurring
year-end adjustments which will not, individually or in the aggregate, be
material in amount); and (iii) fairly present in all material respects the
consolidated financial position of the Company and its consolidated
subsidiaries as of the respective dates thereof and the consolidated results of
operations and cash flows of the Company and its consolidated subsidiaries for
the periods covered thereby. For purposes of this Agreement, "Company Balance
Sheet" means that consolidated balance sheet of the Company and its
consolidated subsidiaries as of June 30, 2000 set forth in the Company's
Quarterly Report on Form 10-Q filed with the SEC and the "Company Balance Sheet
Date" means June 30, 2000.
2.5 Absence of Changes. Since the Company Balance Sheet Date:
(a) each of the Acquired Corporations has operated its respective business
in the ordinary course and consistent with past practices;
(b) there has not been any event that has had a Material Adverse Effect on
the Acquired Corporations, and no fact, event, circumstance or condition exists
or has occurred that could reasonably be expected to have a Material Adverse
Effect on the Acquired Corporations;
(c) none of the Acquired Corporations has (i) declared, accrued, set aside
or paid any dividend or made any other distribution in respect of any shares of
capital stock; (ii) repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities; (iii) sold, issued or granted, or authorized
the issuance of, (A) any capital stock or other security (except for Company
Common Stock issued upon the valid exercise of outstanding Company Options),
(B) any option, warrant or right to acquire any capital stock or any other
security (except for Company Options described in Part 2.3(c) of the Company
Disclosure Schedule), or (C) any instrument convertible into or exchangeable
for any capital stock or other security; (iv) received any Acquisition Proposal
from any Person (other than Parent); (v) made any capital expenditure which,
when added to all other capital expenditures made on behalf of the Acquired
Corporations since the Company Balance Sheet Date exceeds $250,000 in the
aggregate; (vi) changed any of its methods of accounting or accounting
practices, except as required by generally accepted accounting principles;
(vii) made any material Tax election; or (viii) commenced or settled any
material Legal Proceeding;
(d) none of the Acquired Corporations has (i) amended or waived any of its
material rights under, or permitted the acceleration of vesting under, any
provision of any of the Company Employee Plans (as defined in Section 2.13(a))
or any material provision of any agreement evidencing any outstanding Company
Option; (ii) established or adopted any Company Employee Plan; (iii) caused or
permitted any Company Employee Plan to be amended in any material respect; or
(iv) paid any bonus or made any profit-sharing or similar payment to, or
materially increased the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its
directors, officers or employees;
(e) there has been no amendment to the certificate of incorporation or
bylaws of any of the Acquired Corporations, and none of the Acquired
Corporations has effected or been a party to any merger, consolidation, share
exchange, business combination, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction;
(f) except in the ordinary course of business and consistent with past
practices, none of the Acquired Corporations has (i) entered into or permitted
any of the assets owned or used by it which are material to the Acquired
Corporations to become bound by any Contract, or (ii) amended or terminated, or
waived any right or remedy under, any Material Contract (as defined in Section
2.7); and
(g) none of the Acquired Corporations has (i) sold or otherwise disposed of,
or acquired, leased, licensed, waived or relinquished, any right which is
material to the Acquired Corporations or other asset which is material to the
Acquired Corporations to, from or for the benefit of, any other Person except
for rights or other assets sold, disposed of, acquired, leased, licensed,
waived or relinquished in the ordinary course of business
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and consistent with past practices; (ii) made any pledge of any of its assets
or otherwise permitted any of its assets to become subject to any Encumbrance,
except for pledges of immaterial assets made in the ordinary course of business
or (iii) guaranteed any indebtedness for borrowed money.
2.6 Proprietary Assets.
(a) As of the date hereof, Part 2.6(a)(i) of the Company Disclosure Schedule
sets forth all U.S. and foreign patents, patent applications, registered
trademarks, trademark applications, registered copyrights and copyright
applications owned by any of the Acquired Corporations. As of the date hereof,
Part 2.6(a)(ii) of the Company Disclosure Schedule identifies any ongoing
royalty or payment obligations in excess of $100,000 with respect to, each
Proprietary Asset that is licensed or otherwise made available to any of the
Acquired Corporations by any Person and is material to the business of the
Acquired Corporations (except for any Proprietary Asset that is licensed to any
Acquired Corporation under any third party software license generally available
to the public), and identifies the Contract under which such Proprietary Asset
is being licensed or otherwise made available to such Acquired Corporation. The
Acquired Corporations have good and valid title to all of the Acquired
Corporation Proprietary Assets identified or required to be identified in Part
2.6(a)(i) of the Company Disclosure Schedule, free and clear of all
Encumbrances, except for (i) any lien for current taxes not yet due and
payable, and (ii) minor liens that have arisen in the ordinary course of
business and that do not (individually or in the aggregate) materially detract
from the value of the Acquired Corporation Proprietary Asset subject thereto or
materially impair the operations of the Acquired Corporations. The Acquired
Corporations have a valid right to use, license and otherwise exploit all
Proprietary Assets identified in Part 2.6(a)(ii) of the Company Disclosure
Schedule. None of the Acquired Corporations has developed jointly with any
other Person any Acquired Corporation Proprietary Asset that is material to the
business of the Acquired Corporations and with respect to which such other
Person has any rights. There is no Acquired Corporation Contract (with the
exception of end user license agreements in the form previously delivered by
the Company to Parent) pursuant to which any Person has any right (whether or
not currently exercisable) to use, license or otherwise exploit any Acquired
Corporation Proprietary Asset that is material to the business of the Acquired
Corporations.
(b) The Acquired Corporations have taken reasonable measures and precautions
to protect and maintain the confidentiality, secrecy and value of all material
Acquired Corporation Proprietary Assets (except Acquired Corporation
Proprietary Assets whose value would be unimpaired by disclosure). Without
limiting the generality of the foregoing, (i) each current or former employee
of any Acquired Corporation who is or was involved in, or who has contributed
to, the creation or development of any Acquired Corporation Proprietary Asset
has executed and delivered to such Acquired Corporation an agreement
(containing no exceptions to or exclusions from the scope of its coverage) that
is substantially identical to the form of Confidential Information and
Invention Assignment Agreement previously delivered by the Company to Parent,
and (ii) each current and former consultant and independent contractor to any
Acquired Corporation who is or was involved in, or who has contributed to, the
creation or development of any Acquired Corporation Proprietary Asset has
executed and delivered to the Company an agreement (containing no exceptions to
or exclusions from the scope of its coverage) that is substantially identical
to the form of Consultant Confidential Information and Invention Assignment
Agreement previously delivered to Parent. No current or former employee,
officer, director, stockholder, consultant or independent contractor has any
right, claim or interest in or with respect to any Acquired Corporation
Proprietary Asset.
(c) To the best of the knowledge of the Company: (i) all patents,
trademarks, service marks and copyrights held by any of the Acquired
Corporations are valid, enforceable and subsisting; (ii) none of the Acquired
Corporation Proprietary Assets and no Proprietary Asset that is currently being
developed by any of the Acquired Corporations (either by itself or with any
other Person) infringes, misappropriates or conflicts with any Proprietary
Asset owned or used by any other Person; (iii) none of the products, systems,
software, computer, source code, models, algorithm, formula, inventions,
designs or technology that has been designed, created, developed, assembled,
manufactured or sold by any of the Acquired Corporations is infringing,
misappropriating or making any unlawful or unauthorized use of any Proprietary
Asset owned or used by any
A-8
other Person, or has at any time infringed, misappropriated or made any
unlawful or unauthorized use of any Proprietary Asset owned or used by any
other Person; (iv) none of the Acquired Corporations has received any notice
or other communication (in writing) of any actual, alleged, possible or
potential infringement, misappropriation or unlawful or unauthorized use of,
any Proprietary Asset owned or used by any other Person; and (v) no other
Person is infringing, misappropriating or making any unlawful or unauthorized
use of, and no Proprietary Asset owned or used by any other Person infringes
or conflicts with, any material Acquired Corporation Proprietary Asset. The
Acquired Corporation Proprietary Assets constitute all the Proprietary Assets
necessary to enable each of the Acquired Corporations to conduct its business
in the manner in which such business has been and is being conducted. None of
the Acquired Corporations has (i) licensed any of the material Acquired
Corporation Proprietary Asset to any Person on an exclusive basis, or (ii)
entered into any covenant not to compete or Contract limiting its ability to
exploit fully any material Acquired Corporation Proprietary Assets or to
transact business in any market or geographical area or with any Person.
2.7 Contracts.
(a) Part 2.7 of the Company Disclosure Schedule identifies each Acquired
Corporation Contract not filed as an exhibit to the Company SEC Documents
that, as of the date hereof, constitutes a "Material Contract". For purposes
of this Agreement, each of the following shall be deemed to constitute a
"Material Contract":
(i) any Contract that is required by the rules and regulations of the
SEC to be described in the Company SEC Documents or to be filed as an exhibit
thereto;
(ii) any Contract relating to the employment of any employee, and any
Contract pursuant to which any of the Acquired Corporations is or may become
obligated to make any severance, termination, bonus or relocation payment or
any other payment (other than payments in respect of salary) in excess of
$50,000, to any current or former employee or director or any Contract which
provides for the acceleration of vesting of any options or acceleration of
other rights to acquire shares of Company Common Stock;
(iii) any Acquired Corporation Contract relating to the acquisition,
transfer, development, sharing or license of any material Proprietary Asset
(except for any Acquired Corporation Contract pursuant to which (A) any
material Proprietary Asset is licensed to the Acquired Corporations under any
third party software license generally available to the public at a cost of no
more than $50,000, or (B) any material Proprietary Asset is licensed by any of
the Acquired Corporations to any Person on a non-exclusive basis);
(iv) any Contract which provides for indemnification of any officer,
director, employee or agent;
(v) any Contract imposing any restriction on the right or ability of any
Acquired Corporation to (A) compete with any other Person, (B) acquire any
material product or other material asset or any services from any other
Person, sell any material product or other material asset to or perform any
services for any other Person or transact business or deal in any other manner
with any other Person, (C) develop or distribute any material technology, (D)
make, have made, use or sell any current products or products under
development, or (E) acquire any capital stock or other security of any Person;
(vi) any contract that contemplates or involves payment or delivery of
cash or other consideration in an amount or having a value in excess of
$100,000 in the aggregate, or contemplates or involves the performance of
services having a value in excess of $100,000 in the aggregate;
(vii) any other Contract, if a breach of such Acquired Corporation
Contract would reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations; and
(viii) any Contract requiring that any of the Acquired Corporations give
any notice or provide any information to any Person prior to considering or
accepting any Acquisition Proposal or similar proposal, or prior to entering
into any discussions, agreement, arrangement or understanding relating to any
Acquisition Transaction or similar transaction.
(b) Each Material Contract is valid and in full force and effect, and is
enforceable in accordance with its terms against the Company, and to the
Company's knowledge, against the other party thereto, subject to
A-9
(i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies. The Company has delivered to
Parent an accurate and complete copy of each Material Contract. The Company is
not a party to any "standstill" or similar agreement prohibiting any Person
from acquiring any equity securities of the Company.
(c) None of the Acquired Corporations has violated or breached, or committed
any default under, any Material Contract, and, to the Company's knowledge, no
other Person has violated or breached, or committed any default under, any
Material Contract.
(d) To the Company's knowledge, no event has occurred, and no circumstance
or condition exists, that (with or without notice or lapse of time) would
reasonably be expected to (i) give any Person the right to declare a default or
exercise any remedy under any Material Contract; (ii) give any person the right
to receive or require a significant rebate, significant chargeback, significant
penalty or significant change in delivery schedule under any Material Contract;
(iii) give any Person the right to accelerate the maturity or performance of
any Material Contract; or (iv) give any Person the right to cancel, terminate
or modify any Material Contract in each case, in a manner that would reasonably
be expected to have a Material Adverse Effect on the Acquired Corporations.
2.8 Sale of Products; Performance of Services. Each product sold or licensed
by any of the Acquired Corporations to any Person conformed and complied in all
respects with the terms and requirements of any applicable warranty or other
Contract and with all applicable Legal Requirements at the time it was sold
except to the extent that any nonconformance or noncompliance would not
reasonably be expected to result in a Material Adverse Effect on the Acquired
Corporations.
2.9 Liabilities. As of the date of this Agreement, none of the Acquired
Corporations has any accrued, contingent or other liabilities of any nature,
either matured or unmatured (whether or not required to be reflected in
financial statements prepared in accordance with generally accepted accounting
principles, and whether due or to become due), except for: (a) liabilities
identified as such in the "liabilities" column of the Company Balance Sheet;
and (b) normal and recurring liabilities that have been incurred by the
Acquired Corporations since the Company Balance Sheet Date in the ordinary
course of business and consistent with past practices which have not resulted
in any material increase in the Company's liabilities from those disclosed or
provided for in the Company Balance Sheet or in the related notes.
2.10 Compliance with Legal Requirements. Each of the Acquired Corporations
is, and at all times since December 31, 1999 has been, in compliance with all
applicable Legal Requirements, except where the failure to comply with such
Legal Requirements has not had and would not reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations. Since December 31, 1999,
none of the Acquired Corporations has received any notice or other
communication from any Governmental Body regarding any actual or possible
violation of, or failure to comply with, any Legal Requirement, except where
such violation or noncompliance would not reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations.
2.11 Governmental Authorizations. Each of the Acquired Corporations holds
all material Governmental Authorizations necessary to enable such Acquired
Corporation to conduct its business in the manner in which such business is
currently being conducted and as proposed to be conducted. All such
Governmental Authorizations are valid and in full force and effect. Each
Acquired Corporation is, and at all times since December 31, 1999 has been, in
compliance with the terms and requirements of such Governmental Authorizations
except where the failure to comply with such terms and requirements has not had
and would not reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations. Except as would not reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations, since December 31, 1999,
none of the Acquired Corporations has received any notice or other
communication from any Governmental Body regarding (a) any actual or possible
violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
A-10
2.12 Tax Matters. Except as would not, individually or in the aggregate,
have a Material Adverse Effect on the Acquired Corporations, all Tax Returns
required to be filed by or on behalf of any of the Acquired Corporations with
any Governmental Body with respect to any taxable period ending on or before
the Closing Date (the "Acquired Corporation Returns") (a) have been or will be
filed on or before the applicable due date (including any extensions of such
due date), and (b) have been, or will be when filed, prepared in all material
respects in compliance with all applicable Legal Requirements. All amounts
shown on the Acquired Corporation Returns to be due on or before the Closing
Date have been or will be paid on or before the Closing Date. The Company
Financial Statements fully accrue all actual and contingent liabilities for
Taxes with respect to all periods through the dates thereof in accordance with
generally accepted accounting principles. There are no unsatisfied liabilities
for material Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to any notice of
deficiency or similar document received by any Acquired Corporation with
respect to any material Tax (other than liabilities for Taxes asserted under
any such notice of deficiency or similar document which are being contested in
good faith by the Acquired Corporations and with respect to which adequate
reserves for payment have been established). There are no liens for material
Taxes upon any of the assets of any of the Acquired Corporations except liens
for current Taxes not yet due and payable. No extension or waiver of the
limitation period applicable to any of the Acquired Corporation Returns has
been granted (by the Company or any other Person), and no such extension or
waiver has been requested from any Acquired Corporation other than an extension
resulting from the filing of a Tax Return after its due date in the ordinary
course of business. No claim or Legal Proceeding is pending or, to the
Company's knowledge, has been threatened against or with respect to any
Acquired Corporation in respect of any material Tax. None of the Acquired
Corporations has entered into or become bound by any agreement or consent
pursuant to Section 341(f) of the Code. None of the Acquired Corporations has
been, and none of the Acquired Corporations will be, required to include any
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 or events occurring, or accounting
methods employed, prior to the Closing. There is no agreement, plan,
arrangement or other Contract covering any employee or independent contractor
or former employee or independent contractor of any of the Acquired
Corporations that, considered individually or considered collectively with any
other such Contracts, will, or could reasonably be expected to, give rise
directly or indirectly to the payment of any amount that would not be
deductible pursuant to Section 280G or Section 162m of the Code. There is no
agreement, plan, arrangement or Contract whereby the Company would be obligated
to pay any excise taxes due from any employee of the Company. None of the
Acquired Corporations is a party to any Contract to compensate any individual
for excise taxes paid pursuant to Section 4999 of the Code. None of the
Acquired Corporations is, or has ever been, a party to or bound by any tax
indemnity agreement, tax sharing agreement, tax allocation agreement or similar
Contract, including any obligation arising by reason of Treasury Regulations
Section 1.1502-6, and none of the Acquired Corporations has or, by reason of
the consummation of the transactions contemplated under this Agreement, will
have any liability or obligation under any tax indemnity agreement, tax sharing
agreement, tax allocation agreement or similar Contract. None of the Acquired
Corporations have made any distribution of stock of any "controlled
corporation," as that term is defined by Section 355(a)(1) of the Code.
2.13 Employee and Labor Matters; Benefit Plans.
(a) Part 2.13(a) of the Company Disclosure Schedule lists all employee
pension benefit plans (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), all employee welfare
benefit plans (as defined in Section 3(1) of ERISA), and all other bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance, perquisites, fringe benefits and other similar benefit
plans, programs or arrangements (including a specific identification of those
which contain change of control provisions or pending change of control
provisions), and any employment, executive compensation or severance agreements
(including a specific identification of those which contain change of control
provisions or pending change of control provisions), written or otherwise, as
amended, modified or supplemented, for the benefit of, or relating to, any
foreign or domestic former or current employee, officer, director, independent
contractor or consultant (or any of their beneficiaries) of any Acquired
Corporation or any other Entity (whether or not incorporated) which is a member
of a controlled group which includes any of the
A-11
Acquired Corporations or which is under common control with any of the Acquired
Corporations within the meaning of Sections 414(b), (c), (m) or (o) of the Code
or Section 4001(a) (14) or (b) of ERISA, as well as each plan with respect to
which any of the Acquired Corporations could incur liability under Title IV of
ERISA or Section 412 of the Code (collectively, the "Company Employee Plans").
The Company has made available to Parent, in a reasonable time, place and
manner, copies of (i) each such written Company Employee Plan (or a written
description of any Company Employee Plan which is not written) and all related
trust agreements, insurance and other contracts (including policies), summary
plan descriptions, summaries of material modifications, registration statements
(including all attachments), prospectuses and communications distributed to
plan participants, (ii) the three most recent annual reports on Form 5500
series, with accompanying schedules and attachments, filed with respect to each
Company Employee Plan required to make such a filing, (iii) the most recent
actuarial valuation for each Company Employee Plan subject to Title IV of
ERISA, (iv) the latest reports which have been filed with the U.S. Department
of Labor with respect to each Company Employee Plan required to make such
filing, (v) the most recent favorable determination letters issued for each
Company Employee Plan and related trust which is intended to be qualified under
Section 401(a) of the Code (and, if an application for such determination is
pending, a copy of the application for such determination), and (vi) financial
and other information regarding current and projected liabilities with respect
to each Company Employee Plan for which the filings described in (ii), (iii) or
(iv) above are not required under ERISA.
(b) (i) None of the Company Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person (other than
continuation coverage to the extent required by law, whether pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985 or otherwise), and none
of the Company Employee Plans is a "multiemployer plan" as such term is defined
in Section 3(37) of ERISA; (ii) no party in interest or disqualified person (as
defined in Section 3(14) of ERISA and Section 4975 of the Code) has at any time
engaged in a transaction with respect to any Company Employee Plan which could
subject any of the Acquired Corporations, directly or indirectly, to a material
tax, penalty or other material liability for prohibited transactions under
ERISA or Section 4975 of the Code; (iii) no fiduciary of any Company Employee
Plan has breached any of the responsibilities or obligations imposed upon
fiduciaries under Title I of ERISA, which breach would reasonably be expected
to have a Material Adverse Effect on any of the Acquired Corporations; (iv) all
Company Employee Plans have been established and maintained substantially in
accordance with their terms and have operated in compliance in all material
respects with all applicable Legal Requirements, and may by their terms be
amended and/or terminated at any time subject to applicable Legal Requirements
and the terms of each Company Employee Plan, and each of the Acquired
Corporations has performed all material obligations required to be performed by
them under, and are not in any material respect in default under or in
violation of, any Company Employee Plan, and none of the Acquired Corporations
has any knowledge of any default or violation by any other Person with respect
to, any of the Company Employee Plans; (v) each Company Employee Plan which is
intended to be qualified under Section 401(a) of the Code is the subject of a
favorable determination letter from the Internal Revenue Service (or comparable
letter, such as an opinion or notification letter as to the form of plan
adopted by one or more Acquired Corporations), and, to the Company's knowledge,
nothing has occurred which may reasonably be expected to impair such
determination; (vi) all contributions required to be made with respect to any
Company Employee Plan pursuant to Section 412 of the Code, or the terms of the
Company Employee Plan or any collective bargaining agreement, have been made on
or before their due dates (including any extensions thereof); (vii) 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 30-day notice
requirement has been waived under the regulations to Section 4043 of ERISA) has
occurred for which there is any material outstanding liability to any Acquired
Corporation nor would the consummation of the transactions contemplated hereby
(including the execution of this Agreement) constitute a reportable event for
which the 30-day notice requirement has not been waived; and (viii) none of the
Acquired Corporations has incurred or reasonably expects to incur any material
liability under Title IV of ERISA including, without limitation, any material
liability arising out of or resulting from an event described in Section 4062,
4063 or 4041 of ERISA (other than liability for premium payments to the Pension
Benefit Guaranty Corporation (the "PBGC") arising in the ordinary course).
A-12
(c) (i) The PBGC has not instituted proceedings to terminate any Company
Employee Plan that is subject to Title IV of ERISA (each, a "Company Defined
Benefit Plan"); (ii) the Company Defined Benefit Plans have no accumulated or
waived funding deficiencies within the meaning of Section 412 of the Code nor
have any extensions of any amortization period within the meaning of Section
412 of the Code or 302 of ERISA been applied for with respect thereto; (iii) as
of January 1, 1999, the present value of the benefit liabilities (within the
meaning of Section 4041 of ERISA) of the Company Defined Benefit Plans,
determined on an ongoing basis using the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such plan's actuary
with respect to such plan's most recently completed fiscal year, does not
exceed by more than $1,000,000 the value of the Company Defined Benefit Plans'
assets and to the knowledge of the Company, nothing has occurred since the end
of the most recently completed fiscal year that would adversely affect the
funding status of such plans; (iv) all applicable premiums required to be paid
to the PBGC with respect to the Company Defined Benefit Plans have been paid;
(v) no facts or circumstances exist with respect to any Company Defined Benefit
Plan which would give rise to a lien on the assets of any Acquired Corporation
under Section 4068 of ERISA or otherwise; and (vi) as of the date hereof,
substantially all of the assets of the Company Defined Benefit Plans are
readily marketable securities or insurance contracts.
(d) (i) None of the Acquired Corporations has ever maintained an employee
stock ownership plan (within the meaning of Section 4975(e)(7) of the Code) or
any other Company Employee Plan that invests in Company capital stock; (ii)
since December 31, 1998, none of the Acquired Corporations has proposed or
agreed to any increase in benefits under any Company Employee Plan (or the
creation of new benefits) or change in employee coverage which would materially
increase the expense of maintaining any Company Employee Plan; (iii) the
consummation of the transactions contemplated by this Agreement will not result
in an increase in the amount of compensation or benefits or accelerate the
vesting or timing of payment of any benefits or compensation payable in respect
of any employee; (iv) no person will be entitled to any severance benefits
under the terms of any Company Employee Plan as a result of the consummation of
the transactions contemplated by this Agreement; and (v) none of the Acquired
Corporations will be denied an income tax deduction pursuant to Section 162(m)
or 280G of the Code.
(e) Each Company Employee Plan covering non-U.S. employees (a "Company
International Plan") has been maintained in substantial compliance with its
terms and with the requirements prescribed by any and all applicable Legal
Requirements (including any special provisions relating to registered or
qualified plans where such Company International Plan was intended to so
qualify) and has been maintained in good standing with applicable regulatory
authorities. The fair market value of the assets of each funded Company
International Plan, if any, (or the liability of each funded Company
International Plan funded through insurance) is sufficient to procure or
provide for the benefits accrued thereunder through the Effective Time
according to the actuarial assumptions and valuations most recently used to
determine employer contributions to the Company International Plan.
(f) The fiduciary liability insurance policies in effect covering the
fiduciaries of the Company Employee Plans (including the Acquired Corporations)
are set forth on Part 2.13(f) of the Company Disclosure Schedule.
(g) (i) there are no controversies pending or, to the knowledge of the
Company, threatened, between any of the Acquired Corporations and any of their
respective employees, which controversies have had, or would reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect
on the Acquired Corporations; (ii) none of the Acquired Corporations is in
breach of any material collective bargaining agreement or other labor union
contract applicable to persons employed by any of the Acquired Corporations
which would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on the Acquired Corporations, nor does the Company know
of any activities or proceedings of any labor union to organize any significant
number of such employees; and (iii) none of the Acquired Corporations is in
breach of any material collective bargaining agreement or other labor union
contract, nor has any knowledge of any activities or proceedings of any labor
unions to organize employees, or of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees (foreign or
domestic) of any of the
A-13
Acquired Corporations which would reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect on the Acquired Corporations.
The Company is not obligated to make any payments or provide any benefits to
any Person under the Worker Adjustment and Retraining Notification Act of 1988,
as amended.
2.14 Environmental Matters. Each of the Acquired Corporations is in
compliance in all material respects with all applicable Environmental Laws,
which compliance includes the possession by each of the Acquired Corporations
of all permits and other Governmental Authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof. None
of the Acquired Corporations has received any notice or other communication (in
writing or otherwise), whether from a Governmental Body, citizens group,
employee or otherwise, that alleges that any of the Acquired Corporations is
not in compliance with any Environmental Law, and, to the Company's knowledge,
there are no circumstances that may prevent or interfere with the compliance by
any of the Acquired Corporations with any Environmental Law in the future.
Except as to the Company, to the Company's knowledge, no current or prior owner
of any property leased or controlled by any of the Acquired Corporations has
received any notice or other communication (in writing or otherwise), whether
from a Governmental Body, citizens group, employee or otherwise, that alleges
that such current or prior owner or any of the Acquired Corporations is not in
compliance with any Environmental Law. To the Company's knowledge, all property
that is or has been leased to, controlled by or used by the Acquired
Corporations, and all surface water, groundwater and soil associated with or
adjacent to such property is in clean and healthful condition and is free of
any material environmental contamination of any nature and none of the Acquired
Corporations has any liability for any clean-up or remediation under any
Environmental Law or the exposure of any individual to Materials of
Environmental Concern. All property that is leased to, controlled by or used by
any of the Acquired Corporations is free of any asbestos or asbestos-containing
material.
2.15 Legal Proceedings; Orders. Except as would not reasonably be expected
to have a Material Adverse Effect on the Acquired Corporations or to materially
delay or interfere with the consummation of the Merger: (i) there is no pending
Legal Proceeding and, to the Company's knowledge, no Person has threatened to
commence any Legal Proceeding, that involves any of the Acquired Corporations
or any of the assets owned or used by any of the Acquired Corporations; and
(ii) there is no order, writ, injunction, judgment or decree to which any of
the Acquired Corporations, or any of the material assets owned or used by any
of the Acquired Corporations, is subject.
2.16 Vote Required. The affirmative vote of the holders of a majority of the
shares of Company Common Stock outstanding on the record date for the Company
Stockholders' Meeting (the "Required Company Stockholder Vote") is the only
vote of the holders of any class or series of the Company's capital stock
necessary to adopt this Agreement and otherwise approve the Merger and the
other transactions contemplated by this Agreement.
2.17 Non-Contravention; Consents. Neither the execution, delivery or
performance of this Agreement by the Company nor the consummation of the Merger
by the Company or any of the other transactions contemplated by this Agreement,
will directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of any of the
provisions of the certificate of incorporation or bylaws of any of the Acquired
Corporations or any resolution adopted by the stockholders, the board of
directors or any committee of the board of directors of any of the Acquired
Corporations;
(b) result in a violation of any Legal Requirement or any order, writ,
injunction, judgment or decree to which any of the Acquired Corporations, or
any of the material assets owned or used by any of the Acquired Corporations,
is subject;
(c) contravene, conflict with or result in a violation of any of the terms
or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by any of the Acquired Corporations or that otherwise relates to
the business of any
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of the Acquired Corporations or to any of the assets owned or used by any of
the Acquired Corporations, except where the contravention of, conflict with or
violation of, any such terms or requirements would not, individually or in the
aggregate, have a Material Adverse Effect on the Acquired Corporations; or
(d) contravene, conflict with or result in a violation or breach of, or
result in a default under, any provision of any Material Contract, or give any
Person the right to (i) declare a default or exercise any remedy under any
Material Contract, (ii) a rebate, chargeback, penalty or change in delivery
schedule under any Material Contract, (iii) accelerate the maturity or
performance of any Material Contract, or (iv) cancel, terminate or modify any
term of any Material Contract, except in each case where the contravention of,
conflict with, or violation or breach of any such provision would not,
individually or in the aggregate, have a Material Adverse Effect on the
Acquired Corporations.
Except as may be required by the Exchange Act, the DGCL, the HSR Act and the
NASD Bylaws (as they relate to the Form S-4 Registration Statement and the
Proxy Statement) none of the Acquired Corporations was, is or will be required
to make any filing with or give any notice to, or obtain any Consent from, any
Person in connection with (x) the execution, delivery or performance of this
Agreement, or (y) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, except in each case, where the
failure to make any filing, give any notice or obtain any Consent would not,
individually or in the aggregate, have a Material Adverse Effect on the
Acquired Corporations.
2.18 Fairness Opinion. The Company's board of directors has received the
opinion of Credit Suisse First Boston Corporation ("Credit Suisse First
Boston"), financial advisor to the Company, to the effect that, as of the date
of this Agreement, the exchange ratio in the Merger is fair, from a financial
point of view, to the holders of Company Common Stock. The Company will furnish
an accurate and complete copy of the written confirmation of such opinion to
Parent as soon as reasonably practicable after the date hereof.
2.19 Financial Advisor. Except for the amounts payable to Credit Suisse
First Boston ("CSFB") under that certain agreement dated June 6, 2000 by and
between the Company and CSFB, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger or any of the other transactions contemplated by this
Agreement. The Company has furnished to Parent accurate and complete copies of
all agreements under which any such fees, commissions or other amounts have
been paid or may become payable and all indemnification and other agreements
related to the engagement of Credit Suisse First Boston.
2.20 Takeover Statutes. As of the date hereof and at all times on or prior
to the Effective Time, the board of directors of the Company has and will take
all actions so that the restrictions applicable to business combinations
contained in Section 203 of the DGCL are, and will be, inapplicable to the
execution, delivery and performance of this Agreement and to the consummation
of the Merger and the other transactions contemplated by this Agreement.
2.21 Full Disclosure.
(a) None of the information supplied or to be supplied by or on behalf of
the Company for inclusion or incorporation by reference in the Form S-4
Registration Statement will, at the time the Form S-4 Registration Statement is
filed with the SEC or at the time it becomes effective under the Securities
Act, 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 the light of the circumstances under which they are
made, not misleading. None of the information supplied or to be supplied by or
on behalf of the Company for inclusion or incorporation by reference in the
Proxy Statement will, at the time the Proxy Statement is mailed to the
stockholders of the Company or at the time of the Company Stockholders'
Meeting, 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 the light of the circumstances under which they are
made, not misleading. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder.
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SECTION 3. Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub represent and warrant to the Company (subject to such
exceptions or qualifications as are disclosed in writing in the disclosure
schedule supplied by Parent to the Company dated as of the date hereof (the
"Parent Disclosure Schedule"), which disclosure shall provide an exception to
or otherwise qualify only those representations and warranties of Parent and
Merger Sub contained in the section of this Agreement corresponding to the part
or section reference of the Parent Disclosure Schedule where such disclosure
appears, and such exceptions or qualifications shall not be deemed to be an
exception to, or qualify, any other representation or warranty) as follows:
3.1 Due Organization; Subsidiaries. Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all necessary power and authority: (i) to
conduct its business in the manner in which its business is currently being
conducted; (ii) to own and use its assets in the manner in which its assets are
currently owned and used; and (iii) to perform its obligations under all
Material Contracts by which it is bound. Each of Parent and Merger Sub is
qualified to do business as a foreign corporation, and is in good standing,
under the laws of all jurisdictions where the nature of its business requires
such qualification and where the failure to be so qualified would have a
Material Adverse Effect on Parent and Merger Sub, taken as a whole.
3.2 Authority; Binding Nature of Agreement. Each of Parent and Merger Sub
has the absolute and unrestricted right, power and authority to enter into and
to perform its obligations under this Agreement (except that Parent will need
to amend its certificate of incorporation to increase the authorized member of
shares of Parent Common Stock prior to the Effective Time). The Board of
Directors of Parent (at a meeting duly called and held) has authorized and
approved the execution, delivery and performance of this Agreement by Parent
and approved the Merger. This Agreement constitutes the legal, valid and
binding obligation of Parent and Merger Sub, enforceable against Parent and
Merger Sub, as the case may be, in accordance with their terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief
of debtors, and (ii) rules of law governing specific performance, injunctive
relief and other equitable remedies.
3.3 Capitalization, Etc.
(a) As of the date of this Agreement, the authorized capital stock of Parent
consists of: (i) 180,000,000 shares of Parent Common Stock; and (ii) 2,000,000
shares of Preferred Stock, $.01 par value per share. As of August 24, 2000,
125,768,295 shares of Parent Common Stock have been issued and are outstanding
and no shares of Parent's Preferred Stock have been issued or are outstanding.
As of the date hereof, no shares of capital stock of Parent are held in
Parent's treasury. All of the outstanding shares of Parent Common Stock have
been duly authorized and validly issued, and are fully paid and nonassessable.
(b) As of August 24, 2000: (i) 15,482,750 shares of Parent Common Stock are
subject to issuance pursuant to stock options granted and outstanding under
Parent's 1992 Stock Option Plan; (ii) 391,666 shares of Parent Common Stock are
subject to issuance pursuant to stock options granted and outstanding under
Parent's 1997 Directors' Stock Option Plan; (iii) 2,664 shares of Parent Common
Stock are subject to issuance pursuant to stock options granted and outstanding
Parent's 1982 Employee Incentive Stock Option Plan; (iv) 225,201 shares of
Parent Common Stock are subject to issuance pursuant to Parent's Cimaron 1998
Stock Incentive Plan; (v) 3,697,029 shares of Parent Common Stock are subject
to issuance pursuant to stock options granted and outstanding Parent's 2000
Equity Incentive Plan; (vi) 133,722 shares of Parent Common Stock are subject
to stock options granted and outstanding under Parent's YuniNetwork's 1999
Equity Incentive Plan; and (vii) 53,328 shares of Parent Common Stock are
subject to issuance under various other outstanding stock option agreements. In
addition as of August 24, 2000, (i) 24,504 shares of Parent Common Stock are
reserved for issuance pursuant to Parent's 1997 Employee Stock Purchase Plan,
and (ii) 1,163,858 shares are reserved for issuance under Parent's 1998
Employee Stock Purchase Plan. (Stock options granted by Parent pursuant to the
1992 Stock Option Plan, 1997 Directors' Stock Option Plan, 1982 Employee
Incentive Stock Option Plan, Parent's Cimaron 1998 Stock Incentive Plan,
Parent's 2000 Equity Incentive Plan and other options outstanding to purchase
Parent Common Stock are referred to collectively herein as "Parent Options").
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(c) Except as set forth in Sections 3.3(a) or 3.3(b), as of August 24, 2000,
there is no: (i) outstanding subscription, option, call, warrant or right
(whether or not currently exercisable) to acquire any shares of the capital
stock or other securities of Parent; (ii) outstanding security, instrument or
obligation that is or may become convertible into or exchangeable for any
shares of the capital stock or other securities of Parent; (iii) rights
agreement, stockholder rights plan (or similar plan commonly referred to as a
"poison pill") or Contract under which Parent is or may become obligated to
sell or otherwise issue any shares of its capital stock or any other
securities; or (iv) condition or circumstance that may give rise to or provide
a basis for the assertion of a claim by any Person to the effect that such
Person is entitled to acquire or receive any shares of capital stock or other
securities of Parent.
(d) All outstanding shares of Parent Common Stock, all outstanding Parent
Options and all outstanding shares of capital stock of each Subsidiary of
Parent have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Legal Requirements, and (ii) all
requirements set forth in applicable Contracts. The Parent Common Stock to be
issued in the Merger will, when issued in accordance with the provisions of
this Agreement, be validly issued, fully paid and nonassessable.
3.4 SEC Filings; Financial Statements.
(a) Parent has made available to the Company all registration statements,
proxy statements and other statements, reports, schedules, forms and other
documents filed by Parent with the SEC since December 31, 1999 (the "Parent SEC
Documents"). All statements, reports, schedules, forms and other documents
required to have been filed by Parent with the SEC since December 31, 1999 have
been so filed. As of the time it was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing): (i) each of the Parent SEC Documents complied in all material
respects with the applicable requirements of the Securities Act or the Exchange
Act (as the case may be); and (ii) 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 in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The financial statements (including any related notes) contained in the
Parent SEC Documents (the "Parent Financial Statements"): (i) complied as to
form in all material respects with the published rules and regulations of the
SEC applicable thereto; (ii) were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC, and except that the unaudited financial statements may not contain
footnotes and are subject to normal and recurring year-end adjustments which
will not, individually or in the aggregate, be material in amount), and
(iii) fairly present in all material respects the consolidated financial
position of Parent and its consolidated subsidiaries as of the respective dates
thereof and the consolidated results of operations and cash flows of Parent and
its consolidated subsidiaries for the periods covered thereby. For purposes of
this Agreement, "Parent Balance Sheet" means that consolidated balance sheet of
Parent as of December 31, 1999 set forth in Parent's Annual Report on Form 10-K
filed with the SEC and the "Parent Balance Sheet Date" means December 31, 1999.
3.5 Absence of Changes. Since the Parent Balance Sheet Date:
(a) there has not been any event that has had a Material Adverse Effect on
Parent, and no fact, event, circumstance or condition exists or has occurred
that could reasonably be expected to have a Material Adverse Effect on Parent;
(b) Parent has operated its business in the ordinary course and consistent
with past practices; and
(c) there has been no amendment to the certificate of incorporation or
bylaws of Parent (other than an amendment to Parent's certificate of
incorporation increasing the authorized number of shares of Parent Common Stock
to 630,000,000).
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3.6 Non-Contravention; Consents. Neither the execution and delivery of this
Agreement by Parent and Merger Sub by Parent nor the consummation by Parent and
Merger Sub of the Merger will directly or indirectly (with or without notice or
lapse of time) (a) conflict with or result in any breach of any provision of
the certificate of incorporation (assuming such certificate of incorporation is
amended to increase the number of shares of Parent Common Stock reserved
thereunder sufficient to consummate the Merger) or bylaws of Parent or Merger
Sub, (b) result in a default by Parent or Merger Sub under any Contract to
which Parent or Merger Sub is a party, except for any default that has not had
and will not have a Material Adverse Effect on Parent, or (c) result in a
violation by Parent or Merger Sub of any order, writ, injunction, judgment or
decree to which Parent or Merger Sub is subject, except for any violation that
has not had and will not have a Material Adverse Effect on Parent. Except as
may be required by the Securities Act, the Exchange Act, state securities or
"blue sky" laws, the DGCL, the HSR Act, any foreign antitrust law or regulation
and the NASD Bylaws (as they relate to the S-4 Registration Statement and the
Proxy Statement), Parent is not and will not be required to make any filing
with or give any notice to, or to obtain any Consent from, any Person in
connection with the execution, delivery or performance of this Agreement or the
consummation of the Merger.
3.7 Liabilities. As of the date of this Agreement, Parent has no accrued,
contingent or other liabilities of any nature, either matured or unmatured
(whether or not required to be reflected in financial statements prepared in
accordance with generally accepted accounting principles, and whether due or to
become due), except for: (a) liabilities identified as such in the
"liabilities" column of the Parent Balance Sheet; and (b) normal and recurring
liabilities that have been incurred by Parent since the Parent Balance Sheet
Date in the ordinary course of business and consistent with past practices
which have not resulted, in the aggregate, in any material increase in Parent's
liabilities from those disclosed or provided for in the Parent Balance Sheet or
in the related notes.
3.8 Compliance with Legal Requirements. Parent is, and at all times since
December 31, 1999 has been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had and would not reasonably be expected to have a Material Adverse
Effect on Parent. Since December 31, 1999, Parent not has received any notice
or other communication from any Governmental Body regarding any actual or
possible violation of, or failure to comply with, any Legal Requirement, except
where such violation or noncompliance would not reasonably be expected to have
a Material Adverse Effect on Parent.
3.9 Governmental Authorizations. Parent holds all material Governmental
Authorizations necessary to enable Parent to conduct its business in the manner
in which such business is currently being conducted and as proposed to be
conducted. All such Governmental Authorizations are valid and in full force and
effect. Parent is, and at all times since December 31, 1999 has been, in
compliance with the terms and requirements of such Governmental Authorizations
except where the failure to comply with such terms and requirements has not had
and would not reasonably be expected to have a Material Adverse Effect on
Parent. Except as would not reasonably be expected to have a Material Adverse
Effect on Parent, since December 31, 1999, Parent has not received any notice
or other communication from any Governmental Body regarding (a) any actual or
possible violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
3.10 Environmental Matters. Parent is in compliance in all material respects
with all applicable Environmental Laws, which compliance includes the
possession by Parent of all permits and other Governmental Authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof. Parent has not received any notice or other communication
(in writing or otherwise), whether from a Governmental Body, citizens group,
employee or otherwise, that alleges that Parent is not in compliance with any
Environmental Law, and, to Parent's knowledge, there are no circumstances that
may prevent or interfere with the compliance by Parent with any Environmental
Law in the future. To Parent's knowledge, no current or prior owner of any
property leased or controlled by Parent has received any notice or other
communication (in writing or otherwise), whether from a Governmental Body,
citizens group, employee or otherwise, that alleges that such current or prior
owner or any of Parent is not in compliance with any
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Environmental Law. To Parent's knowledge, all property that is or has been
leased to, controlled by or used by Parent, and all surface water, groundwater
and soil associated with or adjacent to such property is in clean and healthful
condition and is free of any material environmental contamination of any nature
and Parent has no liability for any clean-up or remediation under any
Environmental Law or the exposure of any individual to Materials of
Environmental Concern. All property that is leased to, controlled by or used by
Parent is free of any asbestos or asbestos-containing material.
3.11 Legal Proceedings; Orders. Except as would not reasonably be expected
to have a Material Adverse Effect on Parent or to materially delay or interfere
with the consummation of the Merger: (i) there is no pending Legal Proceeding
and, to Parent's knowledge, no Person has threatened to commence any Legal
Proceeding, that involves Parent or any of the assets owned or used by Parent;
and (ii) there is no order, writ, injunction, judgment or decree to which
Parent, or any of the material assets owned or used by Parent, is subject.
3.12 Full Disclosure. None of the information supplied or to be supplied by
or on behalf of Parent for inclusion or incorporation by reference in the Form
S-4 Registration Statement will, at the time the Form S-4 Registration
Statement is filed with the SEC or at the time it becomes effective under the
Securities Act, 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 the light of the circumstances under which they
are made, not misleading. None of the information supplied or to be supplied by
or on behalf of Parent for inclusion or incorporation by reference in the Proxy
Statement will, at the time the Proxy Statement is mailed to the stockholders
of the Company or at the time of the Company Stockholders' Meeting, 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
the light of the circumstances under which they are made, not misleading. The
Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated by the
SEC thereunder.
SECTION 4. Certain Covenants of the Company
4.1 Operation of the Company's Business.
(a) During the Period from the date of this Agreement through the Effective
Time (the "Pre-Closing Period"), the Company shall: (i) ensure that each of the
Acquired Corporations conducts its business and operations (A) in the ordinary
course and in accordance with past practices, and (B) in compliance with all
applicable Legal Requirements and the requirements of all Material Contracts;
(ii) use commercially reasonable efforts to ensure that each of the Acquired
Corporations preserves intact its current business organization, keeps
available the services of its current officers and employees and maintains its
relations and goodwill with all suppliers, customers, landlords, creditors,
licensors, licensees, employees and other Persons having business relationships
with the respective Acquired Corporations; (iii) provide all notices,
assurances and support required by any Contract relating to any Proprietary
Asset in order to ensure that no condition under such Contract occurs which
could result in, or could increase the likelihood of any transfer or disclosure
by any Acquired Corporation of any Proprietary Asset; (iv) keep in full force
and effect (with the same scope and limits of coverage) all insurance policies
in effect as of the date of this Agreement covering all material assets of the
Acquired Corporations and (v) to the extent requested by Parent, cause its
officers to report regularly to Parent concerning the status of the Acquired
Corporations' respective businesses.
(b) Except as disclosed in the Company Disclosure Schedule, during the Pre-
Closing Period, the Company shall not (without the prior written consent of
Parent which consent, or refusal to consent, will not be unreasonably delayed),
and shall not permit any of the other Acquired Corporations to:
(i) declare, accrue, set aside or pay any dividend or make any other
distribution in respect of any shares of capital stock or repurchase, redeem or
otherwise reacquire any shares of capital stock or other securities, except
repurchases of unvested shares at cost in connection with the termination of
the employment or consulting relationship with any employee or consultant
pursuant to stock option or purchase agreements;
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(ii) sell, issue, grant or authorize the issuance or grant of (i) any
capital stock or other security, (ii) any option, call, warrant or right to
acquire any capital stock or other security, or (iii) any instrument
convertible into or exchangeable for any capital stock or other security
(except that (A) the Company may issue Company Common Stock upon the valid
exercise of Company Options outstanding as of the date of this Agreement or
pursuant to the Company's 1997 Employee Stock Purchase Plan as in effect on the
date hereof, and (B) the Company may grant options under its 1997 Stock Plan to
purchase no more than 20,000 shares of Company Common Stock to any single
current or prospective employee of the Company, and no more than an aggregate
of 600,000 plus the number of shares of Company Common Stock subject to options
that are cancelled during such period shares of Company Common Stock pursuant
to all such grants);
(iii) amend or waive any of its rights under, or accelerate the vesting
under, any provision of any of the Company's stock option plans, any provision
of any agreement evidencing any outstanding stock option or any restricted
stock purchase agreement, or otherwise modify any of the terms of any
outstanding option or any related Contract;
(iv) amend or permit the adoption of any amendment to its certificate of
incorporation or bylaws, or effect or become a party to any merger,
consolidation, share exchange, business combination, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(v) form any subsidiary or acquire any equity interest or other interest
in any other Entity;
(vi) make any capital expenditure outside the ordinary course of
business or make any single capital expenditure in excess of $75,000; provided
however, that the maximum amount of all capital expenditures made on behalf of
the Acquired Corporations during the Pre-Closing Period shall not exceed
$250,000 in the aggregate;
(vii) except in the ordinary course of business and consistent with past
practice, enter into or become bound by, or permit any of the assets owned or
used by it to become bound by, any Material Contract, or amend or terminate, or
waive or exercise any material right or remedy under, any Material Contract;
(viii) acquire, lease or license any right or other asset from any other
Person or sell or otherwise dispose of, or lease or license, any right or other
asset to any other Person (except in each case for assets acquired, leased,
licensed or disposed of by the Company in the ordinary course of business and
not having a value, or not requiring payments to be made or received, in excess
of $50,000 individually, or $250,000 in the aggregate), or waive or relinquish
any material right;
(ix) lend money to any Person, or incur or guarantee any indebtedness
(except that the Company may make routine borrowings in the ordinary course of
business and in accordance with past practices under the Company's credit
facilities outstanding as of the date hereof (without any amendment or
modification thereto));
(x) establish, adopt or amend any Company Employee Plan or collective
bargaining agreement, pay any bonus or make any profit-sharing or similar
payment to, or increase the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of its directors
or officers; provided, however, that the Company may make regularly scheduled
bonus payments and increase the amount of wages paid to employees in the
ordinary course of business and consistent with past practices;
(xi) hire any new employee having an annual salary in excess of
$150,000;
(xii) change any of its methods of accounting or accounting practices in
any respect except as required by generally accepted accounting principles;
(xiii) make any material Tax election;
(xiv) commence or settle any material Legal Proceeding;
(xv) enter into any material transaction or take any other material
action outside the ordinary course of business and inconsistent with past
practices;
(xvi) take or agree to take any action which would result in the failure
to satisfy the condition provided for in Section 6.1 or 6.2; or
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(xvii) agree or commit to take any of the actions described in clauses
"(i)" through "(xvi)" of this Section 4.1(b).
4.2 No Solicitation.
(a) The Company shall not directly or indirectly, and shall not authorize or
permit any of the other Acquired Corporations or any Representative of any of
the Acquired Corporations directly or indirectly to, (i) solicit, initiate, or
knowingly encourage or induce the making, submission or announcement of any
Acquisition Proposal or knowingly take any action that could reasonably be
expected to lead to an Acquisition Proposal, (ii) furnish any information
regarding any of the Acquired Corporations to any Person in connection with or
in response to an Acquisition Proposal or an inquiry or indication of interest
that could reasonably be expected to lead to an Acquisition Proposal, (iii)
engage in discussions or negotiations with any Person with respect to any
Acquisition Proposal, (iv) approve, endorse or recommend any Acquisition
Proposal, or (v) enter into any letter of intent or similar document or any
Contract having a primary purpose of effectuating, or which would effect, any
Acquisition Transaction; provided, however, that prior to the adoption of this
Agreement by the Required Company Stockholder Vote, this Section 4.2(a) shall
not prohibit the Company from furnishing nonpublic information regarding the
Acquired Corporations to, or entering into discussions with, any Person in
response to a Superior Offer that is submitted to the Company by such Person
(and not withdrawn) if (1) such Superior Offer shall not have been received as
the result of a breach of any of the provisions set forth in this Section 4.2,
(2) the board of directors of the Company concludes in good faith, after
consultation with its outside legal counsel, that such action is required in
order for the board of directors of the Company to comply with its fiduciary
obligations to the Company's stockholders under applicable law, (3) at least 48
hours prior to furnishing any such nonpublic information to, or entering into
discussions with, such Person, the Company gives Parent written notice of the
identity of such Person and of the Company's intention to furnish nonpublic
information to, or enter into discussions with, such Person, and the Company
receives from such Person an executed confidentiality agreement containing
provisions no less favorable in the aggregate to the Company than those
contained in the Mutual Nondisclosure Agreement dated March 16, 2000 between
Parent and the Company (the "Nondisclosure Agreement"), and (4)
contemporaneously with furnishing any additional nonpublic information to such
Person, the Company furnishes such additional nonpublic information to Parent
(to the extent such nonpublic information has not been previously furnished by
the Company to Parent) provided, that this Section 4.2(a) shall not prohibit
the Company's board of directors from complying with Rules 14d-9 and 14e-2
under the Exchange Act or making any disclosure to the Company's stockholders
that is required by law. Without limiting the generality of the foregoing, the
Company acknowledges and agrees that any violation of any of the restrictions
set forth in the preceding sentence by any Representative of any of the
Acquired Corporations, whether or not such Representative is purporting to act
on behalf of any of the Acquired Corporations, shall be deemed to constitute a
breach of this Section 4.2 by the Company.
(b) The Company shall promptly (and in no event later than one business day
after receipt by any officer or director of the Company or by any employee of
the Company's financial advisors or outside legal counsel of any Acquisition
Proposal or any request for nonpublic information from a Person that could
reasonably be expected to make an Acquisition Proposal) advise Parent in
writing of any Acquisition Proposal or any request for nonpublic information
relating to any of the Acquired Corporations (including the identity of the
Person making or submitting such Acquisition Proposal or request, and the terms
thereof) that is made or submitted by any Person during the Pre-Closing Period.
The Company shall promptly notify Parent in writing of any material
modification to any such Acquisition Proposal or request.
(c) The Company shall immediately cease and cause to be terminated any
existing discussions with any Person that relate to any Acquisition Proposal.
(d) The Company will promptly request each Person that has executed, within
12 months prior to the date of this Agreement, a confidentiality, standstill or
similar agreement in connection with its consideration of a possible
Acquisition Transaction to return all confidential information heretofore
furnished to such Person by or on behalf of the Company.
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SECTION 5. Additional Covenants of the Parties
5.1 Registration Statement; Proxy Statement.
(a) As promptly as practicable after the date of this Agreement, Parent and
the Company shall prepare and cause to be filed with the SEC the Proxy
Statement and Parent shall prepare and cause to be filed with the SEC the Form
S-4 Registration Statement, in which the Proxy Statement will be included as a
prospectus. Each of Parent and the Company shall use all reasonable efforts to
cause the Form S-4 Registration Statement and the Proxy Statement to comply
with the rules and regulations promulgated by the SEC, to respond promptly to
any comments of the SEC or its staff and to have the Form S-4 Registration
Statement declared effective under the Securities Act as promptly as
practicable after it is filed with the SEC. The Company will use all reasonable
efforts to cause, and Parent shall cooperate with the Company in causing, the
Proxy Statement to be mailed to the Company's stockholders, as promptly as
practicable after the Form S-4 Registration Statement is declared effective
under the Securities Act. The Company and Parent shall promptly furnish to the
other party all information concerning such party and, with respect to the
Company, the Company's stockholders that may be required or reasonably
requested in connection with any action contemplated by this Section 5.1. If
any event relating to any of the Acquired Corporations or Parent occurs, or if
the Company or Parent becomes aware of any information, that should be
disclosed in an amendment or supplement to the Form S-4 Registration Statement
or the Proxy Statement, then the Company or Parent, as the case my be, shall
promptly inform the other party thereof and shall cooperate with Parent in
filing such amendment or supplement with the SEC and, if appropriate, in
mailing such amendment or supplement to the stockholders of the Company.
(b) Prior to the Effective Time, Parent shall use reasonable efforts to
obtain all regulatory approvals needed to ensure that the Parent Common Stock
to be issued in the Merger will be registered or qualified under the securities
law of every jurisdiction of the United States in which any registered holder
of Company Common Stock has an address of record on the record date for
determining the stockholders entitled to notice of and to vote at the Company
Stockholders' Meeting.
5.2 Company Stockholders' Meeting.
(a) The Company shall call, give notice of and hold a meeting of the holders
of Company Common Stock to vote on a proposal to adopt this Agreement (the
"Company Stockholders' Meeting"). The Company Stockholders' Meeting shall be
held (on a date selected by the Company in consultation with Parent) as
promptly as practicable after the Form S-4 Registration Statement is declared
effective under the Securities Act. Each of the Company and Parent shall ensure
that all proxies solicited by or on behalf of the Company or Parent in
connection with the Company Stockholders' Meeting are solicited in compliance
with all applicable Legal Requirements.
(b) Subject to Section 5.2(c): (i) the Proxy Statement shall include a
statement to the effect that the board of directors of the Company recommends
that the Company's stockholders vote to adopt this Agreement at the Company
Stockholders' Meeting (the recommendation of the Company's board of directors
that the Company's stockholders vote to adopt this Agreement being referred to
as the "Company Board Recommendation"); and (ii) the Company Board
Recommendation shall not be withdrawn or modified in a manner adverse to
Parent, and no resolution by the board of directors of the Company or any
committee thereof to withdraw or modify the Company Board Recommendation in a
manner adverse to Parent shall be adopted or proposed.
(c) Notwithstanding anything to the contrary contained in Section 5.2(b), at
any time prior to the adoption of this Agreement by the Required Company
Stockholder Vote, (i) the Company Board Recommendation may be withdrawn or
modified in a manner adverse to Parent and such recommendation may be included
in the Proxy Statement (or the withdrawal of the Company Board Recommendation
may be noted therein), or (ii) the Company may terminate this Agreement
pursuant to Section 8.1(h), if, and only if: (A) an unsolicited, bona fide
written offer to purchase all of the outstanding shares of Company Common Stock
is made to the Company and is not withdrawn; (B) the Company provides Parent
with at least two business days prior notice of any meeting of the Company's
board of directors at which such board of directors will consider and
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determine whether such offer is a Superior Offer; (C) the Company's board of
directors determines in good faith (after consultation with the Company's
financial advisor of nationally recognized reputation) that such offer
constitutes a Superior Offer; (D) the Company's board of directors determines
in good faith, after consultation with the Company's outside legal counsel,
that, in light of such Superior Offer, the withdrawal or modification of the
Company Board Recommendation or the termination of this Agreement is required
in order for the Company's board of directors to comply with its fiduciary
obligations to the Company's stockholders under applicable law; (E) the Company
Board Recommendation is not withdrawn or modified in a manner adverse to Parent
or this Agreement is not terminated pursuant to Section 8.1(h), in each case,
at any time within one business day after Parent receives written notice from
the Company confirming that the Company's board of directors has determined
that such offer is a Superior Offer; (F) the Company shall have released Parent
from the provisions of any standstill or similar agreement restricting Parent
from acquiring securities of the Company; and (G) neither the Company nor any
of its Representatives shall have violated any of the restrictions set forth in
Section 4.2 in connection with the receipt of such Superior Offer.
(d) The Company's obligation to call, give notice of and hold the Company
Stockholders' Meeting in accordance with Section 5.2(a) shall not be limited or
otherwise affected by the commencement, disclosure, announcement or submission
of any Superior Offer or other Acquisition Proposal, or by any withdrawal or
modification of the Company Board Recommendation.
5.3 Regulatory Approvals. The Company and Parent shall use commercially
reasonable efforts to file, as soon as practicable after the date of this
Agreement, all notices, reports and other documents required to be filed with
any Governmental Body with respect to the Merger and the other transactions
contemplated by this Agreement, and to submit promptly any additional
information requested by any such Governmental Body. Without limiting the
generality of the foregoing, the Company and Parent shall, promptly after the
date of this Agreement, prepare and file the notifications required under the
HSR Act and any applicable foreign antitrust laws or regulations in connection
with the Merger. The Company and Parent shall respond as promptly as
practicable to (i) any inquiries or requests received from the Federal Trade
Commission or the Department of Justice for additional information or
documentation and (ii) any inquiries or requests received from any state
attorney general, foreign antitrust authority or other Governmental Body in
connection with antitrust or related matters. Each of the Company and Parent
shall (1) give the other party prompt notice of the commencement or threat of
commencement of any Legal Proceeding by or before any Governmental Body with
respect to the Merger or any of the other transactions contemplated by this
Agreement, (2) keep the other party informed as to the status of any such Legal
Proceeding or threat, and (3) promptly inform the other party of any
communication to or from the Federal Trade Commission, the Department of
Justice or any other Governmental Body regarding the Merger. Except as may be
prohibited by any Governmental Body or by any Legal Requirement, the Company
and Parent will consult and cooperate with one another, and will consider in
good faith the views of one another, in connection with any analysis,
appearance, presentation, memorandum, brief, argument, opinion or proposal made
or submitted in connection with any Legal Proceeding under or relating to the
HSR Act or any other foreign, federal or state antitrust or fair trade law. In
addition, except as may be prohibited by any Governmental Body or by any Legal
Requirement, in connection with any Legal Proceeding under or relating to the
HSR Act or any other foreign, federal or state antitrust or fair trade law or
any other similar Legal Proceeding, each of the Company and Parent will permit
authorized Representatives of the other party to be present at each meeting or
conference relating to any such Legal Proceeding and to have access to and be
consulted in connection with any document, opinion or proposal made or
submitted to any Governmental Body in connection with any such Legal
Proceeding. At the request of Parent, the Company shall agree to divest, sell,
dispose of, hold separate or otherwise take or commit to take any action that
limits its freedom of action with respect to its or its Subsidiaries' ability
to retain, any of the businesses, product lines or assets of the Company or any
of its Subsidiaries, provided that any such action is conditioned upon the
consummation of the Merger and such action when taken together with any similar
action by Parent would not have a Material Adverse Effect on Parent at and
after the Effective Time.
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5.4 Stock Options.
(a) Subject to Section 5.4(b), at the Effective Time, all rights with
respect to Company Common Stock under each Company Option then outstanding
shall be converted into and become rights with respect to Parent Common Stock,
and Parent shall assume each such Company Option in accordance with the terms
(as in effect as of the date of this Agreement) of the stock option plan under
which it was issued and the terms of the stock option agreement by which it is
evidenced. From and after the Effective Time, (i) each Company Option assumed
by Parent may be exercised solely for shares of Parent Common Stock, (ii) the
number of shares of Parent Common Stock subject to each such Company Option
shall be equal to the number of shares of Company Common Stock subject to such
Company Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounding down to the nearest whole share, (iii) the per share
exercise price under each such Company Option shall be adjusted by dividing the
per share exercise price under such Company Option by the Exchange Ratio and
rounding up to the nearest cent, and (iv) any restriction on the exercise of
any such Company Option shall continue in full force and effect and the term,
exercisability, vesting schedule and other provisions of such Company Option
shall otherwise remain unchanged; provided, however, that each Company Option
assumed by Parent in accordance with this Section 5.4(a) shall, in accordance
with its terms, be subject to further adjustment as appropriate to reflect any
stock split, stock dividend, reverse stock split, reclassification,
recapitalization or other similar transaction effected subsequent to the
Effective Time. Parent shall file with the SEC, no later than 10 business days
after the date on which the Merger becomes effective, a registration statement
on Form S-8 relating to the shares of Parent Common Stock issuable with respect
to the Company Options and the Company ESPP Options assumed by Parent in
accordance with this Section 5.4(a).
(b) Prior to the Effective Time, the Company shall take all action that may
be necessary (under the plans pursuant to which Company Options are outstanding
and otherwise) to effectuate the provisions of this Section 5.4 and to ensure
that, from and after the Effective Time, holders of Company Options have no
rights with respect thereto other than those specifically provided in this
Section 5.4.
(c) At the Effective Time all outstanding rights to purchase shares of
Company Common Stock under the ESPP ("Purchase Rights") shall be converted (in
accordance with the Exchange Ratio) into rights to purchase shares of Parent
Common Stock (with the number of shares rounded down to the nearest whole share
and the purchase price as of the offering date for each offering period in
effect as of the Effective Time rounded up to the nearest whole cent). All such
converted Purchase Rights shall be assumed by Parent, and each offering period
in effect under the ESPP immediately prior to the Effective Time shall be
continued in accordance with the terms of the ESPP until the end of such
offering period. No additional offering periods will be granted under the ESPP
following the Effective Time, provided that references to the Company in the
ESPP and related documents shall mean Parent (except that the purchase price as
of the enrollment date for a relevant period shall be determined with respect
to the fair market value of the Company Common Stock on such date, as adjusted
hereby). Parent agrees that, from and after the Effective Time, the Company's
employees not participating in an offering which has been continued under the
Company's ESPP may participate in the employee stock purchase plan sponsored by
Parent (the "Parent ESPP"), subject to the terms and conditions of the Parent
ESPP, and that service with the Company shall be treated as service with Parent
for purposes of determining eligibility of the Company's employees under the
Parent ESPP.
5.5 Employee Benefits. Parent agrees that all employees of the Company who
continue employment with Parent or the Surviving Corporation after the
Effective Time ("Continuing Employees") shall be eligible to continue to
participate in the Surviving Corporation's retirement, health, vacation and
other non-equity based employee benefit plans; provided, however, that (a)
nothing in this Section 5.5 or elsewhere in this Agreement shall limit the
right of Parent or the Surviving Corporation to amend or terminate any such
retirement, health, vacation or other employee benefit plan at any time, and
(b) if Parent or the Surviving Corporation terminates any such retirement,
health, vacation or other employee benefit plan, then, the Continuing Employees
shall be eligible to participate in Parent's health, vacation and other non-
equity based employee benefit plans, to substantially the same extent as
employees of Parent in similar positions and at similar grade levels. With
respect to such benefits and to the extent permitted under the applicable
employee benefit plans of Parent,
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credit for service accrued by Continuing Employees (and eligible dependents)
for employment with any Acquired Corporation prior to the Effective Time shall
be recognized (except to the extent necessary to prevent duplication of
benefits), any pre-existing condition limitations (to the extent such
limitations did not apply to a pre-existing condition under a similar or
corresponding Company Employee Plan) and eligibility waiting periods applicable
to any Continuing employee of an Acquired Corporation under any group health
plan shall be waived, and employees shall be given credit for amounts paid
under any Company Employee Plan during the same period for purposes of applying
deductibles, co-payments and out-of-pocket maximums as though such amounts had
been paid in accordance with the terms and conditions of the applicable Company
Employee Plan. Nothing in this Section 5.5 or elsewhere in this Agreement shall
be construed to create a right in any employee to employment with Parent, the
Surviving Corporation or any other Subsidiary of Parent and, subject to any
other binding written agreement between an employee and Parent or the Surviving
Corporation, the employment of each Continuing Employee shall be "at will"
employment.
5.6 Indemnification of Officers and Directors.
(a) All rights to indemnification existing in favor of those Persons who are
or were directors and officers of the Company (the "Indemnified Persons") for
acts and omissions occurring prior to the Effective Time, as provided in the
Company's Certificate of Incorporation or Bylaws (as in effect as of the date
of this Agreement) and as provided in the indemnification agreements between
the Company and said Indemnified Persons (as in effect as of the date of this
Agreement), shall survive the Merger and shall be observed by the Surviving
Corporation, and Parent shall take all action necessary to cause the Surviving
Corporation to observe such rights, to the fullest extent permitted by Delaware
law.
(b) From the Effective Time until the sixth anniversary of the Effective
Time, Parent shall maintain in effect, for the benefit of the Indemnified
Persons with respect to acts or omissions occurring prior to the Effective
Time, the existing policy of directors' and officers' liability insurance
maintained by the Company as of the date of this Agreement (the "Existing
Policy"); provided, however, that (i) Parent may substitute for the Existing
Policy a policy or policies of no less favorable coverage, and (ii) Parent
shall not be required to pay annual premiums for the Existing Policy (or for
any substitute policies) in excess of 175% of the annual premium payable under
the Existing Policy as of the date hereof (which the Company has represented to
Parent is $217,373 per annum). In the event any future annual premiums for the
Existing Policy (or any substitute policies) exceed 175% of such current annual
premium, Parent shall be entitled to reduce the amount of coverage of the
Existing Policy (or any substitute policies) to the amount of coverage that can
be obtained for a premium equal to 175% of such current annual premium.
5.7 Additional Agreements.
(a) Subject to Section 5.7(b), Parent and the Company shall use all
reasonable efforts to take, or cause to be taken, all actions necessary to
consummate the Merger and make effective the other transactions contemplated by
this Agreement. Without limiting the generality of the foregoing, but subject
to Section 5.7(b), each party to this Agreement (i) shall make all filings (if
any) and give all notices (if any) required to be made and given by such party
in connection with the Merger and the other transactions contemplated by this
Agreement; (ii) shall use all reasonable efforts to obtain each Consent (if
any) required to be obtained (pursuant to any applicable Legal Requirement or
Contract, or otherwise) by such party in connection with the Merger or any of
the other transactions contemplated by this Agreement; and (iii) shall use all
reasonable efforts to lift any restraint, injunction or other legal bar to the
Merger. The Company shall promptly deliver to Parent a copy of each such filing
made, each such notice given and each such Consent obtained by the Company
during the Pre-Closing Period.
(b) Notwithstanding anything to the contrary contained in this Agreement,
Parent shall not have any obligation under this Agreement to: (i) dispose or
transfer or cause any of its Subsidiaries to dispose of or transfer any assets,
or to commit to cause any of the Acquired Corporations to dispose of any
assets; (ii) discontinue or cause any of its Subsidiaries to discontinue
offering any product or service, or to commit to cause any of the Acquired
Corporations to discontinue offering any product or service; (iii) license or
otherwise make available, or
A-25
cause any of its Subsidiaries to license or otherwise make available, to any
Person, any technology, software or other Proprietary Asset, or to commit to
cause any of the Acquired Corporations to license or otherwise make available
to any Person any technology, software or other Proprietary Asset; (iv) hold
separate or cause any of its Subsidiaries to hold separate any assets or
operations (either before or after the Closing Date), or to commit to cause any
of the Acquired Corporations to hold separate any assets or operations; (v)
make or cause any of its Subsidiaries to make any commitment (to any
Governmental Body or otherwise) regarding its future operations or the future
operations of any of the Acquired Corporations; or (vi) contest any Legal
Proceeding relating to the Merger if Parent determines in good faith that
contesting such Legal Proceeding might not be advisable.
(c) During the Pre-Closing Period, the Company shall promptly notify Parent
in writing of (i) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute a material inaccuracy in any representation or warranty made by the
Company in this Agreement if such representation or warranty had been made as
of the time of the occurrence, existence or discovery of such event, condition,
fact or circumstance, or such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date of this Agreement; and (ii)
any material breach of any covenant or obligation of the Company that, in each
case of clauses (i) and (ii), would make the timely satisfaction of any
condition set forth in Section 6 or Section 7 impossible or unlikely or that
has had or would reasonably be expected to have a Material Adverse Effect on
the Acquired Corporations. No notification given to Parent pursuant to this
Section 5.7(c) shall limit or otherwise affect any of the representations,
warranties, covenants or obligations of the Company contained in this
Agreement.
(d) During the Pre-Closing Period, Parent shall promptly notify the Company
in writing of (i) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute a material inaccuracy in any representation or warranty made by
Parent in this Agreement if such representation or warranty had been made as of
the time of the occurrence, existence or discovery of such event, condition,
fact or circumstance, or such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date of this Agreement; and (ii)
any material breach of any covenant or obligation of Parent that, in each case
of clauses (i) and (ii), would make the timely satisfaction of any condition
set forth in Section 6 or Section 7 impossible or unlikely or that has had or
would reasonably be expected to have a Material Adverse Effect on Parent. No
notification given to the Company pursuant to this Section 5.7(d) shall limit
or otherwise affect any of the representations, warranties, covenants or
obligations of Parent contained in this Agreement.
(e) During the Pre-Closing Period, Parent shall not (without the prior
written consent of the Company, which consent, or refusal to consent, will not
be unreasonably delayed):
(i) declare, accrue, set aside or pay any extraordinary dividends or
make any other extraordinary distribution in respect of any shares of Parent
Common Stock;
(ii) amend or permit the adoption of any amendment to its certificate of
incorporation (other than an amendment to increase the authorized shares of
Parent Common Stock) in a manner adverse to the stockholders of the Company;
(iii) commence or consummate any merger (other than the Merger), share
exchange, exchange offer or other business combination or series of mergers,
share exchanges, exchange offers, which in the aggregate (i) would result in
the issuance of more than 25,000,000 shares of Parent Common Stock, or (ii)
which would reasonably be expected to delay the consummation of the Merger;
(iv) take or agree to take any action which would result in the failure
to satisfy the condition provided for in Section 7.1 or Section 7.2; or
(v) agree or commit to take any of the actions described in clauses
"(i)" through "(iii)" of this Section 5.7(e).
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5.8 Disclosure. Parent and the Company shall consult with each other before
issuing any press release or otherwise making any public statement with respect
to the Merger or any of the other transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, neither Parent nor the
Company shall, and neither Parent nor the Company shall permit any of their
respective Representatives to, make any disclosure regarding the Merger or any
of the other transactions contemplated by this Agreement unless (a) the other
party shall have approved such disclosure, or (b) the other party shall have
been advised in writing by its outside legal counsel that such disclosure is
required by applicable law; provided, however, that no such consultation or
agreement shall be required by either party if, prior to the date of such
release or public statement, the Company shall have withheld, withdrawn,
modified or refrained from making its recommendation in favor of adoption of
this Agreement in compliance with Section 5.2(c).
5.9 Tax Matters. At or prior to the filing of the Form S-4 Registration
Statement, the Company and Parent shall execute and deliver to Xxxxxx Godward
LLP and to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation, tax
representation letters in customary form. Parent, Merger Sub and the Company
shall each confirm to Xxxxxx Godward LLP and to Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, Professional Corporation, the accuracy and completeness as of the
Effective Time of the tax representation letters delivered pursuant to the
immediately preceding sentence. Parent and the Company shall use all reasonable
efforts prior to the Effective Time to cause the Merger to qualify as a
reorganization under Section 368(a) of the Code. Following delivery of the tax
representations letters pursuant to the first sentence of this Section 5.9,
each of Parent and the Company shall use its reasonable efforts to cause Xxxxxx
Godward LLP and Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation,
respectively, to deliver to it a tax opinion satisfying the requirements of
Item 601 of Regulation S-K promulgated under the Securities Act which tax
opinion will be included as an exhibit to the Form S-4 Registration Statement.
In rendering such opinions, each of such counsel shall be entitled to rely on
the tax representation letters referred to in this Section 5.9.
5.10 Listing. Parent shall use reasonable efforts to cause the shares of
Parent Common Stock being issued in the Merger to be approved for listing
(subject to notice of issuance) on The Nasdaq National Market.
5.11 Access and Investigation.
(a) During the Pre-Closing Period, subject to applicable antitrust laws and
regulations relating to the exchange of information, the Company shall, and
shall cause the respective Representatives of the Acquired Corporations to: (i)
provide Parent and Parent's Representatives with reasonable access to the
Acquired Corporations' Representatives, personnel, properties and assets and to
all existing books, records, Tax Returns, work papers and other documents and
information relating to the Acquired Corporations (including the status of
product development efforts); and (ii) provide Parent and Parent's
Representatives with such copies of the existing books, records, Tax Returns,
work papers and other documents and information relating to the Acquired
Corporations, and with such additional financial, operating and other data and
information regarding the Acquired Corporations, as Parent may reasonably
request.
(b) During the Pre-Closing Period, subject to applicable antitrust laws and
regulations relating to the exchange of information, Parent shall, and shall
cause the respective Representatives of Parent to: (i) provide the Company and
the Company's Representatives with reasonable access to Parent's
Representatives, personnel, properties and assets and to all existing books,
records, Tax Returns, work papers and other documents and information relating
to Parent; and (ii) provide the Company and the Company's Representatives with
such copies of the existing books, records, Tax Returns, work papers and other
documents and information relating to Parent, and with such additional
financial, operating and other data and information regarding Parent, as the
Company may reasonably request.
5.12 Exemption from Liability Under Section 16(b). Assuming that the Company
delivers to Parent the Section 16 Information (as defined below) reasonably in
advance of the Effective Time, the Board of Directors of Parent, or a committee
of Non-Employee Directors thereof (as such term is defined for purposes of Rule
16b-3(d) under the Exchange Act), shall reasonably promptly thereafter and in
any event prior to the
A-27
Effective Time adopt a resolution providing that the receipt by the Company
Insiders (as defined below) of Parent Common Stock in the Merger, and of
options to purchase Parent Common Stock upon conversion of options to purchase
shares of Company Common Stock, in each case pursuant to the transactions
contemplated hereby and to the extent such securities are listed in the Section
16 Information provided by the Company to Parent prior to the Effective Time,
are intended to be exempt from liability pursuant to Section 16(b) under the
Exchange Act such that any such receipt shall be so exempt. "Section 16
Information" shall mean information accurate in all respects regarding the
Company Insiders, the number of shares of Company Common Stock held by each
such Company Insider and expected to be exchanged for Parent Common Stock in
the Merger, and the number and description of the options to purchase shares of
Company Common Stock held by each such Company Insider and expected to be
converted into options to purchase shares of Parent Common Stock in connection
with the Merger. "Company Insiders" shall mean those officers and directors of
the Company who will be subject to the reporting requirements of Section 16(a)
of the Exchange Act as a result of their service as a director or executive
officer of Parent after the Effective Time and who are listed in the Section 16
Information.
5.13 Board of Directors of Parent. Parent's board of directors shall adopt
resolutions providing that, effective immediately after the Effective Time,
Xxxxxxx Xxxxxx shall be appointed as a member of Parent's board of directors to
serve until the next meeting of stockholders of Parent.
SECTION 6. Conditions Precedent to Obligations of Parent and Merger Sub
The obligations of Parent and Merger Sub to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
6.1 Accuracy of Representations. The representations and warranties of the
Company contained in this Agreement, other than those contained in Section 2.8,
shall have been accurate in all respects as of the date of this Agreement and
shall be accurate in all respects as of the Closing Date as if made on and as
of the Closing Date (except as to such representations and warranties made as
of a specific date, which shall have been accurate in all respects as of such
date), except that, in each case, any inaccuracies in such representations and
warranties will be disregarded if, after aggregating all inaccuracies of such
representations and warranties as of the date of this Agreement and as of the
Closing Date (without duplication), such inaccuracies and the circumstances
giving rise to all such inaccuracies do not constitute a Material Adverse
Effect on the Acquired Corporations determined as of the Closing Date (it being
understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect"
qualifications and other materiality qualifications, contained in such
representations and warranties shall be disregarded, and (ii) any update of or
modification to the Company Disclosure Schedule made or purported to have been
made after the date of this Agreement shall be disregarded). The
representations and warranties of the Company contained in Section 2.8 shall
have been accurate in all respects as of the date of this Agreement and shall
be accurate in all respects as of the Closing Date as if made on and as of the
Closing Date, except that, in each case, any inaccuracies in such
representations and warranties will be disregarded if, after aggregating all
inaccuracies of such representations and warranties contained in Section 2.8 as
of the date of this Agreement and as of the Closing Date (without duplication),
such inaccuracies and the circumstances giving rise to all such inaccuracies do
not constitute a Material Adverse Effect on the Acquired Corporations
determined as of the Closing Date (it being understood that, for purposes of
determining the accuracy of such representations and warranties, (i) all
"Material Adverse Effect" qualifications and other materiality qualifications,
contained in such representations and warranties shall be disregarded, and (ii)
any update of or modification to the Company Disclosure Schedule made or
purported to have been made after the date of this Agreement shall be
disregarded).
6.2 Performance of Covenants. Each covenant or obligation that the Company
is required to comply with or to perform at or prior to the Closing shall have
been complied with and performed in all material respects.
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6.3 Effectiveness of Registration Statement. The Form S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued and still be pending,
and no proceeding for that purpose shall have been initiated or be threatened,
by the SEC with respect to the Form S-4 Registration Statement.
6.4 Stockholder Approval. This Agreement shall have been duly adopted by the
Required Company Stockholder Vote.
6.5 Agreements and Documents. Parent shall have received the following
agreements and documents, each of which shall be in full force and effect:
(a) a legal opinion of Xxxxxx Godward LLP, dated as of the Closing Date and
addressed to Parent, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code (it being
understood that (i) in rendering such opinion, Xxxxxx Godward LLP may rely upon
the tax representation letters referred to in Section 5.9, and (ii) if Cooley
Godward LLP does not render such opinion or withdraws or modifies such opinion,
this condition shall nonetheless be deemed to be satisfied if Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, Professional Corporation renders such opinion to Parent);
and
(b) a certificate executed on behalf of the Company by its Chief Executive
Officer confirming that the conditions set forth in Sections 6.1, 6.2, 6.4,
6.6, 6.7, 6.8 and 6.9 have been duly satisfied.
6.6 No Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred any Material Adverse Effect on the Acquired
Corporations.
6.7 HSR Act. The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated and any similar waiting
period under any applicable foreign antitrust law or regulation shall have
expired or been terminated; and any Consent required under any applicable
foreign antitrust law or regulation shall have been obtained.
6.8 No Restraints. No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Merger shall have
been issued by any court of competent jurisdiction and remain in effect, and
there shall not be any Legal Requirement enacted or deemed applicable to the
Merger that makes consummation of the Merger illegal.
6.9 No Governmental Litigation. There shall not be pending any Legal
Proceeding in which a Governmental Body is a party: (a) challenging or seeking
to restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement; (b) relating to the Merger and
seeking to obtain from Parent or any of its Subsidiaries any damages that may
be material to Parent; (c) seeking to prohibit or limit in any material respect
Parent's ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the stock of the Surviving
Corporation; (d) which would materially and adversely affect the right of
Parent, the Surviving Corporation or any Subsidiary of Parent to own the assets
or operate the business of the Acquired Corporations; or (e) seeking to compel
Parent or the Company, or any Subsidiary of Parent or the Company, to dispose
of or hold separate any material assets, as a result of the Merger or any of
the other transactions contemplated by this Agreement.
SECTION 7. Conditions Precedent to Obligation of the Company
The obligation of the Company to effect the Merger and otherwise consummate
the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
7.1 Accuracy of Representations. The representations and warranties of
Parent contained in this Agreement shall have been accurate in all respects as
of the date of this Agreement and shall be accurate in all respects as of the
Closing Date as if made on and as of the Closing Date (except as to such
representations and
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warranties made as of a specific date, which shall have been accurate in all
respects as of such date), except that any inaccuracies in such representations
and warranties will be disregarded if, after aggregating all inaccuracies of
such representations and warranties as of the date of this Agreement and as of
the Closing Date (without duplication), such inaccuracies and the circumstances
giving rise to all such inaccuracies do not constitute a Material Adverse
Effect on Parent determined as of the Closing Date (it being understood that,
for purposes of determining the accuracy of such representations and warranties
as of the Closing Date, (i) all "Material Adverse Effect" qualifications and
other materiality qualifications, and any similar qualifications, contained in
such representations and warranties shall be disregarded, and (ii) any update
of or modification to the Parent Disclosure Schedule made or purported to have
been made after the date of this Agreement shall be disregarded).
7.2 Performance of Covenants. Each covenant and obligation that Parent and
Merger Sub are required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
7.3 Effectiveness of Registration Statement. The Form S-4 Registration
Statement shall have become effective in accordance with the provisions of the
Securities Act, and no stop order shall have been issued and still be pending,
and no proceeding for that purpose shall have been initiated or be threatened,
by the SEC with respect to the Form S-4 Registration Statement.
7.4 Stockholder Approval. This Agreement shall have been duly adopted by the
Required Company Stockholder Vote.
7.5 Documents. The Company shall have received the following documents:
(a) a legal opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional
Corporation, dated as of the Closing Date, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368 of the Code (it
being understood that (i) in rendering such opinion, Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, Professional Corporation may rely upon the tax representation letters
referred to in Section 5.9, and (ii) if Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation does not render such opinion or withdraws or modifies
such opinion, this condition shall nonetheless be deemed to be satisfied if
Xxxxxx Godward llp renders such opinion to the Company); and
(b) a certificate executed on behalf of Parent by an executive officer of
Parent, confirming that conditions set forth in Sections 7.1, 7.2, 7.6, 7.8 and
7.9 have been duly satisfied.
7.6 No Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred any Material Adverse Effect on Parent.
7.7 HSR Act. The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated and any similar waiting
period under any applicable foreign antitrust law or regulation shall have
expired or been terminated; and any Consent required under any applicable
foreign antitrust law or regulation shall have been obtained.
7.8 Listing. The shares of Parent Common Stock to be issued in the Merger
shall have been approved for listing (subject to notice of issuance) on The
Nasdaq National Market.
7.9 No Restraints. No temporary restraining order, preliminary or permanent
injunction or other order preventing the consummation of the Merger by the
Company shall have been issued by any court of competent jurisdiction and
remain in effect, and there shall not be any Legal Requirement enacted or
deemed applicable to the Merger that makes consummation of the Merger by the
Company illegal.
7.10 No Governmental Litigation. There shall not be pending any Legal
Proceeding in which a Governmental Body is a party: (a) challenging or seeking
to restrain or prohibit the consummation of the Merger or any of the other
transactions contemplated by this Agreement; (b) relating to the Merger and
seeking
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to obtain from Parent or any of its Subsidiaries any damages that may be
material to Parent; (c) seeking to prohibit or limit in any material respect
Parent's ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the stock of the Surviving
Corporation; (d) which would materially and adversely affect the right of
Parent, the Surviving Corporation or any Subsidiary of Parent to own the assets
or operate the business of the Acquired Corporations; or (e) seeking to compel
Parent or the Company, or any Subsidiary of Parent or the Company, to dispose
of or hold separate any material assets, as a result of the Merger or any of
the other transactions contemplated by this Agreement.
SECTION 8. Termination
8.1 Termination. This Agreement may be terminated prior to the Effective
Time (whether before or after the adoption of this Agreement by the Required
Company Stockholder Vote):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have been
consummated by February 28, 2001; provided, however, that a party shall not be
permitted to terminate this Agreement pursuant to this Section 8.1(b) if the
failure to consummate the Merger by February 28, 2001 is primarily attributable
to a failure on the part of such party to perform any covenant in this
Agreement required to be performed by such party at or prior to the Effective
Time;
(c) by either Parent or the Company if a court of competent jurisdiction or
other Governmental Body shall have issued a final and nonappealable order,
decree or ruling, or shall have taken any other action, having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger;
(d) by either Parent or the Company if (i) the Company Stockholders' Meeting
(including any adjournments and postponements thereof) shall have been held and
completed and the Company's stockholders shall have taken a final vote on a
proposal to adopt this Agreement, and (ii) this Agreement shall not have been
adopted at the Company Stockholders' Meeting (and shall not have been adopted
at any adjournment or postponement thereof) by the Required Company Stockholder
Vote;
(e) by Parent (at any time prior to the adoption of this Agreement by the
Required Company Stockholder Vote) if a Triggering Event shall have occurred;
(f) by Parent if (i) any of the Company's representations and warranties
contained in this Agreement shall be inaccurate as of the date of this
Agreement, or shall have become inaccurate as of a date subsequent to the date
of this Agreement (as if made on such subsequent date), such that the condition
set forth in Section 6.1 would not be satisfied as of the time such
representation or warranty shall have become inaccurate (assuming the Closing
Date were as of such time), or (ii) any of the Company's covenants contained in
this Agreement shall have been breached such that the condition set forth in
Section 6.2 would not be satisfied as of the time of such breach (assuming the
Closing Date were as of such time); provided, however, that if an inaccuracy in
any of the Company's representations and warranties as of a date subsequent to
the date of this Agreement or a breach of a covenant by the Company is curable
by the Company and the Company is continuing to exercise all reasonable efforts
to cure such inaccuracy or breach, then Parent may not terminate this Agreement
under this Section 8.1(f) on account of such inaccuracy or breach until 30 days
subsequent to the date of such inaccuracy or breach;
(g) by the Company if (i) any of Parent's representations and warranties
contained in this Agreement shall be inaccurate as of the date of this
Agreement, or shall have become inaccurate as of a date subsequent to the date
of this Agreement (as if made on such subsequent date), such that the condition
set forth in Section 7.1 would not be satisfied as of the time such
representation or warranty shall have become inaccurate (assuming the Closing
Date were as of such time), or (ii) if any of Parent's covenants contained in
this Agreement shall have been breached such that the condition set forth in
Section 7.2 would not be satisfied as of the time of such breach (assuming the
Closing Date were was of such time); provided, however, that if an inaccuracy
in any of Parent's
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representations and warranties as of a date subsequent to the date of this
Agreement or a breach of a covenant by Parent is curable by Parent and Parent
is continuing to exercise all reasonable efforts to cure such inaccuracy or
breach, then the Company may not terminate this Agreement under this Section
8.1(g) on account of such inaccuracy or breach until 30 days subsequent to the
date of such inaccuracy or breach; or
(h) by the Company, in accordance with the terms of Section 5.2(c), provided
that Parent has received the termination fee pursuant to Section 8.3(c).
8.2 Effect of Termination. In the event of the termination of this Agreement
as provided in Section 8.1, this Agreement shall be of no further force or
effect; provided, however, that (i) this Section 8.2, Section 8.3 and Section 9
shall survive the termination of this Agreement and shall remain in full force
and effect, and (ii) the termination of this Agreement shall not relieve any
party from any liability for any willful breach of any representation,
warranty, covenant or obligation contained in this Agreement.
8.3 Expenses; Termination Fees.
(a) Except as set forth in this Section 8.3, all fees and expenses incurred
in connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses, whether or not
the Merger is consummated; provided, however, that Parent and the Company shall
share equally all fees and expenses, other than attorneys' and accountants'
fees, incurred in connection with (A) the filing, printing and mailing of the
Form S-4 Registration Statement and the Proxy Statement and any amendments or
supplements thereto and (B) the filing by the parties hereto of the pre-merger
notification and report forms relating to the Merger under the HSR Act and the
filing of any notice or other document under any applicable foreign antitrust
law or regulation.
(b) In the case of termination of this Agreement by Parent or the Company
pursuant to Section 8.1(b) or Section 8.1(d), the Termination Fee (as defined
in Section 8.3(c)) shall be paid by the Company at or prior to the consummation
of any Acquisition Transaction referred to in Section 8.3(c)(i) or 8.3(c)(ii),
as the case may be; in the case of termination of this Agreement by Parent
pursuant to Section 8.1(e), the Termination Fee shall be paid by the Company
within two (2) business days after such termination; and in the case of
termination of this Agreement by the Company pursuant to Section 8.1(h), the
Termination Fee shall be paid by the Company at or prior to such termination.
(c) If (i) (A) this Agreement is terminated by Parent or the Company
pursuant to Section 8.1(d), (B) at or prior to the time of the termination of
this Agreement an Acquisition Proposal shall have been publicly disclosed,
announced, commenced, submitted or made, (C) such Acquisition Proposal shall
not have been unconditionally and publicly withdrawn by the Person making such
Acquisition Proposal at least five (5) business days prior to the date of the
Company Stockholders' Meeting; provided however, that in the event such
Acquisition Proposal is not withdrawn at least five (5) business days prior to
the Company Stockholders' Meeting, the Company shall, at Parent's request,
postpone the Company Stockholders' Meeting for five (5) business days, and (D)
within nine (9) months after such termination the Company consummates any
Acquisition Transaction, (ii) (A) this Agreement is terminated by Parent or the
Company pursuant to Section 8.1(b), (B) at or prior to the time of the
termination of this Agreement an Acquisition Proposal shall have been
disclosed, announced, commenced, submitted or made (C) such Acquisition
Proposal shall not have been unconditionally and publicly withdrawn by the
Person making such Acquisition Proposal at least five (5) business days prior
to February 28, 2001, (D) within nine (9) months after such termination the
Company consummates any Acquisition Transaction, and (E) Parent shall not have
taken or failed to take any action, which action or failure to act constitutes
a material breach of the covenants and agreements set forth in this Agreement,
that can be shown to be a significant contributing factor to the Merger failing
to be consummated by February 28, 2001, and (F) the Company shall have taken or
failed to take any action, which action or failure to act constitutes a breach
of the covenants and agreements set forth in this Agreement, that can be shown
to be a significant contributing factor to the Merger failing to be consummated
by February 28, 2001, (iii) this Agreement is terminated by Parent pursuant to
Section 8.1(e), or (iv) this Agreement is terminated by
A-32
the Company pursuant to Section 8.1(h), then, in each case of clauses (i)
through (iv) above, the Company shall pay to Parent, in cash at the time
specified in the next sentence, a nonrefundable fee in the amount equal to
$135,000,000. Notwithstanding anything to the contrary contained herein, solely
for purposes of determining whether any fee shall be payable under clauses (i)
or (ii) of this Section 8.3(c), the reference to "15%" in each place it appears
in the definition of "Acquisition Transaction" set forth in Exhibit A hereto
shall be replaced with "50%".
(d) If the Company fails to pay when due any amount payable under this
Section 8.3, then the Company shall pay to Parent interest on such overdue
amount (for the period commencing as of the date such overdue amount was
originally required to be paid and ending on the date such overdue amount is
actually paid to Parent in full) at a rate per annum equal to the "prime rate"
(as announced by Bank of America or any successor thereto) in effect on the
date such overdue amount was originally required to be paid.
SECTION 9. Miscellaneous Provisions
9.1 Amendment. This Agreement may be amended with the approval of the
respective boards of directors of the Company and Parent at any time (whether
before or after adoption of this Agreement by the stockholders of the Company);
provided, however, that after any such adoption of this Agreement by the
Company's stockholders, no amendment shall be made which by law requires
further approval of the stockholders of the Company without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
9.2 Waiver.
(a) No failure on the part of any party to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any party
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege
or remedy.
(b) No party shall be deemed to have waived any claim arising out of this
Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
party; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
9.3 No Survival of Representations and Warranties. None of the
representations and warranties contained in this Agreement or in any
certificate delivered pursuant to this Agreement shall survive the Merger.
9.4 Entire Agreement; Counterparts. This Agreement and the other agreements
referred to herein constitute the entire agreement among the parties hereto and
supersedes all other prior agreements and understandings, both written and
oral, among or between any of the parties with respect to the subject matter
hereof and thereof; provided, however, that the Nondisclosure Agreement shall
remain in full force and effect. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
9.5 Applicable Law; Jurisdiction. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof. In any action between any of the parties arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement: (a) each of the parties irrevocably and unconditionally consents and
submits to the exclusive jurisdiction and venue of the state and federal courts
located in the State of Delaware; (b) if any such action is commenced in a
state court, then, subject to applicable law, no party shall object to the
removal of such action to any federal court located in the State of Delaware;
(c) each of the parties irrevocably waives the right to trial by jury; and (d)
each of the parties irrevocably consents to service of process by first class
certified mail, return receipt requested, postage prepaid, to the address at
which such party is to receive notice in accordance with Section 9.8.
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9.6 Attorneys' Fees. In any action at law or suit in equity to enforce this
Agreement or the rights of any of the parties hereunder, the prevailing party
in such action or suit shall be entitled to receive a reasonable sum for its
attorneys' fees and all other reasonable costs and expenses incurred in such
action or suit.
9.7 Assignability. This Agreement shall be binding upon, and shall be
enforceable by and inure solely to the benefit of, the parties hereto and their
respective successors and assigns; provided, however, that neither this
Agreement nor any of the Company's rights hereunder may be assigned by the
Company without the prior written consent of Parent, and any attempted
assignment of this Agreement or any of such rights by the Company without such
consent shall be void and of no effect. Except as provided in Section 5.6,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any Person (other than the parties hereto) any right, benefit or remedy of
any nature whatsoever under or by reason of this Agreement.
9.8 Notices. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly given on the day of delivery if delivered by hand or facsimile
(with confirmation of delivery), or on the second business day after being sent
by registered overnight mail, return receipt requested, by overnight courier or
overnight express delivery service or by facsimile (in each case, with
confirmation of delivery) to the address or facsimile telephone number set
forth beneath the name of such party below (or to such other address or
facsimile telephone number as such party shall have specified in a written
notice given to the other parties hereto):
if to Parent or Merger Sub:
Applied Micro Circuits Corporation
0000 Xxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Facsimile No. (000) 000-0000
Attn: General Counsel
with a copy to (which copy shall not constitute notice):
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxx, XX 00000-0000
Facsimile No. (000) 000-0000
Attn: Xxxxxxxxx X. Xxxx, Esq.
if to the Company:
MMC Networks, Inc.
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile No. (000) 000-0000
Attn: President and Chief Executive Officer
with copies to (which copies shall not constitute notice):
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation
Xxx Xxxxxx
Xxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Facsimile No. (000) 000-0000
Attn: Xxxxx X. Xxxxx, Esq.
Xxxxx X. Xxxxxxxx, Esq.
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9.9 Construction.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words "without limitation."
(d) Execept as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
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In Witness Whereof, the parties have caused this Agreement to be executed as
of the date first above written.
Applied Micro Circuits Corporation
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
Mercury Acquisition Corp.
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxx Xxxxx
Title: ______________________________
MMC Networks, Inc.
By: /s/ Xxxxxxx Spreaf
----------------------------------
Name: Xxxxxxx Spreaf
Title: President & CEO
[Signature Page to Agreement and Plan of Merger and Reorganization]
EXHIBITS
Exhibit A Certain Definitions
EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
Acquired Corporation Contract. "Acquired Corporation Contract" shall mean
any Contract: (a) to which any of the Acquired Corporations is a party; (b) by
which any of the Acquired Corporations or any asset of any of the Acquired
Corporations is bound or under which any of the Acquired Corporations has any
obligation; or (c) under which any of the Acquired Corporations has any right
or interest.
Acquired Corporation Proprietary Asset. "Acquired Corporation Proprietary
Asset" shall mean any Proprietary Asset owned by or licensed to any of the
Acquired Corporations or otherwise used by any of the Acquired Corporations.
Acquisition Proposal. "Acquisition Proposal" shall mean any offer, proposal
or indication of interest (other than an offer, proposal or indication of
interest by Parent) contemplating or otherwise relating to any Acquisition
Transaction.
Acquisition Transaction. "Acquisition Transaction" shall mean any
transaction or series of transactions involving:
(a) any merger, consolidation, share exchange, business combination,
issuance of securities, direct or indirect acquisition of securities,
recapitalization tender offer, exchange offer or other similar transaction in
which (i) any of the Acquired Corporations is a constituent corporation, (ii) a
Person or "group" (as defined in the Exchange Act and the rules promulgated
thereunder) of Persons directly or indirectly acquires beneficial or record
ownership of securities representing more than 15% of the outstanding
securities of any class of voting securities of any of the Acquired
Corporations, or (iii) any of the Acquired Corporations issues securities
representing more than 15% of the outstanding securities of any class of voting
securities of any of the Acquired Corporations;
(b) any direct or indirect sale, lease, exchange, transfer, license,
acquisition or disposition of any business or businesses or of assets or rights
that constitute or account for 15% or more of the consolidated net revenues,
net income or assets of the Acquired Corporations; or
(c) any liquidation or dissolution of any of the Acquired Corporations.
Agreement. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached, as it may be amended from
time to time.
Company Common Stock. "Company Common Stock" shall mean the Common Stock,
$.001 par value per share, of the Company.
Company Disclosure Schedule. "Company Disclosure Schedule" shall mean the
disclosure schedule that has been prepared by the Company in accordance with
the requirements of Section 9.6 of the Agreement and that has been delivered by
the Company to Parent on the date of the Agreement and signed by the President
of the Company.
Company ESPP Options. "Company ESPP Options" mean all outstanding options
under the Company's 1997 Employee Stock Purchase Plan.
Consent. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
i
Contract. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, instrument, note, option, warranty, purchase
order, license, sublicense, insurance policy, benefit plan or legally binding
commitment or undertaking of any nature.
Encumbrance. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right or restriction
of any nature (including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any restriction on
the receipt of any income derived from any asset, any restriction on the use
of any asset and any restriction on the possession, exercise or transfer of
any other attribute of ownership of any asset).
Environmental Law. "Environmental Law" means any Legal Requirement relating
to pollution or protection of human health or the environment (including
ambient air, surface water, ground water, land surface or subsurface strata),
including any Legal Requirement relating to emissions, discharges, releases or
threatened releases of Materials of Environmental Concern, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, handling of or exposure of any individual to
Materials of Environmental Concern;
Entity. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
Form S-4 Registration Statement. "Form S-4 Registration Statement" shall
mean the registration statement on Form S-4 to be filed with the SEC by Parent
in connection with issuance of Parent Common Stock in the Merger, as said
registration statement may be amended.
Governmental Authorization. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, variance, clearance,
registration, qualification or authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement; or (b) right under any Contract with any
Governmental Body.
Governmental Body. "Governmental Body" shall mean any: (a) nation, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; or (c) governmental or quasi-governmental authority of any
nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
HSR Act. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
Legal Proceeding. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry,
audit, examination or investigation commenced, brought, conducted or heard by
or before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
Legal Requirement. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation,
ruling or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Body
(or under the authority of the NASD).
iii
Material Adverse Effect. An event, violation, inaccuracy, circumstance or
other matter will be deemed to have a "Material Adverse Effect" on the Acquired
Corporations if such event, violation, inaccuracy, circumstance or other matter
(considered together with all other matters that would constitute exceptions to
the representations and warranties set forth in the Agreement but for the
presence of "Material Adverse Effect" or other materiality qualifications, or
any similar qualifications, in such representations and warranties) had or
could reasonably be expected to have or give rise to a material adverse effect
on (i) the business, financial condition, capitalization, assets, liabilities,
operations or financial performance of the Acquired Corporations taken as a
whole, (ii) the ability of the Company to consummate the Merger or any of the
other transactions contemplated by the Agreement or to perform any of its
obligations under the Agreement, or (iii) Parent's ability to vote, receive
dividends with respect to or otherwise exercise ownership rights with respect
to the stock of the Surviving Corporation; provided, however, that none of the
following shall be deemed in themselves, either alone or in combination, to
constitute, and none of the following shall be taken into account in
determining whether there has been or will be, a Material Adverse Effect on the
Acquired Corporations: (a) any change in the market price or trading volume of
the Company's stock after the date hereof; (b) any failure by the Company to
meet internal projections or forecasts or published revenue or earnings
predictions for any period ending (or for which revenues or earnings are
released) on or after the date of this Agreement; (c) any adverse change,
effect, occurrence, state of facts or development attributable to conditions
affecting the industries in which the Company participates, the U.S. economy as
a whole or foreign economies in any locations where an Acquired Corporation has
material operations or sales; (d) any adverse change, effect, occurrence, state
of facts or development resulting from compliance with the terms of, or the
taking of any action required by, this Agreement (other than compliance with
the terms of, or any action required by Section 4.1(a)), or (e) any of the
following adverse changes, effects, occurrences, state of facts or developments
to the extent the affected party successfully bears the burden of proving by
clear and convincing evidence they are directly and primarily attributable to
the announcement or pendency of the Merger: (i) cancellations of or delays in
customer orders, (ii) reductions in sales, (iii) disruptions in supplier,
distributor or partner relationships, and (iv) nongovernmental litigation. An
event, violation, inaccuracy, circumstance or other matter will be deemed to
have a "Material Adverse Effect" on Parent if such event, violation,
inaccuracy, circumstance or other matter (considered together with all other
matters that would constitute exceptions to the representations and warranties
set forth in the Agreement but for the presence of "Material Adverse Effect" or
other materiality qualifications, or any similar qualifications, in such
representations and warranties) had or could reasonably be expected to have a
material adverse effect on (i) the business, financial condition,
capitalization, assets, liabilities, operations or financial performance of
Parent and its Subsidiaries taken as a whole, or (ii) the ability of Parent to
consummate the Merger or any of the other transactions contemplated by the
Agreement or to perform any of its obligations under the Agreement; provided,
however, that none of the following shall be deemed in themselves, either alone
or in combination, to constitute, and none of the following shall be taken into
account in determining whether there has been or will be, a Material Adverse
Effect on Parent: (a) any change in the market price or trading volume of
Parent's stock after the date hereof; (b) any failure by Parent to meet
internal projections or forecasts or published revenue or earnings predictions
for any period ending (or for which revenues or earnings are released) on or
after the date of this Agreement; (c) any adverse change, effect, occurrence,
state of facts or development attributable to conditions affecting the
industries in which Parent participates, the U.S. economy as a whole or foreign
economies in any locations where Parent has material operations or sales; (d)
any adverse change, effect, occurrence, state of facts or development resulting
from compliance with the terms of, or the taking of any action required by,
this Agreement; or (e) any of the following adverse changes, effects,
occurrences, state of facts or developments to the extent the affected party
successfully bears the burden of proving by clear and convincing evidence they
are directly and primarily attributable to the announcement or pendency of the
Merger: (i) cancellations of or delays in customer orders, (ii) reductions in
sales, (iii) disruptions in supplier, distributor or partner relationships, and
(iv) nongovernmental litigation.
Materials of Environmental Concern. "Materials of Environmental Concern"
shall mean all chemicals, pollutants, contaminants, wastes, toxic substances,
petroleum and petroleum products and any other substance that is now or
hereafter regulated by any Environmental Law or that is otherwise a danger to
health,
iv
reproduction or the environment.
NASD. "NASD" shall mean the National Association of Securities Dealers, Inc.
Parent Common Stock. "Parent Common Stock" shall mean the Common Stock,
$0.01 par value per share, of Parent.
Parent Contract. "Parent Contract" shall mean any Contract: (a) to which
Parent is a party; (b) by which Parent or any asset of Parent is or may become
bound or under which Parent has, or may become subject to, any obligation; or
(c) under which Parent has or may acquire any right or interest.
Person. "Person" shall mean any individual, Entity or Governmental Body.
Proprietary Asset. "Proprietary Asset" shall mean any: (a) registered
patent, patent application, trademark (whether registered or unregistered),
trademark application, trade name, fictitious business name, service xxxx
(whether registered or unregistered), registered service xxxx application,
registered copyright, copyright application, registered maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, source code, algorithm, invention, design,
blueprint, engineering drawing, proprietary product, technology, proprietary
right or other intellectual property right or intangible asset; or (b) right to
use or exploit any of the foregoing.
Proxy Statement. "Proxy Statement" shall mean the proxy statement/prospectus
to be sent to the Company's stockholders in connection with the Company
Stockholders' Meeting.
Representatives. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange Commission.
Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
amended.
Subsidiary. An entity shall be deemed to be a "Subsidiary" of another Person
if such Person directly or indirectly owns, beneficially or of record, an
amount of voting securities of other interests in such Entity that is
sufficient to enable such Person to elect at least a majority of the members of
such Entity's board of directors or other governing body, or at least 50% of
the outstanding equity or financial interests of such Entity.
Superior Offer. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase at least a majority of the
outstanding Company Common Stock on terms that the board of directors of the
Company determines, in its good faith judgment, after consultation with its
financial advisor of nationally recognized reputation to be more favorable to
the Company's stockholders than the terms of the Merger; provided, however,
that any such offer shall not be deemed to be a "Superior Offer" if any
financing required to consummate the transaction contemplated by such offer is
not committed or is not reasonably capable of being obtained by such third
party on a timely basis.
Tax. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, withholding tax or payroll tax), levy, assessment, tariff, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or
collected by or under the authority of any Governmental Body.
Tax Return. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
v
Triggering Event. A "Triggering Event" shall be deemed to have occurred if:
(i) the board of directors of the Company shall have failed to recommend that
the Company's stockholders vote to adopt this Agreement, or shall have
withdrawn or modified in a manner adverse to Parent the Company Board
Recommendation; (ii) the Company shall have failed to include in the Proxy
Statement the Company Board Recommendation; (iii) the board of directors of the
Company shall have approved, endorsed or recommended any Acquisition Proposal;
(iv) the Company shall have entered into any letter of intent or similar
document or any Contract relating to any Acquisition Proposal; (v) a tender or
exchange offer relating to securities of the Company shall have been commenced
and the Company shall not have sent to its securityholders, within ten business
days after the commencement of such tender or exchange offer, a statement
disclosing that the Company recommends rejection of such tender or exchange
offer; (vi) an Acquisition Proposal is publicly announced, and the Company
fails to issue a press release announcing its opposition to such Acquisition
Proposal or fails to reaffirm the Company Board Recommendation at the request
of Parent within ten business days after such Acquisition Proposal is
announced; or (vii) any of the Acquired Corporations or any Representative of
any of the Acquired Corporations shall have violated any of the restrictions
set forth in Sections 4.2(a)(i) or 4.2(a)(ii) and such breach shall have
resulted in the submission, commencement, announcement or the making of an
Acquisition Proposal.
vi
